[ex10x1x1.jpg]

--------------------------------------------------------------------------------

included in and subject to this Agreement as if the Additional Lands were listed
in Exhibit A;

     (c) if Owner (or either of them) is the Acquiring Party, the Additional
Lands shall be deemed to be included in and subject to this Agreement as if the
Additional Lands were listed in Exhibit A unless TRC notifies Owner, in writing,
within sixty (60) days following TRC’s receipt of Owner’s notice, that TRC
declines to include the Additional Lands in this Agreement, in which event Owner
shall be free to hold and operate such Additional Lands for its own account,
free and clear of any claims by or obligations to TRC;

     (d) if TRC or Owner propose to include Additional Lands pursuant to this
Section 1.2 that are burdened, as of the date of acquisition, by any royalties
on production (including without limitation any royalties created by or under
the Acquisition Documents) (“Third Party Royalties”), then the Acquiring Party
shall provide the other Party copies of any leases, purchase agreements, deeds
or other documents reflecting such burdens. TRC in “good faith” located
additional claims following signing of the Memorandum of Understanding to
further safeguard against Third Party acquisitions. Should additional Third
Party lands be acquired, they will be so for the benefit of the Project and
shall be governed by this Agreement; and

     (e) Following the inclusion of Additional Lands in the Property pursuant to
this Section 1.2, the Parties shall take such actions and execute such
instruments (including without limitation an amendment to this Agreement) as
either Party may reasonably desire or as may be required under the terms of the
Acquisition Documents or applicable law to subject the Additional Lands and the
Acquisition Documents to the terms of this Agreement.

     1.3 Activities Outside the Area of Interest. Nothing in this Agreement
shall be construed to limit either Party’s right to stake, purchase, lease,
apply for or otherwise acquire, on its own behalf and without any obligation
whatsoever to the other, any right, title or interest whatsoever in or to any
real property or mineral interests situated outside of the Area of Interest, and
such right, title and interest shall not be subject to this Agreement.

     1.4 Relinquishment of Property. If TRC elects to abandon or relinquish any
portion of the Property (the “Relinquished Property”), either before or after
TRC’s exercise of the Option, TRC shall first provide notice thereof to Owner,
specifying which portion of the Property is to be abandoned or relinquished, and
within thirty (30) days from and after such notice Owner may elect to receive
all or any portion of such Relinquished Property by notice to TRC. In such a
case, TRC shall, rather than abandoning or relinquishing such property, deliver
to Owner a duly executed deed in recordable form conveying to Owner (85.0% to
Steven Van Ert and 15.0% to Noel Cousins as tenants in common) all of TRC’s
rights, title and interest in the Relinquished Property so elected by Owner and
warranting the absence of any lien or encumbrance arising by, through or under
TRC; provided, however, that such obligation shall not extend to rights included
in the Property pursuant to Section 1.2 that are held under lease or similar
agreement with a third party and to whom TRC has a similar pre-existing
obligation to relinquish such Property; and provided, further, that if the lease
or other agreement with the third party does not preclude a transfer to Owner,
Owner shall have the right to elect to receive a transfer of such rights, but

MISC-035-2.doc

2

--------------------------------------------------------------------------------

which right must be exercised within thirty (30) days after TRC’s required
notice to Owner. For avoidance of doubt, the Parties acknowledge that Owner may
elect to take ownership of all, none or some portion of the Relinquished
Property, in Owner’s discretion. Upon delivery of such deed or transfer, all of
TRC’s rights, title, interest and obligations with respect to the Relinquished
Property shall terminate, except that: (1) TRC shall perform its reclamation
obligations under Section 11.3, and (2) if the Relinquished Property includes
unpatented mining claims and notice of relinquishment is provided after July 1
of any calendar year, TRC shall be required (as provided in Section 13.3) to
make all filings and payments to the Bureau of Land Management (“BLM”) and to
Inyo County to maintain such claims for that calendar and assessment year.

2. WARRANTIES AND REPRESENTATIONS

2.1 By TRC. TRC represents and warrants to Owner that TRC has the full right,
power

and capacity to enter into and perform this Agreement upon the terms set forth
herein, and doing so will not be in breach of any other agreement to which TRC
is a party. TRC is a corporation in good standing under the laws of Idaho and is
authorized to do business in California. All transactions contemplated herein
and any corporate or other actions required to authorize TRC to enter into and
perform this Agreement have been properly taken. The person signing this
Agreement for TRC has proper corporate authority to do so as TRC’s Chief
Executive Officer. TRC agrees not to encumber title to the Property while this
Agreement is in effect.

     2.2 By Owner. Owner represents and warrants to TRC that the Owner has the
full right, power and capacity to enter into and perform this Agreement upon the
terms set forth herein, and doing so will not be in breach of any other
agreement to which Owner is a party. Owner further represents and warrants to
TRC that each of the individuals comprising Owner is unmarried. Owner agrees not
to encumber title to the Property while this Agreement is in effect. The
representations and warranties of Owner set forth above are the joint and
several obligations of each of the persons comprising Owner. Owner specifically
makes no representations or warranties related to (i) ownership of the Property,
(ii) the process of location, the filing for record and maintenance of the
unpatented mineral claims, (iii) the existence of a mineral discovery within the
unpatented mining claims included within the Property, or (iv) the accuracy of
any data or technical information furnished by Owner to TRC either before or
subsequent to the execution of this agreement.

3. CONDITIONAL TRANSFER AND EXPLORATION AND DEVELOPMENT
RIGHTS

3.1 Conditional Transfer. Within sixty (60) days after the Parties’ execution of
this

Agreement, Owner shall conditionally transfer the Property to TRC using a deed
substantially in the form attached hereto as Exhibit B (the “Transfer Deed”), in
accordance with and subject to all the terms and conditions of this Agreement,
which Transfer Deed shall reserve to Owner the Royalty provided for herein.
Owner’s conveyance of the Property shall be secured by (1) a deed of trust
listing Owner as the beneficiary a form of which is attached hereto as Exhibit D
(“Deed of Trust”), which Deed of Trust shall be executed by TRC and recorded in
the official records of

MISC-035-2.doc

3

--------------------------------------------------------------------------------

Inyo County, California immediately after recording of the Transfer Deed and
prior to TRC’s causing any physical disturbance on the Property, but in any
event within thirty (30) days after TRC’s receipt of the Transfer Deed, and (2)
a duly executed and recordable reconveyance deed substantially in the form
attached hereto as Exhibit C (the “Reconveyance Deed”), which shall be held in
escrow in the Law offices of Deconcini, McDonald, Yetwin & Lacy, P.C. (“DMYL”)
with instructions to the deliver the Reconveyance Deed to Owner if the Option to
purchase the Property expires or upon the termination of this Agreement caused
by any breach thereof by TRC. TRC shall execute and deliver to DMYL the
Reconveyance Deed prior to Owner’s obligation to deliver to TRC the Transfer
Deed. Within thirty (30) days after the Transfer Deed is recorded, TRC shall
prepare and file with the BLM a notice of transfer of interest for all
unpatented mining claims within the Property, pay all required filing fees, and
provide a copy of the same to Owner.

     3.2 Exploration and Development Rights. Upon the Parties’ execution of this
Agreement, TRC shall have the exclusive right and privilege of entering upon the
Property to Explore, Prospect for and Develop, but not Mine Minerals contained
upon or within the Property. TRC shall have no right to Mine Minerals from the
Property or use the Property for Mine purposes unless and until TRC’s Option to
purchase the Property is exercised as provided herein.

3.3 Option to Purchase Property. TRC shall have an option to purchase the
Property upon the terms and conditions set forth in Section 6.1 of this
Agreement (the “Option”). The Option may be exercised at any time while this
Agreement remains in effect and, if exercised, shall allow TRC the right to Mine
the Property subject to applicable laws and regulations.

3.4 Definitions. As used in this Section 3 and elsewhere in this Agreement, the
following terms shall have the following definitions:

“Explore” and “Prospect” shall mean entering and conducting all means and
methods of search above and below the surface, with or without machinery and
equipment, including, but without being limited to:

                   a)    Conducting geologic, geophysical, geochemical and other
exploration  studies and tests.                     b)    Digging or excavating
pits, adits, shafts and other types of excavation.                     c)   
Drilling test holes.                     d)    Excavating drill hole sites,
sumps and mud pits.                     e)    Constructing roads reasonably
required for ingress, egress, access to  work and campsites, and communication. 
                   f)    Extracting and removing samples in non-commercial
quantities for the  purpose of collecting information and making analyses and
tests. 

MISC-035-2.doc 4

--------------------------------------------------------------------------------

g) Building camp and other facilities to service exploration operations.

“Development” or “Develop” shall include (without limitation) all preparation
for the removal and recovery of Minerals from the Property, including the
preparation of a feasibility study, and construction or installation of a mill
or any other improvements to be used for the mining, handling, milling,
processing or other beneficiation of Minerals recovered from the Property.

“Mine” shall mean the mining, extracting, producing, handling, milling or other
processing of Minerals for commercial sale.

“Minerals” shall mean any and all mineral substances of any nature as may be
subject to location under the General Mining Law of the United States, together
with any rights to sand, gravel and other common minerals or materials that may
be exercised by virtue of holding such mining claims or that may be otherwise
obtained by TRC.

4. PAYMENTS TO OWNER

4.1 TRC Shares. On execution of this Agreement, TRC shall issue and deliver to
Owner

one hundred thousand (100,000) shares of TRC common stock. The stock will be
issued with an effective date of September 15, 2006 in proportion to Owner’s
interest in this Agreement (that is, 85,000 shares will be issued and delivered
to Steven Van Ert and 15,000 shares will be issued and delivered to Noel
Cousins). TRC agrees to further issue and deliver to Owner one hundred thousand
(100,000) shares of TRC common stock on September 15 of each subsequent year
that this Agreement remains in effect, in the same proportion as specified
above. Owner acknowledges that the stock certificates evidencing the TRC Shares
may carry a legend indicating that the shares have not been registered under the
Securities Act of 1933, as amended, and are restricted securities for purposes
of U.S. federal securities laws. TRC represents that such securities require a
one-year holding period before they can be offered for sale but agrees that in
any case the restrictions imposed on TRC shares granted to Owner under this
Agreement may not exceed restrictions on similarly situated securities. The
removal of the restrictive legend is done by request of Owner through a selling
broker to the Transfer Agent and includes an opinion letter from TRC counsel.
TRC will not unduly delay any registration process that is within TRC’s control,
and if TRC’s stock is registered on the Toronto Stock Exchange or any other
stock exchange, Owner may elect to take any or all shares to which it is
entitled hereunder through that exchange upon notice to TRC.

                   A.    Representations and    Warranties Regarding Shares. TRC
represents and  warrants to Owner as follows with respect to all TRC shares
issued or to be issued to Owner in  connection with this Agreement (including
the shares contemplated in Section 6.1 below):        (1)    Capitalization.   
The authorized capital of TRC consists, on the                     Execution
Date, of         shares of common stock,    shares of which  are issued and
outstanding. All of the outstanding shares of common stock have been 

MISC-035-2.doc 5

--------------------------------------------------------------------------------

  duly authorized, are fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.     (2) Valid
Issuance of Shares. All TRC shares, when issued and delivered in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable, and free of restrictions on transfer other than restrictions on
transfer under applicable state and federal securities laws or applicable
exchange requirements. The shares will be issued in compliance with all
applicable federal and state securities laws and all applicable exchange
requirements.     (3) Disclosure. TRC has made available to Owner all the
information reasonably available to TRC that Owner has requested concerning the
shares. No representation or warranty of TRC contained in this Agreement, and no
certificate furnished or to be furnished to Owner under this Agreement, contains
or will contain any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
  4.2      Payments Prior to Exercise of Option.     A.      Initial Payment.
TRC shall pay to Owner upon execution of this Agreement  

the sum of $75,000, which will be paid in accordance with each Owner’s interest
in the Property ($63,750 to Steven Van Ert and $11,250 to Noel Cousins). Such
payment shall not be credited toward any other obligation of TRC.

B. Tax Offset Payment. TRC shall make a one time payment to each of the persons
constituting Owner to offset their state and federal tax obligations for the
receipt of the initial 100,000 shares of TRC common stock delivered in
accordance with Section 4.1 and any taxes imposed for such reimbursement.
Payment will be based on such persons’ actual tax bracket (based on the
representation of a tax preparer or counsel for Owner, but not to exceed 34%)
and the closing price of TRC’s common shares on the Execution Date. Such payment
shall be delivered to such persons at least one month prior to the relevant
federal income tax payment deadline.

C. Subsequent Payments. Unless the Option has been properly exercised or this
Agreement has been terminated prior to the dates set forth below, TRC shall pay
Owner the following payments on or before the dates set forth below:

By September    15,    2007    $75,000  By September    15,    2008    $100,000 
By September    15,    2009    $125,000  By September    15,    2010   
$150,000  By September    15,    2011    $175,000  By September    15,    2012 
  $200,000 

MISC-035-2.doc

6

--------------------------------------------------------------------------------

By September    15,    2013    $225,000  By September    15,    2014 and
annually thereafter                         until exercise of Option or
termination                         of Agreement    $250,000 

  All such payments shall be paid to each Owner according to his pro-rata
ownership interest. Such payments may be made in currency or by check of TRC or
its agent (at the option of TRC), and said payments shall be made to Owner in
the manner and at the addresses specified in Section 15. Such payments shall not
be credited toward any other obligation of TRC.   5.      ROYALTIES     5.1
Production Royalty. Subject to Section 6 of this Agreement, TRC shall pay to
Owner,  

as a production royalty (the “Royalty”), four percent (4.0%) of the Net Smelter
Returns from all Minerals mined and removed from the Property. Notwithstanding
any provision of this Agreement to the contrary, the Royalty shall be payable
only with respect to Minerals that are ultimately and actually recovered and for
which TRC receives payment or consideration. TRC shall have no obligation to pay
any Royalty on Minerals extracted from the Property for testing purposes,
including without limitation for bulk samples, assays, geochemical analyses,
amenability to milling and recovery determinations, pilot plant tests and test
trommel operations, unless and until such Minerals are subsequently sold.

     5.2 Net Smelter Returns. The term “Net Smelter Returns” as used herein
shall mean the actual sale proceeds received by TRC from the sale of Minerals to
a smelter, refinery or other processor (as reported on the smelter settlement
sheet) less only the following expenses actually incurred and borne by TRC: (i)
the actual costs of freighting or transporting said Minerals from the mine or
mill to the point or points of sale (including without limitation costs of
loading, transporting and insuring the ores, metals, minerals and concentrates
in transit), unless already deducted by the purchaser; and (ii) all charges and
costs of or relating to smelting and refining (including without limitation
sampling, assaying and weighing charges), unless already deducted by the
purchaser. If such smelter is owned or controlled by TRC or any of its
affiliates, then charges, costs and penalties for such operations shall mean
(for the purposes of calculating Net Smelter Returns) the amount that TRC would
have incurred if such operations were carried out at facilities not owned or
controlled by TRC then offering comparable services for comparable products on
prevailing terms. For avoidance of doubt, in calculating Net Smelter Returns
there shall not be any deduction for any costs of mining, or any costs of
transporting Minerals to the mill, or any costs of processing Minerals other
than said smelting and refining costs.

     5.3 Advance Minimum Royalty Payments. Upon exercise of its Option and each
year thereafter on or before the anniversary date of such exercise for so long
as any of the mining claims (or any amendments, relocations or replacements
thereof) or other tracts constituting the Property (including any Additional
Lands acquired pursuant to Section 1.2 above) are owned by TRC or its
successors, TRC shall pay Owner (allocating 85% to Steven Van Ert and 15% to
Noel Cousins) the sum of One Hundred Fifty Thousand Dollars ($150,000), which
amount shall be a credit against any

MISC-035-2.doc

7

--------------------------------------------------------------------------------

Royalty owing on production of Minerals during such year. This amount shall be a
minimum royalty and shall not be credited against Royalty on production for
subsequent years. If TRC desires to abandon or relinquish any of the mining
claims (or any amendments, relocations or replacements thereof) or other tracts
constituting the Property (including any Additional Lands acquired pursuant to
Section 1.2 above), then the provisions of Section 1.4 above shall apply.

5.4      Royalty Payments.     A. Generally. Royalty payments shall be made by
TRC, in accordance with  

Section 15, on or before the last day of each calendar month for all Minerals
sold during the preceding calendar month by TRC.

B. Provisional Payments. If any Royalty becomes due and payable hereunder prior
to final settlement with a smelter, refiner or other bona fide purchaser, or
prior to TRC’s final determination, in accordance with Section 13.4, of all of
the facts necessary to calculate the amount of Royalty payable to Owner with
respect to commingled Minerals, then TRC shall pay to Owner a provisional
Royalty based upon TRC’s then current estimates of such facts and the
preliminary settlement with the smelter, refiner or other bona fide purchaser.
Payments of provisional Royalty shall be subject to subsequent adjustment in
accordance with Section 5.4. C.

C. Adjustments. If TRC determines that any Royalty payment made pursuant to this
Agreement was underpaid or overpaid, then TRC shall correct such overpayment or
underpayment by adjustment to the amount of the next subsequent payment.

D Taking In Kind. Owner may, by notice to TRC, elect to receive Royalty in the
form of doré, in which case Owner shall make arrangements for the acceptance and
transfer of doré as will accommodate TRC’s normal shipping schedule. For
purposes of determining the credits for minimum royalty obligations, the value
of Royalty taken in kind shall be based on the contained value of such ores or
concentrates as of the date of delivery to Owner. Contained value shall be based
on assays performed as a part of the sale by TRC of similar doré and the spot
metal prices published in Metals Week or other generally acceptable industry
guide for the date of transfer.

E. Statement. At such time as TRC makes any payment of Royalty or provisional
Royalty to Owner, TRC shall provide Owner a brief written statement setting
forth the manner in which such payment of Royalty or provisional Royalty was
calculated and shall include settlement sheets and such other documentation as
will allow Owner to readily understand and verify the calculation of the Royalty
payment.

5.5 Audits. All Royalty payments made during each calendar year shall be
considered final and in full satisfaction of all obligations of TRC with respect
thereto (except in the event of fraud or intentional misrepresentation), unless
Owner gives TRC written notice describing and setting forth a specific objection
to the determination thereof within six (6) months following the

MISC-035-2.doc

8

--------------------------------------------------------------------------------

end of the calendar year during which such Royalty payments were paid. Owner
shall have the right, upon reasonable notice and at reasonable times, to have
TRC’s accounts and records relating to mining operations and Royalty
calculations audited by an independent auditor. If such audit determines that
there has been a deficiency or an excess in the payment(s) made to Owner, such
deficiency or excess shall be resolved by adjusting the next monthly Royalty
payment due hereunder, or by direct payment if no monthly Royalty payment
follows the audit determination, or such payment is insufficient to fully adjust
for such deficiency or excess. Owner shall pay all costs of such audit unless a
deficiency of five percent (5%) or more of the amount due to Owner is determined
to exist. TRC shall pay the costs of such audit if a deficiency of five percent
(5%) or more of the amount due to Owner is determined to exist. All books and
records used by TRC to calculate Royalty due hereunder shall be kept in
accordance with GAAP, consistently applied. Failure on the part of Owner to
provide a notice of objection within the six-month period shall establish the
correctness and preclude the filing of exceptions thereto or making of claims
for adjustment thereon (by either Party) except where fraud or intentional
misrepresentation can be shown.

5.6 Other Minerals. If non-metallic minerals are produced from the Property,
Owner shall be entitled to a production royalty of eight percent (8.0%) of the
gross receipts received by TRC for the sale of such non-metallic minerals,
without any deductions therefrom.

6.      OPTION TO PURCHASE PROPERTY AND REDUCE ROYALTY     6.1 Option to
Purchase Property. Owner hereby grants to TRC, and TRC shall have, the  

exclusive Option to purchase and retain all of Owner’s right, title and interest
in the Property. The Option shall be exercised after completion of a feasibility
study for the mining of the Property and the decision by TRC’s board of
directors to commence commercial production of Minerals from the Property, and
shall be exercised by written notice to Owner together with (1) a copy of said
feasibility study, (2) a written resolution by said board to commence commercial
production of Minerals from the Property, and (3) one million (1,000,000) TRC
common shares issued and delivered to Owner in proportion to Owner’s interest in
this Agreement (that is, 850,000 shares will be issued and delivered to Steven
Van Ert and 150,000 shares will be issued and delivered to Noel Cousins). Owner
acknowledges that the stock certificates evidencing such shares may carry a
legend that indicates that the shares have not been registered under the
Securities Act of 1933, as amended. If TRC’s stock is registered on the Toronto
Stock Exchange or any other stock exchange, Owner may elect to take any or all
shares to which it is entitled hereunder through that exchange upon notice to
TRC. If the Option is timely exercised by TRC, the Parties shall close the
purchase and sale of the Property at a closing (the “Option Closing”) to be held
at 10:00 a.m. on the date that is ten (10) days following Owner’s receipt of the
notice of exercise of the Option and said study, resolution and shares, at a
location in Reno, Nevada , specified by TRC in its notice, unless the Parties
otherwise mutually agree. At the Option Closing, the following shall occur: (i)
Owner shall deliver to TRC a duly executed release of the Deed of Trust in
recordable form, (ii) Owner shall notify DMYL to deliver the Reconveyance Deed
to TRC, (iii) this Agreement shall terminate, subject to the provisions of
Section 11.5 below. The provisions of Section 4.1. A above shall apply to the
TRC shares issued and delivered pursuant to this Section 6.1.

MISC-035-2.doc

9

--------------------------------------------------------------------------------

6.2 Option to Reduce Royalty. At any time prior to the Option Closing, TRC shall
have the exclusive right to purchase from Owner one-quarter of the four percent
(4.0%) Royalty (the “Royalty Reduction Option”) for a cash payment of One
Million Dollars ($1,000,000), to be split by the Owner in proportion to the
respective ownership interests (the “Royalty Reduction Payment”). If TRC desires
to exercise the Royalty Reduction Option, TRC shall deliver written notice of
exercise to Owner. If the Royalty Reduction Option is timely exercised by TRC,
the Parties shall close the purchase and sale of the one percent (1.0%) Royalty
interest at a closing (the “Royalty Reduction Closing”) to be held at 10:00 a.m.
on the date that is ten (10) days following Owner’s receipt of the notice of
exercise of the Royalty Reduction Option, at a location specified by TRC in its
notice, unless the Parties otherwise mutually agree. At the Royalty Reduction
Closing, the following shall occur: (i) TRC shall deliver to Owner a cashiers’
check or certified funds in the amount of the Royalty Reduction Payment (split
to the Owner as provided above), and (ii) Owner shall deliver to TRC a duly
executed conveyance substantially in the form attached hereto as Exhibit D of
one percent (1.0%) of the Royalty payable on the production of Minerals from the
Property. If the Royalty Reduction Closing occurs, then the Royalty accruing
under this Agreement shall be owned as follows:

  Owner: three percent (3.0%)

TRC: one percent (1.0%)

The royalty on non-metallic minerals shall be unaffected by any Royalty
Reduction Closing.

7.      WORK COMMITMENT     7.1 Work Commitment Obligation. Prior to exercise of
the option, TRC shall conduct a  

minimum of One Hundred Thousand Dollars ($100,000) of exploration work on or for
the benefit of the Property during each Lease Year until such time as Minerals
are being mined from the Property in commercial quantities, or TRC exercises its
Option to Purchase the Property. Any Exploration Expenditures in excess of the
required annual amounts may be carried forward or credited toward any subsequent
Lease Year’s work obligation. All Exploration Expenditures shall be made on or
for the benefit of the Property. Within thirty (30) days after the end of each
Lease Year, TRC shall deliver to Owner a written accounting and summary of
monies spent on the Property for exploration work and included in Exploration
Expenditures.

     7.2 Exploration Expenditures. For purposes of this Agreement, “Exploration
Expenditures” shall mean and include all direct and indirect costs incurred to
Explore, Prospect and Develop the Property, including without limitation the
following: (a) costs of surveying (including without limitation geophysical and
geochemical surveys), mapping, sampling, bulk sampling, drilling and trenching;
(b) costs of operations and payments in connection with obtaining or maintaining
exploration or similar or related permits, licenses, approvals, consents or
authorizations (but excluding the cost of any bonds); (c) costs of conducting
required environmental, wildlife or similar, related or associated studies,
reports, analyses or documents;

MISC-035-2.doc

10

--------------------------------------------------------------------------------

and (d) all other costs incurred in the conduct of other activities that are
incidental to, in furtherance of, in preparation for or associated with any or
all of the foregoing; provided however, that Exploration Expenditures shall not
include corporate overhead charges.

     7.3 Lease Year. For purposes of this Agreement, the term “Lease Year” shall
mean and refer to the period commencing on September 15 of a calendar year and
ending on September 14 of the following calendar year. The first Lease Year
shall be deemed to have commenced on September 15, 2006.

     7.4 Payment in Lieu. If TRC fails to perform the minimum work requirement
for any particular Lease Year, TRC may elect, in its sole discretion, to pay
Owner the difference between the annual work obligation as set forth in Section
7.1 for the Lease Year in question and the cost of the work actually performed
during that Lease Year and, upon such payment, TRC shall be deemed to have
satisfied in full the minimum work requirement for that Lease Year. In the event
TRC fails to perform the minimum work requirements for any particular Lease Year
and elects not to make the payment described in the preceding sentence, and
subject to TRC’s right to contest the default under Section 11.2, Owner may
declare this Agreement terminated by providing written notice thereof to TRC and
DMYL shall be directed to deliver the Reconveyance Deed to Owner.

8. ACCESS AND INSPECTION

Owner or its duly authorized representatives shall be permitted to enter on the
Property and the workings thereon of TRC at all reasonable times for the purpose
of inspection, but in such a manner as not to unreasonably hinder the operations
of TRC. Owner shall indemnify and hold harmless TRC from and against all claims,
demands and liabilities arising from or relating to such entry or inspection,
except to the extent caused by TRC’s negligence or willful misconduct.

9. DELIVERY OF DATA

TRC agrees to furnish to Owner all geologic or other data generated by TRC. Data
shall be provided on November 1 of each year during continuance of this
Agreement, to update Owner on data gathered between those dates. TRC shall
furnish Owner copies of all basic maps, drill logs, engineering and geological
data, and other factual data and factual material pertaining to the Property
prepared by or for TRC (including interpretative data); provided, however, that:
(1) TRC shall be under no obligation whatsoever to provide Owner with any
financial information or any information regarding proprietary techniques or
processes; (2) Owner shall rely and act on all information provided by TRC at
Owner’s sole risk; and (3) TRC shall have no liability on account of any such
information received or acted on by Owner. Any non-public information received
by Owner under this provision that is specifically marked by TRC as confidential
shall be held as confidential at all times that this Agreement is in effect. TRC
agrees to allow Owner or its agent (duly authorized in writing) to examine, at
its place of storage, and take possession and ownership of any core or drill
cuttings from the Property that were retained by TRC after termination of this
Agreement. Owner shall have thirty (30) days within which to remove, at Owner’s
sole cost, such core or cuttings as Owner chooses to

MISC-035-2.doc

11

--------------------------------------------------------------------------------

remove. TRC shall not be liable for the loss or destruction of core or cuttings
not removed within the said thirty (30) day period.

10.      TITLE     10.1 Provision of Information. Upon request by TRC, Owner
shall promptly furnish to  

TRC copies of all information in its possession or under its control relating to
title to or description of the Property, including without limitation copies of
any abstracts and certificates of title, title insurance policies, commitments
for title insurance, title reports, memoranda or opinions of counsel,
certificates of location, amendments or relocations, prior deeds, contracts,
applications for patent, proofs of labor, maps, surveys and documents filed with
any local, state or federal governmental agency. TRC shall promptly reimburse
Owner for the costs of such copies. Upon execution of this Agreement, Owner
shall provide to TRC any and all information in its possession or under its
control regarding any existing or past industrial, milling, manufacturing, waste
storage, exploration, development, mining, processing or beneficiating use of
the Property. Pursuant to this Section 10.1, Owner shall only be obligated to
provide to TRC information that is in its possession or under its control, and
Owner shall not be obligated to obtain or provide any other information or
documents.

     10.2 Title Defects and Cure. If (1) in the reasonable opinion of TRC’s
counsel, Owner’s title is defective, or (2) Owner’s title is contested or
challenged by any person, entity or governmental agency and Owner is unable or
unwilling to promptly correct the defects or alleged defects in title, TRC may
attempt, with all reasonable dispatch, to perfect, defend or initiate litigation
to protect Owner’s title, at TRC’s sole risk and expense. All such expenses
shall be credited as Exploration Expenditures. In that event, Owner shall
execute all documents and shall take such other actions as are reasonably
necessary to assist TRC in its efforts to perfect, defend or protect Owner’s
title.

     10.3 Amendment and Relocation. Provided that TRC shall first give notice
and obtain approval from the Owner, which approval shall not be unreasonably
withheld, TRC shall have the right to relocate or amend or the location of any
of the mining claims included in the Property whenever TRC reasonably deems such
action desirable in order to perfect the mining claims, cure defective
locations, include additional ground in the mining claims, convert the mining
claims to mill sites or for any other reason. Any such relocation or amendment
shall be made by TRC as agent for and in the name of Owner, except to the extent
such mining claims are part of the Additional Lands included in this Agreement
pursuant to Section 1.2 and such claims are owned by a third party. Any new
locations resulting from such actions or relocations shall be deemed part of the
Property and shall be subject to all of the terms and conditions of this
Agreement. Any abandonment shall be subject to the provisions of Section 1.4.

     10.4 Lesser Interest. If Owner’s title to any mining claim or other parcel
or tract within the Property from which production is made is less than 100%,
then the Royalty payable under this Agreement shall be reduced to the same
proportion as the undivided right and title actually owned by Owner bears to the
entire undivided right and title to that claim, parcel or tract from which such
production is made. All other payments and obligations required hereunder shall

MISC-035-2.doc

12

--------------------------------------------------------------------------------

remain the same regardless of any actual or alleged title defects or lesser
interest.

     10.5 No Limitation. Nothing herein contained and no notice or action that
may be taken under this Section 10 shall limit or detract from TRC’s right to
terminate this Agreement at any time.

     10.6 Liability. TRC at any time may withdraw from or discontinue any
action, activity or application undertaken or initiated by it pursuant to
Section 10.2 or 10.3. TRC shall not be liable to Owner in any way (except for
payment of any costs or obligations accrued before such withdrawal or
discontinuance) if Owner is unsuccessful in, withdraws from or discontinues any
such action, activity or application.

     10.7 Additional and After-Acquired Title. If Owner subsequently acquires
any further right, title or interest in or to the Property, Owner shall promptly
provide TRC with written notice thereof, and such right, title and interest
shall, without payment of additional consideration, become part of the Property
subject to all of the terms and conditions of this Agreement.

11.      TERMINATION AND TERM     11.1 By TRC. TRC shall have the right to
terminate this Agreement at any time upon notice  

to Owner specifying an effective termination date. Upon the effective date of
such notice, this Agreement shall automatically terminate without further action
of the Parties, and TRC shall have no further rights or obligations hereunder
other than such as have accrued prior to the date of such termination and those
specified in Section 11.3.

     11.2 Default/Termination by Owner. If TRC shall be in default in making any
payment or performing any other obligation herein, Owner may give written notice
to TRC of such default, setting forth in such notice the nature and details of
such default. TRC shall have thirty (30) days after receiving a notice of
default to remedy a default in payment, and thirty (30) days after receiving a
notice of default with respect to any other default in which to commence to cure
such default and thereafter to diligently prosecute such cure until completion.
If TRC fails to cure or commence to cure the default within the times specified,
or if TRC fails to contest such default by written notice to Owner within
fifteen (15) days after receiving a notice of default from Owner, Owner may
terminate this Agreement by written notice to TRC. If TRC contests the existence
of a default, TRC shall initiate arbitration proceedings in accordance with
Section 12 of this Agreement within the time periods specified above. If TRC
disputes the default and the matter is submitted to arbitration, this Agreement
and all rights granted to TRC under this Agreement shall not be terminated in
whole or in part by Owner unless the arbitrator determines that TRC is in
default and thereafter TRC fails to cure the default within the period specified
in the arbitrator’s decision or sixty (60) days after such default has been
confirmed in arbitration, whichever is longer.

     11.3 Removal of Equipment/ Reclamation. Following the termination of this
Agreement pursuant to Section 11.1 or 11.2, TRC shall have no further rights or
obligations hereunder other than such as have accrued prior to the date of such
termination, except as provided in this Section 11.3, and DMYL shall be
instructed to deliver the Reconveyance Deed to Owner. TRC shall within one
hundred

MISC-035-2.doc

13

--------------------------------------------------------------------------------

and twenty (120) days from the termination of the Agreement remove all
structures, machinery, equipment and other property of every description placed
upon the Property, provided that TRC shall not remove any underground ladders or
timbers or stulls required for support of mine openings. All drill, mining, and
other roads, sites, excavations and disturbances made by TRC shall be reclaimed
to the written satisfaction of all federal, state and local regulatory agencies,
except for any that Owner specifically directs in writing to be left in place.
Such exceptions will become the sole responsibility of Owner who will assume
liability and reclamation responsibility for such exceptions. The Property shall
be left in a safe condition and in full compliance with all federal, state,
county and local regulations and ordinances pertaining to reclamation and the
environment. If TRC does not remove its structures, machinery or equipment
during such period, Owner may, at its sole election, make arrangements to do so
and the cost thereof shall be borne by TRC, or sell the equipment and retain any
proceeds from such sale.

11.4 Term. Subject to Section 11.5 below, this Agreement shall terminate
automatically twenty (20) years after the Execution Date, unless sooner
terminated through exercise of the Option or as otherwise provided herein;
provided, however, if the Option to Purchase has not been exercised, TRC shall
have the right to extend this Agreement for additional one-year terms for a
total of not more than ten (10) years, provided that TRC has fully performed all
its obligations under this Agreement, and is conducting exploration,
pre-development or mining activities on the Property on the date of expiration
of the term being extended. TRC shall deliver written notice to Owner of its
intention to exercise its right to extend the Agreement under this provision.

     11.5 Survival. All representations, warranties and other provisions of this
Agreement containing rights and obligations that are intended to continue beyond
the termination of this Agreement shall survive such termination and remain in
effect until their existence is of no benefit to either Party.

12.      ARBITRATION     12.1 Resolution of Disputes. Any dispute, controversy
or claim arising out of or  

relating to this Agreement or the subject matter of this Agreement, or the
breach, termination or validity of this Agreement, shall be settled by binding
arbitration as provided in this Section 12.

12.2 Appointment of Arbitrator. There shall be one arbitrator appointed by the
Parties who shall be disinterested in the dispute, controversy or claim, shall
have no connection with any Party and shall have knowledge or experience in the
general subject matter to be arbitrated. If the Parties fail to agree on an
arbitrator within twenty (20) days after arbitration is initiated, the Parties
shall each submit the names of three arbitrators to the then current Executive
Director of the Rocky Mountain Mineral Law Foundation who shall select the
arbitrator from the names so submitted.

12.3 Procedures. The place of arbitration shall be at a location designated by
the Arbitrator. If the Parties do not agree on a procedure, the then current
Commercial Arbitration

MISC-035-2.doc

14

--------------------------------------------------------------------------------

Rules of the American Arbitration Association shall apply to the extent they are
not inconsistent with this Section. The arbitrator shall apply the law as made
applicable by the Agreement. Unless the procedure for discovery is otherwise
agreed to by the Parties, the arbitrator, at the request of a Party, shall
establish rules for pre-hearing discovery which shall comport with due process,
expeditious determination of the issues and fairness. Unless otherwise agreed by
the Parties, the depositions of no more than two witnesses on each side may be
taken without the consent of the arbitrator. The Federal Rules of Civil
Procedure shall govern all aspects of the depositions, including admissibility.

12.4 Award. The decision in the arbitration shall be rendered, unless otherwise
agreed by the Parties, no later than thirty (30) days after the date the
hearings were closed. The decision of the arbitrator shall be in writing and
shall be final and binding on the Parties. If the Parties settle the dispute in
the course of arbitration, such settlement shall be approved by the arbitrator
on request of either Party and become the award. The arbitrator shall award
reasonable attorney fees, arbitration fees and related costs incurred by the
prevailing Party to the prevailing Party.

13.      OPERATIONS AND RELATED RIGHTS AND OBLIGATIONS     13.1 Conduct of
Operations. TRC shall conduct its operations hereunder in a good and  

miner-like manner, and shall strictly and fully comply with all applicable
federal, state and local laws, rules, regulations and ordinances. TRC shall
obtain all required or applicable regulatory permits and authorizations, and
post all required or applicable reclamation bonds, before making any disturbance
on the Property. Nothing contained herein shall be construed, and no covenants
shall be implied, to require TRC to open or develop any mine or mines on the
Property or to perform any exploration, development or other work thereon at any
time that TRC in its discretion determines not to conduct such activities, so
long as TRC complies with the express requirements of this Agreement. Whether or
not any such exploration, development, mining or other activities shall at any
time be conducted and the location, manner, method, extent, rate and timing of
such activities shall be determined within the sole and absolute discretion of
TRC. Whenever TRC deems it necessary or advisable, it may discontinue or resume
exploration, or development, from time to time during the term hereof.

     13.2 Protection from Liens. TRC agrees to pay all expenses incurred in
connection with its operations hereunder and to permit no liens arising from any
act of TRC or its agents or contractors to remain upon the Property.

     13.3 Annual Claim Maintenance Requirements. TRC shall perform all work,
filings and payments required to maintain the Property pursuant to federal,
state and county laws or regulations during the term of this Agreement. TRC
shall pay all annual fees required to maintain the Property to the BLM, and
shall provide Owner with evidence of such payment on or before August 1 of each
year. TRC shall prepare and timely record each year with Inyo County appropriate
affidavits documenting the intent to maintain the Property. TRC has fulfilled
its obligation to reimburse Owner for claim maintenance fees paid to the BLM for
the assessment year beginning September 1, 2006.

MISC-035-2.doc

15

--------------------------------------------------------------------------------

     13.4 Commingling. TRC shall have the right of mixing or commingling, at any
location and either underground or at the surface, any ores, metals, Minerals or
mineral products from the Property and other properties, provided that TRC first
shall provide to Owner a written statement describing in detail how commingling
will be done. Owner shall then have thirty (30) days to object to such
procedures. Any commingling dispute not resolved by the Parties within thirty
(30) days thereafter shall be resolved by arbitration as provided herein. Such
authorized commingling procedures shall be followed at all times prior to any
mixing or commingling by TRC, and such procedures shall be the basis of
allocation of the Royalty payable to Owner under this Agreement in the event of
a sale by TRC of Minerals so mixed or commingled.

     13.5 Cross-Mining Rights and Vertical Boundaries. Following exercise of the
Option, TRC shall have cross-mining rights involving ores and minerals, waste
materials, water, ventilation, mining machinery, mining equipment, and mining
supplies as may be necessary, useful or convenient from time to time in the
conduct of mining operations in, upon or under the Property or in, upon or under
other properties owned or controlled by TRC in the area. Owner and TRC agree
that vertical boundaries shall be applicable in determining ownership of
Minerals and other materials from the Property. The Property shall not be used
for the disposal of waste or overburden from any other property unless such
disposal is done as part of an integrated mining operation involving concurrent
commercial production from the Property.

     13.6 Permits and Approvals. Owner understands that TRC may make efforts to
obtain permits, licenses, rights, approvals or authorizations from governmental
or private persons or entities in connection with the exercise by TRC of its
rights under this Agreement. Upon request by TRC, Owner shall assist and
cooperate fully with TRC in any such endeavors, including without limitation by
the execution of pertinent documents, so long as such requests are reasonable
and Owner is not required to incur more than nominal expense in doing so.

     13.7 Indemnification and Insurance. TRC shall indemnify Owner against and
hold Owner harmless from any suit, claim, judgment, demand or liability
whatsoever arising out of TRC’s ownership of the Property or any of the
activities of TRC or its agents or contractors in the exercise of any of its
rights pursuant to this Agreement. TRC shall maintain reasonable insurance to
support the indemnification required by this Agreement in an amount of at least
Two Million Dollars ($2,000,000.00) as comprehensive form general liability for
each occurrence for combined bodily injury and property damage. Owner shall be
named as co-insured under such policies and TRC shall provide Owner with a
certificate of such insurance prior to the commencement of any operations under
this Agreement or any entry onto the Property. TRC’s obligations under this
provision shall relate back and include any activities undertaken by TRC from
and after August 7, 2006.

  14. ASSIGNMENTS AND TRANSFERS

TRC may not assign, sublease or otherwise transfer its interest in this
Agreement without Owner’s prior written consent in each instance, which shall
not be unreasonably withheld. No assignment, sublease or transfer shall be
effective against the non-transferring party until that party

MISC-035-2.doc

16

--------------------------------------------------------------------------------

receives written notice of the transfer in accordance with Section 15. Any
permitted transfer shall be binding upon and extend to the successors, heirs and
assigns of the Parties. If TRC is merged into or acquired by another entity, the
shares to be conveyed under Sections 4.1 and 6.1 shall be valued, at the
election of Owner, as either equivalent shares of the new entity, or a cash
value equal to the greater value of the closing price of TRC’s shares on (i) the
day of the announcement of the assignment, transfer or merger, or (ii) the day
of the closing of the transaction.

15.      NOTICES AND PAYMENTS     15.1 Notices. Any notice required to be given
to Owner hereunder shall be in writing and  

shall be given by personal delivery or by registered or certified mail, return
receipt requested, addressed as follows:

  Steven Van Ert
P.O. Box 3785
Chatsworth, CA 91313

Noel Cousins
P.O. Box 37061
Tucson, AZ 85740

  With copy to:

  John C. Lacy, Esq.
DeConcini McDonald Yetwin & Lacy, P.C.
2525 East Broadway Boulevard, Suite 200
Tucson, AZ 85716-5300
(520) 322-5000

and any notice given to TRC shall be in writing and shall be given by personal
delivery or by registered or certified mail, return receipt requested, addressed
as follows:

  Timberline Resources Corporation
1100 East Lakeshore Drive, Suite 301
Coeur d’Alene, ID 83814

Either Party may, by notice to the other given as aforesaid, change its mailing
address for future notices. All such notices shall be effective upon personal
delivery or upon the deposit thereof in the United States mail with postage
prepaid and addressed as aforesaid.

15.2 Payments. All payments to Owner and all deliveries of shares to Owner shall
be allocated between the two persons constituting Owner as provided herein, and
shall be delivered in accordance with Section 15.1 above. Either of the persons
constituting Owner may from time to time notify TRC to deliver payments or
shares to a bank account or agent, and TRC shall comply with such

MISC-035-2.doc

17

--------------------------------------------------------------------------------

notices.

16.      TAXES     16.1 Real and Personal Property Taxes. During the term of
this Agreement (and  

thereafter if the Option is exercised), TRC shall timely pay all ad valorem and
real property taxes and assessments levied upon, assessed against or relating to
the Property and all taxes and assessments levied or assessed upon or against
the personal property of TRC located on or about the Property. Upon termination
of this Agreement (other than by exercise of the Option), any applicable taxes
shall be prorated as of the effective date of termination, provided, however,
that if TRC’s activities have resulted in a different taxing status of the
Property, TRC shall remain responsible for any increase in taxes until the new
taxing status is removed unless Owner consents to such new taxing status.

16.2 Taxes Related to Operations. During the term of this Agreement (and
thereafter if the Option is exercised), TRC shall pay all taxes, assessments and
fees imposed or assessed in connection with the production of Minerals from the
Property or other activities of TRC pursuant to this Agreement, including
without limitation any net proceeds, production, occupation, sales, severance,
privilege, or other similar or related taxes.

16.3 Cooperation. Owner shall promptly furnish to TRC all bills, demands,
notices or statements received by Owner that relate to any tax, assessment or
fee for which TRC is responsible under the provisions of this Section 16.

17. FORCE MAJEURE

If TRC is delayed or interrupted in or prevented from exercising its rights or
performing its obligations, as herein provided, by reasons of "force majeure,"
then, and in all such cases, TRC shall be excused, without liability, from
performance of its obligations set forth in this Agreement (except as to
obligations to pay money or transfer common stock), but the provisions shall
again come into full force and effect upon the termination of the period of
delay, prevention, disability or condition. TRC shall notify Owner of the
beginning and ending date of any period of force majeure and the period of time
required for performance under this Agreement shall be extended for the period
of the disability. "Force majeure" includes all disabilities arising from causes
beyond the reasonable control of TRC; including, without limitation, acts of
God, accidents, fires, damages to facilities, labor troubles, unavailability of
fuels, supplies and equipment, unusually severe weather, orders or requirements
of courts or government agencies, or the inability to obtain environmental
clearance or operating permits that may be required by governmental authorities.

18.      GENERAL     18.1 Memorandum. Upon execution of this Agreement, the
Parties shall also execute and  

MISC-035-2.doc

18

--------------------------------------------------------------------------------

record, in the real property records of Inyo County, California, a memorandum of
this Agreement to provide public notice of this Agreement. In the event of any
conflict or inconsistency between this Agreement and the memorandum, this
Agreement shall control. This Agreement shall not be recorded by either Party.

18.2 Governing Law. This Agreement shall be governed by the laws of the State of
California, and by the laws, rules and regulations of the United States of
America applicable to the location and possession of, and title to, the mining
claims subject hereto.

     18.3 Interpretation and Enforcement. If any court or administrative body
(including any arbitrators under Section 12) of competent jurisdiction
determines that any provision of this Agreement is unenforceable, illegal or in
conflict with any federal, state or local law, the Parties shall petition (or
shall hereby be deemed to have petitioned) such court or administrative body to
reform such provision in such a way as to carry out the intent of the Parties to
the maximum extent permissible. However, if the court or administrative body
declines to so act, such provision shall be considered severable from the rest
of this Agreement and the other provisions of this Agreement shall remain
unaffected and in full force and effect, and this Agreement shall be construed
and enforced as if it did not contain such provision. Subject to the preceding
sentences of this Section 18.3, no modification or alteration of this Agreement
shall be effective unless in writing and executed by all Parties. The headings
used in this Agreement are for convenience only and shall be disregarded in
construing this Agreement. This Agreement shall be construed as though both
Parties jointly drafted it. This Agreement may be specifically enforced. In the
case of any judicial proceeding, each of the Parties, on behalf of themselves
and their successors, hereby attorns to the exclusive jurisdiction of the courts
of the State of California or the federal district court for the District of
California, as may be applicable, in respect of any disputes arising hereunder,
with venue to be in Inyo County, California or the nearest federal court, as the
case may be.

18.4 Good Faith and Fair Dealing. The Parties shall be under obligations of good
faith and fair dealing with respect to all conduct and actions related to this
Agreement.

18.5 Waiver. Failure by Owner at any time, or from time to time, to enforce or
to require strict observance of any of the terms of this Agreement shall not
constitute a waiver thereof, nor limit or impair such terms in any respect. In
addition, any such failure shall not affect Owner’s right to avail itself at any
time of such remedies as it may have for any default hereunder by TRC.

18.6 Entire Agreement. This Agreement and the attached Exhibits set forth the
entire, complete and final agreement between the Parties with respect to the
subject matter hereof and supersede all prior negotiations and agreements
between the Parties with respect to the subject matter of this Agreement,
including but not limited to the Memorandum of Understanding and the Original
Lease insofar as the Memorandum of Understanding and the Original Lease relate
to the Property.

18.7 Perpetuities. Notwithstanding any provision of this Agreement to the
contrary,

MISC-035-2.doc

19

--------------------------------------------------------------------------------

[ex10x20x1.jpg]

--------------------------------------------------------------------------------

Exhibit A

Property

The “Property” consists of the following unpatented lode mining claims situated
in Inyo County, California, the names of which, the serial number assigned by
the California State Office of the Bureau of Land Management and the place of
record of the location notice thereof in the official records of Inyo County are
as follows:

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CM    1    CAMC    267755   
96/108  CM    2    CAMC    267756    96/109  CM    3    CAMC    267757   
96/110  CM    4    CAMC    267758    96/111  CM    5    CAMC    267759   
96/112  CM    6    CAMC    267760    96/113  CM    7    CAMC    267761   
96/114  CM    8    CAMC    267762    96/115  CM    9    CAMC    267763   
96/116  CM    10    CAMC    267764    96/117  CM    11    CAMC    267765   
96/118  CM    12    CAMC    267766    96/119  CM    13    CAMC    267767   
96/120  CM    14    CAMC    267768    96/121  CM    15    CAMC    267769   
96/122  CM    16    CAMC    267770    96/123  CM    17    CAMC    267771   
96/124  CM    29    CAMC    267776    96/129  CM    31    CAMC    267778   
96/131  CM    33    CAMC    267780    96/133 

MISC-035-2.doc

22

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CM 40    CAMC    267787   
96/140  CM 42    CAMC    267788    96/141  CM 44    CAMC    267789    96/142  CM
63    CAMC    267805    96/158  CM 64    CAMC    267806    96/159  CM 66   
CAMC    267808    96/161  CM 67    CAMC    267809    96/162  CM 68    CAMC   
267810    96/163  CM 69    CAMC    267811    96/164  CM 70    CAMC    267812   
96/165  FAT    147    CAMC    269062    96/1832  FAT    148    CAMC    269063   
96/1833  FAT    149    CAMC    269064    96/1834  FAT    150    CAMC    269065 
  96/1835  FAT    151    CAMC    269066    96/1836  FAT    152    CAMC   
269067    96/1837  FAT    153    CAMC    269068    96/1838  FAT    154    CAMC 
  269069    96/1839  FAT    155    CAMC    269070    96/1840  FAT    156   
CAMC    269071    96/1841  FAT    157    CAMC    269072    96/1842  FAT    158 
  CAMC    269073    96/1843  FAT    159    CAMC    269074    96/1844  FAT   
160    CAMC    269075    96/1845  FAT    161    CAMC    269076    96/1846  FAT 
  162    CAMC    269077    96/1847 

MISC-035-2.doc

23

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  FAT    163    CAMC    269078   
96/1848  FAT    164    CAMC    269079    96/1849  FAT    165    CAMC    269080 
  96/1850  FAT    166    CAMC    269081    96/1851  FAT    167    CAMC   
269082    96/1852  FAT    168    CAMC    269083    96/1853  FAT    171    CAMC 
  270065    96/4464  FAT    172    CAMC    270066    96/4465  FAT    173   
CAMC    270067    96/4466  FAT    174    CAMC    270068    96/4467  FAT    175 
  CAMC    270069    96/4468  FAT    176    CAMC    270070    96/4469  FAT   
177    CAMC    270071    96/4470  FAT    178    CAMC    270072    96/4471  FAT 
  179    CAMC    270073    96/4472  FAT    180    CAMC    270074    96/4473 
FAT    181    CAMC    270075    96/4474  FAT    182    CAMC    270076   
96/4475  FAT    183    CAMC    270077    96/4476  FAT    184    CAMC    270078 
  96/4477  FAT    185    CAMC    270079    96/4478  FAT    186    CAMC   
270080    96/4479  FAT    191    CAMC    270085    96/4484  FAT    193    CAMC 
  270088    96/4486  FAT    195    CAMC    270089    96/4488  FAT    197   
CAMC    270090    96/4490 

MISC-035-2.doc

24

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  FAT 199    CAMC    270093   
96/4492  FAT 211    CAMC    271324    97/0726  FAT 213    CAMC    271326   
97/0728  FAT 215    CAMC    271328    97/0730  FAT 217    CAMC    271330   
97/0732  FAT 219    CAMC    271332    97/0734  FAT 221    CAMC    271334   
97/0736  FAT 223    CAMC    271336    97/0738  FAT 225    CAMC    271338   
97/0740  Mesa    #3    CAMC    264621    94/4291  Mesa    #21    CAMC    264622 
  94/5693  Mesa    #23    CAMC    264623    94/5694  Mesa    #24    CAMC   
264624    94/5695  Mesa    # 26    CAMC    265625    94/5696  Mesa    #4   
CAMC    267098    95/4130  Mesa    #5    CAMC    267099    95/4131  Mesa    #6 
  CAMC    267100    95/4132  Mesa    #7    CAMC    267101    95/4133  Mesa   
#8    CAMC    267102    95/4134  Mesa    #9    CAMC    267103    95/4135  Mesa 
  #10    CAMC    267104    95/4136  Mesa    #11    CAMC    267105    95/4137 
Mesa    #12    CAMC    267106    95/4138  Mesa    #13    CAMC    267107   
95/4139  Mesa    #25    CAMC    267108    95/4140  CMP 1    CAMC    280789   
03/1109 

MISC-035-2.doc

25

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CMP 2    CAMC    280790   
03/1110  CMP 3    CAMC    280791    03/1111  CMP 4    CAMC    280792    03/1112 
CMP 5    CAMC    280793    03/1113  CMP 6    CAMC    280794    03/1114  CMP 7   
CAMC    280795    03/1115  MP    1    CAMC    286713    06/5246  MP    2   
CAMC    286714    06/5247  MP    3    CAMC    286715    06/5248  MP    4   
CAMC    286716    06/5249  MP    5    CAMC    286717    06/5250  MP    6   
CAMC    286718    06/5251  MP    7    CAMC    286719    06/5252  MP    8   
CAMC    286720    06/5253  MP    9    CAMC    286721    06/5254  MP    10   
CAMC    286722    06/5255  MP    11    CAMC    286723    06/5256  MP    12   
CAMC    286724    06/5257  MP    13    CAMC    286725    06/5258  MP    14   
CAMC    286726    06/5259  MP    15    CAMC    286727    06/5260  MP    16   
CAMC    286728    06/5261  MP    17    CAMC    286729    06/5262  CGL 1    CAMC 
  286730    06/5263  CGL 2    CAMC    286731    06/5264  CGL 3    CAMC   
286732    06/5265 

MISC-035-2.doc

26

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CGL    4    CAMC    286733   
06/5266  CGL    5    CAMC    286734    06/5267  CGL    6    CAMC    286735   
06/5268  CGL    7    CAMC    286736    06/5269  CGL    8    CAMC    286737   
06/5270  CGL    9    CAMC    286738    06/5116  CGL    10    CAMC    286739   
06/5115  CGL    11    CAMC    286740    06/5117  CGL    12    CAMC    286741   
06/5118  CGL    13    CAMC    286742    06/5119  CGL    14    CAMC    286743   
06/5120  CGL    16    CAMC    286744    06/5121  CGL    18    CAMC    286745   
06/5122  CGL    29    CAMC    286746    06/5271  CGL    30    CAMC    286747   
06/5272  CGL    31    CAMC    286748    06/5273  CGL    32    CAMC    286749   
06/5274  CGL    33    CAMC    286750    06/5275  CGL    34    CAMC    286751   
06/5276  CGL    35    CAMC    286752    06/5277  CGL    36    CAMC    286753   
06/5278  CGL    37    CAMC    286754    06/5123  CGL    38    CAMC    286755   
06/5124  CGL    39    CAMC    286756    06/5125  CGL    40    CAMC    286757   
06/5126  CGL    41    CAMC    286758    06/5127 

MISC-035-2.doc

27

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CGL    42    CAMC    286759   
06/5128  CGL    43    CAMC    286760    06/5129  CGL    44    CAMC    286761   
06/5130  CGL    45    CAMC    286762    06/5131  CGL    46    CAMC    286763   
06/5132  CGL    47    CAMC    286764    06/5133  CGL    48    CAMC    286765   
06/5134  CGL    49    CAMC    286766    06/5279  CGL    50    CAMC    286767   
06/5280  CGL    51    CAMC    286768    06/5281  CGL    52    CAMC    286769   
06/5282  CGL    53    CAMC    286770    06/5283  CGL    54    CAMC    286771   
06/5284  CGL    55    CAMC    286772    06/5285  CGL    56    CAMC    286773   
06/5286  CGL    57    CAMC    286774    06/5287  CGL    58    CAMC    286775   
06/5288  CGL    59    CAMC    286776    06/5289  CGL    60    CAMC    286777   
06/5290  CGL    61    CAMC 286778    06/5291  CGL    62    CAMC    286779   
06/5292  CGL    63    CAMC    286780    06/5135  CGL    64    CAMC    286781   
06/5136  CGL    65    CAMC    286782    06/5137  CGL    66    CAMC    286783   
06/5138  CGL    67    CAMC    286784    06/5139 

MISC-035-2.doc

28

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CGL    68    CAMC    286785   
06/5140  CGL    69    CAMC    286786    06/5293  CGL    70    CAMC    286787   
06/5294  CGL    71    CAMC    286788    06/5295  CGL    72    CAMC    286789   
06/5296  CGL    73    CAMC    286790    06/5297  CGL    74    CAMC    286791   
06/5298  CGL    75    CAMC    286792    06/5299  CGL    76    CAMC    286793   
06/5300  CGL    77    CAMC    286794    06/5301  CGL    78    CAMC    286795   
06/5302  CGL    79    CAMC    286796    06/5303  CGL    81    CAMC    286797   
06/5304  CGL    83    CAMC    286798    06/5305  CGL    85    CAMC    286799   
06/5306  CGL    86    CAMC    286800    06/5307  CGL    87    CAMC    286801   
06/5308  CGL    88    CAMC    286802    06/5309  CGL    89    CAMC    286803   
06/5310  CGL    90    CAMC    286804    06/5311  CGL    91    CAMC    286805   
06/5312  CGL    92    CAMC    286806    06/5313  CGL    93    CAMC    286807   
06/5314  CGL    94    CAMC    286808    06/5315  CGL    95    CAMC    286809   
06/5316  CGL    300    CAMC    286810    06/5317 

MISC-035-2.doc

29

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CGL    301    CAMC    286811   
06/5318  CGL    302    CAMC    286812    06/5319  CGL    303    CAMC    286813 
  06/5320  CGL    304    CAMC    286814    06/5321  CGL    305    CAMC   
286815    06/5322  CGL    306    CAMC    286816    06/5323  CGL    307    CAMC 
  286817    06/5324  CGL    308    CAMC    286818    06/5325  CGL    309   
CAMC    286819    06/5326  CGL    310    CAMC    286820    06/5327  CGL    311 
  CAMC    286821    06/5328  CGL    312    CAMC    286822    06/5329  CGL   
313    CAMC    286823    06/5330  CGL    314    CAMC    286824    06/5331  CGL 
  315    CAMC    286825    06/5332  CGL    316    CAMC    286826    06/5333 
CGL    317    CAMC    286827    06/5334  CGL    318    CAMC    286828   
06/5335  CGL    319    CAMC    286829    06/5336  CGL    320    CAMC    286830 
  06/5337  CGL    321    CAMC    286831    06/5338  CGL    322    CAMC   
286832    06/5339  CGL    323    CAMC    286833    06/5340  CGL    324    CAMC 
  286834    06/5341  CGL    325    CAMC    286835    06/5342  CGL    326   
CAMC    286836    06/5343 

MISC-035-2.doc

30

--------------------------------------------------------------------------------

CLAIM NAME    BLM CAMC #    COUNTY RECORDING #  CGL    327    CAMC    286837   
06/5344  CGL    328    CAMC    286838    06/5345  CGL    329    CAMC    286839 
  06/5346  CGL    330    CAMC    286840    06/5347  CGL    331    CAMC   
286841    06/5348  CGL    332    CAMC    286842    06/5349  CGL    333    CAMC 
  286843    06/5350  CGL    401    CAMC    286844    06/5351  CGL    402   
CAMC    286845    06/5352  CGL    403    CAMC    286846    06/5353  CGL    404 
  CAMC    286847    06/5354  CGL    405    CAMC    286848    06/5355  CGL   
406    CAMC    286849    06/5356  CGL    407    CAMC    286850    06/5357  CGL 
  408    CAMC    286851    06/5358  CGL    409    CAMC    286852    06/5359 
CGL    410    CAMC    286853    06/5360  CGL    411    CAMC    286854   
06/5361  CGL    412    CAMC    286855    06/5362  CGL    413    CAMC    286856 
  06/5363  CGL    414    CAMC    286857    06/5364  CGL    415    CAMC   
286858    06/5365  CGL    416    CAMC    286859    06/5366  CGL    417    CAMC 
  286860    06/5367  CGL    418    CAMC    286861    06/5368 

MISC-035-2.doc

31

--------------------------------------------------------------------------------

Exhibit B

Transfer Deed

AFTER RECORDING, PLEASE RETURN TO: Timberline Resources Corporation 1100 East
Lakeshore Drive, Suite 301 Coeur d’Alene, Idaho 83814

MINING DEED

(With Reservation of Royalty)

This Mining Deed (“Deed”) is made effective as of
__________________
, 2007, by and between STEVEN VAN ERT, an unmarried man, and NOEL COUSINS, an
unmarried man

(“Grantor”), and TIMBERLINE RESOURCES CORPORATION, an Idaho corporation whose
address is 1100 East Lakeshore Drive, Suite 301, Coeur d’Alene, Idaho 83814
(“Grantee”).

WITNESSETH

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor and Grantee undertake and agree as follows:

1. Conveyance of Mining Claims. Grantor hereby quitclaims to Grantee the
unpatented lode mining claims described in Exhibit 1 attached hereto and by
reference made a part hereof (the “Claims”), together with any improvements
located thereon, any ores, minerals, waste dumps, tailings materials and mineral
rights belonging or in any way appertaining thereto, and any water rights,
easements, rights-of-way, access rights and other appurtenances thereto;
RESERVING, however, unto Grantor the Royalty and related rights set forth in
Section 3 hereof.

2. Representations and Warranties. Grantor makes no representations or
warranties regarding the validity or ownership of the Claims. Grantee represents
and warrants to Grantor that Grantee has the full right, power and capacity to
enter into and perform this Deed upon the terms set forth herein, and doing so
will not be in breach of any other agreement to which Grantee is a party.
Grantee is a corporation in good standing under the laws of Idaho. All corporate
and other actions required to authorize Grantee to enter into and perform this
Deed have been properly taken. The person signing this Deed for Grantee has
proper corporate authority to do so as Grantee’s Chief Executive Officer.

3. Reservation of Royalty. Grantor reserves, and Grantee agrees to pay, a four
percent (4.0%) net smelter returns production royalty from any production and
sale of minerals from the Claims, to be determined and paid in accordance with
the provisions of Exhibit 2 attached hereto and by reference made a part hereof
(the “Royalty”), which Royalty shall run with the Claims (including any
amendments or relocations thereof) and the land within the Claims and

MISC-035-2.doc

32

--------------------------------------------------------------------------------

shall be binding upon Grantee and any and all successors to Grantee, such that
Grantor shall be entitled to the Royalty regardless of who owns or mines the
Claims.

4. Survival of Mineral Agreement. This Deed is given pursuant to that certain
Mineral Agreement dated
__________________
, 2007 (but effective September 15, 2006) by and between Grantor and Grantee
(“Mineral Agreement”), the terms and conditions of which shall survive the
execution and delivery of this Deed.

5. Construction. This Deed shall be construed in accordance with and governed by
the laws of the State of California without regard for choice of laws or
conflict of laws principles that would require or permit the application of the
laws of any other jurisdiction.

6. Binding Effect. This Deed shall inure to the benefit of and be binding upon
the parties and their respective successors and assigns.

7. Execution. This Deed may be executed in counterparts, all of which taken
together shall constitute a single and complete instrument.

IN WITNESS WHEREOF, Grantor and Grantee have executed this Deed on the dates
indicated in the acknowledgements below, but effective as of the date first set
forth above.

Grantor:

STEVEN VAN ERT

NOEL COUSINS

Grantee:

TIMBERLINE RESOURCES CORPORA-
TION, an Idaho corporation

By
John Swallow, Chief Executive Officer

MISC-035-2.doc

33

--------------------------------------------------------------------------------

STATE OF CALIFORNIA    )      : ss.  COUNTY OF    ) 

On this
______
day of
______________
, 2007, personally appeared before me, a Notary Public, STEVEN VAN ERT, who
acknowledged that he executed the above instrument.

[seal]     

--------------------------------------------------------------------------------

    NOTARY PUBLIC, residing in    My commission expires:     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

STATE OF ARIZONA    )      : ss.  COUNTY OF    ) 

On this
______
day of
______________
, 2007, personally appeared before me, a Notary Public, NOEL COUSINS, who
acknowledged that he executed the above instrument.

[seal]     

--------------------------------------------------------------------------------

    NOTARY PUBLIC, residing in    My commission expires:     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

STATE OF IDAHO                   )                         ) ss.  COUNTY OF     
                 ) 

--------------------------------------------------------------------------------

                     On this    day of    _______________
, 2007, personally appeared before me, a Notary  Public, John    Swallow, the   
   Chief Executive Officer of TIMBERLINE RESOURCES 

CORPORATION, an Idaho corporation, who acknowledged that he executed the above
instrument on behalf of said corporation.

[seal]
__________________________________________
NOTARY PUBLIC, residing in My commission expires:
__________________________________________

_____________________

MISC-035-2.doc

34

--------------------------------------------------------------------------------

Exhibit 1

Claims

(Attach Exhibit A from Mineral Agreement)

MISC-035-2.doc

35

--------------------------------------------------------------------------------

Exhibit 2

Royalty

     1. Royalty. Grantee shall pay to Grantor (allocating 85% to Steven Van Ert
and 15% to Noel Cousins) the production Royalty of four percent (4.0%) of the
Net Smelter Returns from all Minerals mined and removed from the Claims.
“Minerals” shall mean any and all mineral substances of any nature as may be
subject to location under the General Mining Law of the United States, together
with any rights to sand, gravel and other common minerals or materials that may
be exercised by virtue of holding such mining claims or that may be otherwise
obtained by Grantee. Notwithstanding any other provision of this Deed, the
Royalty shall be payable only with respect to Minerals that are ultimately and
actually recovered and for which Grantee receives payment or consideration.
Grantee shall have no obligation to pay any Royalty on Minerals extracted from
the Claims for testing purposes, including without limitation for bulk samples,
assays, geochemical analyses, amenability to milling and recovery
determinations, pilot plant tests and test trommel operations, unless and until
such Minerals are subsequently sold.

     2. Net Smelter Returns. “Net Smelter Returns” shall mean the actual sale
proceeds received by Grantee from the sale of Minerals to a smelter, refinery or
other processor (as reported on the smelter settlement sheet) less only the
following expenses actually incurred and borne by Grantee: (i) the actual costs
of freighting or transporting said Minerals from the mine or mill to the point
or points of sale (including without limitation costs of loading, transporting
and insuring the ores, metals, minerals and concentrates in transit), unless
already deducted by the purchaser; and (ii) all charges and costs of or relating
to smelting and refining (including without limitation sampling, assaying and
weighing charges), unless already deducted by the purchaser. If such smelter is
owned or controlled by Grantee or any of its affiliates, then charges, costs and
penalties for such operations shall mean (for the purposes of calculating Net
Smelter Returns) the amount that Grantee would have incurred if such operations
were carried out at facilities not owned or controlled by Grantee then offering
comparable services for comparable products on prevailing terms. For avoidance
of doubt, in calculating Net Smelter Returns there shall not be any deduction
for any costs of mining, or any costs of transporting Minerals to the mill, or
any costs of processing Minerals other than said smelting and refining costs.

                   3.    Advance Minimum Royalty Payments. If Grantee exercises
the option granted to it in  Section 6.1    of the Mineral Agreement, then each
year on or before the anniversary date of the option 

exercise for so long as any of the Claims (or any amendments, relocations or
replacements thereof) exist, Grantee shall pay Grantor (allocating 85% to Steven
Van Ert and 15% to Noel Cousins) the sum of One Hundred Fifty Thousand Dollars
($150,000), which amount shall be a credit against any Royalty owing on the
production of Minerals during the following one-year period. This amount shall
be a minimum royalty and shall not be credited against Royalty on production for
any subsequent or other time period.

4. Relinquishment of Claims. If Grantee desires to abandon or relinquish any of
the Claims (or any amendments, relocations or replacements thereof), then
Grantee shall first provide

MISC-035-2.doc

36

--------------------------------------------------------------------------------

written notice thereof to Grantor, specifying which of the Claims are to be
abandoned or relinquished, and within thirty (30) days from and after such
notice Grantor may elect to receive all or any of such Claims by notice to
Grantee. In such a case, Grantee shall, rather than abandoning or relinquishing
such Claims, deliver to Grantor a duly executed deed in recordable form
conveying to Grantor (85% to Steven Van Ert and 15% to Noel Cousins as tenants
in common) all of Grantee’s rights, title and interest in the Claims so elected
by Grantor and warranting the absence of any lien or encumbrance arising by,
through or under Grantee. For avoidance of doubt, the parties acknowledge that
Grantor may elect to take ownership of all, none or some portion of the Claims
to be abandoned or relinquished, in Grantor’s discretion.

5.      Royalty Payments     A. Generally. Royalty payments shall be made by
Grantee, to such addresses or  

bank account as Grantor may direct in writing, on or before the last day of each
calendar month for all Minerals sold during the preceding calendar month by
Grantee.

B. Provisional Payments. If any Royalty becomes due and payable prior to final
settlement with a smelter, refiner or other bona fide purchaser, or prior to
Grantee’s final determination of all of the facts necessary to calculate the
amount of Royalty payable to Grantor with respect to commingled Minerals, then
Grantee shall pay to Grantor a provisional Royalty based upon Grantee’s then
current estimates of such facts and the preliminary settlement with the smelter,
refiner or other bona fide purchaser. Payments of provisional Royalty shall be
subject to subsequent adjustment in accordance with Section 5.C below.

C. Adjustments. If Grantee determines that any Royalty payment made pursuant to
this Deed was underpaid or overpaid, then Grantee shall correct such overpayment
or underpayment by adjustment to the amount of the next subsequent payment.

D. Taking In Kind. Grantor may, by notice to Grantee, elect to receive Royalty
in the form of doré, in which case Grantor shall make arrangements for the
acceptance and transfer of doré as will accommodate Grantee’s normal shipping
schedule. For purposes of determining the credits for minimum royalty
obligations, the value of Royalty taken in kind shall be based on the contained
value of such ores or concentrates as of the date of delivery to Grantor.
Contained value shall be based on assays performed as a part of the sale by
Grantee of similar doré and the spot metal prices published in Metals Week or
other generally acceptable industry guide for the date of transfer.

E. Statement. At such time as Grantee makes any payment of Royalty or
provisional Royalty to Grantor, Grantee shall provide Grantor a brief written
statement setting forth the manner in which such payment of Royalty or
provisional Royalty was calculated and shall include settlement sheets and such
other documentation as will allow Grantor to readily understand and verify the
calculation of the Royalty payment.

6. Audits. All Royalty payments made during each calendar year shall be
considered

MISC-035-2.doc

37

--------------------------------------------------------------------------------

final and in full satisfaction of all obligations of Grantee with respect
thereto (except in the event of fraud or intentional misrepresentation), unless
Grantor gives Grantee written notice describing and setting forth a specific
objection to the determination thereof within six (6) months following the end
of the calendar year during which such Royalty payments were paid. Grantor shall
have the right, upon reasonable notice and at reasonable times, to have
Grantee’s accounts and records relating to mining operations and Royalty
calculations audited by an independent auditor. If such audit determines that
there has been a deficiency or an excess in the payment(s) made to Grantor, such
deficiency or excess shall be resolved by adjusting the next monthly Royalty
payment due hereunder, or by direct payment if no monthly Royalty payment
follows the audit determination, or such payment is insufficient to fully adjust
for such deficiency or excess. Grantor shall pay all costs of such audit unless
a deficiency of five percent (5%) or more of the amount due to Grantor is
determined to exist. Grantee shall pay the costs of such audit if a deficiency
of five percent (5%) or more of the amount due to Grantor is determined to
exist. All books and records used by Grantee to calculate Royalty due hereunder
shall be kept in accordance with generally accepted accounting principles,
consistently applied. Failure on the part of Grantor to provide a notice of
objection within the six-month period shall establish the correctness and
preclude the filing of exceptions thereto or making of claims for adjustment
thereon (by Grantor or Grantee) except where fraud or intentional
misrepresentation can be shown.

7. Other Minerals. If non-metallic minerals are produced from the Claims,
Grantor shall be entitled to a production royalty of eight percent (8.0%) of the
gross receipts received by Grantee for the sale of such non-metallic minerals,
without any deductions therefrom.

[End]

MISC-035-2.doc

38

--------------------------------------------------------------------------------

Exhibit C

Reconveyance Deed

AFTER RECORDING, PLEASE RETURN TO: Steven Van Ert P.O. Box 3785 Chatsworth, CA
91313

MINING DEED

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, TIMBERLINE RESOURCES CORPORATION, an Idaho corporation
whose address is 1100 East Lakeshore Drive, Suite 301, Coeur d’Alene, ID 83814
(“Grantor”) hereby conveys to STEVEN VAN ERT (an unmarried man whose address is
P.O. Box 3785, Chatsworth, California 91313) an undivided eighty-five percent
(85.0%) interest, and to NOEL COUSINS (an unmarried man whose address is P.O.
Box 37061, Tucson, Arizona 85740) an undivided fifteen percent (15.0%) interest,
as tenants in common (collectively, “Grantees”), in and to all of the unpatented
lode mining claims described in Exhibit 1 attached hereto and by reference made
a part hereof (the “Claims”), which Claims are located in Inyo County,
California, together with any improvements located thereon, any ores, minerals,
waste dumps, tailings materials and mineral rights belonging or in any way
appertaining thereto, and any water rights, easements, rights-of-way, access
rights and other appurtenances thereto.

Grantor warrants that the Claims are free and clear of any liens, claims or
encumbrances arising by, through or under Grantor. Grantor further warrants that
it has the full right, power and capacity to execute and deliver this Mining
Deed; that doing so will not be in breach of any agreement to which Grantor is a
party; that Grantor is a corporation in good standing under the laws of Idaho;
that all corporate and other actions required to authorize Grantor to execute
and deliver this Mining Deed have been properly taken; and that the person
signing this Mining Deed for Grantor has proper corporate authority to do so as
Grantor’s Chief Executive Officer.

This Mining Deed is executed and delivered pursuant to that certain Mineral
Agreement dated
__________________
, 2007 (but effective September 15, 2006) by and between Grantor and Grantees,
the terms and conditions of which shall survive the execution and delivery of
this Mining Deed.

IN WITNESS WHEREOF, Grantor has caused this Mining Deed to be executed by its
duly authorized representative on the date indicated in the acknowledgement
below, to be effective as of that date.

MISC-035-2.doc

39

--------------------------------------------------------------------------------

Grantor:

TIMBERLINE RESOURCES CORPORA-
TION, an Idaho corporation

By
John Swallow, Chief Executive Officer

STATE OF IDAHO                   )                         ) ss.  COUNTY OF     
                 ) 

--------------------------------------------------------------------------------

                     On this    day of    _______________
, 2007, personally appeared before me, a Notary  Public, John    Swallow, the   
   Chief Executive Officer of TIMBERLINE RESOURCES 

CORPORATION, an Idaho corporation, who acknowledged that he executed the above
instrument on behalf of said corporation.

[seal]
__________________________________________
NOTARY PUBLIC, residing in My commission expires:
__________________________________________

_____________________

MISC-035-2.doc

40

--------------------------------------------------------------------------------

Exhibit 1

Claims

(Attach Exhibit A from Mineral Agreement)

MISC-035-2.doc

41

--------------------------------------------------------------------------------

Exhibit D

Royalty Conveyance

AFTER RECORDING, PLEASE RETURN TO: Timberline Resources Corporation 1100 East
Lakeshore Drive, Suite 301 Coeur d’Alene, ID 83814

CONVEYANCE OF ROYALTY INTEREST

This Conveyance of Royalty Interest is made this
_____
day of
__________________
, 200___, by and between STEVEN VAN ERT (an unmarried man) as to an eighty-five
percent (85.0%) undivided interest, and NOEL COUSINS (an unmarried man) as to a
fifteen percent (15.0%) undivided interest (“Grantor”), and TIMBERLINE RESOURCES
CORPORATION, an Idaho corporation whose address is 1100 East Lakeshore Drive,
Suite 301, Coeur d’Alene, Idaho 83814 (“Grantee”).

WITNESSETH

A. Grantor and Grantee are parties to that certain Mineral Agreement dated
__________________
, 2007 but effective September 15, 2006 (the “Agreement”) involving the
unpatented lode mining claims described in Exhibit 1 attached hereto and by
reference made a part hereof (the “Property”), a memorandum of which was
recorded in the Inyo County, California, real property records on
_______________
, 2007, as Reception No.
_____
, in Book
______
, at Page
_____
. The Property is located in Inyo County, California. All capitalized terms used
in this document shall have the meanings ascribed to them in the Agreement,
unless otherwise defined in this document.

B. Pursuant to the Agreement, Grantee agreed to pay to Grantor a production
Royalty of four percent (4.0%) of Net Smelter Returns upon all Minerals mined
and removed from the Property, and Grantor granted Grantee a Royalty Reduction
Option to purchase from Grantor one-quarter of the four percent (4.0%) Royalty
(that is, an option to reduce the Royalty payable to Grantor from four percent
to three percent).

C. Grantee has exercised its Royalty Reduction Option to purchase from Owner
one-quarter of the four percent (4.0%) Royalty, and has paid to Grantor the
Royalty Reduction Payment required under the Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Grantor hereby conveys and assigns to Grantee
one-fourth of the

MISC-035-2.doc

42

--------------------------------------------------------------------------------

four percent (4.0%) Royalty, and the parties agree that, from and after the date
of this instrument, the Royalty shall be owned as follows:

Grantor owns a three percent (3.0%) Royalty, to be allocated eighty-five percent
(85.0%) to Steven Van Ert and fifteen percent (15.0%) to Noel Cousins.

Grantee owns a one percent (1.0%) Royalty, which shall be deemed to have
terminated by merger of said Royalty interest with and into Grantee’s ownership
of the Property.

Grantor’s conveyance is made without any warranties or representations except
that the Royalty interest conveyed to Grantee is free and clear of any liens,
claims or encumbrances arising by, through or under Grantor.

IN WITNESS WHEREOF, Grantor and Grantee have executed this instrument on the
dates indicated in the acknowledgements below, but effective as of the date
first set forth above.

Grantor:

STEVEN VAN ERT

NOEL COUSINS

Grantee:

TIMBERLINE RESOURCES CORPORA-
TION, an Idaho corporation

By
John Swallow, Chief Executive Officer

MISC-035-2.doc

43

--------------------------------------------------------------------------------

STATE OF CALIFORNIA    )      : ss.  COUNTY OF    ) 

On this
______
day of
______________
, 200___, personally appeared before me, a Notary Public, STEVEN VAN ERT, who
acknowledged that he executed the above instrument.

[seal]     

--------------------------------------------------------------------------------

    NOTARY PUBLIC, residing in    My commission expires:     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

STATE OF ARIZONA                                   )                           
             : ss.      COUNTY OF                                   )        On
this    day of
______________
, 200___, personally appeared before me,    a  Notary Public, NOEL COUSINS, who
acknowledged that he executed the above instrument.          [seal]         

--------------------------------------------------------------------------------

    NOTARY PUBLIC, residing in        My commission expires:         

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

STATE OF IDAHO                                         )                       
                   ) ss.  COUNTY OF                                         )   
                   On this    day of
_______________
, 200___, personally appeared before me, a Notary  Public, John Swallow, the
Chief Executive Officer of TIMBERLINE RESOURCES 

CORPORATION, an Idaho corporation, who acknowledged that he executed the above
instrument on behalf of said corporation.

[seal]
__________________________________________
NOTARY PUBLIC, residing in My commission expires:
__________________________________________

_____________________

MISC-035-2.doc

44

--------------------------------------------------------------------------------

Exhibit 1

Property

(Attach Exhibit A from Mineral Agreement)

MISC-035-2.doc

45

--------------------------------------------------------------------------------

Exhibit D

Deed of Trust

AFTER RECORDING, PLEASE RETURN TO: Steven Van Ert P.O. Box 3785 Chatsworth, CA
91313

DEED OF TRUST AND ASSIGNMENT OF RENTS

BY THIS DEED OF TRUST,

  made this __ day of
___________
, 2007,

between TIMBERLINE RESOURCES CORPORATION, an Idaho corporation whose address is
1100 East Lakeshore Drive, Suite 301, Coeur d’Alene, Idaho 83814 (the "Trustor"
herein),

___________________________________________
, whose address is
______________

___________________________________________
(the "Trustee" herein),

  and

STEVEN VAN ERT (an unmarried man) as to an eighty-five percent (85.0%) undivided
interest, and NOEL COUSINS (an unmarried man) as to a fifteen percent (15.0%)
undivided interest, whose respective mailing addresses are P.O. Box 3785,
Chatsworth, CA 91313 and P.O. Box 37061, Tucson, AZ 85740 (the "Beneficiary"
herein),

the Trustor hereby conveys, transfers and assigns to Trustee in Trust, with
Power of Sale, those certain unpatented mining claims more particularly
described in Exhibit 1 attached hereto and by this reference made a part hereof
(the "Property" herein); TOGETHER WITH the rents, issues, profits and income
thereof (all of which are hereinafter called "Property Income"), SUBJECT
HOWEVER, to the right, power and authority hereinafter given to and conferred
upon Beneficiary to collect and apply such Property Income.

This Deed of Trust is given for the purpose of securing the performance of each
agreement of Trustor contained in that certain Mineral Agreement dated of even
date therewith and this Deed of Trust executed by Trustor in favor of
Beneficiary.

MISC-035-2.doc

46

--------------------------------------------------------------------------------

To protect the security of this Deed of Trust, it is agreed that:

1.      Obligations of Trustor a. Conduct of Operations - All work performed by
Trustor on the Property until the  

obligations described in Sections 4 and 6 of the Mineral Agreement have been
satisfied.

b. Protection from Liens - Trustor shall pay all expenses incurred by it in its
operations on the Property hereunder and shall allow no liens arising from any
act of Trustor to remain upon the Property; provided, however, that Trustor
shall not be required to remove any such lien as long as Trustor is contesting
in good faith the validity or amount thereof.

c. Payment of Taxes - Trustor shall pay all taxes and assessments levied upon or
against the Property or any mineral production therefrom.

d. Indemnity - Trustor shall protect, defend and indemnify Trustee against and
hold Beneficiary and Trustee harmless from any suit, claim, judgment or demand,
administrative proceeding or sanction, expense, including reasonable attorneys'
fees, whatsoever arising out of Trustor's exploration, development, mining and
mineral processing activities on the Property, provided that if the Beneficiary
or any person or instrumentality acting on Beneficiary's behalf shall have been
a contributing cause to the event giving rise to such suit, claim, demand or
judgment, Trustor and Beneficiary shall be responsible to the extent that each
contributed to the cause giving rise to such suit, claim, demand or judgment.

e. Maintenance of Unpatented Mining Claims - Trustor agrees to pay all
governmental fees required by law in order to maintain the unpatented mining
claims included within the Property. The Trustor shall further record with the
appropriate county and file with the appropriate United States agency any
required affidavits, notices of intent to hold and other documents in proper
form attesting to the payment of governmental fees and another other action or
declaration in sufficient detail to reflect compliance with the requirements
applicable to and required for the maintenance of the unpatented mining claims.
Trustor shall provide proof of payment of the claim maintenance fee to
Beneficiary not later than ten (10) days prior to the due date (currently
September 1 of each year).

2.      Default and Foreclosure a. Notice of Foreclosure by Trustee - If Trustor
defaults in the performance of its  

obligations under the terms of the Mineral Agreement or this Deed of Trust,
Trustee shall give the notice and permit the cure periods and allow the exercise
of rights permitted under the terms of Sections 11 and 12 of the Mineral
Agreement, the terms of which are incorporated herein by this reference. Upon
the failure to take action as permitted therein or final determination of
default, Trustee shall, (1) declare all sums secured hereby immediately due and
payable and (2) on delivery by Beneficiary to Trustee of written notice of
election to have the Property sold, and after the giving of notice of sale in
the manner provided by law, proceed to sell the Property at public

MISC-035-2.doc

47

--------------------------------------------------------------------------------

auction the property under the power of sale contained herein.

b. Foreclosure Sale - At any sale of the Property under the power of sale
contained herein, any person, including Trustor, Trustee or Beneficiary may
purchase at such sale. Trustee shall deliver to the purchaser at such sale its
Trustee's Deed, without covenant or warranty, express or implied to the Property
so sold. Trustee shall apply the proceeds of the Trustee's sale in the manner
provided by law after first deducting costs and expenses of exercising the power
of sale, and of the sale, including but not limited to costs of evidence of
title, the Trustee's fees and Trustee's attorney's fees, if any. The purchaser
at the Trustee's sale shall be entitled to immediate possession of the Property
as against the Trustor and shall have a right to the summary proceedings to
obtain possession provided under applicable law together with costs and
reasonable attorney's fee.

c. Delivery of Data - If this Deed of Trust is foreclosed or the Property is
otherwise deeded back to Beneficiary without foreclosure action, upon written
request given by Beneficiary within thirty (30) days from and after foreclosure
or other conveyance of the Property to Beneficiary, Trustor shall, within a
reasonable time, furnish Beneficiary copies of all available exploration,
development and mining data pertaining to the Property prepared by or for
Trustor.

3.      Title Matters a. Defense of Actions - Trustor shall appear in and defend
any action or proceeding  

purporting to affect the possessory rights in the Property or the rights or
powers of the Beneficiary or Trustee; and shall pay all costs and expenses,
including cost of evidence of title and reasonable attorneys' fees, in such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit
brought by Beneficiary to foreclose this Deed of Trust.

b. Amendment, Relocation and Patent of Mining Claims - Trustor shall have the
right to amend or relocate in its name any of the unpatented claims that are
secured by this Deed of Trust as provided in Section 10 of the Mineral
Agreement. Any unpatented mining claim so amended or relocated or any additional
or new right acquired by Trustor within the area of interest established by the
Mineral Agreement shall be subject to the terms of this Deed of Trust as if
described herein.

c. Condemnation Awards - Any award of damages in connection with any
condemnation for public use of or injury to the Property or any part thereof is
hereby assigned and shall be paid to Beneficiary and shall be applied to the
purchase price as if the same were payment of "Net Profits" under the terms of
the promissory note.

4. Release

Upon written request of Beneficiary (or proof of the same furnished by Trustor)
stating that all sums secured hereby have been paid and upon surrender of this
Deed of Trust and the promissory note to Trustee for cancellation and retention
and upon payment of its fees, Trustee

MISC-035-2.doc

48

--------------------------------------------------------------------------------

shall, by Deed of Release and Full Reconveyance, release and reconvey the
Property, without covenant or warranty, express or implied. The recitals in such
Deed of Release and Full Reconveyance of any matters shall be conclusive proof
of the truthfulness thereof. The grantee in such Deed of Release and Full
Reconveyance may be described as "The Person or Persons Legally Entitled
Thereto."

5.      Trustee's Rights and Obligations a. Acceptance - Trustee accepts this
trust when this Deed of Trust, duly executed and  

acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of pending sale under any other deed of
trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.

b. Resignation - Trustee herein may resign by mailing or delivering notice
thereof to Beneficiary and to Trustor. Upon such resignation, the Beneficiary
may appoint a successor trustee, which appointment shall constitute a
substitution of trustee upon the mailing and recording of written notice thereof
by the Beneficiary in the manner prescribed by law for the substitution of a
trustee of a deed of trust. A successor trustee herein shall, without conveyance
from the predecessor trustee, succeed to all the predecessor's title, estate,
rights, powers and duties.

6. Inurement

This Deed of Trust applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors,
and assigns.

7.      Construction a. Time of Essence - By accepting payment of any sum
secured hereby after its due  

date, Beneficiary does not waive his right either to require prompt payment when
due of all other sums so secured or to declare default for failure so to pay.
Time is of the essence of this Deed of Trust and each and every provision
hereof.

b. No Implied Covenants - It is expressly agreed that no implied covenant or
condition whatsoever shall be read into any obligation of Trustor, either under
this Deed of Trust or the License and Option Agreement relating to any time
frame as the measure of diligence for prospecting, mining, resumption of mining
if mining operations once commenced are suspended, or any operations of Trustor
hereunder.

MISC-035-2.doc

49

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, this Deed of Trust has been executed as of the date recited

above.

                                                             TRUSTOR:           
                                                     TIMBERLINE RESOURCES
CORPORATION                                                                 
 By: 

--------------------------------------------------------------------------------

                                                                     John
Swallow, Chief Executive Officer    STATE OF IDAHO                             
           )                                           ) ss.  COUNTY OF         
                               )                       On this    day of
_______________
, 200___, personally appeared before me, a Notary  Public, John Swallow, the
Chief Executive Officer of TIMBERLINE RESOURCES 

CORPORATION, an Idaho corporation, who acknowledged that he executed the above
instrument on behalf of said corporation.

[seal]
__________________________________________
NOTARY PUBLIC, residing in My commission expires:
__________________________________________

_____________________

MISC-035-2.doc

50

--------------------------------------------------------------------------------

Exhibit 1

Property

(Attach Exhibit A from Mineral Agreement)

MISC-035-2.doc

51

--------------------------------------------------------------------------------