EXHIBIT 99.2

FOR IMMEDIATE RELEASE

Timberline Resources Signs Letter of Intent to Sell Its Contract Drilling Subsidiary

Coeur d’Alene, Idaho – September 6, 2011 – Timberline Resources Corporation (NYSE Amex: TLR; TSX-V: TBR) (“Timberline” or the “Company”) announced today that it has signed a non-binding Letter of Intent (“LOI”) to sell its wholly-owned contract drilling subsidiary, Timberline Drilling, Inc. (“TDI”), to a private company formed by a group of investors, including certain members of the current senior management team of TDI.  

The sale is valued at approximately $13 million, subject to closing adjustments, and will allow Timberline to:

·

focus on the Company’s core business of gold exploration, development, and production;

·

repay its $5 million convertible debt obligation and, with the assumption of all TDI debt by the purchaser, become debt-free;

·

retain certain strategic benefits of owning the drilling subsidiary by entering into an agreement with the purchaser to provide future core drilling services to Timberline at below-market prices;

·

accelerate drilling and exploration at its district-scale South Eureka (Nevada) gold property.

Paul Dircksen, Timberline’s President and CEO, commented, “With gold prices exceeding $1,800 per ounce, we believe that the economic potential of our core business is extremely compelling and requires our uncompromised focus. &nbs