Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers.
On October 8, 2020, Timberline Resources Corporation (the “Company”) announced that Patrick Highsmith will be joining the Company as its President and Chief Executive Officer. Mr. Highsmith will succeed Steven Osterberg, the Company’s current President and Chief Executive Officer, who will resign from those offices concurrently with Mr. Highsmith’s appointment, effective immediately. Dr. Osterberg’s resignation was not the result of any disagreement with the Company. Dr. Osterberg will continue as the Company’s Vice President Exploration, and he will continue to be a director on the Company’s Board of Directors.
Mr. Highsmith has more than 30 years of international experience including operational, exploration and business development roles with major companies such as Newmont Mining, BHP, Rio Tinto, and Fortescue Metals Group. He also has co-founded, and/or acted as a director or senior executive in several junior companies. His junior company pedigree includes Canadian listed companies such as: Lithium One, Bellhaven Copper & Gold, Pure Energy Minerals, Idaho Champion Gold Mines, and FireFox Gold, for whom he is co-founder and chairman of the board. Mr. Highsmith has been involved with several significant discoveries and helped add value to those projects through various stages of economic advancement, partnerships, joint ventures, or sales. He has a long history with Dr. Hennigh (a recent addition to the Company’s Board of Directors), Chairman Leigh Freeman, as well as the outgoing CEO, Steven Osterberg. Patrick holds degrees in Geological Engineering and Economic Geology (Geochemistry) from the Colorado School of Mines. He has specialized technical expertise in gold, copper, and lithium exploration.
In connection with Mr. Highsmith’s appointment as Chief Executive Officer, on October 7, 2020, the Company entered into a term sheet regarding certain employment terms and conditions for Mr. Highsmith’s appointment as Chief Executive Officer (the “Employment Term Sheet”). Under the Employment Term Sheet, Mr. Highsmith will be paid an annual base salary of $168,000. Mr. Highsmith will be entitled to participate in the Company’s health insurance plan and Mr. Highsmith will be entitled to participate in the employee benefit plans sponsored by the Company currently or in the future, such as group life insurance policy, retirement plans, stock option plan, performance bonuses and salary increases, all at the discretion of the Company’s Board of Directors and its Compensation Committee in accordance with the normal practices of the Company.
In connection with Mr. Highsmith’s appointment as Chief Executive Officer, he will also receive a one-time inducement award comprised of a common stock purchase option (the “Inducement Option”) , with a 5-year life, to purchase 750,000 shares of common stock at an exercise price of $0.27, the closing price of the Company’s shares of common stock on October 7, 2020 as quoted on the OTCQB. The Inducement Option will be vested 25% upon the grant with the balance at 25% on each of the three subsequent anniversaries.
In connection with Mr. Osterberg’s appointment as Vice President Exploration, he will be issued 250,000 options, with a 5-year life, to purchase 250,000 shares of common stock at an exercise price of $0.27, the closing price of the Company’s shares of common stock on October 7, 2020 as quoted on the OTCQB. The options will vest immediately upon issuance.
In connection with Dr. Hennigh’s appointment to the Board of Directors as previously announced, he will be issued 100,000 options, with a 5-year life, to purchase 100,000 shares of common stock at an exercise price of $0.27, on the closing price of the Company’s shares of common stock on October 7, 2020 as quoted on the OTCQB. The options will vest immediately upon issuance.
The issuance of options is subject to any approvals required by the OTCQB and TSX-V. Such issuances will be made pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(a)(2) of the Securities Act.