ESTRELLA RESOURCES LIMITED — Capital/Financing Update 2012

Dec 5, 2012

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ASX ANNOUNCEMENT

Chile’s star in copper-gold

ESTRELLA RESOURCES LIMITED ACN 151 155 207

AUSTRALIAN REGISTERED OFFICE: Level 17, 15 Castlereagh Street Sydney NSW 2000 Australia

POSTAL ADDRESS: PO Box R514 Royal Exchange NSW 1225 Australia

CONTACT DETAILS: Telephone: +61 2 9993 4475 Facsimile: +61 2 9993 4433 Email: admin@estrellaresources.com.au

CHILE OFFICE: Av. Vitacura 5250, Oficina 802, Vitacura Santiago, Chile

ASX CODE: ESR

6 December 2012

Estrella signs MoU with NYSE Listed SQM for major Chilean project – Project Altair

HIGHLIGHTS

• MoU signed with SQM for 5 year JV for ‘Project Altair’

• SQM is listed on the NYSE with market cap US$14.5B

• Exclusive rights to explore 250,000 ha of prime located, prospective IOCG belt along the Atacama Fault Zone, untouched since 1920s

• Up to 100% working interest for Estrella in all metal discoveries

• Estrella already well-funded for at least first 12 months of aggressive exploration

1. Introduction

Estrella Resources Limited ( ASX:ESR ) ( Estrella or the Company ) is pleased to announce that it has entered into an exclusive Memorandum of Understanding ( MoU ) for a 5 year Option Agreement ( Option Agreement ) with Sociedad Quimica y Minera de Chile S.A (NYSE.SQM) (SQM) to earn up to 100% working interest in all metal discoveries in Project Altair located in Chile’s Region II ( Altair or Project ).

SQM is one of the largest integrated miners and producers of chemicals in the world and is the world’s largest producer of potassium nitrate, iodine and lithium. SQM produces specialty plant nutrients, iodine and derivatives, lithium and derivatives, potassium chloride and industrial chemicals being a mining company and one of the largest companies in Chile, SQM holds a substantial portfolio of exploration assets which are highly prospective for base and precious metals.

Significant portions of the Project Altair area have been exclusively held by SQM for decades. The project is located 80 km northeast of Antofagasta, running along the highly prospective Atacama Fault Zone for approximately 130km.

Given SQM’s focus on iodine and nitrate related products, along with potassium and lithium, virtually no base and precious metal exploration has ever been undertaken on the Project Altair ground.

The Project consists of two separate areas both of which contain a large number of contiguous tenements and together cover an area of about

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Chile’s star in copper-gold

250,000 ha. Importantly, Altair encompasses a significant portion of northern Chile’s Iron-oxide-coppergold ( IOCG ) belt and as such, has the potential to contain several sizeable deposits (See Figure 1). The scope and size of Altair makes it a highly valuable and strategic addition to Estrella’s portfolio of projects.

This MoU marks the commencement of a long and mutually beneficial partnership between Estrella and SQM. The transaction permits SQM to leverage off Estrella’s significant base and precious metal exploration and mining expertise while simultaneously granting Estrella access to some of the most sought after mining rights in Chile. Estrella will work closely with SQM to unlock the potential value of this exciting new mineral province.

Pursuant to the MoU, Estrella has a 3 month exclusive period to undertake due diligence on Project Altair and formally exchange the Option Agreement. Estrella’s strategy will be to undertake aggressive exploration with a view to quickly focus in on the target areas with the highest potential. Estrella has a strong balance sheet and remains well-funded to undertake the initial exploration program at Altair. Given the prospectivity of this Project and the desire for both Estrella and SQM to progress this opportunity aggressively, Estrella may re-prioritise its current exploration/drilling program on other projects subject to the results of this initial Altair work program.

Figure 1: Altair Project and Tenements

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Project Altair is located in the Antofagasta Region, which is the largest mining district in Chile with a population of 542,000. The Project is also located close to a number major mining developments (see Table 1 below) and associated infrastructure, such as power and access (via the Pan American Highway).

Table 1: Nearby Operations

Deposit	Company	Ore Resource	Ore Reserve	Production	Proximity
Michilla	Antofagasta Minerals	66.7 Mt @ 1.57% Cu	11.9 Mt @ 1.28% Cu	40,000tpa	40km West of Altair south
Antucoya	Antofagasta Minerals	n/a	642 Mt @ 0.35% Cu.	80,000tpa	5km from Altair north
Toyaku	Pucobre and Codelco	n/a	n/a	40,000tpa	Borders Altair north

2. Altair Geology

Project Altair lies within the Galenosa Puntilla sector of Chile’s coastal IOCG belt. Rocks in the region are dominated by Cretaceous aged andesites, dacites, tuffs and diorites. The most relevant geological feature in the region is the 2,000km long Atacama Fault system which is host to numerous multi-element metal deposits in Chile (including Candelaria, Andacollo and La Productora) and several metal deposits in the region including Antucoya (Antofagasta Minerals) and Tovaku (Pucobre – Codelco). The mineralisation styles in the Project Altair region are quite diverse and include mantos, epithermal systems, breccia pipes and porphyries.

SQM’s historical mining and exploration activities have been focussed on iodine and nitrate deposits within the shallow (100m depth maximum) ‘Caliche’ calcium carbonate cover unit. However, these activities (including shallow depth drilling) have produced a large and broad spectrum database of historical near surface geochemical results that Estrella is accessing to rapidly prioritise multiple exploration targets.

3. Terms

Estrella has signed a MoU to enter into a 5 year option agreement with SQM for Project Altair. Under the Option Agreement, ESR will be required to pay SQM nominal option fees over the 5 year period which essentially will be based on the size of all land held under the Option Agreement at the time of each relevant payment milestone.

Estrella is required after the first 2 years to reduce the exploration area to a maximum of 32,000ha by the end of the 5 year option term. Estrella is not restricted in the selection of the area that it chooses to retain and expects to be able to substantially pinpoint its exploration priorities following the planned initial high level exploration program. Estrella will have, at all times during the Option Agreement, the right to relinquish any parts of Project Altair back to SQM with no further liability.

Under the terms of the proposed Option Agreement, Estrella will have the right to earn to 100% of all Metal projects (being IOCG etc metals but excluding non-metallic minerals such as nitrates and lithium) found within the broader Project Altair by solely funding all expenditure up until the completion of a Pre-feasibility Study ( PFS ). Upon the completion of a PFS, SQM retains “back-in rights” to earn back 49% of the each project by contributing 49% of funding for the relevant project going forward. In the event SQM does not exercise its relevant “back-in rights”, Estrella will retain 100% of the project and thereafter pay to SQM an annual royalty stream relating to that specific project. The royalty payable is based upon revenue from the

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specific project and is bench marked to a sliding scale depending on the LME metal copper and gold prices indexed for US inflation rate. At current copper prices, the royalty payable would be 3.0%.

During the term of the Option Agreement, Estrella is required to meet the minimum expenditure requirements for the area held under option. These expenditures include all exploration, mining study and development work to be undertaken on Project Altair. In addition, Estrella will work with SQM in relation to all Nitrate and Lithium discoveries in Project Altair which will be retained by SQM.

Non-metallic minerals such as nitrates, iodine and lithium are not part of the transaction and SQM will retain at all time a 100% interest in these non-metallic minerals.

4. SQM

SQM was founded in 1968 through a joint venture between Copañia Salitrera Anglo Lautaro S.A. (“Anglo Lautaro”) and Corporacion de Fomento de la Produccón (“Production Development Corporation” or “Corfo”), a Chilean government entity. In 1971, Anglo Lautaro sold off its shares to Corfo, and SQM was wholly owned by the Chilean government until 1983. Three years after its formation, in 1971, Anglo Lautaro sold all of its shares to Corfo, and SQM was wholly owned by the Chilean Government until 1983. In 1983, Corfo began a process of privatization by selling shares to the public and subsequently listing such shares in the Santiago Stock Exchange. By 1988 all shares were publicly owned. SQM is listed on the New York Stock Exchange since 1993 and currently has a market capitalisation in excess of US$14.5B.

SQM is the world’s largest producer of potassium nitrate, iodine and lithium. The company produces Specialty Plant Nutrients, Iodine and derivatives, lithium and derivatives, potassium chloride and industrial chemicals. The company has commercial offices in more than 20 countries, which enables SQM to offer its products to customers in over 100 countries throughout the world. In 2011, it is estimated that SQM sales accounted for approximately 49% of world potassium nitrate sales (excluding China), 37% of the iodine sales in the world and 31% of world lithium sales. In 2011 SQM’s total revenue was US$2.1B and they have a Capital Expenditure plan of US$500M for 2012.

For more information about SQM please visit their webpage: www.sqm.com

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5. Commentary

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Estrella's Managing Director, Dr. Jason Berton, said:

“The MoU with SQM represents a landmark transaction for Estrella.

“The exploration potential of the tenements contained in Project Altair are exceptionally rare and highly sought after due to their obvious metalliferous potential coupled with their omission from systematic advanced exploration techniques targeting base and precious metal exploration due to the industrial chemical focus in the region for many decades.

“Project Altair is a highly strategic asset for Estrella and opens up a multiple number of exploration and development opportunities.

“The transaction forms the basis of a strong long-term relationship between SQM and Estrella.

“The coupling of Estrella’s significant exploration expertise and SQM’s “in country” experience and respect will enhance collaborative work together and should quickly unlock the huge potential of this ground.”

Competent Person’s Statement

Exploration information in this announcement is based upon work undertaken by Dr. Jason Berton, the Managing Director of Estrella Resources Limited whom is a Member of the Australasian Institute of Metallurgy and Mining (AusIMM). Dr Berton has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a ‘Competent Person’ as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr Berton consents to the inclusion in this document of the statements based on his information and context in which they appear.

About Estrella Resources

Estrella Resources Limited is an ASX listed, Chilean focused copper-gold exploration company. Estrella has a number of exploration projects in Chile. With a highly experienced board, a strong operational and management team and a sole focus on Chilean copper and gold projects, the Company is well positioned to develop its projects and add value for shareholders.

Directors and Management Dr. Jason Berton Managing Director Gavin Solomon Non-Executive Chairman Julian Bavin Non-Executive Director Simon Kidston Non-Executive Director Juan Pablo Vargas de la Vega General Manager - Chile Justin Clyne Company Secretary

ESTRELLA RESOURCES LIMITED ACN 151 155 207

ASX CODE: ESR ORDINARY FULLY PAID SHARES: 87,101,000 UNLISTED OPTIONS: 7,205,000

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