ESTRELLA RESOURCES LIMITED — Capital/Financing Update 2013

Feb 17, 2013

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ASX ANNOUNCEMENT

Chile’s star in copper-gold

18 February 2013

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

Estrella exchanges Binding Option Agreement with SQM for Altair Project

HIGHLIGHTS

• 5 Year Option Agreement exchanged with SQM for Project Altair

• Exclusive right to explore/develop 2,560km[2] of tenement area, which straddles prospective IOCG belt along the Atacama Fault Zone

• Additional ground now secured linking Altair North and Altair South

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

ASX CODE: ESR

• Estrella now has one of the largest prospective IOCG tenement portfolios in Chile

• Estrella entitled to earn a 100% working interest in all metal discoveries (subject to 49% claw back rights or, alternatively, royalty payments to SQM)

• Estrella well-funded for initial exploration program on Project Altair

1. Introduction

Estrella Resources Limited ( ASX:ESR ) ( Estrella or the Company ) is pleased to advise that that it has now formally exchanged the 5 year Option Agreement ( Option Agreement ) with Sociedad Quimica y Minera de Chile S.A (NYSE.SQM) (SQM). This Option Agreement was previously the subject of a Memorandum of Understanding ( MoU ), announced to the ASX on 6 December 2012. The Option Agreement entitles Estrella to earn a 100% working interest (subject to SQM’s 49% claw back rights or, alternatively, royalty payments to SQM) in all metal discoveries in the Altair Project ( Altair or Project ), which is located in Chile’s Region II.

The key commercial terms are largely consistent with those previously agreed with SQM in the MoU plus a number of additional terms which are highly beneficial to both companies. This includes increasing the total project area from 2,500km[2] to 2,560km[2] . Part of the increase involved securing the previously unavailable middle ground between Altair North and Altair South which now links the two areas transforming them into a largely contiguous tenement package. This greatly increases the strategic value of the project area, which now covers a continuous 130km of strike along the highly prospective Atacama Fault Zone (see Figure 1). Altair Project is located in the mining district of the Antofagasta region and encompasses a significant portion of the entire Northern Chile IOCG belt.

AUSTRALIA | CHILE

www.estrellaresources.com.au

ASX ANNOUNCEMENT

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Chile’s star in copper-gold

Figure 1: Altair location

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Pursuant to the Option Agreement, Estrella has secured the exclusive right to explore one of the largest and most prospective IOCG tenement packages in northern Chile. Altair is also well located close to a number of existing mining operations as well as associated, existing infrastructure (road, rail, power and water).

The Option Agreement has been structured such that Estrella’s obligation to pay option fee payments is minimal during the initial years. This enables Estrella to focus its funds towards exploration of the tenement areas with the intention to rapidly identifying multiple key prospects within the Altair Project. Estrella believes that the working arrangement with SQM is a ‘win-win’ for both companies as it significantly de-risks the upfront investment for Estrella whilst bringing significant value to both companies upon each new discovery.

Estrella remains well-funded to undertake exploration on the Altair Project on a stand-alone basis however, given the significant size of the tenement package and the multiple initial target zones already identified and the Company’s desire to quickly move to become a metals producer, consideration will be given to identifying appropriately funded and experienced joint venture partners to expedite exploration.

Figure 2: Signing ceremony on 15 February 2013 with representatives of Estrella and SQM

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Commenting on this landmark Option Agreement, Estrella's Chairman, Gavin Solomon, said:

“The signing of the SQM Option Agreement continues the mutually beneficial and strategic partnership between Estrella and SQM established several months ago and catapults Estrella towards becoming a significant mining entity in the coming years should we be able to unlock the prospectivity of the Altair Project that the Estrella Board believes is achievable.

Both companies recognise the strategic importance of Altair Project and its potential. With the consolidation of Altair North and Altair South into a largely contiguous tenement package, Estrella has now secured one of the largest and most sought after exploration packages in Chile.

The Altair Project complements Estrella’s current projects at Luna, Venus and Jupiter and Estrella intends to continue forward with our exploration plans for these areas whilst the Altair Project gains traction.

Estrella is well-funded to undertake the initial exploration program. Given the desire to advance exploration as quickly as possible, Estrella will consider joint venture opportunities that are in accordance with the Company’s exploration strategy.”

2. Due Diligence

Since signing the MoU, Estrella has undertaken detailed due diligence on the Altair Project which has reinforced Estrella’s view of the prospectivity of the tenement package.

On the technical front, Estrella has reviewed all data provided by SQM, which includes a significant amount of high level historical exploration. The analyses of the historical results are highly encouraging and Estrella is enthused to follow up on these results with a well-developed exploration program.

In addition, Estrella has engaged SRK Consulting ( SRK ) to assist with the assessment of Altair's prospectivity. As part of this process, SRK has already undertaken a detailed review of SQM’s surface geochemical data as well as open file geology data available for the entire tenement package.

SRK has concluded that there is significant potential for large IOCG mineralisations to occur within the tenement package. This is based on Altair’s geological setting and the known presence of Cu, Fe, Pb and Zn in the soil anomalism. Importantly, SRK has noted that the areas of intense anomalism occur coincidentally with the presence faults and fault intersections. SRK have indicated these fault zones may have provided a potential pathway/trap site for the mineralised fluids.

Estrella's confidence in the investment merits of Altair has been improved throughout the process by:

• Promising historical exploration work by SQM already completed on Altair;

• Positive preliminary assessment by external consultants;

• Strategic consolidation of Altair into a largely contiguous tenement package; and

• A strong market sentiment for copper and especially Chilean copper stories.

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Chile’s star in copper-gold

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3. Exploration Program

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.

Based on the work by SRK and Estrella to date, 6 initial target areas have already been identified, which may be prospective for large IOCG mineralisation (Figure 3). These areas appear to be underlain by prospective Jurassic or Cretaceous granite and volcanics and metasediments (of the highly prospective La Negra Formation). The geology is further controlled for the presence of multiple intersecting faults with significant geochemical anomalies.

A detailed exploration program is currently being developed by Estrella to focus in on the high priority target areas. These areas feature fault intersections of the Atacama Fault Zone and mapped geological units known to host polymetallic mineral systems elsewhere in the Chilean IOCG belt (such as. Los Mantos Blancos, Antucoya, La Productora, Candelaria and Andacollo).

Estrella’s current plan is a first phase work program involving additional infill soil sampling, which will be undertaken on the highest priority target areas. This would be supported by geophysical surveys including magnetics, radiometrics, induced polarisation (IP) and electrical resistivity over the target zones. Targets would be ranked based on the results of the first phase program. The highest ranking targets would be tested with reverse circulation drilling.

Estrella is delighted that over 1,800 surface sample pulps from SQM’s historical exploration programs at Altair remains in storage and are available for Estrella’s purposes. Most of these samples were previously tested for Cu, Fe, Zn, Pb, As & Mo but not for minor elements. Estrella may analyse these samples for minor elements and conduct pathfinder analysis of the identified target zones. As no additional field work is required by Estrella to obtain the data and that the sample pulps are readily available to Estrella this is a very cost effective and time efficient way for Estrella to extract more valuable geochemical information that will greatly assist our exploration targeting.

4. 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 multielement 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.

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Figure 3: Project Altair exploration target map (generated by SRK Consulting). Note the additional northwest tenement areas were not included in the work undertaken by SRK.

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5. Key Terms

Under the Option Agreement, Estrella is required to pay SQM nominal option fees over the 5 year period which are based on the size of all tenements held under the Option Agreement at the time of each relevant payment milestone.

Estrella is required after the initial 2 years to progressively reduce the exploration area down to a maximum of 32,000ha by the end of the 5 year option term. Estrella has total discretion in the selection of the tenement areas that it chooses to retain in Altair and Estrella 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 ongoing liability.

Estrella also has the right to earn a 100% interest in each and all Metal projects (excluding non-metallic minerals such as nitrates, lithium and iodine) found within Project Altair by solely funding all expenditure up until the completion of a Pre-feasibility Study ( PFS ) for each such discovery. Upon the completion of a PFS, SQM retains “back-in rights” to earn back 49% of each such 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 each such project and thereafter pay to SQM an annual royalty stream relating solely from that specific project and is bench marked to a sliding scale depending on the LME metal copper and gold prices indexed for US inflation rates.

Estrella is required to meet the agreed minimum expenditure requirements for Project Altair held under the Option Agreement. These expenditures include all exploration, mining study and development work to be undertaken on Project Altair.

Non-metallic minerals such as nitrates, iodine and lithium are not part of the Altair transaction and SQM retains at all times a 100% interest in these non-metallic minerals. In the case where both economically extractable metallic and non-metallic mineral deposits coincide, priority is given to the metallic extraction.

6. About 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 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. SQM 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

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Chile’s star in copper-gold

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.

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.

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

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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 presentation 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

ESTRELLA RESOURCES LIMITED ACN 151 155 207

ASX CODE: ESR

ORDINARY FULLY PAID SHARES: 87,101,000

UNLISTED OPTIONS: 7,205,000

Juan Pablo Vargas de la Vega General Manager - Chile

Justin Clyne Company Secretary

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AUSTRALIA | CHILE