STELLAR RESOURCES LIMITED — AGM Information 2007

Oct 30, 2007

THIS IS AN IMPORTANT DOCUMENT

AND REQUIRES YOUR ATTENTION

If you are in any doubt as to how to deal with it, please consult your financial or other professional adviser.

STELLAR RESOURCES LIMITED ABN 96 108 758 961

(‘Stellar’ or ‘Company’)

NOTICE OF ANNUAL GENERAL MEETING

and

EXPLANATORY STATEMENT

The annual general meeting will be held:

•	at Level 7, 530 Little Collins Street, Melbourne 3000;
•	on 28 November 2007 at 10.30am.
You can	vote by:
•	attending and voting at the meeting; or
•	appointing someone as your proxy to attend and vote at the meeting on your
	behalf, by completing and returning the proxy form to Stellar in the manner set
	out in the proxy form. The proxy form must be received by the Share Registry
	of Stellar no later than 10.30am on 26 November 2007.

STELLAR RESOURCES LIMITED ABN 96 108 758 961

NOTICE OF ANNUAL GENERAL MEETING

The annual general meeting of the members of Stellar Resources Limited will be held:

• on Wednesday, 28 November 2007

• at 10.30am

• at Level 7, 530 Little Collins Street, Melbourne 3000

1. RESOLUTIONS

A. Financial statements and reports

To table the following statements and reports and provide members with the opportunity to raise any issues or ask questions generally of the directors concerning those financial statements or the business operations of the Company:

• (a) the financial report of the Company and controlled entities for the year ended 30 June 2007;

• (b) the directors’ report; and

• (c) the independent auditor’s report thereon.

B. Ordinary resolutions

To consider and, if thought fit, to pass the following resolutions each as an ordinary resolution:

Resolution 1: Adoption of Remuneration Report

“ THAT the Remuneration Report for the year ended 30 June 2007 be adopted.”

Resolution 2: Re-election of Director

“ THAT Barrie E. Laws, a director retiring by rotation in accordance with clause 57.1 of the Company’s constitution, being eligible for re-election and having signified his candidature for the office, be re-elected as a director of the Company.”

Resolution 3: Approval of previous issue of shares

“ THAT, in accordance with Listing Rules 7.4 and 7.5 of the Listing Rules of ASX Limited, the issue to Discovery Metals Limited on 12 February 2007 of 300,000 fully paid ordinary shares in the capital of the Company is hereby ratified and approved.”

Resolution 4: Approval of further previous issue of shares

“ THAT, in accordance with Listing Rules 7.4 and 7.5 of the Listing Rules of ASX Limited, the issue to clients of Taylor Collison Limited on 7 May 2007 of 8,400,000 fully paid ordinary shares in the capital of the Company at an issue price of 35 cents per share is hereby ratified and approved.”

Resolution 5: Exemption of issue of securities under scheme

“ THAT for the purposes of Rule 7.2 (Exception 9(b)) of the Listing Rules of ASX Limited, and all other purposes, approval is given to the issue of securities of the Company under the Stellar Employee Option Plan as an exception to Rule 7.1 of those Listing Rules.”

C. Special resolutions

To consider and, if thought fit, to pass the following resolutions each as a special resolution:

Resolution 6: Amendment of clause 22A.8 of the constitution

“ THAT clause 22A.8 of the constitution of the Company be deleted and replaced by a new provision viz

‘This clause 22A will, unless renewed in accordance with the Corporations Act 2001 (Cth), automatically cease to have effect 3 years after the date of its adoption or renewal or last renewal (as the case may require).’

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Resolution 7: Renewal of proportional takeover provisions

“ THAT, in accordance with section 648G(4) of the Corporations Act 2001 , the proportional takeover provisions contained in clause 22A of the constitution of the Company be renewed for a period of three years from 28 November 2007.”

2. VOTING RESTRICTIONS

Resolutions 3 and 4

For the purposes of resolutions 3 and 4, the Company will disregard any votes cast by:

• (a) a person who participated in the issue; and

• (b) an associate of that person.

However, the Company need not disregard a vote in respect of resolution 3 or resolution 4 if:

• (c) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (d) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

3. VOTING ENTITLEMENT

The Company has determined, in accordance with Regulation 7.11.37 of the Corporations Regulations 2001 , that the Company’s shares quoted on ASX Limited at 7.00pm AEST on 26 November 2007 will be taken for the purpose of the annual general meeting to be held by the persons who held them at that time. Accordingly, those persons will be entitled to attend and vote (if not excluded) at the meeting.

4. HOW TO VOTE

Shareholders entitled to vote at the Annual General Meeting may vote by attending the Meeting in person, by attorney or proxy or, in the case of corporate shareholders, by a corporate representative.

5. VOTING IN PERSON OR BY ATTORNEY

Shareholders or their attorneys wishing to vote in person should attend the Meeting. Persons are asked to arrive at least 30 minutes prior to the time the Meeting is to commence, so that their shareholding may be checked against the register and their attendance recorded. Shareholders intending to attend the Meeting by attorney must ensure that they have, not later than 48 hours prior to the time the Meeting is to commence, provided the original or a certified copy of the power of attorney to the Company, in the same manner prescribed below for the giving of proxy forms to the Company.

6. VOTING BY PROXY

• (a) Shareholders wishing to vote by proxy must complete, sign and deliver the enclosed personalised proxy form or forms, in accordance with the instructions on the form, prior to 10.30 am Melbourne time on 26 November 2007 by:

  • Post in the reply paid envelope provided

  • Hand delivery to: Stellar Resources Limited c/- Link Market Services Limited, Level 9, 333 Collins Street Melbourne 3000 or

  • Fax to: Stellar Resources Limited C/- Link Market Services Limited on +61 2 9287 0309.

• (b) A shareholder who is entitled to vote at the meeting may appoint:

• (1) one proxy if the shareholder is only entitled to one vote; or

• (2) one or two proxies if the shareholder is entitled to more than one vote.

• (c) If a shareholder appoints one proxy, that proxy may vote on a show of hands. If a shareholder appoints two proxies, neither proxy may vote on a show of hands.

• (d) Where the shareholder appoints two proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not do so, each proxy may exercise one-half of the votes, and any fraction of votes will be disregarded.

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• (e) A proxy need not be a shareholder of the Company. In the case of joint holders, all should sign the proxy form. In the case of corporations, proxies must be executed in accordance with the Corporations Act 2001 .

• (f) To be valid, a proxy form signed under a power of attorney must be accompanied by the signed power of attorney, or a certified copy of the power of attorney.

• (g) If the abstention box on the proxy form for the item of business is marked, the proxy will be directed not to vote on a show of hands or on a poll and the relevant shares will not be counted in calculating the required majority on a poll. If no box is marked, the proxy will not be directed as to how to vote and may vote as he or she thinks fit.

• (h) If the proxy form is signed by the shareholder but does not name the proxy or proxies in whose favour it is given, or the proxy does not attend the Annual General Meeting, the chairperson of the Meeting may either act as proxy or complete the proxy by inserting the name of one or more Directors or the Company Secretary.

• (i) The chairperson of the Annual General Meeting intends to vote all undirected proxies from shareholders (who are eligible to vote in favour of the Resolutions) in favour of the Resolutions to be voted on at the Annual General Meeting. The chairperson will not vote any undirected proxies from shareholders ineligible to vote in favour of the Resolutions.

• (j) If you require an additional proxy form, the Company will supply it on request to the undersigned.

7. VOTING BY CORPORATE REPRESENTATIVE

Corporate shareholders wishing to vote by corporate representative should:

• (a) obtain an appointment of corporate representative form from the Registry;

• (b) complete and sign the form in accordance with the instructions on it; and

• (c) bring the completed and signed form with them to the Annual General Meeting.

DATED 24 October 2007

BY ORDER OF THE BOARD

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.................................................. M. J. S. Drummond Company Secretary

STELLAR RESOURCES LIMITED ABN 96 108 758 961

EXPLANATORY STATEMENT

1. INTRODUCTION

The purpose of this Explanatory Statement is to provide shareholders with an explanation of the business of the meeting and the Resolutions proposed to be considered at the Annual General Meeting on 28 November 2007 and to assist shareholders in determining how they wish to vote on those Resolutions. This Explanatory Statement should be read in conjunction with the Notice of Meeting and forms part of the Notice of Meeting.

2. BUSINESS OF THE MEETING - SUMMARY

• a. To table the financial statements of the Company for the period ended 30 June 2007 and to give the members the opportunity to raise issues and ask questions generally concerning the financial statements or business operations of the Company.

• b. To consider and vote on the following ordinary resolutions:

Resolution 1 - to adopt the Remuneration Report;

Resolution 2 - to re-elect Barrie E. Laws as a Director;

Resolution 3– to approve a previous issue of shares;

• Resolution 4– to approve a further previous issue of shares; and

Resolution 5– to exempt from Listing Rule 7.1 the issue of any securities under the Stellar Employee Option Plan;

• c. To consider and vote on the following special resolutions:

• Resolution 6– to amend clause 22A.8 of the constitution; and

Resolution 7– to renew the proportional takeover provisions of the constitution.

3. WHY THE MEETING IS BEING HELD

a. Financial Statements and Reports

The Board is required to lay before the meeting the financial statements, Directors’ report and independent auditor’s report for the year ended 30 June 2007.

Copies of the financial statements and abovementioned reports are contained in the Annual Report for the Financial Year ended 30 June 2007 which has been lodged with ASX and is available for shareholders to access and download from the Company’ website http://www.stellarresources.com.au/user/files//Annual%20Report/2007/070038SRL.pdf.

Shareholders can also request a printed copy of the Annual Report by telephoning the Company Secretary, Mr Melvyn Drummond on (+61 3) 9909 7618. Shareholders who have opted in writing to receive a hard copy of the Annual Report will receive it in the mail with this Notice of Meeting.

The chairperson of the meeting will take shareholders’ questions and comments about the management of the Company. The auditor of the Company will be available to take shareholders’ questions about the conduct of the audit, the preparation and content of the auditor’s report, the accounting policies adopted by the Company in relation to the preparation of the financial statements or the independence of the auditor in relation to the conduct of the audit.

In addition to taking questions at the meeting, written questions to the auditor about the content of the auditor’s report or the conduct of the audit of the annual financial report to be considered at the meeting may be submitted not later than five business days before the meeting to:

The Company Secretary Stellar Resources Limited Level 7, 530 Little Collins Street Melbourne Victoria 3000

Facsimile: +61 3 9909 7621 E-mail: mel.drummond@stellarresources.com.au

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Copies of any questions received will be made available at the meeting. The chairperson of the meeting will allow the auditor to answer written questions submitted to the auditor before the meeting. If the auditor has prepared a written answer to a question, the chairperson of the meeting may permit the auditor to table that written answer. A written answer tabled at the meeting will be made reasonably available to members as soon as practicable after the meeting.

Shareholders are not required to pass any resolution in relation to the financial statements and reports (other than Resolution 1 being the adoption of the Remuneration Report for the year ended 30 June 2007).

b. Resolution 1 – Adoption of Remuneration Report for year ended 30 June 2007

The Remuneration Report forms part of the statutory Annual Report for the year ended 30 June 2007 which is available for shareholders to access and download from the Company’s website www.stellarresources.com.au. The Remuneration Report sets out the remuneration policy of the Company and reports the remuneration arrangements in place for the executive Directors, other specified executives and the non-executive Director.

The Company is required by the Corporations Act 2001 to put to the vote at the annual general meeting a resolution that the Remuneration Report be adopted. But, it should be noted, the vote on this resolution is advisory only and does not bind the Directors or the Company. Accordingly, the Company will not be required to alter any arrangements detailed in the Remuneration Report, should the Report not be adopted. However, notwithstanding the strict legal position, the Board has determined that it will take the outcome of the vote into account when considering the remuneration practices and policy of the Company.

Before calling for votes in relation to this resolution, the chairperson of the meeting will allow a reasonable opportunity for the members present to ask questions about, or make comments on, the Remuneration Report.

The Directors make no voting recommendation to shareholders in relation to this resolution.

c. Resolution 2 - Re-election of Barrie E. Laws as a Director

Clause 57.1 of the Company’s constitution provides that, at the close of each annual general meeting, one third of the Directors (or, if their number is not a multiple of three, then the number nearest to but not more than one third of the Directors) must retire from office. The Directors retire by rotation, with the Director(s) who have been the longest in office since being appointed or re-appointed being the Director(s) who must retire in any year. If two or more Directors were elected or appointed on the same day, they are required to agree among themselves or determine by lot which of them must retire. The constitution ensures that no Director is able to remain in office for longer than three years without facing re-election. Under clause 57.4, a retiring Director is entitled to offer himself for reelection as a Director at the annual general meeting which coincides with his retirement.

Mr Laws is 66 and was elected as a non- executive Director of the Company at the first annual general meeting held on 10 December 2004. He has experience in management with particular emphasis on funds management. He joined the Norwich Union Group in October 1991 and was appointed to the Board of Norwich Union Life Australia Limited in March 1993 and as its Chief Executive Officer in February 1997. He retired from full time employment with the Norwich Group in March 1998. He is not a director of any other listed public company or trust.

Mr Laws will retire in accordance with the requirements of the Company’s constitution at the close of the annual general meeting. As he is entitled to, and eligible for, re-election, he seeks re-election as a Director of the Company at the meeting.

The Directors (other than Mr Laws) recommend that you vote in favour of this resolution. Mr Laws makes no recommendation to shareholders.

d. Resolution 3 – Approval of a previous issue of shares

Summary of proposal

On 8 November 2006, the Company announced to ASX that it had reached agreement with Discovery Metals Limited (then called Discovery Nickel Limited) (“Discovery”) for the purchase of Discovery’s Dundas nickel project in Tasmania held in Exploration Licence 21/2004, the agreed consideration being the issue of 300,000 fully paid ordinary shares of the Company and the agreement of the Company to pay a 2% net smelter return royalty in relation to any minerals produced by the Company from the licence area. The Company issued 300,000 shares to Discovery in February 2007 on completion of the acquisition of the exploration licence. At that time, the market price of the Company’s ordinary shares was 29 cents.

When the subject shares were issued on 12 February 2007, they comprised approximately 0.51% of the total number of ordinary shares of the Company on issue. Accordingly, they were able to be issued by the Company without having to obtain prior shareholder approval.

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Legal and Regulatory Requirements

ASX Listing Rule 7.1

Under Listing Rule 7.1, the prior approval of the shareholders of the Company is required to an issue of equity securities if the securities, when aggregated with securities issued by the Company during the previous 12 months, exceeds 15% of the number of securities on issue at the commencement of that 12 month period.

Listing Rule 7.4 provides that, where a company in general meeting ratifies a previous issue of equity securities, the issue will be treated as having been made with the requisite approval for the purpose of Listing Rule 7.1, thereby enabling the company to issue further securities without exceeding the 15% in 12 months limitation. This will allow the Company to raise further capital without the delay involved with the requirement to seek prior shareholder approval, so that the Company can readily take advantage of opportunities as and when they arise.

If approved, Resolution 3 will ratify and approve the previous issue of 300,000 ordinary shares as set out in the Resolution.

ASX Listing Rule 7.5

ASX listing Rule 7.5 requires the Notice of Meeting at which shareholders are required to consider Resolution 3 pursuant to Listing Rule 7.4 to include certain specified information in relation to the equity securities that have been issued. This information is set out below:

• (a) the number of securities allotted: 300,000 ordinary shares;

• (b) the price at which the securities were issued: non cash price equivalent to 29 cents per share;

• (c) the terms of the securities: the securities are fully paid ordinary shares ranking equally in all respects with the other fully paid ordinary shares of the Company on issue;

• (d) the basis upon which the allottees were determined: the shares were issued to Discovery pursuant to the sale agreement between Discovery as vendor, Rubicon Min Tech Ventures Pty Ltd as purchaser and the Company;

• (e) the use (or intended use) of the funds raised: there were no funds raised by the issue;

• (f) a voting exclusion statement: this statement is included in section 2 of the Notice of Meeting of which this Explanatory Statement forms part.

The Directors recommend that you vote in favour of this resolution.

e. Resolution 4 – Approval of a further previous issue of shares

Summary of proposal

On 30 April 2007, the Company announced to ASX that it had completed a placement of 8,400,000 fully paid ordinary shares at a price of 35 cents per share to raise $2,940,000 before costs of the issue. The Company had previously appointed Taylor Collison Limited to advise it in relation to this capital raising. The persons selected to apply for the subject shares were sophisticated and professional clients of Taylor Collison Limited capable of making investment decisions without the aid of a prospectus.

When these shares were issued on 7 May 2007 they comprised, together with the shares the subject of Resolution 3 above, less than 15% of the total number of ordinary shares of the Company on issue twelve months earlier. Accordingly, they were able to be issued by the Company without having to obtain prior shareholder approval.

Legal and Regulatory Requirements

ASX Listing Rule 7.1

Under Listing Rule 7.1, the prior approval of the shareholders of the Company is required to an issue of equity securities if the securities, when aggregated with securities issued by the Company during the previous 12 months, exceeds 15% of the number of securities on issue at the commencement of that 12 month period.

Listing Rule 7.4 provides that, where a company in general meeting ratifies a previous issue of equity securities, the issue will be treated as having been made with the requisite approval for the purpose of Listing Rule 7.1, thereby enabling the company to issue further securities without exceeding the 15% in 12 months limitation. This will allow the Company to raise further capital without the delay involved with the requirement to seek prior shareholder approval, so that the Company can readily take advantage of opportunities as and when they arise.

If approved, Resolution 4 will ratify and approve the previous issue of 8,400,000 ordinary shares as set out in the Resolution.

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ASX Listing Rule 7.5

ASX listing Rule 7.5 requires the Notice of Meeting, at which shareholders are required to consider Resolution 4 pursuant to Listing Rule 7.4, to include certain specified information in relation to the equity securities that have been issued. This information is set out below:

• (g) the number of securities allotted: 8,400,000 ordinary shares;

• (h) the price at which the securities were issued: 35 cents per share.

• (i) the terms of the securities: the securities are fully paid ordinary shares ranking equally in all respects with the other fully paid ordinary shares of the Company on issue;

• (j) the basis upon which the allottees were determined: the allottees were sophisticated and professional clients of Taylor Collison Limited selected by Taylor Collison Limited with the approval of the Company.

• (k) the use (or intended use) of the funds raised: the funds raised have been used principally for further exploration of the Company’s Tasmanian projects and Goldfinger project in New South Wales, and will continue to be used for ongoing exploration activities and to provide working capital.

• (l) a voting exclusion statement: this statement is included in section 2 of the Notice of Meeting of which this Explanatory Statement forms part.

The Directors recommend that you vote in favour of this resolution.

f. Resolution 5 – exemption of issue of securities under scheme

Rule 7.1 of the ASX Listing Rules restricts the number of shares and options a listed entity can issue without shareholder approval. Put simply, without the approval of holders of ordinary securities, an entity may not in any 12 month period issue, or agree to issue, a number of shares and/or options exceeding the number of fully paid ordinary shares on issue at the commencement of that period. Rule 7.2 contains a number of exceptions to Rule 7.1. In particular, Rule 7.2 Exception 9(a) of the ASX Listing Rules provides, in the case of an employee incentive scheme established before an entity is listed, that Rule 7.1 does not apply to an issue under the scheme if within 3 years before the date of issue a summary of the terms of the scheme was set out in the prospectus. The Stellar Employee Option Plan was established before the Company was listed in April 2005. In accordance with Rule 7.2 Exception 9(a), a summary of the terms of the Plan was included in the prospectus dated 18 February 2005 issued by the Company.

The exemption from Rule 7.1 conferred by Listing Rule 7.2 Exemption 9(a) will cease to apply upon the expiration of three years from the date of the prospectus i.e. on 18 February 2008.

However, Rule 7.2 Exception 9(b) of the ASX Listing Rules provides that Rule 7.1 does not apply to an issue under an employee incentive scheme if within 3 years before the date of issue holders of ordinary securities have approved the issue of securities under the scheme as an exception to rule 7.1. When approval is sought under this Rule, the notice of meeting must include the following viz

• (a) a summary of the terms of the scheme , which follows:

Purpose

The purpose of the Stellar Employee Option Plan is to encourage participation by Employees in the ownership of the Company through the opportunity afforded to acquire shares and to attract, motivate and retain Employees.

Offers to Employees

The Company may make offers to Employees to issue options to subscribe for unissued ordinary shares of the Company. Notwithstanding that he or she may be an employee in the strict sense, no Director may receive an offer under the Plan. An Employee must accept an offer of options within 10 business days of its receipt.

Exercise Price

The exercise price for options granted under the Plan will be fixed by the Board prior to the making of an offer to an Employee and specified in the offer.

Vesting conditions

The options granted under the Plan may be subject to such vesting conditions as may be fixed by the Board prior to the grant of the options and specified in the offer.

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Participation and other rights

All shares issued upon the exercise of options will rank equally with all other issued ordinary shares and the Company will apply for quotation of all shares issued upon exercise. Options granted under the Plan do not confer any right to participate in dividends or rights issues until ordinary shares are allotted following the exercise of the options. The number of ordinary shares issued on exercise of the options will however be adjusted for bonus issues made prior to their exercise.

Lapse of options

The options will lapse upon the earlier of their expiry, 60 days after the Employee ceases to be an employee for any reason other than death, 12 months from the date the Employee dies or, where a takeover bid within the meaning of the Corporations Act 2001 has been made for the Company, the end of the bid period.

Reorganisation of capital

If the Company reorganises its capital before any options are exercised, the terms of the options will be changed to the extent necessary to comply with the ASX listing rules.

Transfer

Except with the prior written approval of the Board, options granted under the Plan are not transferable.

5% cap

The number of options that may be granted under the Plan when aggregated with:

• (a) the number of ordinary shares that would be issued if all options issued under all employee option plans of the Company were exercised; and

• (b) the number of ordinary shares issued by the Company during the preceding five years under any employee share plan and employee option plan

must not exceed 5% of the issued ordinary shares of the Company at the time the options are granted.

Powers of the Board

The Plan will be administered by the Board which will have an absolute discretion to resolve conclusively all questions of fact or interpretation arising in connection with the Plan.

(b) the number of securities issued under the scheme since the last approval

There has been no previous approval by shareholders pursuant to Listing Rule 7.2 Exemption 9(b). The Company has issued 625,000 options under the scheme since it was adopted. As at the date of this Explanatory Statement, all of these options remain on issue.

(c) a voting exclusion statement

A voting exclusion statement is not required because no director is permitted to participate in the Plan.

The Directors of the Company recommend that you vote in favour of this resolution.

g. Resolution 6 –alteration of constitution

Clause 22A of the constitution of the Company enables the Company to prohibit the registration of a transfer of shares resulting from a proportional takeover bid unless the bid is approved by shareholders in general meeting. A proportional takeover bid occurs when a bidder makes an offer to acquire a proportion of the total number of issued shares in the capital of the Company by acquiring the same percentage of each shareholder’s shares. Clause 22A.8 of the constitution says that clause 22A will automatically cease to have effect 3 years after the date of its adoption.

However, Section 648G of the Corporations Act 2001 provides that a company may renew its proportional takeover provisions for one or more three year periods and that, if the provisions have been renewed on at least one occasion, the further three year renewal period commences when the provisions were renewed, or last renewed.

The purpose of this resolution is to ensure that clause 22A.8 of the constitution is consistent with the provisions of section 648G of the Corporations Act 2001 so that, if (as proposed by Resolution 7) clause 22A of the constitution is renewed by shareholders on one or more occasions, there is no doubt that these proportional takeover provisions will remain in force and no argument about the period or periods during which clause 22A will continue to apply.

The Directors of the Company recommend that you vote in favour of this resolution.

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h. Resolution 7 – renewal of clause 22A of constitution

Summary of proposal

The constitution of the Company was amended at the first annual general meeting of the Company held on 10 December 2004 so as to include a new clause 22A entitled “Proportional takeover bid”. Prior to that, the constitution of the Company did not include proportional takeover provisions. Clause 22A will automatically cease to apply on 10 December 2007 but may be renewed by shareholders in accordance with the Corporations Act 2001 .

Legal and Regulatory Requirements

Section 648G of the Corporations Act 2001 provides that a company may renew its proportional takeover provisions in the same manner as that in which the company could alter its constitution to insert proportional takeover provisions.

Section 648G(5) of the Corporations Act 2001 provides that, with every notice that specifies the intention to propose a resolution to renew a company’s proportional takeover provisions and is sent to a person who is entitled to vote on the resolution, the company must send a statement that:

• explains the effect of the provisions proposed to be renewed; and

• explains the reasons for proposing the resolution and sets out the factual matters and principles underlying those reasons;

• states whether, as at the date on which the statement is prepared, any of the directors of the company is aware of a proposal by a person to acquire, or to increase the extent of, a substantial interest in the company and, if so, explains the extent (if any) to which the proposal has influenced the decision to propose the resolution; and

• for a proposed resolution to renew proportional takeover provisions – reviews both the advantages, and disadvantages, of the provisions proposed to be renewed for the directors and the company’s members during the period during which the provisions have been in effect; and

• discusses both the potential advantages, and the potential disadvantages, of the provisions proposed to be renewed for the directors and the company’s members.

Effect of proportional takeover provisions

Clause 22A of the constitution requires that, if a proportional takeover bid is made, the directors must convene a meeting of shareholders to vote on a resolution to approve the bid. The meeting must be held, and the resolution voted on, before the approving resolution deadline which is defined in the Corporations Act 2001 as the 14th day before the last day of the bid period. The clause does not apply to full takeover offers.

Clause 22A provides that, for a resolution to be approved, it must be passed by a majority of votes at the meeting, excluding votes by the bidder and its associates.

If no resolution to approve the bid has been voted on in accordance with clause 22A as at the end of the 14th day before the end of the bid period, a resolution approving the bid will be deemed by the Corporations Act 2001 to have been passed, thereby allowing the bid to proceed.

If a resolution to approve the bid is rejected, binding acceptances are required to be rescinded, and all unaccepted offers and offers failing to result in binding contracts are taken to be withdrawn.

If the resolution is approved, the relevant transfers of shares will be registered, provided they comply with the other provisions of the constitution and otherwise with the Corporations Act 2001 .

Reasons for proposing renewal of clause 22A

The Directors consider that shareholders should continue to have the opportunity to vote on a proposed proportional takeover bid. A proportional takeover bid for the Company may enable control of the Company to be acquired by a party holding less than a majority interest and without shareholders having the opportunity to dispose of all of their shares. This may mean that shareholders could be at risk of being left as part of a minority interest in the Company. Clause 22A, if renewed, would enable shareholders to decide whether a proportional takeover bid should be permitted to proceed.

Present Acquisition Proposals

At the date of this Explanatory Statement, no Director is aware of any proposal by any person to acquire, or to increase the extent of, a substantial interest in the Company.

Review of Advantages and Disadvantages of clause 22A while previously in effect

The Directors consider that there have been no advantages or disadvantages for them during the last three years as they remained free to make a recommendation on whether a proportional takeover bid should be accepted. No proportional takeover bid having been made during the last three years, the Directors do not consider that there have been any advantages of clause 22A for the members of the Company during this period. Whilst the Directors consider it unlikely, and have no reason to believe that such is the case, they cannot guarantee that the existence of clause 22A has not prevented a potential bidder from making a proportional takeover bid which might have been advantageous to members.

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Potential Advantages and Disadvantages of renewal of clause 22A

The Directors consider that there are no such advantages or disadvantages for them as they remain free to make a recommendation on whether a proportional takeover bid should be accepted. The renewal of the clause will ensure that all members continue to have an opportunity to study a proportional takeover bid, if made, and then attend or be represented by proxy at a meeting called specifically to vote on the proposal. A majority of shares voted at the meeting, excluding the shares of the bidder and its associates, will be required for the resolution to be passed, following which shareholders will be able to decide whether to accept the bid which may result in a change of control of the Company.

This will enable shareholders to prevent a proportional takeover bid proceeding if they believe that control of the Company should not be permitted to pass under the bid and, accordingly, the terms of any future proportional takeover bid are likely to be structured in a manner that is attractive to a majority of shareholders.

It may be argued that the renewal of the clause reduces the possibility of a successful proportional takeover bid and that, as a result, proportional takeover bids for the Company will be discouraged. This, in turn, may reduce opportunities that shareholders may have to sell some of their shares at an attractive price to persons seeking control of the Company and may reduce any ‘takeover speculation’ element in the Company’s share price. It may also be said that the provisions constitute an additional restriction on the ability of individual shareholders to deal freely with their shares.

The Directors consider that the renewal of clause 22A of the constitution is in the interests of shareholders as it allows the majority of shareholders to determine whether a proportional takeover bid should proceed.

The Directors recommend that you vote in favour of this resolution.

4. QUERIES

If you have any queries about the meeting, the Resolutions to be put to the meeting or the proposals being considered, please contact the Company Secretary, Mr Melvyn Drummond, on (03) 9909 7618.

Stellar Resources Limited ABN 96 108 758 961

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APPOINTMENT OF PROXY

If you would like to attend and vote at the Annual General Meeting, please bring this form with you. This will assist in registering your attendance.

Please return your Proxy forms to: Link Market Services Limited Level 12, 680 George Street, Sydney NSW 2000 Locked Bag A14, Sydney South NSW 1235 Australia Telephone: 1300 554 474 From outside Australia: +61 8280 7743 Facsimile: (02) 9287 0309 ASX Code: SRZ Website: www.linkmarketservices.com.au

You can also lodge your vote on-line at www.linkmarketservices.com.au

I/We being a member(s) of Stellar Resources Limited and entitled to attend and vote hereby appoint

A

the Chairman OR if you are NOT appointing the Chairman of the of the Meeting Meeting as your proxy, please write the name of the (mark box) person or body corporate (excluding the registered securityholder) you are appointing as your proxy

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or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following instructions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of the Company to be held at 10:30am on Thursday, 22 November 2007, at Level 7, 530 Little Collins Street, Melbourne Victoria and at any adjournment of that meeting.

Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available on request from the share registry. Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

B To direct your proxy how to vote on any resolution please insert in the appropriate box below.X

ORDINARY RESOLUTIONS For Against Abstain For Against Abstain To receive and consider the Financial Resolution 4 Report, the Directors’ Report and the No Resolution Required Approval of further previous issue of shares Auditors Report Resolution 5 Resolution 1 Exemption of issue of securities under Adoption of Remuneration Report scheme (Non – binding Resolution) SPECIAL RESOLUTIONS Resolution 2 Resolution 6 Re-election of Barrie E Laws as a Director Amendment of clause 22A.8 of the constitution Resolution 3 Resolution 7 Approval of previous issue of shares Renewal of proportional takeover provisions

IMPORTANT: FOR ITEMS 3 & 4 ABOVE

If the Chairman of the Meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of Items 3 & 4 above, please place a mark in this box. By marking this box, you acknowledge C that the Chairman of the Meeting may exercise your proxy even though he/she has an interest in the outcome of these Items and that votes cast by him/her for these Items, other than as proxyholder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 3 & 4 and your votes will not be counted in calculating the required majority if a poll is called on these Items. The Chairman of the Meeting intends to vote undirected proxies in favour of Items 3 & 4.

• If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

D SIGNATURE OF SECURITYHOLDERS – THIS MUST BE COMPLETED

Securityholder 1 (Individual) Sole Director and Sole Company Secretary	Joint Securityholder 2 (Individual) Director/Company Secretary (Delete one)	Joint Securityholder 3 (Individual) Director

This form should be signed by the securityholder. If a joint holding, either securityholder may sign. If signed by the securityholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the securityholder’s constitution and the Corporations Act 2001 (Cwlth).

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Information is collected to administer your securityholding and if some or all of the information is not collected then it might not be possible to administer your securityholding. Your personal information may be disclosed to the entity in which you hold securities. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

SRZ PRX742

How to complete this Proxy Form

1 Your Name and Address

• This is your name and address as it appears on the company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

2 Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in section A. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in section A. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the company. A proxy may be an individual or a body corporate.

3 Votes on Items of Business

You should direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

4 Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or you may copy this form.

To appoint a second proxy you must:

(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together.

5 Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint Holding: where the holding is in more than one name, either securityholder may sign.

Power of Attorney: to sign under Power of Attorney, you must have already lodged the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it. Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission. A form of the certificate may be obtained from the company’s share registry.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 10:30am on Tuesday, 20 November 2007, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy forms may be lodged using the reply paid envelope or:

• by posting, delivery or facsimile to Stellar Resources Limited’s share registry as follows:

Stellar Resources Limited

• C/- Link Market Services Limited

Locked Bag A14 Sydney South NSW 1235

Facsimile: (02) 9287 0309

• lodging it online at Link’s website (www.linkmarketservices.com.au) in accordance with the instructions given there (you will be taken to have signed your proxy form if you lodge it in accordance with the instructions given on the website);

• delivering it to Level 12, 680 George Street, Sydney NSW 2000.