STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2005

Apr 26, 2005

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Quarterly Report for the period ended 31 March 2005

HIGHLIGHTS

CORPORATE

• Stellar Resources Limited is scheduled to list on the ASX on 28 April $\sim$ 2005.
• The company raised $2 million through the issue of 10 million new $\circ$ shares at a subscription price of $0.20 per share. The issue was well supported by new and existing shareholders - and closed 45 percent oversubscribed.
• Cash backing (as at 28/4/05) remains strong at some $5.5 million $\circ$ (11 cents per share).

EXPLORATION

• At Goldfinger, Broken Hill, NSW, geophysical 3D inversion modelling $\Delta$ of the gravity source outlined a deeper target 600 metres west of the existing diamond drill hole. Drilling is scheduled for the June quarter.
• Detailed re-logging and assaying of the upper portions of Goldfinger $\triangle$ hole DDH01 returned anomalous zinc with elevated lead mineralisation over 59 metres at 0.25% Zn (including 0.7m $\omega$ 5.6% Zn) from 230 metres.
• At the Wilgena magnetite prospect in the Tarcoola region a review of $\ddot{\circ}$ the two prior successful drillholes, coupled with the geophysics showing a large and intense magnetic anomaly, has elevated the priority of this iron ore prospect. A program of 2 diamond drill holes has commenced, complete results should be available by the end of June.
• The scout air-core drilling program at Bendigo North was partly $\circ$ successful, but exploration of some areas was impeded by the more widespread presence of a tillite layer. A more powerful air core rig is being sourced to resume drilling on the Falcon gravity high zones, which remain untested.
  • Exploration drilling for oil $&$ gas in the Gippsland Basin of Victoria was delayed due to a drill rig shortage. The onshore program is now expected to commence later in the June 2005 quarter.
  • In Tasmania, a detailed literature search has confirmed the advanced prospectivity of four known areas anomalous in tin, including the St Dizier tin deposit. Drill testing is being planned.

27 April 2005

ASX Code: SRZ

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ABN 96 108 758 961 Suite 713 Exchange Tower 530 Little Collins Street Melbourne Victoría 3000 Australia

Telephone +61 3 9909 7618 Facsimile +61 3 9909 7621

www.stellarresources.com.au srzinfo@stellarresources.com.au

CORPORATE

A prospectus to allot 10 million shares at 20 cents per share, raising $2 million, was lodged with the Australian Investments Commission ("ASIC") on 18 February 2005.

The issue raised $2 million, with a priority allocation to existing shareholders. The issue closed 45 percent oversubscribed on Friday 1 April 2005 and the Share Registry dispatched notices for the allotment of shares on 20 April 2005.

The shares were admitted for trading on the ASX with official quotation commencing on 28 April 2005. Issued capital is now 49 million ordinary shares.

EXPLORATION

During the quarter, the Company remained active on many fronts. Drilling programs were conducted over a number of areas.

BROKEN HILL REGION – New South Wales (Stellar earning 60%)

Goldfinger

During the December quarter 2004, assessment of geochemical results for the mineralised portion of diamond drill hole DDH01 showed strong evidence for alteration consistent with Broken Hill type mineralisation.

In order to confirm the intensity of the alteration apparent in core hole DDH01 the unassayed remainder of the core were re-logged in detail, sampled and assayed. The re-logging showed the presence of alteration and sulphide mineralisation and an interval of anomalous zinc of 59m $(a)$ 0.25% Zn was recorded from 230m downhole. This included a narrow intercept of 0.7m $\omega$ 5.6% Zn, from 280.7m downhole.

The RAB drilling program of the Goldfinger gravity anomaly was completed - on 200 metre spaced lines with holes at 50 metre intervals, for a total of 65 holes (1903 metres). Results have defined a zone of anomalous Pb/Zn geochemistry in end-of-hole samples in the up-dip position from the interpreted gravity target, where two adjacent 50 metre spaced holes returned 0.2% combined Pb/Zn over 4 metres to EOH.

The presence of a wide zone of garnet bearing Pb/Zn mineralised metasediments, including the narrow higher grade interval in DDH01, continues to support the interpretation that the Goldfinger gravity feature reflects a significant zone of Broken Hill style host stratigraphy and alteration.

Positioning of a deep drill hole to test the centre of the gravity source, beneath this zone, is currently being finalised. A small program using deep penetrating Induced Polarisation was carried out to assist in this regard.

Southern Goldfinger

Following a review of previous exploration activity in the region between and south of the Goldfinger and Balaclava prospects, a RAB drilling program (33 holes for 1821 metres) was completed. Only sporadic elevated base metal zones were intersected. No work is currently planned on this prospect.

Ralaclava

A RAB geochemical drill program was completed to investigate the extent of the magnetic and gravity anomalism, coincident with a gold mineralised intercept from earlier R/C drilling (GCBA02, 50-52m at 0.4g/t Au, 100ppm Cu). A total of 1753 metres of drilling was completed in 72 vertical holes. Assays were received but with no coherent anomalous values returned for gold. and other elements were generally low. No work is presently planned.

Three Gums

RAB drilling was completed across four target gravity features in the Three Gums project area, for a total of 678 metres in 53 holes. Geochemical levels are generally low, and the gravity responses are interpreted as almost certainly reflecting a combination of basement topography and distribution of dense amphibolite.

Yanco Glen (Stellar 100%)

A program of inclined RAB hammer holes was completed across the geophysical target zone (11) holes for a total of 547 metres). Geochemical assay levels were generally low, and no explanation for the geophysical features was evident from intersected lithologies. Further work on the Yanco Glen licence will be subject to review of the geophysical data to determine if deeper drilling is warranted.

EALBARA - South Australia (Stellar 100%)

Wilgena Iron Oxide Magnetic/Gravity Target

Three holes for a total of 261 metres were drilled in the December quarter 2004 in an attempt to test a local gravity high within the Wilgena high magnetic zone (see plan below), where previous nearby drill holes (WIL001) recorded intercepts of 35% Fe magnetite. The recent holes failed to penetrate a 50 - 100 metres thick sequence of transported clay and Tarcoola Formation shale. However, in April 2005, a short two-hole diamond-drilling program commenced on the large magnetic anomaly. Complete results from this drilling are expected to be available by the end of June 2005.

The Wilgena magnetic anomaly is interpreted from geophysics to be capable of hosting a large ironore deposit. This drilling program will establish the thickness of the iron-bearing unit and provide drill core for preliminary metallurgical test work.

Wilgena is favourably located near Tarcoola. The Project is within ten kilometres of the trans Australian standard gauge railway line, thereby providing a direct link to ports at Whyalla, Port Pirie and Port Augusta.

Wilgena Magnetic and Gravity Target

Tarcoola Formation - Base Metal Targets

The Tarcoola Basin geology has many features in common with the well-mineralised basins in northern Australia. Stellar has defined potential within the Tarcoola Basin for sediment hosted base metal mineralisation including Mt Isa style copper and possibly Century style zinc.

Dark Hill

The Dark Hill prospect area is approximately 10 kilometres west of Tarcoola, and is defined by subcrop and RAB drill intersections of base metal and gold mineralisation within altered sediments of the Tarcoola Formation. In-fill and step-out RAB drilling was completed during the quarter, to further evaluate the extent of gold and base metal intersections reported previously (DH031 – 5m at $1.24g/t$ Au, 0.2% Pb and 0.4% Zn).

Thirty-nine RAB holes totalling 1188 metres were completed, on three traverses approximately 200 metres, 900 metres and 1.8 kilometres to the east of the previous drilling. Although a number of

individual 4 metre composite assays returned elevated Au and base metal geochemistry, no results exceeded the previous intersections. The potential for the prospect area to yield economic size targets is currently under review.

Shudda

In-fill and step out RAB drilling of the Shudda Cu-Au prospect area was completed during the quarter, with a total of 1518 metres drilled in 42 vertical holes. Results for end-of-hole copper geochemistry indicate a possible association between magnetic lithologies and copper mineralisation. Further geophysical work followed by deeper drilling is planned for the northeastern portion of the prospect, where magnetic features have yet to be tested.

Flla

RAB drilling to test geochemical distribution in the vicinity of the Ella gravity anomaly failed to adequately sample the host quartzite lithology. Further testing of this promising zinc target will be carried out using R/C drilling following additional geophysical surveying (IP).

Tarcoola Ridge - Gold

An assessment of the mining potential of this modest gold resource is expected in the June quarter, but further geological evaluation and drilling is likely to be required.

CULTANA – South Australia (Stellar option to earn an initial $37.5%$ )

Compilation of historical data and review of the Falcon survey results has defined a number of target areas for field inspection and sampling. Ground reconnaissance and mapping of these targets with a view to drill testing has been planned for some time, but to date the company has been unable to secure the necessary access permission from the Department of Defence. Negotiations are ongoing.

PADTHAWAY– South Australia (Stellar option to acquire 100%)

Stellar has an option to acquire three exploration licenses and is managing the exploration program over these titles in the Padthaway district, in southeastern SA. Two base metals prospects, which are under cover, are now ready for drilling and suitable drill rigs have been booked for this quarter.

Drilling on the Kiki prospect, for nickel-copper-base metal mineralisation associated with a large, mafic intrusive complex is part funded by PIRSA, under the SA government's "PACE" exploration initiative. A similar target anomaly on the Tintinara project will be also be tested during the drilling program.

BENDIGO NORTH – Victoria (Stellar 50%)

This project is prospective for Bendigo style mineralization, in an area considered to contain a substantial part of the on strike stratigraphy. The December 2004 air core drill program was resumed in January with some 4,000 metres being drilled.

Interpretation of drilling data is showing a more widespread layer of older cover sequence (likely Permian age glacial tillite) beneath the younger Murray Basin sediments. A more powerful air core rig, capable of penetrating through to the Ordovician basement, is currently being sourced with a view to resumption of the testing program.

Notwithstanding this, in the southern portion of the JV area, a number of holes successfully penetrated the cover sequences. Assays are pending.

The Falcon® gravity targets remain untested on this project.

TASMANIA (Stellar 100%)

Work proceeded on data compilation, which, when combined with the field reconnaissance carried out, has elevated the prospectivity for tin on the Heemskirk license. Application has been made to commence resource definition drilling at the known St Dizier tin deposit, where prior company drilling over 20 years ago demonstrated tin mineralisation. Drilling is scheduled for later in the June quarter.

A number of adjacent tin prospects are being worked-up for drill testing.

The nickel prospectivity is being further evaluated. This includes the engagement of an expert geophysical consultant to assess the Department's recent airborne EM survey, which was flown over areas of western Tasmania in 2002. This study has generated some excellent anomalies.

OIL & GAS — Gippsland, Victoria

The Company has exposure to Lakes Oil's plans to drill two onshore stratigraphic wells in the Marlo area of Victoria. Drilling has been delayed by difficulty in procuring a suitable drilling rig. The first well is now expected to spud in early May 2005, with the second to follow immediately after completion of the first well.

The Company has a 3 percent free carried interest up to production casing in these wells and the Gilbert 1 wildcat well in VICP47, as well as its stake in the listed company, Gippsland Offshore Petroleum Limited (GOP).

OUTLOOK

Stellar continues to be active on all fronts, with drilling planned this quarter on several projects as described above, but subject to drill rig availability. More prospects are being lined up for subsequent drill programs.

Shareholders will be kept advised of progress.

For further details please contact:

David Sasson Investor Relations Manager $(03)$ 9909 7655 Tel: Mobile: 0411 468 966 E-mail: david.sasson@stellarresources.com.au

or visit our Website at: www.stellarresources.com.au