STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2006

Apr 26, 2006

Q

27 April 2006

ASX Code: SRZ

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

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

www.stellarresources.com.au srzinfo@stellarresources.com.au Quarterly Report for the period ended 31 March 2006

HIGHLIGHTS

Exploration

• At the Alpine copper prospect in Tasmania, diamond drill hole AP4 intercepted 95m $\omega$ 0.46% Cu mineralisation from 57.7m to end of hole, including $22.25m$ @ 1.23% Cu from 65 metres. Alpine is open at depth, potential exists for a large mineralised system.
• Data integration and interpretation of airborne EM survey results over the Warrior uranium palaeochannel project has defined target areas for extensions of known U mineralisation. Drilling expected in May.
• Two additional diamond drill holes were completed on the Goldfinger gravity target. Visual assessment of both holes showed low order lead/zinc mineralisation continuing to confirm the extensive mineralisation zone. Assays are awaited.
• At the North Bendigo JV, a sighter drill hole has commenced on a gravity target located east of the inferred Sebastian Fault under cover.
• RC drilling of 18 holes (1,400m) was completed at the Soyuz gold prospect in the central Gawler Craton. Assay results are awaited.
• RAB Drilling (56 holes for 4,012m) at Uno Prospect in central South Australia returned anomalous base metal levels over an area of approximately 2kms by 500m.

Corporate

Stellar holds in excess of $3m cash balance as at 31 March 2006.

Drilling Diary for June Quarter 2006

• Drilling at Warrior. Up to 40 holes for 3,000m of aircore drilling to test $\bullet$ for extensions of known uranium mineralised zones, commencing May;
• North Bendigo, a sighter drill hole for gold in April/May;
• Drilling to be carried out for copper at Alpine, and for zinc and nickel at Ramsay River, Tasmania;
• Robins Rise, SA, drilling IOCGU targets.

CORPORATE

The Company holds a net cash position of $3.18 million as at 31 March 2006.

EXPLORATION

TASMANIA (Stellar 100%)

Alpine Copper

At the Alpine Copper project, three diamond drill holes, AP3, AP4 and AP5, were completed. Hole AP4 intersected 95m of copper mineralisation from 57.7m to the end of the hole, at a grade of 0.46% Cu. Within this broad intercept was a higher grade zone of 22.25m $\omega$ 1.23% Cu. The hole finished in strong mineralisation (with the last sample of 1.2m assaying $0.39%$ Cu).

The consulting geologist reported some 90 plus metres of continuously mineralised drill core $-$ in both massive and disseminated sulphides which is encouraging for the potential for a large mineralised system. The drill core has been submitted for petrology and rock identification to assist in better understanding the nature of the host rock and copper mineralisation at Alpine.

Three to five new drill hole sites have been selected for drilling once permits are in place and a drill rig secured.

AP3 intersected sulphide mineralisation similar to AP4 but of an apparent lower tenor. Assays are awaited. AP5 was stopped short of target due to drilling problems.

Previous work by CRA Exploration (CRAE), outlined anomalous copper mineralisation within a geophysical target zone of 1km length, with additional strike potential to the west across an inferred fault. Previous shallow drilling by CRAE intersected $27m$ @ 0.53% Cu in AP2. Coupled with the work completed by prior tenement holders, the potential exists for a large mineralised system.

Fima Alzi	From (m)	artan		Intercept (m) Grade (% Cu)
mterval	64.65	86.90
(incl)	' 50	80.80	13.30	.44
and	L.OO	152.80(eoh)

Simplified geological plan at Alpine

Section 8700E at Alpine

STELLAR

The aeromagnetic survey image shows substantial features which require testing. Interpretation is underway with a view to designing a drilling program for immediate implementation. The large dimensions of this geophysical anomaly, together with the several well mineralised copper intercepts, plus the open nature of the intersections to date, make Alpine a compelling project.

Alpine is favourably located on the mineral rich west coast of Tasmania, some 35kms from Zeehan. It lies adjacent to a sealed road and a power line. Substantial existing mining and processing facilities are located within a 100km radius of Alpine, which would assist in any potential development.

Ramsay

At the Ramsay licence area, further interpretation of the magnetics and geochemistry was undertaken. Detailed geological mapping was completed along the mapped western ultramafic belt. Stellar has generated a new base metals target – with a zinc focus – based on prior drilling. A new drilling program has been designed and will be drilled once permits are obtained and a diamond drill rig secured.

An initial drilling program focussed on nickel and zinc targets is scheduled to start during the June quarter. Geophysical targets on the eastern side of the licence, where ultramatics are inferred to lie under shallow cover of Tertiary basalt, are also being prioritised for drill testing.

Magnetic image with Stellar's Tasmanian tenements

Additionally, historic zinc intersections from the Arthur Dam area are being assessed as drill targets. Previous intersections by Pasmingo include 3m $\omega$ 2.4% Zn and 2.25% Pb in AD4. At the nearby Butlers Road Prospect, the single previous hole DHB1 (drilled by BHP) intersected 8.5m $\omega$ 1.65% Zn, 0.27% Pb and 29 $g/t$ Ag from near surface.

East Granville Tin

On the Heemskirk licence tin and copper targets, an initial drill hole was drilled into the East Granville trend on a magnetic target immediately north of a small open pit tin mne. Assays reveal a low order gold intersection $(4m \omega 0.4\omega/t)$ at 98m down hole depth.

NEW SOUTH WALES

Goldfinger (Stellar earning 51%, option to 60%)

Two additional diamond cored holes GFDDH05 and GFDDH06 were completed on the Goldfinger gravity target located 20kms south of Broken Hill. Hole GFDDH05, sited to test a low order aeromagnetic anomaly immediately south of the gravity high, was completed at 234m, and intersected low levels of magnetite with some associated sulphide mineralisation, from approximately 140m to 170m downhole. Assays are awaited.

Hole GFDDH06, sited mid-way between GFDDH02 and GFDDH03 on the main gravity anomaly, was completed at 260.8m, and intercepted mineralised lode sequence rocks similar to that present in the earlier two holes. Selected intervals of both holes have been cut and sampled – assay results are pending.

The gravity anomaly has so far only been partially tested over some 600m of its 3km strike length and, in particular, the western extent of the anomaly has not been drill tested. A further technical review will be held at Broken Hill in May to examine all of the core and propose the next round of drilling for further testing of this very large target area. BHP Billiton is providing technical support with further advanced inversion modelling.

Goldfinger summary - Gravity contours and drill hole locations on aeromagnetic image

Panama Hat (Stellar 100%)

Notification to grant the Panama tenement, south-east of Broken Hill, was received during the quarter, and planning is underway to carry out semi-regional gravity coverage of the licence area to evaluate potential Iron Oxide Copper Gold targets ("IOCG") of the Prominent Hill style.

SOUTH AUSTRALIA

Robins Rise (Stellar 100%)

At the Robins Rise project, drilling is scheduled to commence in the June quarter with a program of five holes. The first will target the "Lonesome" prospect which is interpreted to lie at a depth of some 170m. Slightly shallower target depths have been interpreted for geophysical targets in "Woorong", "Robins" the and "Georges" target areas.

Lonesome" magnetic image and gravity contours

Robins Rise magnetics

Pernatty (Stellar 100%)

Notification to grant the Pernatty tenement, located near Carapateena, was received during the quarter. Planning is underway to carry out semi-regional gravity coverage of the licence area to evaluate possible IOCG targets.

Tarcoola Basin Zinc (Stellar 100%)

Notification of PIRSA "PACE" funding was received in the December 2005 quarter, for diamond drill testing of two targets for Proterozoic sediment hosted base metal mineralisation, west of the Ella prospect. Limited air-core drilling traverses were conducted to refine the interpreted basin margin position and diamond drilling is scheduled to start once a suitable rig can be sourced.

URANIUM

Warrior Uranium (Stellar 100%)

Stellar holds a 100% beneficial interest in EL3372 which contains approx 85% of the currently known Warrior uranium mineralised zones. Eight zones of uranium mineralisation were delineated by Power Nuclear Corp ('PNC") within a strike length of approximately 15km. PNC estimated a resource at Warrior but neither the drilling density nor level of assay determination of uranium grades are considered adequate for JORC resource calculations.

Stellar is compiling the historical geological data: digitising critical portions of the existing PNC drill database; reviewing the quality geochemical $\alpha$ f PNC's and geophysical logging data. Stellar "HOISTEM" flown has a. airborne electromagnetic survey to better define the geographic distribution and thickness of sediments within the Warrior palaeochannel.

Warrior Uranium Channel - interpretation of palaeochannel from airborne "HOISTEM" conductivity data, showing anomalous locations and uranium intercepts for historical drill holes and mineralised zones $(A - H)$

These data have provided a valuable insight into the geometry of the already recognised channel and have identified previously unrecognised palaeochannels and areas for drill testing extensions to the known uranium mineralisation. In addition, the review of geological data has identified potential for increasing the average uranium grade.

Drilling is scheduled to commence this quarter.

An aircore drill rig to conduct an initial drilling program of up to 40 holes for 3,000m of aircore drilling to test for extensions of known mineralised zones is scheduled to start in May. An initial 10 traverses of aircore holes at 200m centres over parts of the palaeochannel system, where assessment of historical drilling results has defined prospectivity for uranium mineralisation hosted within the porous host sand units, will be carried out. Further drilling is planned to follow-up on this initial program with the aim of providing data which may allow a JORC compliant resource to be estimated.

This recent work provides strong encouragement for the Company to pursue the extension of the palaeochannel system into Stellar's EL3369 and to assess the other 2,500km2 of Stellar tenements, up to 30% of which contain prospective palaeochannels.

Tarcoola Region, including Iron Ore (Stellar 100%)

Reverse Circulation (RC) drilling of the Coolybring, Wiltabbie and Southwest Wilgena Hill geophysical target areas was completed during the September quarter of 2005. Drilling results confirmed a thick sequence of magnetite mineralisation within jaspilite, with consistent levels of Fe indicated. $An$ independent consultant has been engaged to review the possibilities for upgrading the economic aspects of the Coolybring/Wilgena Hill magnetite occurrences. Subject to this report, Stellar will review the merits of any further on ground activity.

In the light of the increased gold price, the Tarcoola Goldfield will be further assessed.

Sovuz (Stellar 100%)

In March, a slim line RC drill rig drilled a program of $18(100m - 120m)$ deep drill holes, for a total of 1.360m, on the Sovuz gold prospect west of Tarcoola. Previously reported RAB drilling defined an area of approximately 1,200m by 200m anomalous in gold. Drilling costs were partially subsidiesed by the SA Government under its PACE funding program. Assay results are awaited.

Uno (Stellar option to acquire 100%)

Stellar has completed air-core drilling to test three geochemical targets within the Uno prospect. A total of 56 holes for 4,012m of drilling tested these anomalies.

The Uno prospect is focused on the Uno Fault – a major east-west oriented structure which forms the southern margin of the Gawler Range Volcanic province. Geochemical sampling of the licence area has delineated anomalous gold levels over a target zone of up to 3kms strike length within the Uno Fault Zone. A smaller base metal and coincident gold anomalous zone of 1km strike length has been defined at the eastern end of the target area. The geochemical signatures and geological setting are consistent with epithermal vein style mineralisation associated with the Gawler Range Volcanics, and focused within the Uno Fault. Although assay results for gold were generally only weakly anomalous, significant widths of strongly anomalous base metal levels were returned, including:

Hole	From	Interval (m)	Grade
			$Pb($ %)	$\chi$ n (ppm)
AC012	45	8	0.64	575
incl	54	9	1.08	900
AC016	66	8	0.70	1,300
AC022		66	0.12	217
incl	27	27	0.18	272
AC032	45	15	0.27	311
incl	54	ł)	0.39	380
AC037	75	5	0.25	458
and	87	12 (eoh)		1,000

These results indicate that a large geochemical cell is present in the Uno project area and further geophysical evaluation of the prospect for more massive sulphide accumulation is under consideration.

VICTORIA

North Bendigo JV (Stellar 50%)

A sighter drill hole has commenced on a gravity anomaly located east of the inferred Sebastian Fault under cover. The hole is designed to test the depth to the basement and stratigraphy. This target is some 50kms NNW and postulated to be along strike of Bendigo under cover. Further aircore drilling is also planned.

STELLAR

OUTLOOK

Stellar Resources continues to actively explore its portfolio of commodity targets, a number of which have been generated or enhanced by the earlier FALCON® surveys.

In the June quarter, drilling is scheduled for the following areas:

• In the Gawler Craton, SA:
  • a scout aircore drilling program at the Warrior Uranium occurrence and the postulated southern extension of this palaeochannel at Carnding, along with drilling on the Partridge palaeochannel system northeast of Tarcoola:
• At Robins Rise, a PIRSA funded drilling program is planned to test defined IOCG style;
• In Victoria, at the North Bendigo JV, a diamond drill hole will be drilled early in the quarter;
• In Tasmania follow-up diamond drilling is scheduled at the Alpine Copper project; and
• Drilling for nickel and zinc targets is planned at Ramsay River, Tasmania.

The drill and exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr. C.G. Anderson (Fellow of the Australasian Institute of Mining and Metallurgy) who is a Director of the Company with more than twenty years experience in the field of activity being reported. Mr. Anderson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

For further details please contact:

Tom Burrowes	Tel:	$(03)$ 9909 7618		Email: tom.burrowes@stellarresources.com.au
Chris Anderson	Tel:	(08) 8363 1589		Email: chris.anderson@stellarresources.com.au
Bill Michaelidis	Tel:	$(03)$ 9909 7618		Email: bill.michaelidis@sterllarresources.com.au
David Sasson	Moh: -	0411 468 966		Email: davd.sasson@stellarresources.com.au
or visit our Website at: http://www.stellarresources.com.au

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

STELLAR RESOURCES LIMITED

Current quarter

$A'000

ABN

96 108 758 961

Quarter ended ("current quarter")

31 MARCH 2006

Year to date

(9 months)

Consolidated statement of cash flows

Cash flows related to operating activities

			$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for(a) exploration $&$ evaluation(b) development(c) production	(519)	(1,669)
	(d) administration	(178)	(483)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	60	184
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(637)	(1,968)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a) prospects
	(b) equity investments		(612)
	(c) other fixed assets		(12)
1.9	Proceeds from sale of:
	(a) prospects
	(b) equity investments
	(c) other fixed assets
1.10	Loans to other entities
1.11	Loans repaid by other entities		35
1.12	Other (provide details if material)	(4)
	Net investing cash flows	(4)	(589)
1.13	Total operating and investing cash flows(carried forward)	(641)	(2, 557)

$\div$ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows(brought forward)	(641)	(2,557)
1.141.151.161.171.181.19	Cash flows related to financing activitiesProceeds from issues of shares, options, etc.Proceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowingsDividends paidOther (cost of issue)		512
	Net financing cash flows		512
	Net increase (decrease) in cash held	(641)	(2,045)
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	3,822	5,226
1.22	Cash at end of quarter	3,181	3.181

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	106
1.24	Aggregate amount of loans to the parties included in item 1.10	11111
	*************************************

Explanation necessary for an understanding of the transactions 1.25

Remuneration and Directors fees for the quarter.

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

$2.2$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
-3.1	Loan facilities
3.2	Credit standby arrangements

$\div$ See chapter 19 for defined terms.

Estimated cash outflows for next quarter

Development-4.2
		Total	570
Exploration and evaluation5704.1			$A'000

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.	Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	91	182
5.2	Deposits at call	3,090	3,640
53	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	3,181	3,822

Changes in interests in mining tenements

		Tenementreference	Nature of interestnote(2)	Interest atbeginningof quarter	Interest atend ofquarter
-6.1	Interests in miningtenements relinquished,reduced or lapsed
6.2	Interests in miningtenements acquired orincreased	EL3500	E L.- Kychering	Nil	100%

$\div$ See chapter 19 for defined terms.

Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price per	Amount paid up per
				security (see note	security (see note 3)
				$3)$ (cents)	(cents)
7.1	Preference
	i securities
	(description)
7.2	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns
	of capital, buy-
	backs,
	redemptions
7.3	+ Ordinary
	securities	50,838,168	49,400,944
7.4	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns
	of capital, buy-
	backs
7.5	+ Convertible
	debt securities
7.6	(description)
	Changes duringquarter
	(a) Increases
	through issues
	(b) Decreases
	through
	securities
	matured,
	converted
7.7	Options			Exercise price	Expiry date
	Director	3,500,000	Nil	30 cents	10 December 2008
	Executive	625,000	Nil	30 cents	19 August 2009
7.8	Issued during
	quarter	375,000	Nil	30 cents	19 August 2009
7.9	Exercised during
	quarter
7.10	Expired during
	quarter
7.11	Debentures
	(totals only)
7.12	Unsecured
	notes (totals
	only)

$\div$ See chapter 19 for defined terms.

Compliance statement

• $\left\lbrack \right\rbrack$ This statement has been prepared under accounting policies, which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement does /does not* (delete one) give a true and fair view of the matters disclosed.

.......... Date: 27 April 2006 (Company Secretary)

Sign here:

Print name: Bill Michaelidis

Notes

• $\mathbf{I}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• $\overline{4}$ The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
• Accounting Standards ASX will accept, for example, the use of International 5 Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

______________________________

+ See chapter 19 for defined terms.