STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2007

Oct 29, 2007

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Quarterly Report For the period ended 30 September 2007

HIGHLIGHTS

Exploration

• Goldfinger – new copper-cobalt mineralised zone intersected on drill section centred on the western IP target. Stellar JV interest now 60%

• Tarcoola Iron , SA – Coolybring and Wilgena projects being re assessed for economic magnetite project. New drilling scheduled

• Alpine Copper – geological interpretation is showing two copper bearing systems. Drilling now resumed on targets marginal to the magnetic anomaly

• Warrior Uranium , SA – significant zones of Uranium defined by JV partner Toro’s drilling results. New “sonic” drilling technique successful in providing high quality core samples of mineralised intervals

• Robins Rise – expanded gravity surveys highlight several new anomalies prospective for IOCGU style mineralisation

• Cowell – IOCGU and iron ore targets being readied for drilling.

Corporate

• The proposed IPO of tin focused Columbus Metals Limited is progressing

30 October 2007

• Peter Blight appointed General Manager – Business Development

• Cash $4.5 million as at 30 September 2007.

Activities Diary for December Quarter 2007

A steady level of exploration activity is envisaged, including:

• Goldfinger , NSW – project review and JV meeting, systematic RAB drilling of IP zone

• Tarcoola Iron , SA – economic scoping study to be completed; drilling scheduled

ASX Code: SRZ

ABN 96 108 758 961 Level 7 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

• Alpine , TAS – diamond drilling in low-magnetic zone

• Uranium , SA – Toro planning further drilling following receipt of assays

• Kingoonya Palaeochannel , SA – UraniumSA’s drill rig now operational. Drilling in late December quarter or March quarter

• Sunshine , SA – drilling scheduled in December

• Magnet , TAS –project review in preparation for drill targeting

• St Dizier , TAS – metallurgical testwork.

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DETAIL

CORPORATE

As at 30 September 2007, the Company held a strong net cash position of $4.5 million. Stellar also holds financial assets of 10.26 million shares in UraniumSA Limited (ASX: USA) and 6.667 million options in Gippsland Offshore Petroleum Limited (ASX: GOP) exercisable at 20 cents.

New Staff Appointment

Mr Peter Blight was appointed to the role of General Manager – Business Development and will be responsible for reviewing and commercialising existing projects as well as bringing new projects to Stellar. Peter has 27 years experience in the exploration, mining and finance industries. Most recently, he was involved in project development in China and India for Russia’s aluminium giant UC RUSAL. Prior to joining UC RUSAL he provided commodity and company analysis for the global mining equity business of UBS in London. Peter’s experience will be important in focusing the generation of value creating opportunities for Stellar.

Proposed Tin IPO

The prospectus for Columbus Metals Limited – the new tin focused exploration and development company – progressed during the quarter.

EXPLORATION

TASMANIA (Stellar 100%)

Field work during the period was largely in abeyance due to seasonal conditions. Ground work has resumed with the approach of milder weather.

Heemskirk EL

Alpine Copper – data from all drill holes was compiled into geological plans and cross sections. The current drilling program is focused marginal to the northern portion of the magnetic anomaly and closer to holes AP011 and AP012A which reported low magnetic susceptibility and importantly, some gold values. A limited drill program is current for the December quarter.

Tin Exploration and Development

During the quarter, the price of tin on the LME weakened in the first few weeks of August but, reflecting the continuing improved fundamentals in the global tin market, rebounded strongly over the remainder of the period. In October, the price of tin continued to strengthen further.

St Dizier Tin Deposit – the St Dizier tin skarn is located within Heemskirk EL46/2003 in open, button grass country, just 18km from the town of Zeehan. Targets are evident in a 3km trace around the Heemskirk granite. A three hole diamond drilling program was completed at St Dizier Central in April 2007 with all holes reporting excellent tin assays over wide intercepts.

Selected intervals from the April drilling campaign were submitted for initial metallurgical testwork at Burnie in order to evaluate the metallurgical characteristics of the mineralisation. Results are expected during the December quarter.

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The tin skarn is being further assessed and will form an integral part of the proposed new IPO of Columbus Metals Limited.

At Gourlays Creek – in the June quarter the Company completed a program of 7 reverse circulation percussion drill holes along strike to the NW of the three 1984 Geopeko diamond drill holes which were intended to test the prospect for its tin skarn potential.

The Stellar drilling essentially reproduced the Geopeko results and where the 10 drill holes to date and Geopeko surface mapping have allowed a reasonable understanding of the main controls on mineralisation. The western zone sources a strong magnetic high where to date most exploration has focussed. The eastern zone is non magnetic but tends to source more EM and IP conductive anomalies that the magnetic rocks. Both the Geopeko and Stellar drilling intersected significant but intermittent copper mineralisation and minor tin, gold and lead-zinc mineralisation (Table 1).

Hole ID	GDA Easting	GDA Northing	Depth From(m)	Intersection
GC1~~1~~	337062.4	5371958	41	1m@0.3% Sn
			151	1m@0.2% Cu,0.4% Pb,0.4% Zn
			162	2m@0.4% Cu
			172	4m@0.3% Cu
GC2~~1~~	336885.1	5372126	97	1m@2.1% Cu
GC3~~1~~	337269.5	5371945	298	4m@0.3% Cu
			372	4m@0.4% Cu
SRG1	336665.0	5372396	75	9m@0.4% Cu
SRG2	336687.0	5372394	93	3m@0.3% Cu
SRG3	336971.0	5372566	44	3m@1.4% Cu
			53	4m@0.3g/t Au

1GC1-GC3 drilled by Geopeko

Table 1 – Gourlays Creek drilling, best intersections

The best copper intercepts are contained within the magnetic rocks but copper also occurs within the calc silicate (non-magnetic) zone. To date the best results are the copper and gold intersections from SRG3. This is the most easterly of the Stellar drill holes and is drilled within the non magnetic zone. The hole was abandoned (due to drilling difficulties) in gold mineralisation at only 57m, still within the gold intersection.

The stratiform and discontinuous style of copper mineralisation at Gourlays Creek, and its general but not exclusive association with magnetite, is similar to the known mineralisation at Alpine. Both Alpine and Gourlays Creek have copper-gold anomalism associated with non-magnetic carbonate bearing stratigraphy and conductive anomalies from ground electrical geophysics. At both prospects this target type is peripheral to the prominent magnetic anomalies (which have driven drill targeting to date), and consequently the non-magnetic copper-gold style targets are under explored.

Corinna/Hangmans licences cover a substantial area to the north and north-west of Alpine. Data reviews have generated several areas worthy of follow-up exploration. In particular the Alpine style copper targets are considered prospective on these ELs where regional magnetic images show trends and structures of interest.

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Data compilation has also identified a strong stream sediment copper anomaly in Corinna which has not been tested by prior drilling. Stellar is aiming to drill targets during the coming summer season.

Dundas EL – pre winter drilling on conceptual nickel targets failed to intersect sulphide nickel mineralisation. Field work, including mapping and sampling, prior to generating new drill targets based on magnetic and geochemical anomalism will be carried out in the coming months. The Company is preparing access to test magnetic targets on the north western edge of the mapped ultramafic unit.

Ramsay River EL – further review of the historic Magnet silver lead zinc mine have generated advanced targets available for near term assessment. Whilst the Magnet mine was modest tonnage (630,000 tonnes), the historic grade was excellent. The depth and southern extension of the old workings lie within Stellar’s licence area. The trend of the mineralised zone to the southwest of Magnet represents an excellent target, as do various EM anomalies in the district. One historic drill hole (close to tenement boundary) is recorded as intercepting 1m @ 13% Zn and 900g/t Ag within a 6m mineralised zone. Preparations for drill testing are being formulated.

URANIUM

Warrior Uranium (Stellar 100%; Toro Energy Limited able to earn 70%)

Drilling by Toro Energy of approx 8,000m on the Warrior project area has been completed with assays confirming historic results on two established Uranium zones in the Warrior channel. Assay results for “Area A” and “Area B”, in the northern portion of EL3372 (Figure 2), were announced to the ASX on 25 October 2007 and Toro Energy reported:

“Anomalous uranium (>100ppm U308) over 1 metre intervals has been encountered in numerous drill holes in both ‘Area A’ and ‘B’. In general, intersections are between 1 and 7 metre intervals with tenors in the 100-900ppm U308 range. Thicker intervals, where they occur, are generally in the 100-250ppm U308 range with ‘Area A’ having a more coherent mineralisation than ‘Area B’. The mineralisation is open in several directions and further follow-up drilling will be required. Significant portions of the palaeochannel system are yet to be tested and the full extent of the mineralisation is yet to be defined. The drilling has confirmed the historic PNC results and Toro Energy is encouraged that this provides impetus for further exploration.”

Toro also report the following activities planned for December quarter:

• Coring of some drill holes using the sonic drilling method is planned for the last quarter of 2007. This will aid lithological definitions, geological modelling and verify the sampling quality of the aircore drilling method.

• Engagement of consultants to assist in the definition of the uranium species and mineralogical characteristics of the deposit.

• Follow-up drilling will be undertaken in Areas A and B where the mineralised zones are currently open, as well as in other untested areas of the channel.

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Figure 1 – Airborne Electromagnetic data for the merged Warrior Channel project (Toro Energy)

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Figure 2 – Location of “Area A” and “Area B”

Under the terms of the JV, Toro may spend more than $3 million in a staged farm-in over the next four years on parts of the highly prospective Warrior Project.

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Kingoonya Palaeochannel (Stellar 100%; UraniumSA able to earn 70%)

UraniumSA Limited has completed an EM survey over substantial areas of Stellar’s tenement holding across the Kingoonya palaeochannel area which has successfully mapped out the channel geometries, and defined target areas prospective for roll-front uranium deposits. USA has acquired its own drilling rig and downhole logging equipment and, after an extensive period of refurbishment and testing, reconnaissance drilling programs are set to commence during the December quarter.

Stellar presently holds a 100% interest in these areas, with its JV partner able to earn up to 70% interest. In addition, Stellar owns a substantial 16% shareholding in UraniumSA Limited.

NEW SOUTH WALES

Goldfinger (Stellar 60%)

Stellar completed four drill holes GFDDH09, 10, 11 and 12 through the middle of the “Mimdas” conductive/chargeable zone (see Figure 3) during the quarter. As announced to the ASX early in October, assays received for hole GFDDH011 have returned the following intervals:

Depth(m)	Depth(m)	Interval			Grades
From	To	(m)	Cu(%)	Co(ppm)	Pb(%)	Zn(ppm)	Ag (ppm)
35	63	28	0.19	162	0.16	370	11
incl 43	47	4	0.39	273	0.16
and 50	55	5	0.45	106	0.22
incl 53	54	1	1.84

Table 2 – Goldfinger drill intersections

The mineralisation occurs in association with massive pyrrhotite mineralisation and Broken Hill style “lodey” blue quartz and gahnite bearing psammitic rocks. Significant zinc mineralisation (to 2.5% total zinc) is contained within the gahnite, a zinc oxide mineral commonly associated with Broken Hill style mineralisation. (Zinc within gahnite does not report in the acid digest assay).

Hole GFDDH011 is sited on Section 545000E, across the centre of a strong Induced Polarisation zone, coincident with the western half of the Goldfinger gravity feature (Figure 3). Other drilling on this section (GFDDH07-012) has intersected additional pyrrhotite zones at depth, but with only minor visible economic mineralisation. It would seem likely that the geophysical targets are reflecting both the shallow lode intersected in hole GFDDH011 and the deeper pyrrhotite zones.

Stellar is highly encouraged by the discovery of this new lode position and is planning an extensive drilling program to evaluate the full extent of the IP zone.

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Figure 3 – Location for Section 545000E on IP image and gravity contours

Stellar has now earned a 60% interest in this JV and a technical review, prior to a meeting with the JV partners (CBH Resources and Anglo-Ashanti Australasia) will be carried out in order to plan the way forward on this very prospective exploration project.

Panama (Stellar 100%)

Panama EL6556 is located immediately to the east of the Goldfinger and Copper Blow areas. Initial Rotary Air Blast (RAB) drilling of four gravity features in the Panama area was completed in late June. Assay results from the RAB samples were generally low, however surface rock-chip sampling has defined a number of areas of significant gold geochemistry. Further evaluation of these areas is under consideration.

SOUTH AUSTRALIA

Pernatty (Stellar 100%)

The Pernatty EL3583 is located to the west and south of the historic Mt Gunson copper mining area and 30-40km west of the Carrapateena IOCG prospect, held by RMG Services Pty Ltd/Teck Cominco Limited. The target is a large IOCG deposit of the Carrapateena/Prominent Hill style. Drill rig delays have again postponed this program until early 2008.

Robins Rise JV (Stellar 100%; Red Metal right to earn 60%)

The JV covers some 1,700km[2] of EL3336 and EL3436 and is located 100km northwest of the Prominent Hill copper-gold deposit within the Gawler Craton. Red Metal has advised that processing of the expanded gravity survey has highlighted several anomalies which are considered prospective for coppergold mineralisation in structural settings comparable with that over the Prominent Hill deposit an additional 350 gravity stations were collected during the quarter. Heritage clearances in preparation for an extensive drill program are planned for the next quarter. Drilling will be instigated when a suitable rig is available.

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Coober Pedy Ridge (Stellar 100%)

These are contiguous with the Robins Rise JV tenements. Interpretation of aeromagnetic data has outlined a number of target areas for IOCGU style mineralisation and a detailed gravity survey has been completed

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Figure 4 – Aeromagnetic image for the Robins Rise JV (EL3336 and EL3436) and North Coober Pedy (EL3752 and EL3753) project areas

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Figure 5 – New gravity data for area shown in Figure 4 above

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Cowell Joint Venture (Stellar able to earn 75%)

In the Glensea project area, three of five holes drilled earlier in the year intersected a number of narrow quartz-pyrite-chalcopyrite veins with significant intervals of strongly anomalous uranium values. These were returned from holes COD08 and COD06, in the northern portion of the project area.

A number of target geophysical anomalies – both magnetic and gravity – have been defined for drill testing.

A drill rig has been booked to test these for IOCGU style mineralisation targets. Iron ore targets, principally magnetite, are also being assessed.

Tarcoola Region – Sunshine Gold Project (Stellar 100%)

Calcrete sampling has been completed over a target area of some 30km[2] ; on 200m by 200m spacing. A coherent gold anomaly has been defined over an area of approximately 400m by 100m. Previous drilling to the west of this zone at Sunshine returned significant intervals of low to moderate grade gold mineralisation (e.g. RCSUN012, 18-38m (20m) @ 0.41g/t Au and in RCSUN014 with 56-66m (10m) @ 1.44g/t Au).

The geology of this area is considered to be Archaean age, and comparable to Dominion Mining’s Challenger gold mine, approximately 120km to the west. An RC drilling rig is expected to be mobilised to site in December.

Tarcoola Iron – Coolybring Magnetite Project (Stellar 100%)

A benchmarking study of the project against other magnetite resource projects in South Australia and Western Australia concluded that results to date justify Stellar undertaking a scoping study. This study will involve further drilling to better characterise mineralisation types and also to test for the presence of direct shipping hematite both at Coolybring and Wilgena. In addition, external consultants will be engaged to check results and evaluate the key inputs to the project. Limited drilling is expected in the December quarter.

The Coolybring magnetite deposit has sufficient size and quality potential to have elicited enquiry from interested parties. Stellar has provided an initial information pack and on going discussions are expected as the scoping study progresses.

VICTORIA

North Bendigo JV (Stellar 50%)

No field work was conducted during the quarter and Stellar is re-evaluating its involvement in the project.

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OUTLOOK

In the December 2007 quarter, exploration activity is scheduled for the following projects:

• Warrior Uranium , SA – Toro Energy JV – results for recent drilling using “sonic” system.

• Goldfinger, NSW – project review and JV meeting, prior to commencing systematic RAB drilling coverage of the western IP target zone.

• Tarcoola Iron , SA – scoping study being conducted, drilling planned.

• Kingoonya Palaeochannel , SA – UraniumSA JV – reconnaissance drilling traverse to commence during the December quarter.

• Alpine , TAS – diamond drilling to test non-magnetic zone

• Magnet , TAS – complete project review in preparation for drill targeting

• St Dizier , TAS – metallurgical testwork.

• Sunshine , SA – drilling in December

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. It should be noted that the abovementioned exploration results are preliminary.

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

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Appendix 5B Mining exploration entity quarterly report

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

ABN

Quarter ended (“current quarter”) 96 108 758 961 30 September 2007

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a)exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes (paid)/recovered 1.7 Other – Net Operating Cash Flows	Current quarter $A’000	Year to date (3 months) $A’000
	– (914) – – (105) – 73 – 92 –	– (914) – – (105) – 73 – 92 –
	(854)	(854)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other: – Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	– – (8) – – – – – –	– – (8) – – – – – –
	(8)	(8)
	(862)	(862)

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(862)	(862)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other – cost of issue Net financing cash flows	– – – – (1)	– – – – (1)
	(1)	(1)
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(863) 5,172 –	(863) 5,172 –
	4,309	4,309

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

1.23 Aggregate amount of payments to the parties included in item 1.2 1.24 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
	118
	–

• 1.25 Explanation necessary for an understanding of the transactions

Remuneration and directos 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

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000 – –	Amount used $A’000
		–
		–

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development	$A’000
	785
	–
Total	785

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other	189	32
	4,120	5,220
	–	80
	–	–
Total: cash at end of quarter(item 1.22)	4,309	5,172

Changes in interests in mining tenements

Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter

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Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs	67,038,168	67,038,168
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options Directors Executives 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	3,500,000 625,000	Nil Nil	Exercise Price 30 cents 30 cents	Expiry Date 10 December 2008 19 August 2009
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

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Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 30 October 2007 (Director)

Print name: Thomas Burrowes

Notes

• 1 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.

• 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 .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International 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.

== == == == ==

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30/9/2001