STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2008

Jul 23, 2008

Highlights

Iron Ore (SA)

• World record price for iron ore contract between Rio and Baosteel with an 80% increase in the price for Hamersley fines.
• Drilling at the Tarcoola Iron Ore Project extends the deposit width of the iron zone (magnetite) to 260m and identifies primary hematite mineralisation.
• Potential for secondary enriched hematite upgraded by geophysical modelling and drilling results.

Tin (Tasmania)

• Tin price remains above US$22,000/t and well supported by strong fundamentals.
• Preparations continue for IPO of tin focussed Columbus Metals aiming for September quarter as market conditions permit.

Exploration

• Manganese project being assessed in South Australia.
• Metallurgical drilling completed on Perseverance Gold project, SA.
• Stellar's interest in the Goldfinger Zinc project in NSW has increased from 60% to 80%.
• VTEM survey conducted over several areas in Tasmania.
• Drilling continuing on Kingoonya palaeochannel Uranium target (in JV with UraniumSA Limited).
• Sampling and Geophysical surveys commence on Panama Gold project, NSW (in JV with Carpentaria Exploration Limited).

Activities Diary for September Quarter 2008

• Tarcoola (Iron Ore) SA RC drilling program to commence after detailed gravity survey.
• Pernatty (Manganese) SA – Progress geological evaluation of manganese potential on Stellar's 100% owned EL.
• Columbus Metals Limited (Tin) TAS Progress towards IPO.
• Joint Ventures (Uranium) SA Exploration ongoing.

srzinfo@stellarresources.com.au ASX ReleaseQuarterly Report

24 July 2008

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

CORPORATE

Financial Position

As 30 June 2008, the Company held cash and near term securities of $2.1 million. Stellar also holds financial assets of 10.26 million shares in UraniumSA Limited (ASX: USA) valued at some $1.1 million and 6.667 million options in Gippsland Offshore Petroleum Limited (ASX: GOP) exercisable at 20 cents.

MARKETS

Iron Ore

On 23 June 2008, Rio Tinto achieved an 80% increase in its 2008 bench mark contract price for iron fines with Chinese steel producer Baosteel – a significant improvement on the 65% increase achieved by Vale in an earlier settlement. The new price is equivalent to US$94/t fob for a magnetite fines concentrate grading 65% iron. According to Macquarie Equities, spot prices for iron firmed slightly in response to the contract price settlement and despite announcements of de-stocking at Chinese ports. The spot price is currently trading at a 50% premium to the contract price.

Tin

Tin prices retreated slightly from a high of US$25,000/t to US$22,700/t in response to much greater reductions in other LME metal prices rather than fundamentals. However, the price has improved modestly since quarter end. Supply restraint and China's shift from net exporter to net importer of tin have allowed LME tin stocks to decline by 6,700t in the June quarter compared to a decline of 3,700t in March quarter and a 6,000t increase a year ago.

PROJECTS

Tarcoola Iron Ore Project (Stellar 100%)

Drilling Results

Two RC holes and one diamond hole were completed at the Coolybring iron ore prospect in central South Australia during the quarter. RC015 and PD007 extended previous drilling along section 6609770N to the east. RC016 provided a pre-collar 150m to the south of that drill section for a potential subsequent diamond tail.

Hole PD007 extended the width of the magnetite quartz mineralisation by some 30% to 260m on section 6609770N. In particular, PD007 intersected a 37m zone (down hole) of hematite-magnetitequartz mineralisation within the magnetite-quartz horizon. While the hematite is primary in nature, this is the first time that a significant interval has been located and greatly improves the prospects of finding a zone of high-grade hematite within the prospect area. A comparable development of hematite was recently reported by Western Plains at its Tui deposit, 100km to the northeast of Tarcoola.

Figure 1 – Drill Section 6609770N (MGA94) – Tarcoola Iron Ore Project

Assays from PD007 are compared with results from previous holes DD004, RC006 and RC001 in Table 1 to provide some indicative grades. Although the sample is limited, the results indicate that iron grades are higher in the western part of the section compared to the east. The average grade of 35% iron across all holes is comparable with average grades for other Australian magnetite resources. Davis Tube Recovery assessment of some drill core is in progress, to determine magnetic beneficiation characteristics.

Hole	Easting	Northing	Length	From	To	Fe	SiO2
	m	m	m	m	m	%	%
DD004	2230	9770	114	108	222	39.2	43.4
RC006	2200	9770	34	116	150	39.3	38.3
RC001	2408	9770	57	77	134	34.8	na
PD007	2347	9770	133	86	219	29.0	na

Table 1 – Iron and silica assays within the magnetite zone – Drill Section 6609770N

Geological and geophysical profiling of Section 6609770N suggests that there are a number of similarities with the iron ore mine sequence in the Middleback Ranges of South Australia. If that is the case, there is potential to locate magnetite-carbonate mineralisation, the main ore type at OneSteel's Iron Magnet mine, in addition to high grade hematite to the north and possibly west of section 6609770N.

Stellar released a presentation on the hematite potential at the Tarcoola Iron Ore Project to the ASX on July 4, 2008. This presentation can also be found on the company website.

Planned Drilling Program

Stellar has completed a ground gravity survey over and to the west of the magnetite zone identified by ground magnetics and previous drilling. The survey has more tightly defined the gravity high along the western edge of the magnetite zone with potential to define shallower drill targets within the gravity anomaly.

Stellar is planning to drill a number of RC traverses across the gravity and magnetic anomalies during the September quarter.

The program is intended to:

• identify the source of the western gravity high and test it for high grade hematite;
• test the eastern hematite zone for high grade hematite;
• locate the western edge and confirm the width of the magnetite zone;
• identify the distribution of magnetite-carbonate and magnetite-silica to the north of Section 6609770N.

The red dots in Figure 2 identify the current plan for drill collar locations. Some modification of this plan may however be necessary following the ground gravity survey.

SA Government Advances Port Bonython

In June, the South Australian Government received a number of submissions from parties to develop Port Bonython near Whyalla as a bulk commodities export terminal and capable of loading larger ships on a more cost effective basis. It is understood that the submissions are based on an open access multi-user facility. Stellar views this development as an important step forward for its Tarcoola project and all other South Australian iron ore projects that intend to use this facility and welcomes the South Australian Government's pro-active approach to infrastructure development.

Columbus Metals (Stellar 100%)

Steady progress was made during the quarter towards IPO of the planned tin development company, Columbus Metals Limited. The target lodgement date is in August. It is proposed that Stellar shareholders will be offered a priority entitlement in the Columbus Metals IPO, particulars of which will be sent to all current shareholders at the time.

The key assets of Columbus Metals are planned to be:

• Heemskirk Tin Project a majority ownership in a joint venture which includes an historic high grade tin resource drilled by Aberfoyle over 25 years ago (the largest undeveloped high-grade cassiterite tin deposit in Australia);
• St Dizier tin deposit, includes a pre-JORC inferred resource, which may well be amenable to open-cut mining;
• Granville East a number of tin prospects surrounding the northern perimeter of the Heemskirk granite;
• Gourlays Creek a large magnetic signature where drill holes have demonstrated anomalous tin and copper.

Columbus Metals also secured two key staff appointments during the quarter:

• Mr Lindsay Newnham has agreed to join the Board of Columbus Metals as Technical Director & Project Manager. Mr Newnham is well known as a driving force in the development of the Avebury nickel deposits for Allegiance Mining NL. Importantly, he has a strong background in tin geology, including 12 years as Chief Geologist with Renison Limited.
• Mr John Walker a chartered accountant with a long history in senior management in public companies – has agreed to take the role of Company Secretary for Columbus Metals.

DRILLING/ASSAYS

Cowell IOCGU (Stellar 100%)

Drilling intersected narrow vein style Cu + REE (rare earth element) mineralisation and broader intervals of anomalous REE values within variably altered intermediate intrusives and meta-feldspathic sediment (Table 2).

PACE subsidised drilling (COD012 in Table 2) intersected elevated to weakly uraniferous fine grained aplitic intrusives interpreted as texturally and mineralogically similar to uraniferous intrusives in the Rossing District, Namibia.

Hole ID	From	To	Interval
COD011	182	186.9	4.9m	@ 0.11%Cu
COD011	242.25	243.1	0.85m	@ 0.25%Cu, 382ppmCe, 211ppmLa
COD012	198.9	217	18.1m	@ 140ppmCe, 193ppmLa, 191ppmY
COD012	217	245	28m	@ 0.07%Cu
including	217	220	3m	@ 0.1%Cu

Table2 – Selective assay results from Cowell drilling
-----------------------------------------------------------	--	--

The drilling results confirm widespread alteration and mineralisation within the Cowell license areas, however targeting of higher grade and/or greater widths of mineralisation has proven to be problematic to date. An agreement with UraniumSA Limited has been reached whereby it will carry out a program of airborne geophysics and basement sampling drill traverses which are expected to provide increased information for future targeting.

EXPLORATION UPDATE

During the quarter, the Company commissioned an airborne Versatile Time Domain Electromagnetic (VTEM) survey over 521 line kilometres of selected portions of its Tasmanian tenements. Results of the survey have been processed and some of the initial targets generated are discussed below.

A considerable amount of the company's exploration activity in SA was conducted by its joint venture partners.

COPPER/GOLD

Robins Rise JV (SA) (Stellar 100%: Red Metal able to earn 60%)

Red Metal completed an 10 hole RC program totalling 1,569m during the quarter. All holes, apart from one (over the Woorong magnetic high), adequately tested targets in the basement. The Woorong hole ended prematurely due to high water flows and may be tested at a later stage depending on rig availability. Those holes that reached basement encountered a quartz-feldspar gneiss with variable amounts of garnet and magnetite. Minor pyrite and trace chalcopyrite were also observed in the basement gneiss. Red Metal is currently reviewing the results.

Tarcoola Ridge gold (SA) (Stellar100%)

Under a 12month access agreement, LIDDS Pty Ltd drilled three diamond holes to sample gold mineralisation in the vicinity of the historic Perseverance Mine workings at Tarcoola Ridge. Assay results are not yet available. Under the terms of the joint venture agreement, Stellar will be entitled to a sliding royalty, increasing to 10% of all gold produced after the first 15,000 oz.

Panama gold (NSW) (Stellar100%; Carpentaria Exploration able to earn 51%)

Carpentaria Exploration Ltd. has commenced a program of detailed surface sampling and geophysical surveying over the extensive zones of historical gold pits within the Panama license, south of Broken Hill.

North Bendigo (VIC)

Stellar has elected to restructure its interest from a contributing 50% interest to a 2% production royalty.

NICKEL/TIN

Dundas (TAS) (Stellar 100%)

Core from previous drill programs at the Razorback tin mine was inspected and checked against 3D modelling results. In addition, historic estimates of mineralised volumes were also checked against the 3D model with a view to identifying untested zones. Analysis of results to-date suggests a reduced chance of identifying a 1.0 million tonne target resource at Razorback. This conclusion was also supported by the modest VTEM anomaly over Razorback and the lack of repetition of the VTEM anomaly along the Razorback structure.

Heemskirk (TAS) (Stellar 100%)

The VTEM survey has highlighted 3 moderate strength conductors in the NW part of the licence. One of these is along strike, in a similar setting to the known drilled Alpine copper mineralisation. The other two are located under shallow laterite cover and are considered prospective for base metal mineralisation thus requiring ground follow up and drilling. The latter two anomalies fall into licenses which are planned for inclusion in the Columbus IPO.

Ramsay (TAS) (Stellar 100%)

Access to three EM/Magnetic anomalies on the eastern side of the licence was checked during the quarter. A plan for drill access during the summer exploration period was also devised.

URANIUM

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

UraniumSA has continued its drilling program across the Kingoonya palaeochannel project near Tarcoola during the quarter and is currently reviewing results. Agreements to allow rig access to prospective regions of the palaeochannel south of the Trans-Continental Railway are now in place and drilling is scheduled to commence in this region during the coming quarter.

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

Toro Energy has expended over $800,000 on EL3372 ($1.5 million required to earn 51% interest) and has confirmed zones of low level, continuous U mineralisation associated with carbonaceous material at shallow depth, in two main areas. The company is now developing a work program for EL3369W to the south of the Warrior project area, where geophysical data indicates a continuation of the prospective channel (Figure 3).

Figure 3 – Warrior JV Area showing two areas of confirmed U mineralisation and inferred continuation of the Warrior Palaeochannel into EL3369W

ZINC

Goldfinger (NSW) (Stellar 80%)

Under the terms of the Joint Venture, CBH Resources/AngloAshanti Australasia has elected to dilute to a 20% free carried interest. Stellar is planning a 2,000m RAB/Hammer drill program for the fourth quarter of 2008 to investigate areas within the extensive Goldfinger and Galena Hill geochemical trends for shallow, higher grade, Ag /Pb/ Zn mineralisation.

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:

Peter Blight	Tel:	(03) 9909 7618		Email: peter.blight@stellarresources.com.au
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

About Stellar Resources

Stellar Resources Limited listed on the ASX in April 2005 as an exploration company with a significant tenement position in South Australia's highly prospective copper-gold province and Tasmania's proven west coast basemetals province. The strength of the company's tenement position, built before the recent exploration boom, is reflected in the quality of projects within the portfolio and the large number of companies funding joint ventures with Stellar. (Joint venture partners include Toro Energy Limited, UraniumSA Limited, Red Metal Limited and Carpentaria Exploration Limited)

In early 2008, Stellar's strategy shifted from greenfields exploration to a greater focus on advanced exploration and development projects. In South Australia, the Tarcoola Iron Ore Project is now the company's key focus while in Tasmania, acquisition of a 60% interest in the Heemskirk Tin Project in March 2008 provided a particularly attractive development project that is now the core asset in the proposed Columbus Metals IPO. The company continues to hold a number of IOCGU exploration opportunities in South Australia and nickel/tin prospects in Tasmania.

The 100% owned Tarcoola Iron Ore Project comprises two large magnetite deposits at Coolybring and Wilgena Hill located at Tarcoola in central South Australia. The deposits lie within 10km of the standard gauge, open access Trans-Australia railway line which connects them with the iron ore export port of Whyalla and the proposed export terminal at Port Bonython. Current drilling activity is focused on Coolybring due to ease of access and positive grade and metallurgical results so far. Coolybring is potentially a very large magnetite deposit and may also host high grade hematite mineralisation.

Columbus Metals plans to focus on development of the Heemskirk Tin deposits which represent the largest undeveloped high-grade historic tin resource in Australia. Previous work by Aberfoyle over 25 years ago shows significant potential to substantially increase the resource size.

Stellar Resources – adding value through mineral development.

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 June 2008

Consolidated statement of cash flows

	Cash flows related to operating activities		Current quarter$A'000	Year to date(12 months)$A'000
1.1	Receipts from product sales and related debtors		–	–
1.2	Payments for	(a) exploration and evaluation	(1,108)	(3,320)
		(b) development	–	–
	(c) production		–	–
1.3	Dividends received	(d) administration	(177)	(907)
1.4	Interest and other items of a similar nature received		–72	–291
1.5	Interest and other costs of finance paid		–	–
1.6	GST (paid)/recovered		11	295
1.7	Other –		–	–
	Net Operating Cash Flows		(1,202)	(3,641)
	Cash flows related to investing activities
1.8	Payment for purchases of:	(a) prospects	(190)	(300)
		(b) investments	–	–
		(c) other fixed assets	(11)	(64)
1.9	Proceeds from sale of:	(a) prospects	–	–
		(b) investments	–	–
		(c)other fixed assets	9	9
1.10	Loans to other entities		–	–
1.11	Loans repaid by other entities		–	–
1.12	Other:–
	Net investing cash flows		(192)	(355)
1.13	Total operating and investing cash flows(carried forward)		(1,394)	(3,996)

+ See chapter 19 for defined terms. 080074SRL

1.13	Total operating and investing cash flows(brought forward)	(1,394)	(3,996)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	–	1,000
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	–	(1)
	Net financing cash flows	–	999
	Net increase (decrease) in cash held	(1,394)	(2,997)
1.20	Cash at beginning of quarter/year to date	3,569	5,172
1.21	Exchange rate adjustments to item 1.20	–	–
1.22	Cash at end of quarter	2,175	2,175

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 1.2 121
• 1.24 Aggregate amount of loans to the parties included in item 1.10 –
• 1.25 Explanation necessary for an understanding of the transactions

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

5,853,333 ordinary securities issued at 15 cents each for acquisition retention licence RL 5/1997 Zeehan, TAS

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

Current quarter $A'000

+ See chapter 19 for defined terms. 080074SRL.doc

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	–	–

Estimated cash outflows for next quarter

	Total	800
4.2	Development	–
4.1	Exploration and evaluation	800
		$A'000

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown inthe consolidated statement of cash flows) to the related itemsin the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	455	463
5.2	Deposits at call	1,720	3,106
5.3	Bank overdraft	–	–
5.4	Other	–	–
	Total: cash at end of quarter (item 1.22)	2,175	3,569

Changes in interests in mining tenements

		Tenementreference	Nature of interest(note (2))	Interest atbeginning ofquarter	Interest atend ofquarter
6.1	Interests in miningtenements relinquished,reduced or lapsed		See Attachment A
6.2	Interests in miningtenements acquired orincreased		See Attachment A

+ See chapter 19 for defined terms. 080074SRL

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 persecurity (see note 3)(cents)	Amount paid up persecurity (see note 3)(cents)
7.1	Preference+securities(description)
7.2	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returns ofcapital, buy-backs,redemptions
7.3	+Ordinarysecurities	77,891,501	77,891,501
7.4	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returns ofcapital, buy-backs	5,853,333	5,853,333	15 cents	15 cents
7.5	+Convertible debtsecurities(description)
7.6	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough securitiesmatured, converted
7.7	OptionsDirectorsEmployeesExec & EmployeesExec & Employees	3,500,000375,0001,175,000500,000	NilNilNilNil	Exercise Price30 cents30 cents30 cents25 cents	Expiry DateSRZAK 10/12/2008SRZAM 19/08/2009SRZAO 30/11/2010SRZAA 31/01/2011
7.8	Issued duringquarter
7.9	Exercised duringquarter
7.10	Expired/cancelledduring quarter
7.11	Debentures(totals only)
7.12	Unsecured notes(totals only)

+ See chapter 19 for defined terms. 080074SRL.doc

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.

Print name: M J S Drummond

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.

== == == == ==

+ See chapter 19 for defined terms. 080074SRL

Attachment A

		Tenementreference	Nature of interest(note (2))	Interest atbeginning of	Interest atend of
				quarter	quarter
6.1	Interests in miningtenements relinquished,reduced or lapsed	EL 3089 (SA)	Exploration Licence Tarcoola, SAexpired	100%	nil
		EL 4525 (VIC)	Joint Venture	50%	Note 2
6.2	Interests in miningtenements acquired orincreased	RL 5/1997 (TAS)	Retention Licence Purchase,Zeehan, TAS	nil	60%
		EL 4632 (NSW)	Triako JV by election of JVpartners to not contribute to ongoing program	60%	80%
		EL 4125 (SA)(previously ELA2007/379)	Exploration Licence East Wirrida,SA Granted	nil	100%
		ELA 2008/174	Exploration Licence ApplicationTarcoola, SA Granted (see note 1)	nil	100%

• Note 1: ELA 2008/174 replaces EL 3089
• Note 2: Entitled to 2% royalty on gross production over the defined surveyed area

+ See chapter 19 for defined terms. 080074SRL.doc