STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2010

Jul 28, 2010

srzinfo@stellarresources.com.au ASX ReleaseQuarterly Report

For the period ended 30 June 2010

Highlights

Iron Ore Project (SA)

• The first ever drilling at Hicks Hill defined a magnetite body at least 175 metres wide and lying within 30 metres of surface.
• High quality concentrate grading 69% iron and 3.8% silica with no deleterious elements was produced from the drill samples.

Heemskirk Tin Project (TAS)

• Three diamond drill holes targeting gaps in near‐surface historic drilling at Queen Hill have provided good sample for metallurgical test work.
• The first two holes provided good intersections of 4.3m at 0.92% tin and 6.0m at 1.2%.

Uranium Exploration (SA)

JV partner UraniumSA intersected uranium mineralisation the two northerly traverses drilled during first pass exploration of EL 4242.

Corporate

• Stellar held cash of $1.9 million at 30 June 2010.
• Mr Phillip Harman has joined the board as a Non‐executive Director.

Targets for September Quarter 2010

• Application for exploration clearance at Hicks Hill.
• Completion of drilling and metallurgical testwork at Heemskirk Tin.
• Drilling of the Panama Hat gold prospect by joint venture partner Carpentaria Exploration.

About Stellar:

Stellar Resources (SRZ) is focusing on the development of its iron ore and tin projects and advancement of uranium and base metal exploration properties. The company holds a portfolio of tenements located in South Australia, Tasmania and New South Wales that have excellent development potential. Key projects include: Tarcoola Iron Ore located in central South Australia, Heemskirk Tin located near Zeehan in Tasmania, Pirie Basin Uranium located north of Cowell in South Australia and Warrior Uranium located west of Tarcoola in South Australia. The company aims to create shareholder value by identifying and developing mature exploration properties.

ASX Code: SRZ

29 July 2010

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

PROJECTS

Tarcoola Iron Ore Project (Stellar 100%)

The Tarcoola Iron Ore Project is located 8 kilometres from the town of Tarcoola in central South Australia and within 10 kilometres of the Trans‐Australian railway which links the project to the proposed bulk commodity export terminal at Port Bonython. The Coolybring and Hicks Hill magnetic anomalies comprise the Tarcoola Iron Ore Project (see Figure 1).

Figure 1 Tarcoola locality Map and Regional Magnetic Image Locating Hicks Hill and Coolybring

Hicks Hill

Six reverse circulation drill holes were completed across the width of coincident gravity and magnetic anomalies, profiling the mineralisation east of Hicks Hill. The purpose of the holes was to test the grade, recovery and quality of magnetite concentrate produced from the samples and to define the width of the mineralisation.

Results show a shallow magnetite body that lies within 30 metres of the surface at the northern end and deepens at a moderate rate to the south. The horizontal width of the body is at least 175 metres (see Figure 2) The mineralisation has a fine grained layered texture similar to banded iron but without the macroscopic silica banding evident at Coolybring.

Figure 2 Interpretative Geological Drill Section – Hicks Hill

Importantly, the assay results compiled in Table 2 show that Hicks Hill mineralisation is amenable to the production of a high grade premium concentrate. Iron content of the concentrate is 69% with 3.8% silica and negligible concentrations of deleterious elements alumina, phosphorus and sulphur.

Average iron head grade of 28% is relatively high with most of the iron contained in the form of magnetite. The high mass recovery of 33% is also indicative of high magnetite content.

Hole	From	To	Interval	Head	Mass			Concentrate Grade				Fe
Number				Grade	Recovery	Fe	SiO2	Al2O3	P	S	LOI	Recovery
	m	m	m	Fe %	%	%	%	%	%	%	%	%
RC02	30	120	90	29	40	69	4.2	0.2	0.01	0.01	-3.0	93
RC02	126	156	30	27	34	69	3.8	0.1	0.00	0.01	-3.1	84
RC02	162	178	16	22	32	69	4.6	0.2	0.00	0.01	-3.2	96
RC03	64	82	18	29	26	69	3.2	0.1	0.01	0.03	-2.4	63
RC04	90	102	12	30	35	69	3.1	0.4	0.01	0.02	-3.0	79
RC06	84	120	36	27	16	69	2.8	0.2	0.00	0.02	-2.5	43
Average			202*	28	33	69	3.8	0.2	0.00	0.02	-2.9	80

Table 2 Hicks Hill Assay Results

97% passing 38 micron screen

Averages are weighted down hole intersections

* Total - all other numbers in this row are weighted averages

Heemskirk Tin Project (Stellar 60%)

The Heemskirk Tin project (held in joint venture with Gippsland Limited) at Zeehan Tasmania has so far located three high grade tin deposits in Queen Hill, Severn and Montana. Queen Hill is the deposit closest to surface as indicated in Figure 3.

Stellar has commenced a diamond drilling program to sample the near surface mineralisation at Queen Hill and provide assay and metallurgical data in order to update the historic data base. The first two holes shown in Figure 3 and a third hole 20 metres to the northeast were completed during the quarter and returned the following intersections:

• QH2980‐1 intersected 6.0m grading 1.22% tin from 64m
  • best result was 1.0m at 2.2% tin from 69m.
• QH2980‐2 intersected 4.3m grading 0.92% tin from 75.7m
  • best result was 0.7m at 2.45% tin from 75.7m.
• QH3000‐1 intersected 0.7m grading 0.65% tin from 62.0m

The tin mineralisation is hosted by quartz/pyrite fracture filling and siderite veined volcanoclastic towards the base of the target zone shown in Figure 3. These preliminary results serve to better define the mineralised zone and indicate good grades over potentially mineable widths.

Once all holes are completed, a metallurgical testing program will be undertaken to determine the optimum processing route and expected tin recovery. The negligible level of acid soluble tin in the first three holes is encouraging as it suggests that there are only minor amounts of deleterious tin mineral stannite present.

EXPLORATION

Pirie Basin Uranium

Stellar is encouraged by the results of drilling conducted by joint venture partner UraniumSA Limited (USA) on Stellar's EL 4242 in the Pirie Basin of South Australia.

USA drilled 15 holes in its first pass regional exploration program and provided Stellar with initial field results that show uranium mineralisation in three out of four holes in the north drill traverse and two out of six in the middle traverse (see Figure 4). The south traverse, located a further 2.5 kilometres south of the middle traverse is un‐mineralised.

Drill hole MRM 136 provided the best intersection with 7.6m at 0.041% e U3O8 from 58.1m with a high grade intercept of 1.4m grading 0.106% e U3O8 also from 58.1m. In addition, MRM 127, 128, 137 and 138 also provided meaningful intersections. USA concluded that the results from MRM 136 and 137 are "well above the level of potential economic significance".

The north traverse on EL 4242 lies 1,200 metres south of the nearest drill traverse across USA's Plumbush discovery with the middle traverse located a further 800 metres south. The intersections show that in a regional sense the Plumbush mineralisation appears to trend well into EL 4242 and may cover an area of at least 4 square kilometres. USA has advised Stellar that it is planning follow‐up exploration in EL 4242.

Figure 4 Uranium intersections in and around EL 4242 and planned drill traverses

Under the terms of the joint venture, USA can elect to continue now that the 15 hole drilling program is complete. It has two years from the date of election to nominate 40% of the lease area as the continuing project. USA then has the right to earn a 73% interest in the continuing project by meeting expenditure commitments up to definition of a JORC compliant resource.

EL 3978 (SA) (Stellar 100%)

EL 3978 lies to the south of EL 4242 and according to historic drilling hosts a similar Eocene sand sequence to the uranium mineralised sands in EL 4242. Several parties have expressed interest in joint venturing this property. Stellar is currently considering its options.

Warrior (SA) (Stellar 100%) No work was undertaken during the quarter

Copper/Gold

Gourlays (TAS) (Stellar 100%)

A drilling proposal is being prepared to test previously undrilled magnetic highs.

Panama Hat (NSW) (Stellar 100%)

Joint venture partner Carpentaria Exploration Limited has advised that they are preparing an exploration program to follow‐up rock chip and gold in soil anomalism associated with the historic Williams prospect.

Cleanskin/Long Creek (SA) (Stellar 100%)

These licences cover a number of highly prospective IOCGU targets in shallow crystalline basement in an area known as the Coober Pedy ridge. Stellar is considering joint venture possibilities for the licences.

Nickel/Copper

Huskisson (TAS) (Stellar 100%)

Stellar was granted EL 26/2009, Huskisson, on the west coast of Tasmania. The tenement is considered to be highly prospective for nickel, copper and platinum group metals. There is no historic drilling on the tenement.

Lead/Zinc

Goldfinger (NSW) (Stellar 60%) Review of historic drilling data is on‐going.

CORPORATE

As at 30 June 2010, the company held cash and term deposits of $1.9 million. Stellar also holds 4.5 million USA shares presently valued at $0.9 million.

On 7 June, Mr Christopher Anderson resigned as an Executive Director to better focus on his consulting business. Mr Anderson has however advised he will remain available to Stellar as a consultant, which is very much valued.

Mr Phillip Harman joined the board as a Non‐executive Director. Mr Harman is familiar with many of Stellar's assets having previously been a director of Stellar's predecessor company, Gravity Capital Limited.

MARKETS

Iron Ore

Spot prices for 62% iron ore delivered to China declined from US$174/t in April to US$130/t in July due to destocking by Chinese steel mills. In the last two weeks, destocking appears to have ceased and spot iron ore prices have rallied in‐line with steel prices.

Tin

LME tin prices held up well against the trend of declining metal prices over the last quarter increasing marginally from US$19,100/t in April to US$19,300 in July. Tight conditions were caused by reduced production from Indonesia at a time of rising demand and resulted in a 37% decline in LME stocks.

Uranium

Spot uranium prices have risen over the last two weeks from US$41.50/lb to US$43.50/lb after remaining flat for the quarter. Disrupted production from a conversion operation in the US and an increase in short‐term buying by utilities and suppliers caused the price rise.

The drill and exploration results reported herein, insofar as they relate to mineralisation, are based on preliminary field data that has not been subject to formal independent verification. However, the data is of sufficient reliability for exploration purposes and was compiled by Mr C G Anderson (Fellow of the Australasian Institute of Mining and Metallurgy) who is a Consultant of the Company. Mr Anderson has sufficient experience relevant to the style of mineralisation and type of deposits being considered to qualify as a Competent Person as defined by the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2004 Edition). 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:

Peter Blight CEO Tel: 03 9909 7618 Email: peter.blight@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

ABN Quarter ended ("current quarter")

96 108 758 961 30 June 2010

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	(207)	(872)
	(b) development	–	–
	(c) production	–	–
	(d) administration	(135)	(528)
1.3	Dividends received	–	–
1.4	Interest and other items of a similar nature received	35	91
1.5	Interest and other costs of finance paid	–	–
1.61.7	GST (paid)/recoveredOther –	17	53
		–	–
	Net Operating Cash Flows	(290)	(1,256)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects	–	–
	(b) investments	–	–
	(c) other fixed assets	(4)	(4)
1.9	Proceeds from sale/deposit of: (a) prospects	–	350
	(b) investments	–	1,029
	(c)other fixed assets	–	30
1.10	Loans to other entities	–	–
1.11	Loans repaid by other entities	–	–
1.12	Other:	(39)	(42)
	–
	Net investing cash flows	(43)	1,363
1.13	Total operating and investing cash flows(carried forward)	(333)	107

+ See chapter 19 for defined terms. 100070SRL

1.13	Total operating and investing cash flows(brought forward)	(333)	107
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	–	–
1.15	Proceeds from capital raising (Share Purchase Plan)	–	–
1.16	Proceeds from borrowings	–	–
1.17	Repayment of borrowings	–	–
1.18	Dividends paid	–	–
1.19	Other – cost of issue	–	–
	Net financing cash flows	–	–
	Net increase (decrease) in cash held	(333)	107
1.20	Cash at beginning of quarter/year to date	2,267	1,827
1.21	Exchange rate adjustments to item 1.20	–	–
1.22	Cash at end of quarter	1,934	1,934

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 56
• 1.24 Aggregate amount of loans to the parties included in item 1.10 –
• 1.25 Explanation necessary for an understanding of the transactions

Directors fees and remuneration $43k; rent/office support paid to Euro Exploration Services, Adelaide, $4k; rent/office support, Melbourne, paid to Mineral Deposits Limited $9k

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

Current quarter $A'000

+ See chapter 19 for defined terms. 100070SRL.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	500
4.2	Development	–
4.1	Exploration and evaluation	500
		$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	47	106
5.2	Deposits at call	1,887	2,161
5.3	Bank overdraft	–	–
5.4	Other	–	–
	Total: cash at end of quarter (item 1.22)	1,934	2,267

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. 100070SRL

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) Increases
	through issues(b) Decreasesthrough returns of
	capital, buy-backs,redemptions
7.3	+Ordinarysecurities	94,821,858	94,821,858
7.4	Changes duringquarter
	(a) Increasesthrough issues
	(b) Decreasesthrough returns ofcapital, buy-backs
7.5	+Convertible debtsecurities(description)
7.6	Changes duringquarter(a) Increases
	through issues(b) Decreases
	through securitiesmatured, converted
7.7	OptionsDirectors	–	–	Exercise Price–	Expiry Date–
	Exec & EmployeesExec & Employees	1,075,000	Nil	30 cents	SRZAO 30/11/2010
7.8	Issued during	500,000	Nil	25 cents	SRZAA 31/01/2011
7.9	quarterExercised during	–	–	–	–
	quarter	–	–	–	–
7.10	Expired/cancelledduring quarter	–	–	–	–
7.11	Debentures(totals only)
7.12	Unsecured notes(totals only)

+ See chapter 19 for defined terms. 100070SRL.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.

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 6: Accounting for Extractive Industries and AASB 107: 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. 100070SRL

Attachment A

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at	Interest at
		reference	(note (2))	beginning of	end of
				quarter	quarter
6.1	Interests in miningtenements relinquished,reduced or lapsed	EL 3583	Pernatty, SA, relinquishing licence	100%	100%
6.2	Interests in miningtenements acquired orincreased	EL 3655	Exploration Licence Kingoonya,SA, transfer pending	Nil	Nil
		ELA 2009/00330	Exploration Licence ApplicationLake Gairdner, SA, applicationpending	Nil	Nil
		ELA 2009/00339	Exploration Licence ApplicationLake Woorong, SA, applicationpending	Nil	Nil
		EL 26/2009	Exploration Licence ApplicationHuskisson, TAS, ministerialapproval granted	100%	100%
		EL 4525	Robins Rise, SA, licence renewed(formerly EL3336)	100%	100%

+ See chapter 19 for defined terms. 100070SRL.doc