STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2012

Jul 30, 2012

Stellar Resources (SRZ) is an exploration and development company with assets in Tasmania and South Australia. The company is rapidly advancing its high‐grade Heemskirk Tin Project, located near Zeehan in Tasmania, and plans to become Australia's second largest producer of tin.

As at 30 June 2012 Market cap: A$15.64m (7.0c) Cash (30 June): $4.9 million Shares: 223,447,547

Main Shareholders Gippsland Limited 19.5% Resource Capital Fund 16.2% JP Morgan Nominees 9.5%

Board & Management Phillip G Harman Non‐Executive Chairman Thomas J Burrowes Non‐Executive Director David J Isles Non‐Executive Director Thomas H Whiting Non‐Executive Director Peter G Blight Chief Executive Officer Christina R Kemp Company Secretary

ASX Code: SRZ

ABN 96 108 758 961 Level 17, 530 Collins Street Melbourne Victoria 3000 Australia

Telephone +61 3 9618 2540 Facsimile +61 3 9649 7200

www.stellarresources.com.au

For the period ended 30 June 2012

Highlights

• Heemskirk Tin Project delivering excellent drilling results from Severn deposit
• Completed 2,850 metres or 29% of 10,000 metre diamond drilling program.

Best Results:

• ZS113 record high grade intersection of 7 metres @ 3.97% tin.
• ZS110 intersected three tin lodes with a best result of 8 metres @ 1.77% tin.
• ZS111W provided a best result of 8 metres @ 1.59% tin.

Corporate

• Stellar held cash reserves of $4.9 million as at 30 June 2012.
• Sale of non‐core gold exploration assets at Tarcoola.

Targets for September Quarter

• Assay results from diamond drill holes ZS112, ZS112W, ZS113W, ZS115, ZS116 and ZS117.
• Commence drilling exploration targets to the southwest of Severn.
• Initial results from Severn metallurgical test work.
• PFS plant engineering and design to commence.

HEEMSKIRK TIN PROJECT (100% Owned)

Overview

During the quarter, Stellar had two diamond drilling rigs working on an infill program at the Severn deposit. A third diamond drilling rig commenced late in the quarter, testing shallow exploration targets immediately north of the Queen Hill deposit.

Trial pre‐collar drilling with a rotary/percussion rig was terminated after it was shown that it offered no advantage over a diamond drilling rig.

At Severn, five diamond drill holes (ZS108, ZS109, ZS110, ZS111 and ZS113) were completed during the quarter. Wedge holes (ZS110W and ZS111W) were also drilled to provide duplicate intersections of the mineralisation found in the original holes and to assist with our understanding of tin mineralisation continuity.

Environmental monitoring of water quality continued at the Heemskirk and St Dizier deposits.

Metallurgical bench top studies continued on Queen Hill samples with preparatory work conducted on drill samples from the Severn deposit ahead of testing in the proposed Queen Hill circuit.

Diamond Drilling Results

The current drilling program is designed to upgrade the definition of the known tin mineralisation and to identify new lodes within the broader stock‐work of iron sulphide (pyrite and pyrrhotite) veins that make up the Severn mineralised system. Any new lodes identified, will be tracked beyond the currently known resource envelope.

In the southwest of the Severn deposit, drill spacing has been closed in to 50 metre centres. Multiple tin lodes were identified in all holes apart from ZS108. This hole intersected the iron sulphide stock‐ work but may have drilled below or between tin lodes.

ZS113 provided a record result for the Heemskirk Project with a 42 metre intersection grading 1.11% tin from 265 metres down‐hole. The intersection included an upper lode of 7 metres grading 0.97% tin from 279 metres and a lower lode of 12 metres grading 2.58% tin from 292 metres, including 7 metres grading 3.97% tin (see Table 1).

ZS110, drilled 110 metres to the southwest of ZS113, also provided a strong result with three tin lodes. An upper lode grading 0.92% tin over 8 metres from 255 metres, a middle lode grading 0.80% tin over 7 metres from 324 metres and a lower lode grading 1.77% tin over 8 metres from 336 metres.

ZS110W was a wedge hole drilled from 290 metres down ZS110 and confirmed the grade and width of the middle and lower lodes. (For technical reasons the wedge could not be started higher up ZS110 to test the upper lode.)

ZS109, ZS111 and ZS111W tested the interpreted southwest margin of the Severn body. They showed continuity of tin mineralisation in multiple lodes 30 metres to the northeast of historical drill holes ZS65 and ZS43 (see Figure 1).

Hole No	From	To	Interval	Tin	Sol Tin
Severn	m	m	m	%	%
ZS108	417.0	418.0	1.0	0.62	na
ZS109	188.0	191.0	3.0	0.71	0.01
	251.0	254.0	3.0	0.59	0.01
	275.0	282.0	7.0	0.50	0.01
ZS110	255.0	263.0	8.0	0.92	0.01
	324.0	331.0	7.0	0.80	0.01
	336.0	344.0	8.0	1.77	0.01
ZS110W	324.0	331.0	7.0	1.20	0.01
	361.0	367.0	6.0	1.21	0.01
ZS111	211.0	218.0	7.0	0.50	0.01
	233.0	235.0	2.0	0.72	0.01
ZS111W	214.0	216.0	2.0	0.59	0.01
	227.0	235.0	8.0	1.59	0.01
ZS113	265.0	307.0	42.0	1.11	0.02
	279.0	285.0	6.0	0.96	0.02
	292.0	304.0	12.0	2.58	0.02
including	295.0	302.0	7.0	3.97	0.01
including	299.0	300.0	1.0	12.70	0.03

Table 1. Significant Assay Results – Severn Diamond Drilling

Refer to ASX releases on 26 June and 17 July for a more detailed description of the results, diamond drill‐hole collar coordinates and individual assay results.

4

Figure 1: Schematic Long‐section Severn and Montana (Oblique) Tin Deposits

Figure 2. Plan View of Drill Hole Locations

Exploration

Computer modelling of high resolution aeromagnetic data was completed and identified two significant primary targets to the southwest of Severn as well as a number of small shallow secondary targets elsewhere on the retention licence. Figure 3 shows the position of the primary targets Severn South and Golf Course. Drilling of the primary targets is planned to begin late in September quarter.

Figure 3. Surface Projection of Magnetic Drill Targets South of Severn

Two shallow secondary magnetic targets located to the north and north of Queen Hill were tested during the quarter (ZS114 and ZS118). Both holes intersected un‐mineralised volcaniclastic sediments.

Drilling Plan

Diamond drill hole ZS112, located 50 metres to the southwest of ZS113 and ZS113W are complete. ZS112W is currently underway and should be complete in early August (see Figures 1 and 2 for locations). Assay results for these holes should be available in the second half of August.

ZS116 is designed to test for mineralisation out side of the Severn resource envelope and 50 metres up‐dip from the mineralised intersection in ZS113. Drilling of this hole has commenced.

ZS115 will test the lower edge of the Severn resource envelope at a position 200 metres below the ZS113 mineralisation. Drilling of this hole is planned to commence in late August.

ZS117 is planned to drill below the Queen Hill deposit to test for an extension of the mineralisation at depth.

Drilling of the primary magnetic exploration targets to the southwest of Severn is planned to commence late in the September quarter.

Metallurgy Update

Initial characterisation of Heemskirk's cassiterite ore showed that a conventional gravity/flotation process route would provide the best results. During the quarter, test work at the Burnie Research Laboratory continued under the guidance of experienced tin metallurgist Ron Goodman.

Queen Hill work focused on refinements to the classification and gravity circuit and also involved initial acid leach tests on tin float concentrates. The acid leach results gave a threefold increase in tin float concentrate grade by removing acid soluble siderite (iron carbonate) the main gangue mineral. Following these positive results, no further work is planned for the tin float/acid leach circuit.

The next stage of work will involve regrind of the gravity tail to ‐53 micron, further classification and gravity separation with the fine tail (‐20 micron) going to tin float. Test work to remove fine silica from the gravity concentrate using a centrifugal concentrator is planned followed by a lock cycle test to validate the complete Queen Hill circuit.

Severn mineralised samples were taken from diamond drill holes ZS107W, ZS110, ZS110W and ZS113. They will be crushed and sized ahead of heavy media separation. Test work on the upgraded samples using the Queen Hill flow sheet is due to commence in the September quarter.

Results to date indicate that the goal of 70% recovery into a 50% tin concentrate is within reach.

Preliminary Feasibility Study Progress

3D modelling of the drilling results and geological data has commenced following contracting of Tim Callaghan, an experienced local geologist (Renison Bell, Avebury, King Island Scheelite).

Mining engineering studies will commence early in March quarter 2013, once the resource review is underway.

Metallurgical testing has advanced to the stage where major elements of the process circuit are defined with only minor refinements still to be tested. Accordingly, work can now commence on plant layout, engineering cost studies and the provision of services for a 600,000 annual tonne treatment plant. Stellar is in the process of assembling a study team.

Environmental Monitoring

Water sampling from six sites, including headwaters above the area to be affected by mining and drainage channels below this area, continued through the quarter.

Routines were reviewed for the determination of acid‐generating and acid‐neutralising waste rock and ore compositions. Neutralising of acid generating surface waste is a key consideration for environmental management.

Compilation of a Notice of Intent for the Heemskirk Tin Project for submission to The Board of the Tasmanian Environment Protection Authority is planned for the September quarter.

EXPLORATION

Iron Ore

Tarcoola Iron Ore (SA) (Stellar 100%)

The Tarcoola Iron Project is located 8 kilometres from the town of Tarcoola in South Australia. It also lies within 10 kilometres of the Trans‐Australia railway which links the project to the proposed bulk commodity export terminal at Port Bonython. The project comprises Coolybring, with an exploration target of 700 million tonnes of banded iron and Hicks Hill, a magnetite prospect.

No exploration was conducted during the period.

Copper/Gold

EL 40/2010 Heazlewood Hill (TAS) (Stellar 100%)

Figure 4 Electromagnetic Image and Soil Geochemistry – Heazlewood Hill

3D modelling of airborne electromagnetic and magnetic data along with coincident copper gold soil geochemistry has identified a volcanogenic massive sulphide target. The historic Jasper copper gold workings lie a few hundred metres up‐dip from an extensive, strong conductor and may represent near surface veining on the periphery of the target (see Figure 4). The conductor lies at a depth of approximately 150 metres below the surface. Further soil sampling to more tightly define drill targets is planned for September quarter with a program of drilling to follow in December quarter, once weather conditions improve.

AngloGold Ashanti Joint Venture (SA)

In October 2010, AngloGold Ashanti Australia Ltd (AGAA) agreed to joint venture into four Stellar exploration licences (ELs 3752, 3753, 4882 and 4573) in the Gawler Craton of South Australia to explore for world‐class iron oxide copper gold mineralisation. Under the terms of the agreement, AGAA has to spend $5 million within six years to earn a 75% interest in the tenements.

AGAA successfully completed heritage clearance for a gravity survey over an area within EL 3752 and EL 3753 which are located to the south of Coober Pedy. The survey commenced in July and is designed to identify iron oxide copper gold drilling targets. A further heritage survey will be required once specific drill sites are located.

No work was conducted on EL's 4882 and 4573, which lie to the south of Kingoonya, pending the execution of a Part 9B Native Title Access Agreement with the Gawler Ranges Aboriginal Corporation.

EL 36/2003 Whyte River (TAS) (Stellar earning 75%)

Stellar has entered into a joint venture with Bass Metals Limited on EL 36/2003 Whyte River. Under the terms of the joint venture, Stellar can earn a 75% interest in all minerals apart from tin, tungsten and iron by sole funding the first $500,000 of exploration over the next three years.

The next stage of reconnaissance exploration is planned for the December quarter.

Uranium

EL 4242 Midgee (SA) (Stellar 100%)

Joint venture partner UraniumSA Limited can earn a 73% interest in 40% of the tenement by identifying a JORC resource before September 2012.

UraniumSA Limited plans to conduct a drilling program on EL 4242 in the September quarter in order to test for extensions of the Plumbush deposit.

EL 3978 Cowell (SA) (Stellar 100%)

Renaissance Uranium Limited has the right to earn a 75% interest in the tenement by sole funding $2.5 million of expenditure over four years.

There was no exploration on the licence by Renaissance during the quarter.

Lead/Zinc

EL 4632 Goldfinger (NSW) (Stellar 80%)

An area reduction of 50% was negotiated with joint venture partners as a requirement of the exploration licence renewal, with the full area of interest retained.

Nickel

EL 49/2004 Rayne (TAS) (Stellar 100%)

MMG Exploration Pty Ltd, a wholly owned subsidiary of Minmetals Resources Limited (HKEX: 1208), is farming into Stellar's Rayne exploration licence on the west coast of Tasmania. The Rayne tenement is considered prospective for Voisey's Bay style nickel sulphide mineralisation.

No additional work was conducted by MMG during the quarter.

Coal

Penrhyn Coal Royalty

Stellar holds a royalty of $0.60/tonne of coal or iron ore mined from EL 4525 located south of Coober Pedy in South Australia. Southern Coal Holdings Pty Ltd is the holder of this tenement and has released a total coal resource estimate of 352.4 million tonnes following a program of resource definition drilling. Southern Coal is currently investigating alternative approaches to advance the project. No work was conducted on the project during the quarter.

CORPORATE

At the 30 June 2012, the company held cash and term deposits of $4.9 million. Stellar also has investments held in Hiltaba Gold Pty Ltd (a wholly owned subsidiary), notably 3.88 million shares in UraniumSA Limited valued at $349,941, 1.50 million shares and 1.50 million unlisted options in Renaissance Uranium Limited valued at $108,015.

750,000 ordinary shares and 750,000 unlisted options were issued and allotted to Hiltaba Gold Pty Ltd by Renaissance Uranium Limited on election to earn into EL 3978 in the Pirie Basin of South Australia.

Stellar Resources Limited has reached agreement to sell its interest in any gold, silver and copper produced from Exploration Licence 4167 and a royalty over gold production from a mineral claim within the licence area to Mungana Goldmines Limited. (Stellar will retain ownership of EL 4167 and all other minerals discovered on the licence). Consideration for the sale is $250,000 cash, a further conditional payment of $100,000 cash and minimum exploration expenditure on EL 4167 of $500,000 by 29 July 2013.

TIN MARKET

The LME tin price commenced the quarter at US$22,750/t, and trended downward to US$18,775/t by the end of June 2012 and has subsequently declined to US$17,800/t. According to the International Tin Research Institute (ITRI), the recent price trend reflects perceptions of weakening global growth and the impact of technical trading. The fact that LME stocks have also trended down during the quarter suggests that the fundamentals of the market remain robust. ITRI have also reported declining year to date production from the top three primary tin producers China, Indonesia and Peru of 6%, 5% and 10% respectively. In addition, Chinese tin consumers are taking advantage of the 23% discount of the LME price relative to the US$23,000/t Shanghai price to cover the production shortfall with imports. In the year to date, China's imports of refined tin have risen by 183% to 13,581 tonnes. ITRI also reported that China's year to date imports of tin concentrate rose by 12% year on year.

10

Competent Person Statement

The drill and exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr R K Hazeldene (Member of the Australasian Institute of Mining and Metallurgy and Member of the Australian Institute of Geoscientists) who is a Consultant of the Company. Mr Hazeldene 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 Hazeldene 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 CEO Tel: 03 9618 2540 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, 1/6/2010.

Name of entity

STELLAR RESOURCES LIMITED

ABN Quarter ended ("current quarter")

96 108 758 961 30 June 2012

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	(1,151)	(2,584)
	(b) development	–	–
	(c) production	–	–
	(d) administration	(70)	(545)
1.3	Dividends received	–	–
1.4	Interest and other items of a similar nature received	76	148
1.5	Interest and other costs of finance paid	–	–
1.6	Income taxes paid	–	–
1.7	Other – GST (paid)/recovered	122	233
	Net Operating Cash Flows	(1,023)	(2,748)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects	–	–
	(b) equity investments	–	–
	(c) other fixed assets	–	–
1.9	Proceeds from sale/deposit of: (a) prospects	–	–
	(b) equity investments	–	–
	(c) other fixed assets	–	–
1.10	Loans to other entities	–	–
1.11	Loans repaid by other entities	–	–
1.12	Other: Payment security deposits on prospects	–	(10)
	Proceeds security deposits occupancy	–	2
	Net investing cash flows	–	(8)
1.13Total operating and investing cash flows(carried forward)		(1,023)	(2,756)

+ See chapter 19 for defined terms. 120084SRL

1.13	Total operating and investing cash flows(brought forward)	(1,023)	(2,756)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	–	5,688
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: Payment for share issue costs	–	(341)
	Net financing cash flows	–	5,347
	Net increase (decrease) in cash held
		(1,023)	2,591
1.20	Cash at beginning of quarter/year to date	5,902	2,288
1.21	Exchange rate adjustments to item 1.20	–	–
1.22	Cash at end of quarter	4,879	4,879

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 53
• 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 $41k; rent/office support, Melbourne, paid to Mineral Deposits Limited $12k

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. 120084SRL.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

		$A'000
4.1	Exploration and evaluation	738
4.2	Development	–
4.3	Production	–
4.4	Administration	364
	Total	1,102

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	138	307
5.2	Deposits at call	4,741	5,595
5.3	Bank overdraft	–	–
5.4	Other	–	–
	Total: cash at end of quarter (item 1.22)	4,879	5,902

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 attachement A

+ See chapter 19 for defined terms. 120084SRL

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	223,447,547	223,447,547
7.4	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returns ofcapital, buy-backs
7.5	+Convertible debtsecurities(description)
7.6	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough securitiesmatured, converted
7.7	OptionsDirectorsExec & Employees	3,000,0003,125,000	NilNil	Exercise Price20 cents20 cents	Expiry DateSRZAK 30/11/2013SRZAI 26/11/2013
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. 120084SRL.doc

Compliance statement

• 1 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 5).
• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 July 2012 (Company Secretary)

Print name: Christina Kemp

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: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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. 120084SRL

Attachment A

		Tenementreference	Nature of interest(note (2))	Interest atbeginning ofquarter	Interest atend ofquarter
6.1	Interests in miningtenements relinquished,reduced or lapsed	EL6556	Exploration Licence Panama,NSW, relinquished.	100%	Nil
		EL3799	Exploration Licence Cooladding,SA, relinquished	100%	Nil
6.2	Interests in miningtenements acquired orincreased	EL4907	Exploration Licence LakeWoorong, SA, application granted,awaiting licence document.	Nil	Nil
		EL4882 (formerlyEL3655)	Exploration Licence Kingoonya,SA. Licence document received.	100%	100%
		EL3978	Joint Venture with RenaissanceUranium Limited.	Note 1	100%

Note 1 Renaissance Uranium Limited has elected to earn 75% interest.

+ See chapter 19 for defined terms. 120084SRL.doc