Stellar Resources (SRZ) is a Melbourne based tin

exploration and development company. The company is rapidly advancing its flagship high-grade Heemskirk Tin Project, located near Zeehan, Tasmania.

As at 30 September 2016 Market cap: A$13.8m (4.6c) Cash (30 September): $1.4million Shares: 300,227,775

Main Shareholders European Investors 26.0% Capetown SA 20.8% Resource Capital Fund 12.0%

Board & Management

Phillip G Harman Non-Executive Chairman Peter G Blight Managing Director Miguel Lopez de Letona Non-Executive Director Thomas H Whiting Non-Executive Director 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

19 October 2016

Report for the quarter ended 30 September 2016

Highlights

Mining Licence application over Heemskirk tin deposits progressing with Tasmanian Government
JORC resource update underway re-statement from 2004 to 2012 JORC to incorporate recent studies and support future reserve drilling
Ore sorting test work underway – a successful outcome provides the potential for a low cost increase in processing capacity
Fast start DFS – program defined for drilling, metallurgical testing, environmental impact assessment, mining, processing and marketing studies
Sustained tin price recovery the LME tin price has risen by 52% to US$20,020/t, since its January 2016 low, with further upside expected

Corporate

Cash balance of A$1.4m as at 30 September 2016
September quarter expenditure of A$183,367

Targets for December Quarter 2016

ML awarded an important milestone for the Heemskirk tin project
Commencement of a drilling program to convert resources to reserves
Ore sorting test results

Managing Director Peter Blight said: "Stellar is continuing to make good progress with the Heemskirk tin project. The fast start study discussed in the June quarter report is the preferred approach to development and will be the subject of a feasibility study over the next 12 months. Timing is working in the Company's favour with the feasibility study coinciding with a cyclical recovery in the LME tin price. At US$20,020/t the tin price is now 52% above its January 2016 low of US$13,200/t."

Overview

Stellar Resources Limited (ASX:SRZ "Stellar" or the "Company") owns 100% of the Heemskirk project which has a JORC Resource of 6.28mt at 1.14% tin (see Mineral Resource Statement for 2004 JORC resource detail). The Heemskirk Tin Project is the highest grade undeveloped tin project listed on the ASX.

Heemskirk is a world class tin project located near Zeehan in the prolific mining district of northwest Tasmania. It is located within 18 kilometres of Australia's oldest and largest tin mine Rension Bell and has access to excellent infrastructure (see Figure 1).

During the September quarter, the Heemskirk project progressed on a number of fronts:

Mining Lease application over RL5/1997 progressing as expected
Update of the Mineral Resource from JORC 2004 to JORC 2012 commenced
Samples despatched for ore sorting test work
Development Proposal and Environmental Management Plan timeline defined
Feasibility work schedule progressed

Mining Lease Application

In July 2016, Stellar's wholly owned subsidiary Columbus Metals Limited applied for a Mining Lease over the area shown by the yellow boundary in Figure 1. The Mining Lease will replace the current Retention Licence and provide the Company with exclusive rights to mine tin and other economic minerals within the lease area. Feedback from Mineral Resources Tasmania on the Columbus application is, that it is progressing well with no significant obstacles emerging.

Figure 1: Location of Heemskirk tin project relative to other mines, northwest Tasmania

Mineral Resource Update from JORC 2004 to JORC 2012

A re-statement of the Heemskirk Tin Mineral Resource which will comply with JORC 2012 is in progress. The purpose of the update is to include data from drilling, studies on mining, metallurgy, process flow sheets and infrastructure that were completed in the period since the release of the JORC 2004 estimate on 27 February 2013.

In addition, the JORC 2012 mineral resource update will clarify the distribution of cassiterite, the primary tin mineral at Heemskirk, identify the extent of associated base metal mineralisation and provide a more robust resource model.

The updated resource model will also provide a basis for designing a drilling programme and developing an ore reserve estimate in support of a feasibility study.

Ore Sorting Testwork

Representative drill core samples from the Severn and Lower Queen Hill tin deposits were despatched during the quarter to a testing facility in Sydney to determine the suitability of these ore types for preconcentration using ore sorting.

Ore sorting technology could increase the head grade of ore by up to 50% by the early rejection of barren feed material. For this technology to be effective, the increase in head grade would need to be achieved with minimal loss of tin to the waste stream.

Stellar has tested pre-concentration of Severn and Lower Queen Hill samples using heavy media (gravity)separation. These results will serve as a useful benchmark for comparison with the ore sorting outcomes.

Ore sorting is becoming more common in the tin industry with Peru's largest tin mine San Rafael recently installing a circuit to combat the impact of declining grade.

Development Proposal and Environmental Management Plan (DPEMP)

Stellar has established baseline studies for surface water, flora and fauna over the proposed mine and tailings dam sites. In addition, a desk top study of likely groundwater flows and initial treatment plant mass balances have provided a basis for understanding the project water balance. An initial study of acid generating propensity of ore and waste rock types and surface handling of these materials has also been completed.

There are a number of studies still to be completed in order to compile a DPEMP that will be acceptable to the Tasmanian EPA. Figure 2, outlines the timing and the type of studiesrequired – some of which will depend on the outcomes of a planned drilling program.

	т	$T + 3$months	$T + 6$months	$T+9$months	$T+12$months	$T+15$months	$T + 18$months	$T+21$months	T+24months
Surface & ground water
Tailings dam engineering
Tailings dam water
Mine waste management
Noise & dust
Ground vibration & seismicity
Flora & fauna
Hazards
DPEMP preparation
DPEMP modification
Permit completion
Construction

Figure 2: DPEMP Timeline

Feasibility Study Timeline

The timing for a feasibility study is dependant on a drilling program to substantially increase the ratio of indicated to inferred resources at Heemskirk tin. Mining and processing studies will be applied to the resulting resource estimate to define an ore reserve. In addition, infrastructure, logistics, environmental and marketing studies will also be undertaken to fully define all modifying factors for the project. The timeline for completing a feasibility study, financing the project, developing a mine and processing plant and first ore production is shown in Figure 3.

Figure 3: Feasibility Study Timeline

EXPLORATION

Tin

EL6/2014 Stonehenge (TAS) (Stellar 100%)

The Stonehenge EL lies immediately to the south of the Heemskirk deposits and contains similar geology and structure. The planned drilling program on the Heemskirk tin deposits will test structural geological concepts that relate to the distribution of tin mineralisation. If the concepts prove correct the results could be applied to define drilling targets on EL6/2014.

EL1/2004 Ramsay (TAS) (Stellar 100%)

Soil sampling has closed off a 600m by 300m zone containing tin in soil assays in excess of 300ppm. The tin in soil target occurs over a quartz-tourmaline altered granite porphyry which occurs on the northern edge of the Meredith Granite. Stellar is considering all possible approaches to finance a drilling program to test the geochemical target.

EL46/2003 Heemskirk (TAS) (Stellar 100%)

The Heemskirk EL contains the St Dizier tin resource and a number of tin geochemical targets. Stellar is reviewing the results of a scoping study completed in 2015 on St Dizier and considering different processing options.

Uranium

EL 5426 Midgee (SA) (Stellar 100%)

Samphire Uranium Limited has the right to earn a 73% interest in 40% of the tenement by identifying a JORC compliant uranium resource. No exploration was undertaken during the quarter.

EL 5307 Cowell (SA) (Stellar 100%)

This tenement is prospective for sedimentary uranium, copper-gold and graphite. Stellar is considering its options to progress exploration of this tenement.

Copper/Gold

EL 5125 Cleanskin Swamp and EL 5126 Long Creek (SA) (Stellar 100%)

Stellar relinquished its South Australian copper/gold exploration licences during the quarter.

CORPORATE

Cash Position

As at 30 September 2016, Stellar Resources held cash and term deposits of A$1.4 million. Expenditure during the quarter was $183,367.

TIN MARKET

The LME tin price is currently trading at US$20,020/t which represents a 52% gain from the mid-January low of US$13,200/t. In US$ terms, the tin price is still below US$21,000/t, the average price of the last 6 years and well below peak level prices shown in Figure 4.

In the case of the Heemskirk project, AUD/USD weakness has provided a significant benefit lifting the A$ tin price to A$26,000/t or 13% above the 6 year average level. This gain is expected to increase further as the US$ tin price fully recovers.

There are several factors contributing to the improved tin market:

Reduced production in China following temporary smelter closures for environmental inspections during August.
Indonesian refined tin exports are down by 16% in the year to date on the same period in 2015. This is the fourth consecutive year of declining exports shown in Figure 5.
Production in Myanmar appears to have reached a plateau as mining transforms from surface to underground and grade declines shown in Figure 6.
Global tin consumption is recovering after a 4% decline in 2015. Chemical and tinplate uses are driving the recovery with lead-acid battery use emerging as a significant end-use.

Figure 4: London Metal Exchange tin spot price and stocks – daily

Figure 5: Indonesian refined tin exports – monthly

Figure 6: Chinese imports of tin ore and concentrates – monthly

TENEMENT REGISTER

Project	Licence Number	Tenement	Location	Interest held (%)
Development
Heemskirk Tin	RL5/19971	Zeehan	Tasmania	100%
	ML 2/2014	Tailings Dam	Tasmania	100%
St Dizier	EL46/2003	Heemskirk	Tasmania	100%
Exploration
Tin	EL1/2004	Ramsay River	Tasmania	100%
	EL6/2014	Stonehenge	Tasmania	100%
Uranium	EL5307	Cowell	South Australia	100%
	EL5426	Midgee	South Australia	100%2

1Mining Lease application pending over RL5/1997

2 JV with Samphire Uranium Limited earning 73% in uranium interest

3 EL 5125 and EL 5126 were relinquished during the September quarter

MINERAL RESOURCE STATEMENTS

Heemskirk Mineral Resource

Classification	Deposit	Tonnes	Grade	Contained Tin
		millions	% tin	tonnes
Indicated	All	1.41	1.26	17,790
Inferred	All	4.87	1.10	53,710
Total		6.28	1.14	71,500
Indicated	Queen Hill	1.41	1.26	17,790
Inferred	Queen Hill	0.19	1.63	3,090
	Severn	4.17	0.98	40,900
	Montana	0.51	1.91	9,710
Total		6.28	1.14	71,500

block cut-off grade of 0.6% tin
tonnes rounded to reflect uncertainty of estimate
estimates prepared by Resource and Exploration Geology

St Dizier Mineral Resource

Classification	Deposit	Tonnes	Grade		Contained Tin
		millions	% tin	% iron	tonnes
Indicated	St Dizier	1.20	0.69	23.70	8,280
Inferred	St Dizier	1.06	0.52	22.22	5,512
Total Resource		2.26	0.61	23.00	13,792

block cut-off grade of 0.3% Sn
tonnes rounded to reflect uncertainty of estimate
estimate prepared by Resource and Exploration Geology

Competent Person Statement

The information in this report that relates to Exploration Results is compiled by Mr R K Hazeldene who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists and 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 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 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 in this report.

The information in this report that relates to Heemskirk Tin Mineral Resources was last reported on 24th July 2013 in an ASX release titled "Pre-feasibility Study Advances Heemskirk Tin". The information was prepared in accordance with the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' by Tim Callaghan of Resource and Exploration Geology. The information in this report that relates to the St Dizier Mineral Resource was announced on 12 March 2014 in an ASX release titled "Heemskirk Tin Project: New Open Pittable Resource at St Dizier". The information was prepared in accordance with the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code) by Tim Callaghan of Resource and Exploration Geology. Tim Callaghan is a Member of The Australasian Institute of Mining and Metallurgy ("AusIMM"), has a minimum of five years' experience in the estimation and assessment and evaluation of Mineral Resources of this style and is the Competent Person as defined in the JORC Code. This report accurately summarises and fairly reports his estimations and he has consented to the resource report in the form and context in which it appears.

Stellar Resources confirms that it is not aware of any new information or data that materially affects the information included in the Mineral Resource estimates reported on 24th July 2013 and 12 March 2014, Stellar confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. In addition, Stellar Resources confirms that the form and context in which the Competent Person's findings are presented have not been materially modified.

Forward Looking Statements

This report may include forward-looking statements. Forward-looking statements include, but are not limited to statements concerning Stellar Resources Limited's planned activities and other statements that are not historical facts. When used in this report, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. In addition, summaries of Exploration Results and estimates of Mineral Resources and Ore Reserves could also be forward-looking statements. Although Stellar Resources Limited believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.

The entity confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning this announcement continue to apply and have not materially changed.

Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Stellar Resources Limited securities.

For further details please contact:

Peter Blight Managing Director Tel: 03 9618 2540 Email: [email protected]

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

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Name	of entity
	STELLAR RESOURCES LIMITED
ABN		Quarter ended ("current quarter")
96 108 758 961		30 September 2016
	Consolidated statement of cash flows	Current quarter$A'000	Year to date(3months)$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	-	-
1.2	Payments for
	(a)exploration & evaluation	(68)	(68)
	(b)development	-	-
	(c)production	-	-
	(d)staff costs	-	-
	(e)administration and corporate costs	(130)	(130)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	15	15
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Research and development refunds	-	-
1.8	Other (provide details if material)	-	-
1.9	Net cash from / (used in) operating	(183)	(183)

2.	Cash flows from investing activities
2.1	Payments to acquire:
	(a)property, plant and equipment	-	-
	(b)tenements (see item 10)	-	-
	(c)investments	-	-

activities

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(3months)$A'000
	(d)other non-current assets	-	-
2.2	Proceeds from the disposal of:
	(a)property, plant and equipment	-	-
	(b)tenements (see item 10)	-	-
	(c)investments	-	-
	(d)other non-current assets	-	-
2.3	Cash flows from loans to other entities	-	-
2.4	Dividends received (see note 3)	-	-
2.5	Other (provide details if material)	-	-
2.6	Net cash from / (used in) investingactivities	-	-

3.	Cash flows from financing activities
3.1	Proceeds from issues of shares	-	-
3.2	Proceeds from issue of convertible notes	-	-
3.3	Proceeds from exercise of share options	-	-
3.4	Transaction costs related to issues ofshares, convertible notes or options	-	-
3.5	Proceeds from borrowings	-	-
3.6	Repayment of borrowings	-	-
3.7	Transaction costs related to loans andborrowings	-	-
3.8	Dividends paid	-	-
3.9	Other (provide details if material)	-	-
3.10	Net cash from / (used in) financingactivities	-	-

4.	Net increase / (decrease) in cash andcash equivalentsfor the period	(183)	(183)
4.1	Cash and cash equivalents at beginning ofperiod	1,577	1,577
4.2	Net cash from / (used in) operatingactivities (item 1.9 above)	(183)	(183)

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(3months)$A'000
4.3	Net cash from / (used in) investingactivities (item 2.6 above)	-	-
4.4	Net cash from / (used in) financingactivities (item 3.10 above)	-	-
4.5	Effect of movement in exchange rates oncash held	-	-
4.6	Cash and cash equivalents at end ofperiod	1,394	1,394

5.	Reconciliation of cash and cashequivalentsat the end of the quarter (as shown in theconsolidated statement of cash flows) tothe related items in the accounts	Current quarter$A'000	Previous quarter$A'000
5.1	Bank balances	34	57
5.2	Call deposits	1,360	1,520
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end ofquarter (should equal item 4.6 above)	1,394	1,577

6.	Payments to directors of the entityand theirassociates	Current quarter$A'000
6.1	Aggregate amount of payments to these parties included initem 1.2

6.2	Aggregate amount of cash flow from loans to these parties
	included in item 2.3

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

Directors fees and remuneration.

7. Payments to related entities of the entity and their associates

7.1 Aggregate amount of payments to these parties included in item 1.2
7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3
7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

Rent and outgoings, Melbourne, paid to Mineral Deposits Limited.

8.	Financingfacilities availableAdd notes as necessary for an understanding of theposition	Total facility amountat quarter end$A'000	Amount drawn atquarter end$A'000
8.1	Loan facilities	-	-
8.2	Credit standby arrangements	-	-
8.3	Other (please specify)	-	-

8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9.	Estimated cash outflows for next quarter	$A'000
9.1	Exploration and evaluation	171
9.2	Development	-
9.3	Production	-
9.4	Staff costs	-
9.5	Administration and corporate costs	65
9.6	Other (provide details if material)	-
9.7	Total estimated cash outflows	236

Current quarter$A'000
	34

	-

10.	Changes intenements(items 2.1(b) and2.2(b) above)	Tenementreferenceandlocation	Nature of interest	Interestatbeginningof quarter	Interestat end ofquarter
10.1	Interests in miningtenements andpetroleum tenementslapsed, relinquishedor reduced	EL 5125EL 5126	Exploration LicenceCleanskin Swamp, SARelinquishedExploration LicenceLong Creek, SARelinquished	100%100%	--
10.2	Interests in miningtenements andpetroleum tenementsacquired or increased	-	-	-	-

Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.

Sign here: Date: 19 October 2016

(Company secretary)

Print name: Christina R 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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
1. If this quarterly report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
1. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.