STELLAR RESOURCES LIMITED — Interim / Quarterly Report 2018

Apr 25, 2018

26 April 2018

Report for the quarter ended 31 March 2018

Highlights

• All MLs covering Heemskirk tin assets now in place, securing exclusive tenure for 12 years
• Good ore sorting results show 50% upgrade to Severn head grade with excellent tin recovery of 94%
• Razorback EL sampling program across the tailings dam and mine pit floor recently completed

Corporate

• Cash balance of $1.4m as at 31 March 2018
• Rio Tinto ranks tin #1 in a survey of metals facing strong demand from new technologies – particularly electrical and energy storage uses
• Myanmar tin exports decline, tightening the concentrate market in China
• LME tin market also tight with price up by 2% to US$21,500/t and backwardation up from US$100/t to US$215/t since the end of March

Targets for June Quarter 2018

Australia's second largest producer of tin.

• Assay results and preliminary metallurgy on tin tailings from Razorback
• Assay results from Razorback pit sampling and assessment of along strike and subsurface potential

Managing Director Peter Blight said "Stellar's high grade Heemskirk Tin Project achieved important milestones in March quarter. Awarding of a third ML secured tenure for 12 years and demonstrated the state's backing of Stellar. Excellent ore sorting results highlighted the opportunity for further cost optimisation under the fast start development plan. And the addition of the Mt Razorback EL, with its historical tin production, added significant upside to Stellar's Tasmanian tin assets."

Stellar Resources (SRZ) is an exploration and development company with assets in Tasmania. The company is rapidly advancing its high-grade Heemskirk Tin Project, located near Zeehan in Tasmania, and plans to become

ASX Code: SRZ About Stellar:

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

Capital Structure

Shares:	374,513,489
Share Price (SRZ):	A$0.018
Listed Options:	59,142,857
Option Price (SRZO):	A$0.005
Unlisted Options:	15,000,000

Commodity

Tin Price: US$21,500/t Exchange Rate US$ 0.76

Main Shareholders

European Investors 19.5% Capetown SA 16.4%

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 Melanie J Leydin Company Secretary

HEEMSKIRK TIN PROJECT

Mining Lease Approval

During the quarter, Stellar was granted mining lease ML2040P/M over the preferred tailings pipeline route for the Heemskirk Tin Project. This was the third and final ML required to secure tenure over all land required for the project. The three ML's shown in Figure 1, provide Stellar with exclusive access for 12 years to tin and other metals, a tailings transport corridor and an excellent tailings storage site.

Ore Sorting

Stellar completed an ore sorting characterisation test using Steinert KSS technology and samples of recent drill core from the Severn deposit. 200 samples of +20mm ¼ core with tin grades ranging from 0.3% to 5.0% were sorted using X-ray transmission and a laser overlay.

As Figure 2 shows, the technology works well with Severn mineralisation. Tin recovery could be maximised at 93.8% in 62.6% of the mass i.e. 37.4% of the feed is rejected as waste. This would reduce the amount of grinding required and increases the grade of feed into the downstream circuit from 1.27% to 1.90% tin.

Figure 2: Ore Sorting Results

An even greater increase in head grade can be achieved by maximising waste rejection. In Figure 2, this outcome is represented by mass recovery of 43.2% (i.e. 56.8% of the ore is rejected) and a head grade of 2.53% tin. However, the higher head grade comes at the cost of a decline in recovery to 86.6%.

Further test work is planned once a larger sample of Severn mineralisation is obtained. Commissioning of ore sorting at the Renison mine in the next two quarters will also be instructive as it will be the first commercial scale application of the technology using ore that is understood to have similar characteristics to that of Severn.

RAZORBACK EXPLORATION

During the quarter, exploration commenced on the recently acquired Mt Razorback tenement EL11/2017.

A review of historical exploration and tin mining reports at the Razorback and Grand Prize mines was undertaken and highlighted the significant exploration potential around and along strike from these mines. Further data validation and 3D modelling work is underway.

At the Razorback mine, augur sampling was conducted across the tailings dam to test the distribution of tin (see Figure 3). Once assays are known, a metallurgical testing program will be undertaken to determine the availability of tin for recovery in a simple gravity circuit.

Three trenches were also excavated across the floor of the Razorback pit (see Figure 3). The assay data obtained will be used to build on the historical data base and provide sample for metallurgical testing.

Figure 3: Razorback Tin Mine and Tailings Dam

CORPORATE

As at 31 March 2018, the Company held cash and term deposits of $1.4m. Expenditure for the quarter was $0.3m.

TIN MARKET

The London Metal Exchange tin price averaged US$ 21,190/t over march quarter 2018. It was 6.7% higher than the previous quarter and 5.7% higher than the year ago quarter. The price increase was supported by a reduction in exchange stocks (London and Shanghai) to the historically low level of 6,400t and a decline in exports from Myanmar to China.

Rio Tinto has ranked tin #1 in a survey of metals most likely to be positively impacted by new technologies (see Figure 4). MIT, who conducted the survey, indicated that tin's potential strong demand growth from the electrical and energy storage areas and its small market size relative to the size of new demand were the drivers for its ranking.

Figure 4: Rio Tinto Ranking of Technology Metals

• Indonesian refined tin exports grew strongly in 2017, rising by 23% over 2016 levels to 78,190t and placing a ceiling on the tin price. That growth appears to have stabilised in March quarter 2018 with exports of 17,184t representing a 3% decline on the same period in 2017 and a fall of 25% from the December quarter level (see Figure 6).
• Myanmar ore and concentrate shipments to China declined to 4,872t of contained tin in February from 10,632t in January (see Figure 7). If the reduction in supply continues the availability of raw materials for smelters in Gejiu, China's largest tin producing region, will be increasingly limited.
• Gejiu Jinye Renewable Tech and seven other tin smelters plan to cut production by 20% from their Gejiu plants in 2018. The cutbacks are due to the reduced supply and higher cost of raw materials (particularly from Myanmar) and environmental protection measures.

Project	Licence Number	Tenement	Location	Interest held (%)
Development
Heemskirk Tin	2023P/M1RL5/1997	Zeehan	Tasmania	100%
	2M/2014	Tailings Dam	Tasmania	100%
	2040P/M	Tailings Pipeline	Tasmania	100%
St Dizier	EL46/2003	Heemskirk	Tasmania	100%
Exploration
Tin	EL11/2017	Razorback	Tasmania	100%
	EL6/20142	Stonehenge	Tasmania	100%
Uranium	EL54263	Midgee	South Australia	100%

TENEMENT REGISTER

1Mining Lease 2023P/M granted over Heemskirk tin deposits; RL5/1997 maintained over private land holdings

2 The Company is in the process of relinquishing this tenement and is awaiting final approval from MRT

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

ML2040P/M and EL11/2017 granted. EL1/2004 Ramsay River relinquished during the quarter

MINERAL RESOURCE STATEMENTS HEEMSKIRK TIN PROJECTS

Heemskirk Tin Deposits

Classification	Deposit				Tonnage Total Sn Contained Cassiterite1	Cu	Pb	Zn	S	SG
		mt	%	Sn t	% of total Sn	%	%	%	%	mg/l
Indicated	Upper Queen Hill	0.47	1.15	5,000	91	0.12	1.30	0.81	13.80	3.72
	Lower Queen Hill	0.82	1.42	12,000	99	0.03	0.22	0.23	17.91	3.45
Total Indicated		1.29	1.32	17,000	96	0.06	0.61	0.44	16.55	3.55
Inferred	Lower Queen Hill	0.35	1.50	5000	98	0.04	0.14	0.09	16.9	3.31
	Severn	4.03	0.97	39000	99	0.06	0.03	0.05	8.34	3.18
	Montana	0.68	1.56	11000	96	0.07	0.72	1.18	17.8	3.68
Total Inferred		5.06	1.09	55000	98	0.06	0.13	0.25	10.23	3.26
Total Indicated + Inferred		6.35	1.13	72,000	97	0.06	0.23	0.29	11.48	3.32

1.cassiterite = (total Sn% - soluble Sn%)/total Sn%

1. block cut-off grade of 0.6% tin

2. tonnes rounded to reflect uncertainty of estimate

3. estimates prepared by Resource and Exploration Geology under JORC 2012

St Dizier Tin Deposits

St Dizier Tin Deposits
Classification			Tonnage Total Sn Contained Soluble		Cassiterite1	WO3	Fe	S
	mt	%	Sn t	Sn %	% of total Sn	%	%	%
Indicated	1.20	0.69	8,280	0.09	87	0.04	23.70	2.64
Inferred	1.06	0.52	5,512	0.22	58	0.05	22.22	1.81
Total Resource	2.26	0.61	13,786	0.15	75	0.04	23.00	2.25

1.cassiterite = (total Sn% - soluble Sn%)/total Sn%

1. block cut-off grade of 0.3% tin

2. tonnes rounded to reflect uncertainty of estimate

3. estimates prepared by Resource and Exploration Geology under JORC 2012

For further details please contact:

Peter Blight Managing Director Stellar Resources Limited Tel: 03 9618 2540 Email: peter.blight@stellarresources.com.au

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

Figure 8: Tin Tenement Map – Western Tasmania

Competent Persons Statement

The Information in this report that relates to Mineral Resources 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, who is a Member of the Australasian Institute of Mining and Metallurgy ("AusIMM"), has a minimum of five years' experience in the estimation, assessment and evaluation of Mineral Resources of this style and is a Competent Person as defined in the JORC Code. This announcement accurately summarises and fairly reports his estimations and he has consented to the resource report in the form and context in which it appears.

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

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.

Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Nameof entity
STELLAR RESOURCES LIMITED
ABN	Quarter ended ("current quarter")
96 108 758 961	31March2018

	Consolidated statement of cash flows	Current quarter$A'000	Year to date (9months)$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	-	-
1.2	Payments for
	(a)exploration & evaluation	(137)	(1,039)
	(b)development	-	-
	(c)production	-	-
	(d)staff costs	-	-
	(e)administration and corporate costs	(122)	(464)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	7	46
1.5	Interest and other costs of finance paid	(4)	(13)
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) operatingactivities	(256)	(1,470)

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

	Consolidated statement of cash flows	Current quarter$A'000	Year to date (9months)$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 – security deposits	-	(9)
2.6	Net cash from / (used in) investingactivities	-	(9)

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
4.1	Cash and cash equivalents at beginning ofperiod	1,679	2,902
4.2	Net cash from / (used in) operatingactivities (item 1.9 above)	(256)	(1,470)

	Consolidated statement of cash flows	Current quarter$A'000	Year to date (9months)$A'000
4.3	Net cash from / (used in) investingactivities (item 2.6 above)	-	(9)
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	1,423	1,423

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	133	189
5.2	Call deposits	1,290	1,490
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end ofquarter (should equal item 4.6 above)	1,423	1,679

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	62
6.2	Aggregate amount of cash flow from loans to these partiesincluded 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 for the March 2018 quarter.

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. Financing facilities available Add notes as necessary for an understanding of the position

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.

Nil

9.	Estimated cash outflows for next quarter	$A'000
9.1	Exploration and evaluation	52
9.2	Development	-
9.3	Production	-
9.4	Staff costs	-
9.5	Administration and corporate costs	259
9.6	Other (provide details if material)	-
9.7	Total estimated cash outflows	311

Current quarter$A'000
8
-

10.	Changes intenements(items 2.1(b) and2.2(b) above)	Tenementreference andlocation	Nature of interest	Interestatbeginningof quarter	Interestat end ofquarter
10.1	Interests in miningtenements andpetroleum tenementslapsed, relinquishedor reduced	EL1/2004–Tasmania	Tenementrelinquishmentapproved by thedepartment	100%	-
10.2	Interests in miningtenements andpetroleum tenementsacquired or increased	ML 2040P/M –Tasmania	Mining lease grantedover tailings pipelineroute for theHeemskirk Tin Project.	-	100%

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: 26 April 2018

(Company secretary)

Print name: Melanie Leydin

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.