THIS IS AN IMPORTANT DOCUMENT

AND REQUIRES YOUR ATTENTION

If you are in any doubt as to how to deal with it, please consult your financial or other professional adviser.

STELLAR RESOURCES LIMITED ABN 96 108 758 961

('Stellar' or 'Company')

NOTICE OF GENERAL MEETING

and

EXPLANATORY MEMORANDUM

	A General Meeting of the Company is be held:
•	at Christie Offices Conference Room, Lower Ground Floor, 454 CollinsStreet, Melbourne 3000;
•	on 25 January 2012 at 10.30am.
You can vote by:
•	attending and voting at the meeting; or
•	appointing someone as your proxy to attend and vote at the meeting onyour behalf, by completing and returning the Proxy Form to Stellar in themanner set out in the Proxy Form. The Proxy Form must be received bythe Registry of Stellar no later than 10.30am on 23 January 2012.

STELLAR RESOURCES LIMITED ABN 96 108 758 961

NOTICE OF GENERAL MEETING

A general meeting of the Shareholders of Stellar Resources Limited will be held:

On Wednesday**, 25 January 2012**
at 10.30am
at Christie Offices Conference Room, Lower Ground Floor, 454 Collins Street, Melbourne 3000

1. RESOLUTION 1 – APPROVAL OF ISSUE OF CONSIDERATION SHARES

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"THAT for the purposes of item 7 of section 611 of the Corporations Act 2011 and all other purposes the Shareholders approve:

(a) the issue and allotment to Gippsland Limited ABN 31 004 766 376 ("Gippsland") of 43,528,743 fully paid ordinary shares in the capital of the Company ("Consideration Shares"); and

(b) the acquisition by Gippsland of a relevant interest in the Consideration Shares in accordance with the Joint Venture Interest Sale Agreement referred to in the Explanatory Memorandum attached to and forming part of this Notice of Meeting."

2. RESOLUTION 2 – APPROVAL OF PREVIOUS ISSUE OF SHARES

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"THAT for the purposes of Listing Rules 7.1 and 7.4 and all other purposes, Shareholders approve the previous issue of up to 16,323,278 Shares ("Placement Shares") at an issue price per Share of at least 80% of the average market price (calculated in accordance with Listing Rule 7.3.3) and otherwise on the terms and conditions set out in the Explanatory Memorandum forming part of this Notice of Meeting."

Important Note: this Resolution will be withdrawn at the Meeting if the Placement Shares have not been issued before the Meeting.

3. RESOLUTION 3 – APPROVAL OF PROPOSED ISSUE OF SHARES

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"THAT for the purposes of Listing Rule 7.1 and all other purposes, Shareholders approve the issue of up to 16,323,278 Shares ("Placement Shares") at an issue price per Share of at least 80% of the average market price (calculated in accordance with Listing Rule 7.3.3) and otherwise on the terms and conditions set out in the Explanatory Memorandum forming part of this Notice of Meeting.

Important Note: this Resolution will be withdrawn at the Meeting if the Placement Shares have been issued before the Meeting.

4. VOTING RESTRICTIONS

The Company will disregard any votes cast in favour of Resolution 1 by Gippsland or any associate of Gippsland.

The Company will disregard any votes cast on Resolution 2 by any person who participated in the issue or any associate of any such participant. However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) it is cast by the chairperson of the General Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

The Company will disregard any votes cast on Resolution 3 by any person who may participate in the issue and might obtain a benefit (except a benefit solely in their capacity as a Shareholder) if the Resolution is passed or any associate of any such person. However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) it is cast by the chairperson of the General Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

5. VOTING ENTITLEMENT

The Board has determined that the shareholding of each Shareholder for the purposes of ascertaining voting entitlements for the General Meeting will be as it appears on the Register of Members at 7.00pm (Melbourne time) on 23 January 2012.

6. HOW TO VOTE

Shareholders entitled to vote at the General Meeting may vote by attending the meeting in person, by attorney or proxy or, in the case of corporate shareholders, by a corporate representative.

7. VOTING IN PERSON OR BY ATTORNEY

Shareholders or their attorneys wishing to vote in person should attend the meeting. Persons are asked to arrive at least 30 minutes prior to the time the meeting is to commence, so that their shareholding may be checked against the register and their attendance recorded. Shareholders intending to attend the meeting by attorney must ensure that they have, not later than 48 hours prior to the time the meeting is to commence, provided the original or a certified copy of the power of attorney to the Company, in the same manner prescribed below for the giving of Proxy Forms to the Company.

8. VOTING BY PROXY

(a) Shareholders wishing to vote by proxy must complete, sign and deliver the enclosed personalised Proxy Form or Forms, in accordance with the instructions on the Form, prior to 10.30am Melbourne time on 23 January 2012 by:
- Mail
- Hand delivery to: Stellar Resources Limited c/- Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000 or
- Fax to: Stellar Resources Limited C/- Boardroom Pty Limited on +61 2 9290 9655 or
- Online at www.boardroomlimited.com.au/vote/stellargm2012
(b) A Shareholder who is entitled to vote at the meeting may appoint:
- (1) one proxy if the Shareholder is only entitled to one vote; or
- (2) one or two proxies if the Shareholder is entitled to more than one vote.
(c) If a Shareholder appoints one proxy, that proxy may vote on a show of hands. If a Shareholder appoints two proxies, neither proxy may vote on a show of hands.
(d) Where the Shareholder appoints two proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not do so, each proxy may exercise one-half of the votes, and any fraction of votes will be disregarded.
(e) A proxy need not be a Shareholder of the Company. In the case of joint holders, all should sign the Proxy Form. In the case of corporations, proxies must be executed in accordance with the Corporations Act.
(f) To be valid, a Proxy Form signed under a power of attorney must be accompanied by the signed power of attorney, or a certified copy of the power of attorney.
(g) You are encouraged when completing the Proxy Form to direct the proxy by indicating a vote for either "For" or "Against" or "Abstain". If the abstention box for the item of business is marked, the proxy will be directed not to vote on a show of hands or on a poll and the relevant shares will not be counted in calculating the required majority on a poll. If no box is marked, the proxy will not have been directed as to how to vote and may therefore vote as he or she thinks fit, or abstain from voting.
(h) If the Proxy Form is signed by the Shareholder but does not name the proxy or proxies in whose favour it is given, the chairperson of the Meeting may either act as proxy or complete the proxy by inserting the name of one or more Directors or the Company Secretary.
(i) The chairperson of the General Meeting, the company secretary or any directors of the Company intend to vote all undirected proxies from Shareholders (who are eligible to vote) in favour of the Resolutions to be voted on at the General Meeting. The chairperson, the company secretary or any directors will not vote any undirected proxies from any Shareholder who is ineligible to vote in favour of a particular Resolution.
(j) If you require an additional Proxy Form, the Company will supply it on request to the undersigned.

9. VOTING BY CORPORATE REPRESENTATIVE

Corporate Shareholders wishing to vote by corporate representative should:

(a) obtain an appointment of corporate representative form from the Registry;
(b) complete and sign the form in accordance with the instructions on it; and
(c) bring the completed and signed form with them to the General Meeting.

DATED 20 December 2011 BY ORDER OF THE BOARD

..................................................

Christina Kemp – Company Secretary

STELLAR RESOURCES LIMITED

ABN 96 108 758 961

EXPLANATORY MEMORANDUM

1. INTRODUCTION

The purpose of this Explanatory Memorandum is to provide Shareholders with an explanation of the business of the General Meeting to be held on 25 January 2012 and the Resolutions proposed to be considered at the General Meeting and to provide Shareholders with information required by law that is material to your decision on how to vote on the Resolutions. This Explanatory Memorandum should be read in conjunction with and forms part of the accompanying Notice of Meeting.

Certain terms used in this Explanatory Memorandum and the Notice of which it forms part are defined in section 11 of this Explanatory Memorandum (Interpretation).

2. WHY THE MEETING IS BEING HELD

The General Meeting is being held so you can decide whether Gippsland should be permitted to acquire 43,528,743 fully paid ordinary shares in Stellar ("Consideration Shares") pursuant to the Joint Venture Interest Sale Agreement described in section 4 below (Joint Venture Interest Sale Agreement). The acquisition of the Consideration Shares would give Gippsland the right to exercise a maximum of 28.57% of the votes able to be cast by Shareholders at any future general meeting of the Company and would require the issue by Stellar of more than 15% of the number of Shares currently on issue. Resolution 1 deals with this matter.

The General Meeting is also being held so you can decide whether you will approve a Placement to professional and/or sophisticated investors of not more than 15% of the number of Shares currently on issue. This Placement is expected to occur before the General Meeting is held but may not. If the Placement occurs before the General Meeting is held, Resolution 3 will be irrelevant and will be withdrawn. If the Placement may occur after the General Meeting is held, Resolution 2 will be irrelevant and will be withdrawn.

Unless one of the exemptions applies, section 606(1) of the Corporations Act ("the Takeover Prohibition") forbids a person from acquiring a relevant interest in the issued voting shares of a listed company if, as a result of the acquisition, that person's voting power in the company will exceed 20%.

One of the exemptions to the Takeover Prohibition is an acquisition of new shares previously approved by a resolution passed at a general meeting of the company in which the acquisition is made, if no votes are cast in favour of the resolution by the person proposing to make the acquisition or any of its associates and if the members of the company have been given all information known to the person proposing to make the acquisition or its associates, or known to the company, which was material to the decision on how to vote on the resolution, including certain specific information. This exemption is contained in item 7 of section 611 of the Corporations Act.

ASX Listing Rule 7.1 ("the 15% in 12 months rule") says that without the prior approval of shareholders in general meeting a listed company must not issue, or agree to issue, in any 12 month period a number of equity securities which exceeds 15% of the number of ordinary shares on issue at the commencement of that period. However, Exception 16 of Listing Rule 7.2 provides that Listing Rule 7.1 does not apply to an issue of securities approved for the purposes of item 7 of section 611 of the Corporations Act.

Under the Joint Venture Interest Sale Agreement Stellar has agreed, subject to obtaining the approval of Stellar Shareholders under item 7 of section 611 and subject to Gippsland obtaining the approval of its shareholders, to issue the Consideration Shares to Gippsland.

The issue of the Consideration Shares to Gippsland will infringe the Takeover Prohibition and the 15% in 12 months rule unless Resolution 1 is passed.

The principal purpose of the General Meeting is to enable Shareholders to consider Resolution 1 which, if passed, will exempt Gippsland from the Takeover Prohibition, allow Stellar to avoid the operation of the 15% in 12 months rule and, subject to approval by the Gippsland shareholders, allow Stellar, Columbus Metals and Gippsland to complete the sale and purchase of the 40% interest of Gippsland in the Heemskirk Tin Project ("the Heemskirk Minority Interest") pursuant to the Joint Venture Interest Sale Agreement.

The other purpose of the General Meeting is to seek Shareholder approval of the Placement. The Placement does not require Shareholder approval to proceed because the Company has full capacity under the 15% in 12 months rule to issue the Placement Shares. However, Shareholder approval, if obtained under Resolution 2 or Resolution 3 (as the case may be) would restore (in the case of Resolution 2) or preserve (in the case of Resolution 3) the ability of the Company, after the Placement, to quickly raise further capital without prior Shareholder approval should market conditions allow.

3. BACKGROUND

As announced to ASX on 2 November 2011, the Company and its wholly-owned subsidiary Columbus Metals, have entered into a Joint Venture Interest Sale Agreement with Gippsland whereby, subject to Stellar and Gippsland shareholder approval, Columbus Metals will acquire the Heemskirk Minority Interest in exchange for the issue to Gippsland of the Consideration Shares and the grant to Gippsland of a net smelter return royalty over any future tin production from the Project.

The Heemskirk Tin Project currently comprises the Queen Hill, Severn and Montana deposits which are located immediately northwest of Zeehan on the west coast of Tasmania. It has been estimated that the three deposits comprise an Indicated plus Inferred Mineral Resource of 4.4 million tonnes grading 1.1% tin making Heemskirk the highest grade undeveloped tin resource in Australia. Further details of these Mineral Resources are contained in the Table below:

Deposit	Indicated			Inferred			Total
	kt	% Sn	kt Sn	kt	% Sn	kt Sn	kt	% Sn	kt Sn
Queen Hill	1,600	1.2	19				1,600	1.2	19
Montana				360	1.6	6	360	1.6	6
Severn				2,400	0.9	23	2,400	0.9	23
Total	1,600	1.2	19	2,760	1.0	29	4,360	1.1	48

cut-off grade 0.6% tin estimated on 3 March 2011 by Mining One Pty Ltd

The information in this Explanatory Memorandum that relates to Mineral Resources is based on information compiled by Michael McKeown who is a fellow of the Australasian Institute of Mining and Metallurgy. Michael McKeown is employed by Mining One Pty Ltd and he has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC Code). Michael McKeown consents to the inclusion in this Explanatory Memorandum of the matters based on his information in the form and context in which it appears.

Through Columbus Metals, Stellar acquired a 60% interest in the Heemskirk Tin Project from Western Metals Limited early in 2008. That majority interest was originally owned by the Aberfoyle Limited Group of companies. Columbus Metals is the Manager of the Project but is required by the Heemskirk Joint Venture Agreement, which dates back to the 1970's, to pay 100% of all joint venture expenditure until the completion of an Acceptable Feasibility Study. A feasibility study will not qualify as an Acceptable Feasibility Study for the purposes of the Joint Venture Agreement unless it is accompanied by a written commitment, based on the study, from a mutually acceptable bank or other organisation, to lend Gippsland on mutually acceptable terms and conditions not less than one half of all costs required to be met by Gippsland for the development of the mine up to the date of commencement of commercial production. Until the completion of an Acceptable Feasibility Study, Gippsland is not required to contribute to joint venture expenditure for the Project. However, upon the completion of an Acceptable Feasibility Study, the interest of Columbus Metals in the Project increases to 70% and the interest of Gippsland reduces to a 30% contributing interest. Subject to earning its additional 10% interest by completing an Acceptable Feasibility Study, Columbus Metals has the sole right to make a decision to commence commercial mining operations. Upon the commencement of commercial production, Gippsland is not entitled to receive any proceeds from the sale of any products until it has repaid Columbus Metals seventy five per centum (75%) of all joint venture expenditure previously contributed by Columbus Metals and its predecessors on behalf of Gippsland plus interest thereon.

Due to the passage of time since the Heemskirk Joint Venture was established in the 1970's and the poverty of previous records, it is difficult to determine the aggregate amount of Gippsland's joint venture expenditure which has been paid by Columbus Metals and its predecessors to date. However, Columbus Metals estimates that Columbus Metals and its predecessors have incurred total joint venture expenditure of $3,200,000 (including interest) on behalf of Gippsland since the Heemskirk Joint Venture was established. Seventy five per centum (75%) of that amount i.e. $2,400,000 would be repayable by Gippsland to Columbus Metals if the Heemskirk Joint Venture were still in force when commercial production commences, plus other amounts including 75% of the additional expenditure Columbus Metals will incur on behalf of Gippsland in order to complete an Acceptable Feasibility Study.

4. JOINT VENTURE INTEREST SALE AGREEMENT

On 1 November 2011 Stellar, Columbus Metals and Gippsland signed a Joint Venture Interest Sale Agreement whereby Gippsland agreed to sell and Columbus Metals agreed to purchase the Heemskirk Minority Interest.

The sale and purchase of the Heemskirk Minority Interest is subject to and conditional upon satisfaction of the following conditions precedent on or before 29 February 2012 or such later date as may be agreed:

(a) the Shareholders of Stellar passing an ordinary resolution pursuant to, inter alia, item 7 of section 611 of the Corporations Act approving the acquisition of the Consideration Shares by Gippsland; and
(b) the shareholders of Gippsland approving the disposal of the Heemskirk Minority Interest.

Resolution 1 seeks the approval of Shareholders of Stellar referred to in (a) above.

Gippsland is convening a general meeting, to be held on or about 20 January 2012, to seek the approval of its shareholders referred to in paragraph (b) above. A copy of Gippsland's Notice of Meeting and accompanying Explanatory Memorandum can be accessed by Shareholders on the ASX website (www.asx.com.au - code GIP) or on Gippsland's website (www.gippslandltd.com).

Completion of the sale and purchase of the Heemskirk Minority Interest is to take place within 10 business days of the date the abovementioned conditions precedent are satisfied. The Consideration Shares are to be issued to Gippsland at Completion so, if the Gippsland shareholders have approved the disposal of the Heemskirk Minority Interest before this General Meeting is held and if Resolution 1 is passed at this General Meeting, the Consideration Shares will be acquired by Gippsland not later than 9 February 2012. The outcome of Resolution 2 or Resolution 3 (as the case may be) relating to the Placement is irrelevant for the purposes of the Joint Venture Interest Sale Agreement.

There will be no restriction on, or limitation of, the voting power attached to the Consideration Shares, but Gippsland has agreed that it will not dispose of any of the Consideration Shares during the period of six months following Completion and that it will not dispose of more than 50% of the Consideration Shares during the second period of six months following Completion. However, Stellar has agreed to release Consideration Shares from these restrictions on disposal to the extent required to enable Gippsland to transfer Consideration Shares in specie to its shareholders, ratably in accordance with their existing holdings, during the period of 12 months following Completion. Whilst an in specie distribution of Consideration Shares by Gippsland would, to the extent that the shareholders of Gippsland are not associates of Gippsland, reduce the voting power of Gippsland in Stellar, Gippsland is under no legal obligation to make an in specie distribution and Shareholders cannot assume that any such distribution will occur. Gippsland has agreed to enter into a formal restriction agreement with Stellar at Completion so that Stellar is able to enforce the agreed restrictions on disposal of the Consideration Shares.

Shareholders should note that the Joint Venture Interest Sale Agreement also provides that, if at any time during the year following Completion Stellar undertakes a capital raising, Stellar must make reasonable endeavours to offer Gippsland the first right of refusal to participate in the capital raising such that Gippsland can maintain its pro rata interest in Stellar at the level it was immediately before the proposed capital raising. Gippsland must either accept or reject the offer from Stellar within 3 business days of the date it is made. This provision will apply to the Placement if it is to occur after the Consideration Shares have been issued to Gippsland at Completion.

With effect from Completion, the Heemskirk Joint Venture Agreement will be terminated by mutual consent and each party will release the other(s) from all claims under that Agreement. Those mutual releases will, inter alia, relieve Gippsland of any potential liability to reimburse Columbus Metals for Gippsland's proportion of joint venture expenditure paid by Columbus Metals and its predecessors prior to Completion.

Shareholders should also note that the issue of the Consideration Shares is only part of the purchase price payable by Stellar and Columbus Metals for the Heemskirk Minority Interest. The additional component of that purchase price is the grant to Gippsland by Columbus Metals of a net smelter return royalty over any future tin production from the Project. This royalty is to be triggered when the realised tin price is A$25,000 per tonne, at a rate of 1% of net smelter returns. The royalty will then rise linearly to a maximum rate of 2% at a realised tin price of A$30,000 and above. The parties have reached agreement as to the terms of the net smelter royalty deed which is based on the Model Framework Minerals Royalty Deed published by AMPLA. The agreed form of deed is to be signed at Completion. A copy of the AMPLA Model Framework Royalty Deed can be viewed at www.ampla.org.

5. REVISED CAPITAL STRUCTURE

	Number of Shares	Number of Options
Balance at date of Notice of Meeting	108,821,858	6,125,0002
Placement Shares	16,323,278	-
Consideration Shares to be issued toGippsland	43,528,743	-
Balance after issue of ConsiderationShares at Completion if PlacementShares issued before Completion	168,673,879	6,125,000
Balance after issue of ConsiderationShares at Completion if PlacementShares not issued before Completion	152,350,601	6,125,000

Upon Completion, the proposed capital structure of the Company will be as follows1 :

6. RESOLUTION 1– APPROVAL OF ISSUE OF CONSIDERATION SHARES

Resolution 1 seeks Shareholder approval for the acquisition by Gippsland of the Consideration Shares being 43,528,743 fully paid ordinary shares in the capital of the Company on the terms and conditions set out in this Explanatory Memorandum.

The Resolution is an ordinary resolution which means that it is required to be passed by a majority of the Shareholders who attend the Meeting, whether in person or by proxy, attorney or representative.

Section 611 Corporations Act

Section 606(1) of the Corporations Act prohibits a person from acquiring a relevant interest in the issued voting shares of, inter alia, a company listed on ASX (such as Stellar) if, because of the acquisition, that person's or another person's voting power in the company increases from:

(i) 20% or below to more than 20%; or
(ii) a starting point that is above 20% and below 90%.

Under section 610 of the Corporations Act the voting power of a person in a company is the total of the votes attaching to the shares in the company in which that person and that person's associates (within the meaning of the Corporations Act) have a relevant interest.

Under section 608 of the Corporations Act a person will have a relevant interest in shares if, inter alia, the person is the registered holder of the shares.

Under section 12 of the Corporations Act the associates of Gippsland for this purpose are:

(i) a body corporate that Gippsland controls;
(ii) a body corporate that controls Gippsland;

1. It is assumed that none of the Options will be exercised before Completion.

2. 3,000,000 of these Options (1,000,000 each) are held by 3 of the Directors of the Company being Mr P. G. Harman, Mr T. J. Burrowes and Dr D. J. Isles. Those Options expire on 30 November 2013 and are exercisable at $0.20 per Share. The other Director of the Company, Dr T. H. Whiting, holds 1,000,000 Options which expire on 26 November 2013 and are exercisable at $0.20 per Share. The remaining 2,125,000 Options are held by employees of and contractors to Stellar, also expire on 26 November 2013 and are also exercisable at $0.20 per Share.

(iii) a body corporate that is controlled by an entity that controls Gippsland;
(iv) a person with whom Gippsland has, or proposes to enter into, a relevant agreement for the purpose of controlling or influencing the composition of the Board or affairs of Stellar; or
(v) a person with whom Gippsland is acting, or proposing to act, in concert in relation to the affairs of Stellar.

The Corporations Act defines 'control' and 'relevant agreement' very broadly as follows:

(i) Under section 50AA control means the capacity to determine the outcome of decisions about the financial and operating policies of an entity. In determining the capacity you need to take into account the practical influence a person can exert and any practice or pattern of behaviour affecting the financial or operating policies of the entity.
(ii) Under section 9 relevant agreement means an agreement, arrangement or understanding:
- (a) whether formal or informal or partly formal and partly informal;
- (b) whether written or oral or partly written and partly oral; and
- (c) whether or not having legal or equitable force and whether or not based on legal or equitable rights.

Section 611 of the Corporations Act has exceptions to the prohibition in section 606(1) of the Corporations Act. As stated in section 2 above (Why the Meeting is being held), item 7 of section 611 provides a mechanism by which Shareholders may approve an issue of Stellar Shares which would otherwise infringe section 606(1) of the Corporations Act.

As at the date of this Explanatory Memorandum, Gippsland does not have a relevant interest in any Stellar Shares. This is because section 609(7) of the Corporations Act says that a person does not have a relevant interest in shares merely because of an agreement to acquire unissued shares if the agreement is conditional on a resolution under item 7 of section 611 being passed. That section further provides that the person acquires a relevant interest in the shares when the condition is satisfied.

Information required by item 7 of section 611 of Corporations Act

Item 7(b) of section 611 says that for a resolution to be effective under that item Shareholders must have been given all information known to Gippsland or its associates, or known to Stellar, that was material to the decision on how to vote on the resolution, including:

(i) the identity of the person proposing to make the acquisition and their associates; and
(ii) the maximum extent of the increase in that person's voting power in Stellar that would result from the acquisition; and
(iii) the voting power that person would have as a result of the acquisition; and
(iv) the maximum extent of the increase in the voting power of each of that person's associates that would result from the acquisition; and
(v) the voting power that each of that person's associates would have as a result of that acquisition.

The following information is provided in response to the particular requirements of item 7(b), using

for ease of reference the same numbers as above:

(i) The person proposing to make the acquisition is Gippsland Limited ABN 31 004 766 376 of 207 Stirling Highway Claremont Western Australia.

Gippsland is a listed company with mineral exploration and development projects in Egypt and Australia. For more information about Gippsland see its website www.gippslandltd.com or the ASX website www.asx.com.au (reference GIP).

The associates of Gippsland are as follows:

Tantalum International Pty Ltd

Here2win.com Pty Ltd

Adobha Resources (Eritrea) Pty Ltd

Oryx Resources Pty Ltd

Gippsland (Jordan) Pty Ltd

Nubian Resources PLC

Tantalum Egypt JSC and

Nubian Resources JSC.

(ii) The maximum extent of the increase in Gippsland's voting power in Stellar which will result from the acquisition is 28.57% because Gippsland has no voting power in Stellar now but would be entitled to exercise 28.57% of the votes cast by Shareholders at any general meeting of Stellar held after the issue of the Consideration Shares to Gippsland at Completion. However, if the Placement Shares are issued before Completion, the increase in Gippsland's voting power in Stellar resulting from the acquisition will be 25.8%.
(iii) As a result of the acquisition Gippsland would be entitled to 28.57% of the voting power of Stellar. However, if the Placement Shares are issued before Completion, Gippsland will be entitled to 25.8% of the voting power of Stellar.
(iv) There will be no increase in the voting power in Stellar of any of Gippsland's associates resulting from the acquisition because no associate of Gippsland has any voting power in Stellar now and no associate of Gippsland will acquire any voting power in Stellar as a result of the acquisition of the Consideration Shares by Gippsland.
(v) None of Gippsland's associates will have any voting power in Stellar as a result of the acquisition of the Consideration Shares by Gippsland.

Information required by Draft updated ASIC Regulatory Guide 74 (Acquisitions approved by members)

Draft updated Regulatory Guide 74 published by ASIC in May 2011 ("RG 74") says that Shareholders should be given the following additional information which has not been provided elsewhere in this Explanatory Memorandum.

Other than the Royalty Deed and restriction agreement referred to in section 4 above (Joint Venture Interest Sale Agreement), there is no other relevant agreement between Gippsland and Stellar or any of their associates that is conditional upon (or directly or indirectly depends on) Shareholders' approval of the acquisition of the Consideration Shares.

In relation to Gippsland's intentions regarding the future of Stellar if Shareholders approve Gippsland's acquisition of the Consideration Shares, Gippsland has no intention to change the business of Stellar, inject any further capital into Stellar (except as may be required to maintain its proportionate interest as a Shareholder) or change the future employment of present employees of Stellar. Nor is there is any proposal whereby any asset other than the Heemskirk Minority Interest will be transferred between Stellar and Gippsland or their associates or any intention to otherwise redeploy the fixed assets of Stellar.

In addition, Gippsland has no intention to significantly change the financial or dividend distribution policies of Stellar.

No Director has any interest in the acquisition of the Consideration Shares or in the Royalty Deed or restriction agreement referred to above.

There is no intention to change the Board of Stellar if Shareholders approve the acquisition.

Each of the Directors recommends that eligible Shareholders vote in favour of Resolution 1. The reasons for those recommendations are set out in section 9 below.

RG 74 also says that Shareholders should be provided with an analysis of the proposed acquisition that complies with the requirements of Regulatory Guide 111 Content of experts reports. In order to meet this requirement the Board appointed Nexia ASR Pty Ltd as an independent expert and commissioned it to prepare a report to provide an opinion as to whether or not the proposal in the Resolution is fair and reasonable to Shareholders. Nexia ASR Pty Ltd has concluded that the proposed transaction is not fair but is reasonable. The Company strongly recommends that you read the full Independent Expert's Report set out as the Schedule to this Explanatory Memorandum.

7. RESOLUTION 2 – APPROVAL OF PREVIOUS ISSUE OF SHARES

Resolution 2 seeks Shareholder approval of the Placement if it has occurred, and the Placement Shares have been issued, before the General Meeting.

If the Placement Shares have not been issued before the General Meeting, Resolution 2 will be withdrawn and Resolution 3 (see Section 8 below) will proceed instead.

Listing Rule 7.4 allows Shareholders to subsequently approve an issue of Shares which did not infringe the 15% in 12 months rule when made. If such approval is obtained, the Shares are deemed to have been issued with prior Shareholder approval for the purposes of the 15% in 12 months rule. Where Shareholders are being asked to provide their subsequent approval under Listing Rule 7.4 the following information must be provided viz

(a) The maximum number of Placement Shares allotted will be 16,323,278 Shares;
(b) The date by which the Placement Shares will be issued is 25 January 2012;
(c) The issue price of the Placement Shares will be at least 80% of the average market price of Shares calculated over the last five days during which sales of Shares were recorded before the day the Placement Shares are issued;
(d) The Placement Shares will be ordinary shares ranking equally in all respects with the other issued ordinary shares of the Company. The Company will apply to ASX for official quotation of the Placement Shares;
(e) The allottees of the Placement Shares will be sophisticated and/or professional investors identified by Taylor Collison who have been commissioned by the Company to arrange and manage the Placement;
(f) The funds raised by the Placement (after costs) will be used to fund further development drilling and advancement of the Heemskirk Tin Project and to provide working capital; and
(g) Allotment of the Placement Shares will occur progressively.

The Directors recommend that eligible Shareholders vote in favour of Resolution 2.

8. RESOLUTION 3 – APPROVAL OF PROPOSED ISSUE OF SHARES

Resolution 3 seeks Shareholder approval of the Placement if it has not occurred, and the Placement Shares have not been issued, before the General Meeting.

If the Placement Shares have been issued before the General Meeting, Resolution 3 will be withdrawn and Resolution 2 (see Section 7 above) will proceed instead.

All of the Placement Shares can be issued without prior Shareholder approval and without infringing the 15% in 12 months rule because the aggregate number of Placement Shares does not exceed 15% of the number of Shares on issue twelve months ago and because all Shares issued during the previous 12 months are deemed to have been issued with prior Shareholder approval, Shareholders having provided their subsequent approval of the December 2010 placement at the Annual General Meeting held on 17 October 2011. However, if the Placement Shares are issued without prior Shareholder approval, the Company will not be able to issue any further equity securities for a period of 12 months without prior Shareholder approval unless the issue falls within one of the exceptions to Listing Rule 7.1.

Where Shareholders are being asked to provide their prior approval under Listing Rule 7.1 the following information must be provided viz

(a) The maximum number of Placement Shares to be issued is 16,323,278 Shares;
(b) The Company will issue the Placement Shares no later than 3 months after the date of the General Meeting;
(c) The issue price of the Placement Shares will be at least 80% of the average market price of Shares calculated over the last five days during which sales of Shares were recorded before the day the Placement Shares are issued;
(d) The Placement Shares will be ordinary shares ranking equally in all respects with the other issued ordinary shares of the Company. The Company will apply to ASX for official quotation of the Placement Shares;
(e) The allottees of the Placement Shares will be sophisticated and/or professional investors identified by Taylor Collison who have been commissioned by the Company to arrange and manage the Placement;
(f) The funds raised by the Placement (after costs) will be used to fund further development drilling and advancement of the Heemskirk Tin Project and to provide working capital; and
(g) The allotment of the Placement Shares will occur progressively.

The Directors recommend that eligible Shareholders vote in favour of Resolution 3.

9. REASONS FOR DIRECTORS RECOMMENDATION THAT YOU VOTE IN FAVOUR OF RESOLUTION 1

The Heemskirk Tin Project is the Company's principal asset and one of the most attractive undeveloped tin projects in the world. Stellar has created momentum in the Project through 2011, by the release of a JORC compliant resource, completion of a positive scoping study and supportive drilling and metallurgical results. In order to maintain that momentum, Stellar believes that consolidation of the Project ownership is now necessary. After lengthy discussions, Stellar and Gippsland have agreed terms under which Stellar can move to 100% ownership and move the Project forward towards development.

The Heemskirk Joint Venture Agreement was originally formulated in 1977 between Aberfoyle Limited Group, an operating tin producer with internally generated cash flow to fund its commitments and an exploration partner in Gippsland. Stellar acquired the original Aberfoyle interest in 2008 and has since progressed the Project through to the prefeasibility stage. Stellar now faces a significant increase in expenditure commitment to complete a bankable feasibility study and believes that the current Joint Venture Agreement is an impediment to funding this work.

In recent months Stellar has been advised by a number of potential institutional investors and brokers that, while the Project itself is attractive, the ownership structure and Joint Venture Agreement are not. The acquisition of Gippsland's interest in the Project by Stellar will remove the minority interest in the Project and terminate the Joint Venture Agreement, thereby addressing a major concern for new investors.

Stellar is dependent on equity markets rather than cash flow for future funding. The Project is now at a stage where institutional funding is required. Such funding would allow Stellar to broaden its Shareholder base and open access to a much larger capital market than is currently the situation. In addition, it would lift the status of the Project within the tin industry, providing a greater range of opportunities for moving the Project beyond the bankable feasibility study stage to the funding of Project capital expenditure.

The Directors of Stellar believe that all Shareholders will ultimately benefit from the Company owning 100% of the Heemskirk Tin Project.

10. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders should read the Notice of Meeting and this Explanatory Memorandum carefully before deciding how to vote on the Resolutions. If you are in any doubt as to how to deal with it, please consult your financial or other professional adviser.

A Proxy Form accompanies the Notice. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, to sign and return the proxy form in accordance with the instructions contained in section 8(a) of the Notice of Meeting. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

11. INTERPRETATION

In the Notice and this Explanatory Memorandum:

AMPLA means The Resources and Energy Law Association (formerly known as The Australian Mining and Petroleum Lawyers Association);

ASIC means the Australian Securities and Investments Commission;

ASX means ASX Limited ACN 008 624 691;

Board means the board of directors of the Company;

Columbus Metals means Columbus Metals Limited ABN 89 127 557 340;

Consideration Shares means 43,528,743 Shares to be issued to Gippsland pursuant to the Joint Venture Interest Sale Agreement;

Company or Stellar means Stellar Resources Limited ABN 96 108 758 961;

Completion means completion of the sale and purchase of the Heemskirk Minority Interest pursuant to the Joint Venture Interest Sale Agreement;

Corporations Act means Corporations Act 2001 (Cth);

Deed of Assignment and Assumption means the deed dated 2 April 2008 between Western Metals Limited ABN 69 009 150 618 ("WML"), Gippsland and Columbus Metals pursuant to which WML assigned its 60% interest under the Heemskirk Joint Venture Agreement to Columbus Metals with effect from 2 April 2008;

Director means a director of the Company;

General Meeting or Meeting means the general meeting of Shareholders convened by the Notice;

Gippsland means Gippsland Limited ABN 31 004 766 376;

Heemskirk Joint Venture means the joint venture established by the Heemskirk Joint Venture Agreement, currently in force between Columbus Metals and Gippsland.

Heemskirk Joint Venture Agreement or Joint Venture Agreement means the Deed between Abminco NL and Gippsland (then called Gippsland Minerals NL) dated 25 August 1977 as novated pursuant to a Deed of Novation between Aberfoyle Exploration Pty Ltd, Cleveland Tin Limited and Gippsland (then called Gippsland Minerals NL) dated 31 December 1980, as now in force between Gippsland and Columbus Metals as a result of the Deed of Assignment and Assumption.

Heemskirk Minority Interest means the 40% interest of Gippsland in the Heemskirk Tin Project purchased by Columbus Metals pursuant to the Joint Venture Interest Sale Agreement;

Joint Venture Interest Sale Agreement means the agreement so named dated 1 November 2011 between Stellar, Columbus Metals and Gippsland;

JORC means the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Asutralia;

Heemskirk Tin Project or Project means the mineral development project described in the second paragraph of section 3 of this Explanatory Memorandum (Background).

Listing Rules means the listing rules of ASX;

Notice or Notice of Meeting means the Notice of General Meeting which accompanies this Explanatory Memorandum and of which this Explanatory Memorandum forms part;

Options means the options to subscribe for unissued Shares described in section 5 of this Explanatory Memorandum (Revised Capital Structure);

Placement means the issue to sophisticated and/or professional investors (other than Gippsland and its associates unless the Placement occurs after Completion) of up to 16,323,278 Shares at an issue price of at least 80% of the average market price of Shares calculated over the last five days during which sales of Shares were recorded before the day the Placement Shares are issued;

Placement Shares means Shares issued pursuant to the Placement;

Registry means Boardroom Limited of Level 7, 207 Kent Street, Sydney, NSW 2000;

Resolutions means the ordinary resolutions set out in sections 1, 2 and 3 of the Notice;

Royalty Deed means the proposed net smelter return royalty deed described in the last paragraph of section 4 of this Explanatory Memorandum (Joint Venture Interest Sale Agreement);

Shareholder means a holder of a Share;

Share means a fully paid ordinary share in the capital of the Company; and

Stellar or Company means Stellar Resources Limited ABN 96 108 758 961.

12. QUERIES

If you have any queries about the meeting, the Resolution to be put to the meeting or the proposals being considered, please contact the Chief Executive Officer, Mr Peter Blight, on (03) 9618 2540.

SCHEDULE

INDEPENDENT EXPERT'S REPORT PREPARED BY NEXIA ASR PTY LTD

INDEPENDENT EXPERT'S REPORT Acquisition of Gippsland Limited Interest in Heemskirk Tin Project

Nexia ASR Pty Ltd Financial Services Guide

This Financial Services Guide is dated 19 December 2011.

1. About us

Nexia ASR Pty Ltd (ABN 25 825 209 842, Australian Financial Services Licence no 247262) ("Nexia ASR") has been engaged by Stellar Resources Limited ("Stellar") to provide a report in the form of an Independent Experts Report (the "Report") for inclusion with the Notice of Meeting of Shareholders to be held on or about 25 January 2012 to consider resolutions associated with the proposed issue of shares to acquire the 40% interest of Gippsland Limited ("Gippsland") in the Heemskirk Tin Project.

You have not engaged us directly but have been provided with a copy of the Report as a shareholder because of your connection to the matters set out in the Report.

2. This Financial Services Guide

This Financial Services Guide ("FSG") is designed to assist retail clients in their use of any general financial product advice contained in the Report. This FSG contains information about Nexia ASR generally, the financial services we are licensed to provide, the remuneration we may receive in connection with the preparation of the Report, and how complaints against us will be dealt with.

3. Financial services we are licensed to provide

Our Australian Financial Services Licence allows us to provide general financial product advice in relation to various financial products such as securities, interests in managed investment schemes, and superannuation to retail and wholesale clients.

4. General financial product advice

The Report contains only general financial product advice. It was prepared without taking into account your personal objectives, financial situation or needs. You should consider your own objectives, financial situation and needs when assessing the suitability of the Report to your situation. You may wish to obtain personal financial product advice from the holder of an Australian Financial Services Licence to assist you in this assessment.

5. Fees, commissions and other benefits we may receive

Nexia ASR charges fees to produce reports, including this Report. These fees are negotiated and agreed with the entity that engages Nexia ASR to provide a report. Fees are charged on an hourly basis or as a fixed amount, having regard to the time and expertise likely to be engaged in the preparation of the report.

Nexia ASR will receive a fee of approximately $25,000 (plus GST and disbursements) for the preparation of this Report. Directors or employees of Nexia ASR or other associated entities may receive partnership distributions, salary or wages from Nexia ASR.

6. Associations with issuers of financial products

Nexia ASR and its authorised representatives, employees and associates may from time to time have relationships with the issuers of financial products. For example, Nexia ASR may be the auditor of, or provide financial services to, the issuer of a financial product in the ordinary course of its business.

During the 2 year period prior to this report Nexia ASR has provided the following professional services to Stellar and its subsidiaries

Date	Entity	Nature of Work	Fee(excl. GST)$
Jul 2011	Stellar Resources Limited	General taxation and commercial advisory	1,000
Oct 2010 to Jan 2011	Stellar Resources Limited	Taxation advice - employee share options	4,605
May 2010	Stellar Resources Limited	General taxation and commercial advisory	495
Nov 2010, Nov 2011	Columbus Limited	Corporate secretarial support services	792
			6,892

7. Compensation

Nexia ASR has professional indemnity insurance cover for reports of this nature under its professional indemnity insurance policy. This policy meets the compensation arrangement requirements of section 912B of the Corporations Act 2001.

8. Complaints

If you have a complaint, please raise it with us first, using the contact details listed below. We will endeavour to satisfactorily resolve your complaint in a timely manner. In addition, a copy of our internal complaints handling procedure is available upon request.

9. Contact Details

Nexia ASR can be contacted by sending a letter to the following address: Kevin Mullen Nexia ASR Pty Ltd Level 18, 530 Collins St, Melbourne, Vic, 3000

GLOSSARY

Abbreviated Term	Definition

Act	The Corporations Act 2001
AFSL	Australian Financial Services Licence
AGAA	AngloGold Ashanti Australia Limited
ASIC	Australian Securities and Investment Commission
Company	Stellar Resources Limited
Consideration Shares	43,528,743 new fully paid Stellar shares to be issued to Gippsland as part ofthe Proposal
CME	Capitalisation of Maintainable Earnings
DCF	Discounted Cash Flow
EM	Explanatory Memorandum accompanying the Notice of Meeting of Stellarshareholders
Heemskirk Project	Heemskirk tin project located in North-West Tasmania, in which Stellar has a60% interest
Gippsland	Gippsland Limited
LME	London Metals Exchange
Nexia	Nexia ASR Pty Ltd - AFSL Holder 247362
Non Associated Shareholders	Shareholders of the Company not associated with the Proposal
Project	Heemskirk tin project located in North-West Tasmania, in which Stellar has a60% interest
Proposal	The proposed sale of Gippsland's interest in the Project for the issue ofConsideration Shares and the Royalty, as defined at para. 4 of this Report
Royalty	Royalty of between 1% and 2% of net smelter returns payable to Gippsland asdefined at para. 4 of this Report.
Report	This Independent Expert Report prepared by Nexia in relation to the Proposal
Renaissance	Renaissance Uranium Limited
RG 111	ASIC Regulatory Guide 111 - Content of Experts Reports
RG 112	ASIC Regulatory Guide 112 - Independence of Experts
SRZ or Stellar	Stellar Resources Limited
UraniumSA	Uranium SA Limited
VWAP	Volume weighted average price

1.	Introduction 1
1.1	Background 1
1.2	Terms of the Proposal 2
1.3	Purpose and Scope of this Report 2
2.	Executive Summary Opinion 3
2.1	General 3
2.2	Fairness (quantitative assessment) 3
2.3	Reasonableness (qualitative assessment) 9
2.4	General disclosures and Limitations 10
3.	Disclosures and Limitations 11
4.	Regulatory Framework 11
4.1	Corporations Act – Takeover Provisions 11
4.2	ASX Listing Rules – Issues Exceeding 15% of Capital 11
4.3	Guidelines issued by ASIC on Acquisitions agreed to by Shareholders 12
5.	Profile of Stellar 13
5.1	Company Overview and Projects 13
5.2	Share Capital 16
5.3	Financial Position 18
5.4	Financial Performance 18
5.5	Share Price History 19
6.	Assessment of the Proposal 21
7.	Assessment of Fairness (Quantitative Assessment) 21
7.1	Overview 21
7.2	Value of The Heemskirk Project 23
7.3	Value of Stellar Shares Pre Proposal 25
7.4	Value of Stellar Shares Post Proposal 26
7.5	Summary of Assessment of Fairness 27
8.	Assessment of Qualitative Factors 28
8.1	Impact of the Proposal 29
8.2	No Change in Control 29
8.3	Advantages of the Proposal 29
8.4	Disadvantages of the Proposal 30
8.5	Alternatives 30
8.6	Conclusion on Reasonableness 30
9.	Opinion on the Proposal 30
	APPENDIX A 31

Statement of Qualifications, Independence, Declarations and Consents 31
APPENDIX B 33
Overview of Valuation Methodologies 33
APPENDIX C 35
Documents and Information Relied Upon 35
APPENDIX D 36
Impact of Income Tax and the Gippsland Royalty 36
APPENDIX E 38
Mining One Technical Valuation Report 38

19 December 2011

The Directors Stellar Resources Limited Level 17, 530 Collins Street MELBOURNE VIC 3000

Dear Sirs,

Independent Expert's Report pursuant to Section 611 of the Corporations Act and Listing Rule 7.1 Acquisition of Gippsland Limited Interest in Heemskirk Tin Project

As Directors of Stellar Resources Limited ("Stellar", "SRZ" or "the Company") you have requested Nexia ASR Pty Ltd ("Nexia") to prepare an Independent Expert's Report ("the Report") in relation to the proposed issue of shares to acquire the interests of Gippsland Limited ("Gippsland") in the Heemskirk Tin Project.

You have requested Nexia to provide an opinion on whether the Proposal (as described at section 1.2 below) is fair and reasonable to the Shareholders of Stellar.

1. INTRODUCTION

1.1 BACKGROUND

1. Stellar is a mineral exploration company focused on base metals, uranium and gold. Stellar has interests in a number of projects in Tasmania, South Australia and New South Wales. The Company's principal asset is a 60% interest in the Heemskirk tin project located in North-West Tasmania ("Heemskirk Project" or "the Project").
1. On 2 November 2011, Stellar announced that it had signed a sale and purchase agreement with Gippsland in respect of Gippsland's interest in the Heemskirk Project. Details of the terms of the sale agreement are summarised at 1.2 below. Full details are set out in the Explanatory Memorandum accompanying the Notice of Meeting. Completion of the transaction would mean that Stellar moves to 100% ownership of the Heemskirk Project.
1. Stellar has commissioned this Independent Experts Report ("the Report") in respect of the proposed issue of shares so that Shareholders may assess the merits of the Proposal when voting on resolutions at the General Meeting to be held on or about 25 January 2012. This Report only relates to Resolution 1 set out in the Notice of Meeting.

1.2 TERMS OF THE PROPOSAL

1. As noted above, and as set out further in the Explanatory Memorandum ("EM") Stellar has entered into a sale and purchase agreement whereby:
- Gippsland will sell its 40% interest in the Heemskirk Tin joint venture to Stellar's wholly owned subsidiary Columbus Metals Limited;
- Stellar will issue 43,528,743 new fully paid Stellar shares ("Consideration Shares") to Gippsland1 ; and
- Gippsland will retain a royalty over any future tin production from the Heemskirk project. The royalty will be triggered when the net smelter return to Stellar is A$25,000 per tonne of tin. The commencing royalty rate is 1% rising linearly to a maximum rate of 2.0% at a net smelter return of $A30,000 and above. ("the Royalty").

(collectively "the Proposal").

1. The Proposal will take Stellar's interest in the Heemskirk Tin Project to 100%.
1. We are advised that the sale is to be put to Gippsland shareholders prior to the holding of the Stellar general meeting.
1. If the Gippsland shareholders approve the sale the issuance of the Consideration Shares is subject to the approval of Stellar shareholders, as set out in Resolution 1.
1. For the purposes of our analysis of the Proposal we have used 31 October 2011 as the effective date and all financial disclosures are based on unaudited 31 October 2011 management accounts of the Company.

1.3 PURPOSE AND SCOPE OF THIS REPORT

1. Stellar is a listed public company. The Consideration Shares, if issued, will be ordinary shares in the Company and are considered "relevant interests" for the purposes of the Corporations Act 2001 ("the Act"). They are also considered "equity securities" for the purpose of the ASX Listing Rules.
1. Section 606(1) of the Act prohibits the acquisition of more than a 20% interest in a company without the acquirer making a formal takeover offer. There is no exemption even though the interests may be acquired pursuant to an arm's length transaction. The Act does however provide an exception to the rule if shareholder approval for the Proposal is given at a General Meeting of Shareholders.
1. ASX Listing Rule 7.1 ("LR 7.1") prohibits the issue of equity securities exceeding 15% of capital in a 12 month period without the approval of shareholders.
1. If approved, the Proposal would result in Gippsland holding 28.6% of the ordinary shares in the Company, which would exceed the 20% threshold. Also, the issue of the Consideration Shares would exceed the 15% threshold under LR7.1. However if Resolution 1 is approved pursuant to Section 611 of the Act, no further approval under the Listing Rules is required. Consequently, Stellar is seeking shareholder approval under item 7 of section 611 in respect of the issue of the Consideration Shares. The Company

1 Whilst not forming part of the Proposal, the term of the sale and purchase agreement also provide that 50% of the Consideration Shares will be escrowed for 6 months from the date of issue and 50% are to be escrowed for a further 6 months, subject to listing rule requirements. In the event that Gippsland decides to distribute the Consideration Shares to its own shareholders any remaining escrow period will automatically expire, subject to listing rule requirements.

has called a meeting of shareholders, to be held on or about 25 January 2012, to seek such approvals and for other matters outlined in the Notice of Meeting.

So that shareholders may be fully informed, in accordance with the provisions of ASIC Regulatory Guides the Directors of Stellar have engaged Nexia to prepare an Independent Expert's Report for the shareholders of Stellar not associated with the Proposal ("Non Associated Shareholders") in relation to the Proposal. The Report will accompany the Notice of Meeting and EM to be sent to shareholders. The scope of the Report is to consider if the Proposal is fair and reasonable to Non Associated Shareholders.

2. EXECUTIVE SUMMARY OPINION

2.1 GENERAL

1. We have considered the terms of the Proposal as outlined in the Notice of Meeting and in this Report and as a result of our review and considering all of the factors we are of the opinion that the Proposal is not fair but reasonable.
1. We consider that the Directors are justified in recommending that Shareholders vote in favour of the Proposal.
1. In forming our view we have had regard to the fair value of the securities subject of the Proposal, the consideration under the Proposal, the financial impact and other qualitative aspects of the Proposal for Stellar shareholders.

2.2 FAIRNESS (QUANTITATIVE ASSESSMENT)

1. ASIC Regulatory Guide 111 prescribes that under its convention an offer is fair "if the offer price or consideration is equal to or greater than the value of the securities subject of the offer". In the context of the Proposal this position translates to circumstances where the fair value of the assets acquired (i.e. the residual interest in the Heemskirk Project) are greater than or equal to the assessed value of the Consideration Shares and the Royalty.
1. In forming our view on the fairness or otherwise of the Proposal we have also had regard to the fair value of Stellar shares prior to the Proposal and as if the Proposal had been approved. In this manner the dilutive or positive impact of the Proposal on the fair value of Stellar shares is readily demonstrated.
1. As set out in the EM, the Company also proposes to make a placement of approximately 16.3 million shares to institutional shareholders to raise circa $1.3 million ("the Placement") as soon as Gippsland shareholders approve the disposal of Gippsland's interests in the Heemskirk project on the terms set out above. As the Placement has not been made at the time of this Report and is not underwritten or subject to a binding agreement, however may in fact be completed2 prior to the holding of the General Meeting on 25 January 2012, we have formed our view on fairness under 2 scenarios – as if the Placement had occurred and as if the Placement did not occur.
1. Full details of our assessment of fairness of the Proposal are at section 7 of this Report.

2 Subject to when the Placement is completed and the Record Date for the purposes of the General Meeting, the subscribing shareholder(s) may be entitled to vote on the Proposal at the General Meeting.

Value / Consideration Comparison

1. As noted, the Company's major asset is the Heemskirk Project. The Project has a JORC compliant tin resource of approximately 48,000 tonnes of contained tin, which subject to a satisfactory banking feasibility study is ready to be developed into a producing mine.
1. In formulating our views on fairness we have assessed the range of values based on the present value of the Heemskirk Project cashflows assuming a tin price in the range of US$22,000 to US$30,000 per tonne and a US$/A$ exchange rate of 1 to 1. Our preferred, or base case, is based on a tin price of US$26,000. The range of values and the impact on the fair value of each Stellar share is set out below in table 1. As can be noted in all cases the Proposal has a negative impact on the fair value of Stellar shares held by the Non associated shareholders, implying that the Consideration offered is in excess of the fair value of the assets being acquired. Accordingly we consider the Proposal is not fair in the context of the ASIC guidelines.

Table 1
		US$22,000		US$26,000	US$30,000
	WithPlacement	WithoutPlacement	WithPlacement	WithoutPlacement	WithPlacement	WithoutPlacement
NPV of Project -pre tax & pre Royalty		$13.48 mill		$ 75.91 mill		$ 134.4 mill
Fair Value of SRZ shares --pre Proposal (cents pershare)	6.9	6.8	32.1	35.7	55.2	62.3
Fair Value of SRZ shares -post Proposal (cents pershare)	4.1	3.7	30.8	33.2	51.4	56.0
Dilutive Impact of Proposalon fair value of existing SRZshares(cents per share)	2.8	3.1	1.3	2.5	3.8	6.3
% of fair value	40.4%	45.1%	4.2%	7.1%	6.9%	10.0%

Basis of Assessment

1. Our view on fairness is based on an assessment of the value of the asset(s) acquired under the Proposal, being Gippsland's interest in the Heemskirk Project and comparing this to the consideration being paid. The existing joint venture agreement with Gippsland provides that if the project moves to production then Gippsland must re-imburse Stellar 30% of all historical costs incurred on the project. This right of recovery will be forgone if the Proposal is approved. Accordingly we consider the consideration paid (payable) by Stellar for the asset(s) acquired consists of the total of:
- a. The Consideration Shares ;
- b. The Royalty; and
- c. The project expenditure reimbursement right.

Acquired Assets

The Heemskirk Project is both the principal asset of Stellar, and is the subject of the asset being acquired under the Proposal. The Project has a JORC compliant resource, published as 48,000 tonnes of contained tin. Nexia engaged Mining One as a consulting expert in the field to provide a technical valuation of the Heemskirk Project in accordance with the Valmin Code. In accordance with the Valmin

Code Mining One has made an assessment on the basis of the net present value of the cash inflows and outflows associated with the project development and operation. A copy of Mining One's valuation report is included in this Report as Appendix E.

1. Nexia requested Mining One to provide a valuation of 100% of the Project based on pre tax cash flows, with tin prices assumed at US$22,000, US$26,000 and US$30,000 and exclusive of any Royalties payable to Gippsland under the Proposal.
1. The historical 12 month average price per tonne of tin on the London Metals Exchange (cash settled) has been US$26,633. The price has over the last 2 months been in a downward trend and is currently US$20,705. This is close to the 3 year historical average of US$19,640 which reflects a marked decline in prices during the global financial crisis. In October 2011, Reuters published3 the results of its survey of market analysts in respect of forecasts for 2012 tin prices. Of the 13 respondents, the forecasts had a range of US$23,260 to US$29,250 with a mean price of US$26,259 per tonne. In a press release4 about its Tin Annual Review 2011, the International Tin Research Institute notes that "… in the next three to five years there are still good reasons to expect that tin prices will stay well above long term historical averages, mainly as a result of constraints on mine supply". Market commentary by Barclays5 also mentions a "deficit dynamic" in the tin market wherein LME stock are diminishing and if prices remain at current levels production is likely to be stalled and is not expected to meet demand.
1. On balance we are of the view that adopting a price sensitivity range of US$22,000 to US$30,000 is appropriate for our assessment of the Proposal and that US$26,000 per tonne is an appropriate preferred or base case forecast tin price at the date of this Report.
1. All other assumptions concerning the project development and operation including but not limited to capital costs, mining costs, processing costs, processing recovery rates, net smelter return and discount rate have been determined by Mining One based upon their assessment of the Project the mining plan and industry experience.
1. To determine the after tax net present value we have applied to Mining One's technical valuation model the anticipated impost of corporate taxation based upon Stellar's existing tax losses and the depreciation and other deductions arsing from the development of the mine and processing plant.
1. In the absence of reasonable financing proposals for the Project we have assumed that the Project is 100% equity financed. Accordingly, there are no outflows for interest and debt repayments.
1. The present joint venture agreement provides that if the Heemskirk Project moves to development/production, then Stellar will have a 70% interest in the project. Accordingly, whilst Gippsland presently has a 40% interest in the Project, our assessment based on the net present value of the project cashflows accounts for the position whereby Gippsland only has an effective 30% interest in the Project, which it is transferring to Stellar.
1. Table 2 below sets out the summary of the technical valuation of the Project by Mining One, the impact of taxation and the royalty. It can also be noted that the impost of taxation has a significant impact on NPV which is reflective of the fixed capital costs (circa $105.6 million) incurred during the early stages of the Project life cycle, whereas taxation is based upon the profits generated during the project life cycle.
1. We note that at the preferred valuation of $45.566 million, the total project has an in ground resource valuation of approximately $1,520 per tonne of contained tin. This compares favourably with the implied value of other advanced, but not producing, similar sized tin projects of other ASX listed companies (VMS

3 Source – Reuters Base Metal Price Forecasts 2012 (www.reuters.com)

4 www.itri.co.uk

5 www.barclays.co.uk – "Metals Magnifier" Barclays Capital ‐ 23 November 2011

and KAS) of approximately $1,100 per tonne, although that value is based on present market capitalisation rather than a technical NPV, which may yield a higher valuation per tonne.

We have also set out in table 2 the value of Stellar's existing 70% interest in the project proceeds, including the right to expenditure re-imbursement from Gippsland. The NPV of the existing 70% interest is greater than a proportionate 70% of the total project NPV, assuming 100% ownership, because of the future cash benefit of Stellar's existing $15+ million of tax losses.

Table 2
	LowUS$22,000/tonne	PreferredUS$26,000/tonne	HighUS$30,000/tonne
	$000's	$000's	$000's
NPV of Project ($000's) -pre tax	13,483	75,909	134,403
NPV of taxation	(12,825)	(30,343)	(47,657)
NPV of Project (100%)post tax / pre royalty	658	45,566	86,746
NPV of Royalty (post tax)6	-	-	(6,440)
NPV of Stellar's existing70% interest in the Project(including rights to
expenditure re-imbursement)	2,367	33,861	62,731

Value of Stellar Shares

1. As noted above, we consider the consideration paid to Gippsland by Stellar under the Proposal has the 3 elements of the Consideration Shares, the Royalty and forgiving the right to re-imbursement of historical expenditure.
1. The Consideration shares comprise 43,528,743 new fully paid Stellar shares to be issued to Gippsland. Those shares will rank pari pasu with all existing Stellar shares (including the Placement shares) and accordingly share in the benefits of all Stellar's existing assets, including the other exploration assets, cash, investments and receivables.
1. The Royalty will be payable only when net smelter return from the Project equates to US$25,000 per tonne, commencing at 1% and progressing on liner scale to 2% at the capped US$30,000 net smelter return. As noted, the Royalty component of the consideration is only relevant in the US$30,000 technical valuation model. As Gippsland will be a shareholder in Stellar at the time of payment of any royalty, the dilutive impact of the royalty on existing Stellar shareholders is reduced by the interest Gippsland holds in Stellar's total capital.
1. The re-imbursable expenditure has been assessed by the Company to have a present value of approximately $2.8 million, including historical expenditure and forecast expenditure to completion of the bankable feasibility study. If the Proposal is approved this asset of Stellar will be given up to the benefit of Gippsland.

6 The terms of the Royalty (based on net smelter return) mean that under the Mining One cash flow models the LME tin price has to exceed US$26,315 before any royalty becomes payable.

1. As Gippsland will become a shareholder of Stellar and the consideration under the Proposal comprises multiple elements, the Consideration Shares are fixed in number and there is the prospect of the Placement prior to completion of the Proposal, we consider the fairness of the Proposal is best assessed by comparing the interests of non associated Stellar shareholders in the existing equity of Stellar (pre Proposal) to the value of equity as if the Proposal had been implemented. This is expressed on a gross and per share basis.
1. We consider that the most appropriate method of assessing value of Stellar's equity is based upon the fundamental value of the assets and liabilities. It is not our view that current share price can be reliably used as the appropriate value indicator. In our opinion the current pricing is likely to be influenced by current equity market conditions and short term uncertainties concerning fundamentals of the project, and Stellar's ability to develop the Project, and conditions affecting tin prices.
1. Table 3 below sets out the summary of current fair values and fair values post Proposal. We have considered the potential impact of the Placement separately. In addition to the Heemskirk Project as set out at table 2 above, Stellar also has other mineral exploration projects and cash. Details of these other assets are set out at sections 5 and Section 6, including a summary of the valuation of the minerals exploration projects by Mining One. The other assets have a total value of $5.047 million and $6.453 million if the Placement proceeds.

	Low			Preferred	High
		US$ 22,000 / tonne		US$ 26,000 / tonne		US$ 30,000 / tonne
	WithPlacement	NoPlacement	WithPlacement	NoPlacement	WithPlacement	NoPlacement
Pre Proposal
Equity value ($000)	8,689	7,384	40,183	38,877	69,052	67,747
Number of Shares (000)	125,145	108,822	125,145	108,822	125,145	108,822
Value per share (cents)	6.9	6.8	32.1	35.7	55.2	62.3
Value attributable to existing
SRZ sh/h ($000)	8,689	7,384	40,183	38,877	69,052	67,747
Post Proposal
Equity value ($000)	6,981	5,675	51,888	50,582	86,627	85,321
Number of Shares (000)	168,674	152,351	168,674	152,351	168,674	152,351
Value per share (cents)	4.1	3.7	30.8	33.2	51.4	56.0
Value attributable to existingSRZ sh/h ($000)	5,179	4,053	38,498	36,130	64,272	60,944
Impact of Proposal
Equity value ($000)	(1,709)	(1,709)	11,705	11,705	17,575	17,575
Number of Shares (000)	43,529	43,529	43,529	43,529	43,529	43,529
Value per share (cents)	(2.8)	(3.1)	(1.3)	(2.5)	(3.8)	(6.3)
Value attributable to existingSRZ sh/h ($000)	(3,510)	(3,330)	(1,686)	(2,747)	(4,781)	(6,803)
Interest of Gippsland(post Proposal)	25.8%	28.6%	25.8%	28.6%	25.8%	28.6%
Interest of Placement Shares
(post Proposal)	9.7%	0.0%	9.7%	0.0%	9.7%	0.0%
Dilution to pre Proposal FairValue of existing SRZ shares
(%)	40.4%	45.1%	4.2%	7.1%	6.9%	10.0%

Table 3

1. In circumstances where the Proposal would have a negative impact on the value of existing shareholders interests in the equity of Stellar ASIC guidelines prescribe that the offer cannot be considered fair. Accordingly based on the above assessment of the fair value of Stellar equity pre and post Proposal, we consider that the Proposal is not fair to Stellar shareholders.
1. As noted above we have imputed a value, in the pre Proposal analysis, of Stellar's present interest in the Project based on a technical valuation for a 100% interest in the Project. Accordingly the value of Stellar's present (effective 70%) interest assumes the same discount rate would be applied to Stellar's interests in the project irrespective of whether it holds 70% or 100% of the Project. We understand that financiers and investors often place higher risk premiums on part controlled interests in mining projects and those risks

will depend on a number of factors including, but not limited to , the terms of the joint venture agreement and the joint venture partner. We are not in a position to assess the quantum, if any, of risk premium (hence higher discount rate) that might be used when valuing Stellar's effective 70% interest on a stand alone basis. If a higher discount rate was used this would reduce the value of Stellar's existing equity, which would potentially reduce the dilutive impact of the Proposal on existing shareholders interest in the equity of Stellar.

Control Value

In accordance with ASIC guidelines, our assessment of fairness has necessarily been made on a control basis i.e. assuming ownership of 100% of the Company. However, we point out that the Proposal may result in Gippsland holding between 25.8% and 28.6% of Stellar shares, which means that whilst Gippsland may be in a position of significant influence we do not believe control passes to Gippsland. Our assessment of fairness (in accordance with ASIC guidelines) has not made any discount to the control value notwithstanding Gippsland will only acquire a minority interest.

2.3 REASONABLENESS (QUALITATIVE ASSESSMENT)

1. Under ASIC guidelines, if the Proposal is fair it is deemed to be reasonable. However the Proposal may be reasonable notwithstanding that it is not fair.
1. Further, in our opinion, if a transaction is "fair and reasonable" it must also be "in the best interests" of Shareholders. Consequently in our opinion, the Proposal is also reasonable if it is in the best interests of Stellar shareholders.
1. In assessing the Proposal, we have had regard to the following:

Financial Impact of the	ƒ	Generates an improvement in net assets
Proposal on Stellar	ƒ	Has a dilutive impact on net asset backing per share
	ƒ	Potentially has a positive impact on earnings in the medium to long term.
Control does not passto Gippsland	ƒ	Whilst the Proposal is not fair, this assessment is undertaken on acontrolling interest basis, whereas in our view Gippsland do not obtaincontrol of Stellar as a result of the Proposal.
	ƒ	We also note that Gippsland has not requested (as part of the Proposal)representation on Stellar's Board of Directors
Advantages of theProposal	ƒ	Finance providers have indicated to the Company that they may notconsider investing in the Project whilst it is only 60% - 70% controlled byStellar.Moving to 100% ownership will remove those impediments andenable the Company to proceed with feasibility studies, capital raisingsand potential expansion of the resource and development of the project.
	ƒ	Stellar can manage the Project without involving a junior partner.
	ƒ	The risks of having to fund a junior partner through the Project, withreturns only obtained from the Project cashflows, are mitigated.
	ƒ	The Proposal may lead to a re-rating of the Company and share priceimprovement.

Disadvantages of theProposal	ƒThe issue of Consideration Shares and other elements of theconsideration are not fair. However we point out that the dilutive impacton the value of Stellar shares at our preferred valuation is in the range of4% to 7%.
	ƒGippsland will be the largest shareholder and may be in a position toexert influence in the Company.
If the Proposal is NOTapproved	Stellar will need to continue dealing with the Project as a joint venture.Indications are that funding the project under this arrangement may continueto be problematic.Accordingly, Stellar may need to abandon or sell itscurrent interests in the Heemskirk Project and focus future expenditure andmanagement efforts on the other mineral exploration projects in its portfolio.

1. On balance of all the matters considered we are of the view that the Proposal is reasonable.
1. Full details of the reasonableness assessment are at section 8 of this Report.

2.4 GENERAL DISCLOSURES AND LIMITATIONS

Changes in Market conditions

Our analysis and conclusions are based on market conditions existing at the date of this Report. A limitation of our conclusion is that market conditions may change between the date of this Report and when the various aspects of the transaction are concluded.

Individual shareholder circumstances

Acceptance or rejection of the Proposal is a matter for individual shareholders based upon their own views of value, risk, and portfolio strategy. Stellar shareholders who are in doubt as to the action that they should take in relation to the Proposal should consult their professional advisor.

Entirety of Report

1. This summary opinion should be read in conjunction with and not independent of the remainder of this Report.
1. The Report should also be read in conjunction with the Notice of Meeting and EM to which this Report is attached. Terms in this Report are, unless otherwise noted, consistent with terms and description referred in the Notice of Meeting and EM.

Yours sincerely, Nexia ASR Pty Ltd Holder of Australian Financial Services Licence No. 247362

Gary Graco Authorised Representative

3. DISCLOSURES AND LIMITATIONS

1. This Report has been prepared at the request of the directors of Stellar for the purposes of assisting Shareholders in their evaluation of the Proposal.
1. The Report is not intended to serve any other purpose and should not be relied upon by any other person for any other purpose. In preparing this Report, Nexia has relied upon financial and other information provided by Stellar. Furthermore, we have relied upon the representations and opinions of the management of Stellar.
1. We believe that the information provided was reliable, complete and not misleading and there is no reason to believe that any material facts have been withheld. However, we have not conducted any separate due diligence or audit investigations to assess the correctness or completeness of this information. Information, judgements and representations have been evaluated through analysis, enquiry and review to the extent practicable. However, it must be appreciated that such information is not always capable of external verification or validation.
1. Acceptance or rejection of the Proposal is a matter for individual shareholders based upon their own views of value, risk, and liquidity preference and portfolio strategy. Stellar shareholders who are in doubt as to the action that they should take in relation to the Proposal should consult their professional advisor.
1. The opinion of Nexia is based on economic market and other conditions prevailing on the date of this Report. Such conditions can change significantly over a relatively short period of time.

4. REGULATORY FRAMEWORK

4.1 CORPORATIONS ACT – TAKEOVER PROVISIONS

1. Section 606(1) of the Act prohibits the acquisition of an interest in the voting capital of a company without making a formal takeover offer where a person's interest increases either from below 20% to more than 20%; or from a starting point above 20% and below 90%. The interests of "associates" are aggregated for these purposes. Acquisition can be by way of transfer from other shareholders (purchase) or by way of issue of new securities (subscription). Item 7 in the Exemptions Table at Section 611 of the Act provides an exemption to the Section 606 prohibition if the acquisition is approved by a majority of shareholders at general meeting and no votes are cast in favour of the resolution by the acquirer or its associates.
1. If approved, the Proposal will result in the issue of approximately 43.5 million shares to Gippsland. This would take Gippsland's relevant interest in Stellar to approximately 28.6% (after the issue of the Consideration Shares but before considering the impact of any other capital raising). Therefore, the Company requires the approval of the Stellar shareholders not associated with the Proposal
1. Section 611 of the Act requires the Company to disclose all material information on how to vote on the resolution. The directors of Stellar have determined that an Independent Expert's Report commenting on the Proposal should be included with the EM in order for members to decide whether or not it is in the Company's interests to pass the resolution to give effect to the Proposal.

4.2 ASX LISTING RULES – ISSUES EXCEEDING 15% OF CAPITAL

LR 7.1 prohibits the issue equity securities exceeding 15% of the number of ordinary securities on issue 12 months before the date of issue (adjusted for share issues that are excepted or approved by shareholders, and share cancellations in the 12 month period), without the approval of the holders of ordinary securities. The approval of Resolution 1 by shareholders pursuant to Section 611 of the Act will also provide all approvals required under LR7.

4.3 GUIDELINES ISSUED BY ASIC ON ACQUISITIONS AGREED TO BY SHAREHOLDERS

1. ASIC has issued Regulatory Guides 111 Content of Experts Reports ("RG111") and Regulatory Guide 112 – Independence of Experts ("RG112"). We highlight the following from RG111 that are pertinent to this Report.
1. RG111.5 In deciding on the appropriate form of analysis for a report, an expert should bear in mind that the main purpose of the report is to adequately deal with the concerns that could reasonably be anticipated of those persons affected by the proposed transaction. An expert should focus on the purpose and outcome of the transaction, that is, the substance of the transaction, rather than the legal mechanism used to effect the transaction.
1. RG111 does not prescribe the form of analysis relevant to matters subject to acquisitions approved by security holders under item 7 of s611, however practice has commonly adopted the 'fair and reasonable' proposition as an appropriate form of analysis. RG111 sets out the principles of fair and reasonable in the context of a Chapter 6 control transaction.
- RG111.10 It has long been accepted in Australian mergers and acquisitions practice that the words 'fair and reasonable' in s640 established two distinct criteria for an expert analysing a control transaction:
  - (a) is the offer 'fair'; and
  - (b) is it 'reasonable'?

That is, 'fair and reasonable' is not regarded as a compound phrase.

RG111.11 Under this convention, an offer is 'fair' if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer. This comparison should be made:
- (a) assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm's length; and
- (b) Assuming 100% ownership of the 'target' and irrespective of whether the consideration is scrip or cash. The expert should not consider the percentage holding of the 'bidder' or its associates in the target when making this comparison. For example, in valuing securities in the target entity, it is inappropriate to apply a discount on the basis that the shares being acquired represent a minority or 'portfolio' parcel of shares.
RG111.12 An offer is 'reasonable' if it is fair. It might also be 'reasonable' if, despite being 'not fair', the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid before the close of the offer.
1. We have necessarily considered the ASIC guidance in our analysis. The methodology that we have used to form an opinion as to whether the Proposal is fair and reasonable, is summarised as:
- Fairness we have considered the value of Stellar shares prior to the Proposal and as if the Proposal had been approved. In this manner the dilutive or positive impact of the Proposal can be demonstrated. Our analysis of the fairness has been undertaken under two scenarios – as if the Placement had occurred and as if the Placement did not occur. This is because the Placement has not been made at the date of this Report, and is not underwritten or subject to a binding agreement. Whilst the scope of this Report does not extend to opining on the Placement, the Placement may be completed prior to the General Meeting at which the Proposal will be voted on by Stellar shareholders. It is likely that any shares issued in the placement will be eligible to vote on the Proposal.

• Reasonableness - we have analysed other significant factors, which shareholders should consider prior to accepting or rejecting the Proposal including the impact of the Proposal, advantages and disadvantages of the Proposal and the alternatives available to Stellar if the Proposal is not approved.

5. PROFILE OF STELLAR

5.1 COMPANY OVERVIEW AND PROJECTS

Since listing on 28 April 2005, Stellar has operated as a mineral exploration company with the objective of identifying and developing economic reserves of base metals, uranium and gold. The Company and its controlled entities engage in exploration and development of mineral projects in Tasmania, South Australia and New South Wales.

Heemskirk Tin Project (Stellar 60%)

1. The Heemskirk Tin Project is the company's principal asset. It is located near Zeehan on Tasmania's West Coast in an area well serviced by power, water, transport, mining and other infrastructure. Stellar currently holds a 60% interest in the project with joint venture partner Gippsland. On completion of a bankable feasibility study, Stellar will move to a 70% interest in the Project.
1. Drilling by Gippsland in the 1970s and subsequently Aberfoyle Limited during the 1980s identified three tin deposits: Queen Hill, Montana and Severn. In 2010, Stellar added to the substantial drilling database with 6 diamond drill holes into the near surface Queen Hill deposit. The Stellar results confirmed the high grade nature of the mineralization and provided fresh samples for metallurgical testing. These tests indicated that tin is recoverable using a process similar to that employed at the nearby Renison Bell tin mine.
1. In March 2011, Stellar released a JORC compliant inferred resource estimate for Queen Hill, Montana and Severn of 4.36 million tonnes grading 1.1% tin or 48,000 tonnes of contained tin. All three deposits are open with recent drilling 110 metres to the north of Queen Hill at Stormsdown intersecting high grade tin and base metals mineralisation. Recent drilling has also shown further exploration potential below the Severn deposit.
1. In July 2011, Stellar completed a scoping study which showed the potential for economic development of the project assuming supportive long-term tin price and exchange rate.
1. The project has now entered the pre-feasibility stage involving:
- continued drilling to upgrade and expand the resource estimate;
- exploration to locate a fourth deposit on the retention licence;
- assessment of the silver, lead and zinc potential;
- environmental assessment of the mining plan; and
- continued metallurgical assessment of the three deposits.

Pirie Basin Uranium (Stellar 100%, joint venture partners earning interests)

1. The Pirie Basin is located south of Whyalla along the east coast of the Eyre Peninsula in South Australia. The recent discovery of the Blackbush and Plumbush sedimentary uranium deposits by UraniumSA Limited established the Pirie Basin as a new uranium province and greatly upgraded the potential of Stellar's exploration licenses (EL 4242 and EL 3978) located in the southern half of the Basin.
1. UraniumSA Limited ("UraniumSA") is Stellar's joint venture partner in EL 4242 and has until September 2012 to earn a 73% interest in 40% of the licence area by identifying a JORC inferred resource. Regional exploration drilling by UraniumSA has shown that Plumbush mineralization extends into the northwest corner of EL 4242. However, closer spaced drilling is required to test the full extent of this mineralization.
1. Renaissance Uranium Limited ("Renaissance"), joint ventured into EL 3978 in October 2010 with a grant of 750,000 shares and 750,000 options to Stellar on Ministerial approval of the agreement. A further 750,000 shares and options are to be granted to Stellar on the 12 month anniversary of approval. Under the terms of the joint venture, Renaissance has the right to earn a 75% interest in the license by sole funding $3.5 million of expenditure over five and a half years.
1. Renaissance completed a gravity survey to identify basin architecture and followed up with 31 rotary mud drill holes in a wide-spaced reconnaissance program. So far the program has identified thick sequences of Eocene sands, the host horizon for the Blackbush and Plumbush uranium deposits to the north, with elevated uranium levels in some holes. Closer spaced follow-up drilling is planned over priority targets.

Tarcoola Palaeochannel Uranium (Stellar 100%)

1. UraniumSA has joint ventured into a number of Stellar tenements in the Tarcoola area (EL 4707, 3799, 4167, 4301) to explore for palaeochannel uranium. Reconnaissance drilling has so far failed to identify targets for follow up. Under the terms of the agreement, UraniumSA has rights to uranium only and can earn a 70% interest in by identifying a JORC resource.
1. Stellar owns 100% of the Warrior palaeochannel uranium mineralisation on EL 4570. Past drilling has identified two areas of moderate grade and tonnage.

Tarcoola Iron Ore Project (Stellar 100%)

1. The Tarcoola Iron Ore Project is located 8 kilometres from Tarcoola in central South Australia. It also lies within 10 kilometres of the Trans-Australian railway which links the project to the proposed bulk commodity export terminal at Port Bonython. The project comprises Coolybring (EL 4167) with an exploration target of 700 million tonnes of magnetite banded iron and Hicks Hill (EL 4389) a magnetite prospect located 45 kilometres to the southeast of Coolybring.
1. Stellar is in the process of identifying a joint venture partner to advance the project to a drill-out of the Coolybring deposit to a JORC inferred resource and completion of a pre-feasibility study.

Copper and Gold

Table 4
Project / Licence	Comments
AngloGold Ashanti Joint VentureSouth Australia(AGAA earning 75%)	In October 2010, AngloGold Ashanti Australia Limited ("AGAA")agreed to joint venture into four Stellar exploration licenses (ELs3752, 3753, 3655 and 4573) in the Gawler Craton of SouthAustralia to explore for world –class iron oxide copper goldmineralization. Under the terms of the agreement, AGAA has tospend $5 million within six years to earn a 75% interest in thelicenses.
EL 46/2003 GourlaysTasmania(Stellar 100%)	Two diamond drill holes tested high amplitude magneticanomalies. The results were moderately encouraging with severalnarrow zones of copper veining. Follow-up work will depend onthe outcome of geological modeling.
EL 6556 Panama HatNew South Wales(Stellar 100%)	Reverse circulation drill testing below a number of high grade rockchip samples around the Panama Hat mine and Williams Prospectprovided results that were insufficiently encouraging to warrant asecond round of drilling. Stellar is currently investigating thepotential to joint venture the property.
EL 36/2003 Whyte RiverTasmania(Stellar earning 75%)	Stellar has entered into a joint venture with Bass Metals Limitedon EL36/2003 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.
Tarcoola GoldfieldSouth Australia	Stellar owns four mining licences (ML 4650, 4667, 5179 and 5300)and has an interest in one mineral claim (MC 4195) over thehistorical Tarcoola Goldfield. Limited continuity of mineralisationhas restricted exploration in the area. Low Impact Diamond Drillingis undertaking a preliminary evaluation of MC 4195 to determinethe economics of developing a small resource (<30,000 oz).

Other Metals

Table 5
Project / Licence	Comments
EL 1/2004 Ramsay TasmaniaTin/Lead(Stellar 100%)	Surface sampling and geological assessment of five geophysicallyanomalous zones was completed during the year. Two moderatetargets were identified for follow-up work.
EL 26/2009 Huskisson TasmaniaNickel(Stellar 100%)	Stellar completed a VTEM survey over the licence during the yearand identified six anomalies worthy of follow-up exploration. Thesetargets represent the earliest stage of exploration.
EL 40/2010 Heazlewood Hill	Stellar was recently awarded this licence and plans to follow up a

TasmaniaNickel(Stellar 100%)	number of untested geophysical anomalies that were identified byprevious explorers.
EL 49/2004 Rayne TasmaniaNickel(Stellar 100%, MMG earning up to80%)	MMG Exploration Pty Ltd, a wholly owned subsidiary of MinmetalsResources Limited (HKEx Code: 1208) is undertaking a stagedfarm-in into the license by sole funding exploration of up to $14million to earn an 80% interest. The first stage of the project wasrecently completed with drilling of a 644m diamond drill hole thatidentified a zone of pyrrhotite mineralisation as the probablesource of the target magnetic anomaly.
EL 4632 Goldfinger New SouthWalesZinc(Stellar 80%)	The joint venture covers geology that is prospective for Broken Hillstyle mineralisation. Exploration to date has producedencouraging intersections but is yet to identify a resource. Stellaris considering reducing its equity in the project to fund furtherexploration.
Coal Royalty	Stellar holds a royalty of $0.60/tonne of coal or iron ore minedfrom EL 4525 located south of Coober Pedy in South Australia.Southern Coal Holdings Pty Ltd, the holder of this licence, recentlyreleased a coal resource estimate of 352.4 million tonnes for thePenrhyn deposit following a program of resource definition drilling.Southern Coal Holdings is considering the application of cleancoal upgrading technology as part of a development strategy forthe deposit.

5.2 SHARE CAPITAL

1. Stellar currently has on issue approximately 108.8 million ordinary shares.
1. In its most recent capital raising in December 2010 the Company raised $2.1 million, through the issue of 14 million shares at a price of $0.15 per share in a placement to sophisticated investors.
1. At 14 November 2011, there were 1,910 shareholders in the Company and the spread of shareholders was as follows:

Table 6: Shareholder Spread
Range(Shares)	HoldersShares		% of IssuedCapital

1-1,000	231	87,200	0.08%
1,001-5,000	482	1,413,611	1.30%
5,001-10,000	263	2,183,293	2.01%
10,001-100,000	778	28,272,178	25.98%
100,001+	156	76,865,576	70.63%
Total	1,910	108,821,858	100%

1. In addition to the shares on issue, there are 6.125 million unlisted options over Stellar shares outstanding, from grants to employees/directors. These options have an exercise price of $0.20 and expiry dates of 26 and 30 November 2013. As the options represent less than 6% of the capital of Stellar and are significantly out of the money, the financial analysis in this Report is not presented on a fully diluted basis.
1. Table 7 sets out the interests of top 20 shareholders at 14 November 2011

Rank	Table 7: Top 20 Shareholders – Pre ProposalName	Holding as% of All Shareson Issue
1	JP MORGAN NOMINEES AUSTRALIA LIMITED	16.88%
2	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	4.88%
3	JPC INTERNATIONAL PTY LTD	4.60%
4	AWJ INVESTMENTS PTY LTD	2.23%
5	FOUNTAIN OAKS PTY LTD	2.06%
6	L J THOMSON PTY LTD	1.78%
7	MRS XIAOQIONG CHEN	1.10%
8	UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD	1.06%
9	CAROJON PTY LTD	0.92%
10	OCTIFIL PTY LTD	0.92%
11	PROVIDENCE GOLD AND MINERALS PTY LTD	0.92%
12	TOAD FACILITIES PTY LTD	0.84%
13	CALAMA HOLDINGS PTY LTD	0.82%
14	DR LEON EUGENE PRETORIUS	0.69%
15	MR BARRIE ERNEST LAWS & MRS MERRILYN FRANCES LAWS <b &="" a="" c="" fund="" laws="" m="" super="">	0.62%
16	MR CRAIG HONNER & MRS ALISON HONNER	0.61%
17	MRS EWA AURELIA KOZLOWSKI	0.60%
18	YELWAC PTY LTD	0.56%
19	NUTSVILLE PTY LTD	0.55%
20	MRS STELLA EMILY DOWNEY	0.54%
		43.18%

Impact of the Proposal

1. If approved, the Proposal will result in the issue of 43.5 million shares to Gippsland, and a total of 152.3 million shares on issue. If the Placement occurs, there will be a total of 168.7 million shares on issue post Proposal. Gippsland would hold approximately 28.6% of the ordinary shares on issue (25.8% if the Placement occurs), making it the single largest shareholder.
1. For completeness we note that to the extent Gippsland distributes the Stellar shares to its shareholders, Gippsland's direct interest in Stellar will reduce. However, the timing and extent of any such distribution is not specifically part of the terms of the Proposal and is beyond the control of Stellar. Accordingly this Report makes no assumption in this regard.

5.3 FINANCIAL POSITION

The following table sets out the consolidated balance sheet of the Company (including all subsidiaries) as of the last audited (30 June 2011) financial statements and the comparative balance sheet as at 30 June 2010.

		31 Oct 2011	30 Jun 2011	31 Jun 2010
		$000	$000	$000
		UNAUDITED	AUDITED	AUDITED
Current Assets
Cash and cash equivalents		1,378	2,288	1,934
Trade and other receivables		91	113	139
Other		43	30	35
Other financial assets	(1)	589	661	741
Total current assets		2,101	3,092	2,849
Non current assets
Property, plant and equipment		95	96	127
Exploration expenditure		7,184	6,491	5,263
Total non current assets		7,278	6,587	5,390
Total assets		9,379	9,679	8,239
Current liabilities
Trade and other payables		119	284	205
Provisions		12	27	24
Total current liabilities		131	311	229
Total liabilities		131	311	229
Net assets		9,248	9,368	8,011

Equity
Issued capital		21,731	21,731	19,737
Reserves		1,454	1,454	1,103
Accumulated losses		(13,936)	(13,816)	(12,830)
Total equity		9,248	9,368	8,011

Notes:

(1) Other financial assets are shares and options in listed investments carried at market value

Exploration expenditure is carried at the lower of unamortised cost or recoverable value. Accordingly it is not necessarily reflective of current fair markets value. Our assessment at Section 6 considers the current value of the company's mineral assets.

5.4 FINANCIAL PERFORMANCE

A summary of Stellar's financial performance for the financials years to 30 June 2011 and 2010 is set out in the table below. This table departs from the format of audited financial statements to highlight operating results and the effect of non-operating and "non-cash" items.

Table 9: Consolidated Statement of Comprehensive Income

Year ended		30 Jun 2011	30 Jun 2010
		$000	$000

Revenue		7	-

Administration expenditure		(949)	(13)
Exploration expenditure and other costs written off		(747)	(900)
Operating EBITDA		(1,689)	(913)

Other income	(1)	780	998
Impairment of available-for-sale investments		(140)	-
Fair value loss on financial assets		(71)	(1)
EBITDA		(1,121)	83
Depreciation and amortisation		(7)	(14)
Interest income		142	97
Income tax (expense) / benefit		-	-
Net Profit after tax from continuing operations		(986)	167
Net gain / (loss) on available-for-sale financial assets taken to equity		(211)	418
Recognition of profit on sale on available-for-sale
financial assets taken to income statement		(140)	(192)

Total comprehensive profit / (loss) for the period		(1,337)	392

Notes:

(1) Other income is principally gains on disposal of available-for-sale investments, exploration tenements and property, plant and equipment.

5.5 SHARE PRICE HISTORY

The historical share price movement of the Company and volumes traded over the 12 months to 15 November 2011 are shown below. Also shown is the S&P/ASX300 Metals and Mining index (based to Stellar's price for comparison).

Figure 1: Stellar 12 Month Trading History

1. Shares in the Company have traded within the range of 22.5 cents to 8.6 cents over this period. The 12 month high of 22.5 cents coincided with the announcement of high grade JORC resource for Heemskirk Tin Project in early March 2011. Since June 2011, the share price has declined to the current levels. This downward trend may in part be reflective of the broader sector. In recent months prior to the announcement of the Proposal, shares traded within a narrower band of 12 cents to 9 cents, albeit with significantly lower volumes traded.
1. The volumes traded over the 12 months represent approximately 44% of issued capital.
1. Table 10 sets out the share price movements, volume of shares traded and volume-weighted average share price ("VWAP") over recent periods prior to the announcement regarding the Proposal, as well as subsequent to the announcement.

82.

		Table 10: Stellar Price and Volume Movements

Period	High	Low	Volume	Proportion ofShare Cap(approx.)	VWAP
	$	$	000's	%	$
Post Announcement
	0.095	0.080	753	0.7%	0.085
Prior to 2 November 2011
5 days	0.096	0.092	80	0.1%	0.095
1 month	0.100	0.086	849	0.8%	0.095
3 month	0.140	0.086	2,300	2.1%	0.112
6 month	0.215	0.086	12,383	11.4%	0.166

6. ASSESSMENT OF THE PROPOSAL

1. In assessing whether the Proposal Transactions are fair and reasonable from the perspective of the shareholders, we have had regard to the criteria set out in RG111.
1. The following factors have been considered in our evaluation of whether the Proposal is fair and reasonable to Stellar shareholders :
- the value of the assets acquired under the Proposal, being Gippsland's interest in the Heemskirk Project;
- the value of the consideration paid for those assets viz. the Consideration Shares, the Royalty and the rights to reimbursement of project expenditure;
- the fundamental value of Stellar's projects;
- the historical trading prices of Stellar shares;
- whether the Proposal brings about a change of control of Stellar;
- the financial impact of the Proposal on Stellar;
- the alternatives available to Stellar if the Proposal does not proceed;
- the other qualitative advantages and disadvantages of the Proposal to Stellar; and
- any other factors which may have a material impact.
1. The following sections set out details of our assessment of fairness (section 7) and qualitative aspects of the Proposal (section 8).

7. ASSESSMENT OF FAIRNESS (QUANTITATIVE ASSESSMENT)

7.1 OVERVIEW

1. An assessment of fairness is referrable to price. In the context of the Proposal where the fair value of the assets acquired (i.e. the residual interest in the Heemskirk Project) are greater than or equal to the assessed value of the consideration paid for those assets, the Proposal can be considered to be fair.
1. The asset(s) acquired under the Proposal are Gippsland's interest in the Heemskirk Project.
1. The existing joint venture agreement with Gippsland provides that if the project moves to production then Gippsland must re-imburse Stellar 30% of all historical costs incurred on the project. This right of recovery

will be forgone if the Proposal is approved. Accordingly we consider the consideration paid (payable) by Stellar for the asset(s) acquired consists of the total of:

a. The Consideration Shares;
b. The Royalty; and
c. The project expenditure reimbursement right.
1. As Gippsland will become a shareholder of Stellar and the consideration under the Proposal comprises multiple elements, the Consideration Shares are fixed in number and there is the prospect of the Placement prior to completion of the Proposal, we consider the fairness of the Proposal is best assessed by comparing the interests of Non Associated Shareholders in the existing equity of Stellar (pre Proposal) to the value of equity as if the Proposal had been implemented. This is expressed on a gross and per share basis.
1. In this manner the dilutive or positive impact of the Proposal on the fair value of Stellar shares is readily demonstrated. In circumstances where the Proposal is fair, there would be a positive impact (or no impact) on the fair value per share of the Proposal. By contrast, where the Proposal has a dilutive impact on the fair value of per Stellar share, then the Proposal cannot be considered fair.
1. As set out in the EM, the Company also proposes to make the Placement of approximately 16.3 million shares to institutional shareholders (utilising the Company's ability under ASX Listing Rules to issue up to 15% of the shares on issue 12 months prior to the date of issue) as soon as Gippsland shareholders approve the disposal of Gippsland's interests in the Heemskirk project. The price per share under the Placement is to be based on Stellar's VWAP.
1. The Placement has not been made at the time of this Report, and is not underwritten or subject to a binding agreement. However it may in fact be completed prior to the holding of the General Meeting on 25 January 2012. Accordingly, we have formed our view on fairness under two scenarios – as if the Placement had occurred and as if the Placement did not occur. We have assumed the Placement will occur at a price of 8 cents per share, based on recent trading (5 day VWAP to 29 November: 8.2 cents, last closing price 8.0 cents) and will raise approximately $1.3 million. For completeness we note that our analysis indicates variation in the actual Placement price from our assumed level of 8 cents does not materially affect the results or our opinion on the Proposal.
1. In the first instance, we have considered various valuation approaches when estimating the fair market value of Stellar ordinary shares, including:
- net asset and net tangible asset backing;
- the quoted price of Stellar shares, subject to their being a liquid and active market;
- net present value of projected cash flows (discounted cash flow) ("DCF");
- capitalisation of estimated future maintainable earnings ("CME"); and
- comparison with similar open market transactions.

A detailed explanation of these techniques is set out in Appendix B.

1. The selection of the techniques that are appropriate to apply in any situation rests with the circumstances of the particular case. The valuation techniques are not mutually exclusive and can be applied in conjunction with each other. RG111 requires that an expert should, where possible, use more than one valuation methodology and consider the range of values when forming an opinion in the assessment of the transaction.
1. As the Company is not yet engaged in any mining activity or other business, we consider the most appropriate valuation methodology is an assessment based on the net asset position, having factored the fair value of its various mineral assets. It is not our view that current share price can be reliably used as

the appropriate value indicator. In our opinion the current pricing is likely to be influenced by current equity market conditions and short term uncertainties concerning fundamentals of the project, and Stellar's ability to develop the Project, and conditions affecting tin prices.

7.2 VALUE OF THE HEEMSKIRK PROJECT

1. As noted, the Company's major asset is the Heemskirk Project. The Project has a JORC compliant tin resource of approximately 48,000 tonnes of contained tin, which subject to a satisfactory banking feasibility study is readily to be developed into a producing mine.
1. ASIC guidelines provide that where specialist assets are part of the subject matter the independent expert should commission a specialist in the field to undertake core valuation of the asset.. In preparing this Report Nexia engaged Mining One as a suitably qualified and experience mining project consultancy to provide a technical valuation of the Heemskirk Project in accordance with the Valmin Code. Mining One has knowledge of the Project having assisted Stellar with the August 2011 scoping study. The Valmin Code requires that where a minerals project has a JORC compliant resource any valuation be assessed on the basis of the net present value of the cash inflows and outflows associated with the project development and operation. A copy of Mining One's valuation report is included in this Report as Appendix E.
1. Nexia requested Mining One to provide a valuation of 100% of the Project based on pre tax cash flows, exclusive of any Royalties payable to Gippsland under the Proposal, and with tin prices assumed at US$22,000, US$26,000 and US$30,000 and a US$/A$ exchange rate of 1 to 1 for the reasons outlined below.

Key Assumptions

With the exception of tin price and exchange rate, all other assumptions concerning the project development and operation including but not limited to capital costs, mining costs, processing costs, processing recovery rates, net smelter return and discount rate have been determined by Mining One based upon their assessment of the Project the mining plan and industry experience.

Tin Price

The historical 12 month average price per tonne of tin on the London Metals Exchange (cash settled) has been US$26,633. The price has over the last 2 months been in a downward trend and is currently US$20,705. This is close to the 3 year historical average of US$19,640 which reflects a marked decline in prices during the global financial crisis. Figure 2 sets out the historical LME tin price (cash settled) and the LME stocks of tin over the four year period to 23 November 2011.

Figure 2: Historical Tin Price and Stocks

1. In October 2011, Reuters published the results of its survey of market analysts in respect of forecasts for 2012 tin prices. Of the 13 respondents, the forecasts had a range of US$23,260 to US$29,250 with a mean price of US$26,259 per tonne.
1. In a press release about its Tin Annual Review 2011, the International Tin Research Institute notes that "… in the next three to five years there are still good reasons to expect that tin prices will stay well above long term historical averages, mainly as a result of constraints on mine supply". Market commentary by Barclays Capital in its Metals Magnifiers publication of 23 November also mentions a "deficit dynamic" in the tin market wherein LME stock are diminishing and if prices remain at current levels production is likely to be stalled and is not expected to meet demand.
1. Given the consensus forecasts, the 12 month average price and industry analysis of the tin market, on balance we are of the view that adopting a price sensitivity range of US$22,000 to US$30,000 is appropriate for our assessment of the Proposal and that US$26,000 per tonne represents a preferred or base case forecast tin price at the date of this report.

Exchange Rate

Over the past 12 months the US$ / A$ exchange rate has traded within a narrow band of 0.95 to 1.05. Given current global uncertainties, whilst there has been speculation about where the exchange rate may sit long term, we do not believe there is enough evidence available to forecast a long term position or range. Accordingly, we consider that the last 12 months provides the best indication for the purposes of this assessment and have instructed Mining One to apply a 1 for 1 exchange rate in their technical valuation model.

Assessment of NPVs Post Tax and Royalty

1. The present joint venture agreement provides that if the Heemskirk Project moves to development/production, then Stellar will have a 70% interest in the project. Accordingly, whilst Gippsland presently has a 40% interest in the Project, our assessment based on the net present value of the project cash flows accounts for the position whereby Gippsland only has an effective 30% interest in the Project, which it is transferring to Stellar.
1. Table 11 sets out the summary of the technical valuation of the Project by Mining One on a pre tax basis, and before accounting for the Royalty at the three tin price levels. Refer to Appendix E for details of Mining One's report which details the assumptions and inputs used to arrive at these values.
1. Also set out in the Table is the impact of the Royalty and taxation. Appendix D contains details of the annual cash flows Nexia has determined would apply for the Royalty and income tax. We note that based on legislation currently before the Upper House, the Minerals Resource Rent Tax has no applicability to the Heemskirk Tin Project. In the context of this Report, taxation refers to income tax.
1. It can also be noted that the impost of income tax has a significant impact on NPV which is reflective of the fixed capital costs (circa $105.6 million) incurred during the early stages of the Project life cycle, whereas taxation is based upon the profits generated during the project life cycle.
1. The Royalty will be payable only when net smelter return from the Project equates to US$25,000 per tonne, commencing at 1% and progressing on liner scale to 2% at the capped US$30,000 net smelter return. As noted, the Royalty component of the consideration is only relevant in the US$30,000 technical valuation model. As Gippsland will be a shareholder in Stellar at the time of payment of any royalty, the dilutive impact of the royalty on existing Stellar shareholders is reduced by the interest Gippsland holds in Stellar's total capital.
1. At the preferred valuation of $45.566 million, the total Project has an in ground resource valuation of approximately $1,520 per tonne of contained tin. This compares favourably with the implied value of other advanced, but not producing, similar sized tin projects of other ASX listed companies (VMS and KAS) of

approximately $1,100 per tonne, although that value is based on present market capitalisation rather than a technical NPV, which may yield a higher valuation per tonne.

1. Table 11 also sets out our assessment of the value of Stellar's existing effective interest of 70% in the project proceeds, including the rights to expenditure re-imbursement from Gippsland. We have assessed this value utilising the cash flows from Mining One's model, adjusted to reflect the relative rights and obligations of Stellar's existing interest, based on the joint venture agreement. Refer to Appendix D for details of annual cash flows.
1. Our assessment of this existing interest value assumes the same discount rate would be applied to Stellar's interests in the project irrespective of whether it holds 70% or 100% of the Project. We understand that financiers and investors often place higher risk premiums on part controlled interests in mining projects and those risks will depend on a number of factors including, but not limited to , the terms of the joint venture agreement and the joint venture partner.
1. We are not in a position to assess the quantum, if any, of risk premium (hence higher discount rate) that might be used when valuing Stellar's effective 70% interest on a standalone basis. We merely note that if a higher discount rate was used this would reduce the value of Stellar's existing equity.
1. The NPV of the existing 70% interest is greater than a proportionate 70% of the total project NPV, assuming 100% ownership, because of the future cash benefit of Stellar's existing $15+ million of tax losses. Under this scenario the tax losses are all for the benefit of Stellar's existing shareholders and are not diluted by the introduction of Gippsland as a shareholder.

Table 11
	Low	Preferred	High
	US$22,000/tonne	US$26,000/tonne	US$30,000/tonne
NPV of Project ($000's) -	$000's	$000's	$000's
pre tax	13,483	75,909	134,403
NPV of taxation	(12,825)	(30,343)	(47,657)
NPV of Project (100%)post tax / pre royalty	658	45,566	86,746
NPV of Royalty (post tax)7	-	-	(6,440)
NPV of Stellar's existing70% interest in the Project(including rights to
expenditure re-imbursement)	2,367	33,861	62,731

7.3 VALUE OF STELLAR SHARES PRE PROPOSAL

1. As noted above we consider that the most appropriate method of assessing value of Stellar's equity is based upon the fundamental value of the assets and liabilities of Stellar.
1. Table 12 sets out the assessed fair values of Stellar's assets and liabilities and the calculated equity value on a gross and per share basis. These are presented for both scenarios with regard to the Placement and under three levels of assumed forecast tin price. We have adopted the values of cash, listed investments and liabilities based on the unaudited 31 October 2011 management accounts. As noted above, we have

7 The terms of the Royalty (based on net smelter return) mean that under the Mining One cash flow models the LME tin price has to exceed US$26,315 before any royalty becomes payable.

determined the fair value of Stellar's interests in the Project based on the assessment of the present value of the Project's after tax cashflow. The value of Stellar's other mineral assets adopted from the independent assessment by Mining One which adopted industry valuation techniques suitable to the assets.

Table 12

	LOWUS$ 22,000 / tonne		PREFERREDUS$ 26,000 / tonne		HIGHUS$ 30,000 / tonne		Notes
	WithPlacement	NoPlacement	WithPlacement	NoPlacement	WithPlacement	NoPlacement
$000
Cash	2,684	1,378	2,684	1,378	2,684	1,378	Stellar management accounts
Listed Investments70% interest in the	589	589	589	589	589	589	based on quoted pricesNexia assessment
Heemskirk Tin Project	2,368	2,368	33,861	33,861	62,731	62,731	(Table 2)Mining One assessment
Other Exploration Projects	3,180	3,180	3,180	3,180	3,180	3,180	(Refer Appendix E)
	8,821	7,515	40,314	39,008	69,184	67,878
Accounts Payable	(119)	(119)	(119)	(119)	(119)	(119)	Stellar management accounts
Provisions	(12)	(12)	(12)	(12)	(12)	(12)	Stellar management accounts
	(131)	(131)	(131)	(131)	(131)	(131)
Equity Value	8,689	7,384	40,183	38,877	69,052	67,747

Number of Shares (000)	125,145	108,822	125,145	108,822	125,145	108,822
Value per Share (cents)	6.9	6.8	32.1	35.7	55.2	62.3

The re-imbursable expenditure has been assessed by the Company to have a notional present value of approximately $2.8 million (on a pre-tax basis), including historical expenditure and forecast expenditure to completion of the bankable feasibility study. If the Proposal is approved this asset of Stellar will be given up to the benefit of Gippsland. We note that this "asset" or right is a part of Stellar's interest in the joint venture and cannot be considered separate from Stellar's joint venture interests The value of this right is included within the value ascribed to Stellar's 70% interest at Table12.

7.4 VALUE OF STELLAR SHARES POST PROPOSAL

1. The Consideration shares comprise 43,528,743 new fully paid Stellar shares to be issued to Gippsland. Those shares will rank pari pasu with all existing Stellar shares (including the Placement shares) and accordingly share in the benefits of all Stellar's existing assets, including the other exploration assets, cash, investments and receivables.
1. As a result of the Proposal Stellar will increase its interest in the Project to 100%, but will also take on the obligation for the Royalty which will reduce the equity value. Table 13 sets out the impact of the Proposal on the fair value of Stellar shares. Again, this analysis is presented on a gross and per share basis.

Table 13

		LowUS$ 22,000 / tonne		PreferredUS$ 26,000 / tonne	HighUS$ 30,000 / tonne
	WithPlacement	NoPlacement	WithPlacement	NoPlacement	WithPlacement	NoPlacement
$000
Equity Value (Pre Proposal)	8,689	7,384	40,183	38,877	69,052	67,747
Impact of Proposal:Increase to 100% interest inHeemskirk Tin ProjectImpact of Royalty	(1,709)-	(1,709)-	11,705-	11,705-	24,016(6,441)	24,016(6,441)
Equity Value
Post Proposal	6,981	5,675	51,888	50,582	86,627	85,321
Number of Shares (000)	168,674	152,351	168,674	152,351	168,674	152,351
Value per SharePost Proposal (cents)	4.1	3.7	30.8	33.2	51.4	56.0

7.5 SUMMARY OF ASSESSMENT OF FAIRNESS

Table 14 provides a summary of the fair values pre and post Proposal on a gross and per share basis, and also sets out the impact of the Proposal on a gross and per share basis.

Table 14
		Low		Preferred		High
		US$ 22,000 / tonne		US$ 26,000 / tonne		US$ 30,000 / tonne
	WithPlacement	NoPlacement	WithPlacement	NoPlacement	WithPlacement	NoPlacement
Pre Proposal (refer Table 12)
Equity value ($000)	8,689	7,384	40,183	38,877	69,052	67,747
Number of Shares (000)	125,145	108,822	125,145	108,822	125,145	108,822
Value per share (cents)	6.9	6.8	32.1	35.7	55.2	62.3
Value attributable to existingSRZ sh/h ($000)	8,689	7,384	40,183	38,877	69,052	67,747
Post Proposal (refer Table 13)
Equity value ($000)	6,981	5,675	51,888	50,582	86,627	85,321
Number of Shares (000)	168,674	152,351	168,674	152,351	168,674	152,351
Value per share (cents)	4.1	3.7	30.8	33.2	51.4	56.0
Value attributable to existingSRZ sh/h ($000)	5,179	4,053	38,498	36,130	64,272	60,944
Impact of Proposal
Equity value ($000)	(1,709)	(1,709)	11,705	11,705	17,575	17,575
Number of Shares (000)	43,529	43,529	43,529	43,529	43,529	43,529
Value per share (cents)	(2.8)	(3.1)	(1.3)	(2.5)	(3.8)	(6.3)
Value attributable to existingSRZ sh/h ($000)	(3,510)	(3,330)	(1,686)	(2,747)	(4,781)	(6,803)
Dilution to pre Proposal FairValue of existing SRZ shares(%)	40.4%	45.1%	4.2%	7.1%	6.9%	10.0%

On our preferred case, the Proposal results in a dilution of between 4.2% and 7.1% of the pre Proposal fair value. Also, we point out that the Proposal is dilutive in all cases.
In light of the above, we are or the view that the Proposal is not fair.

8. ASSESSMENT OF QUALITATIVE FACTORS

1. Under ASIC guidelines by the Proposal being considered fair, it is also reasonable. However the Proposal may be reasonable notwithstanding that it is not fair.
1. Further, in our opinion, if a transaction is "fair and reasonable" it must also be "in the best interests" of Shareholders. Consequently in our opinion, the Proposal is also reasonable if it is in the best interests of Stellar shareholders.
1. In assessing if the Proposal is reasonable and in the best interests of Stellar shareholders, we have had regard to the financial impact, the position of Stellar Shareholders and the advantages and disadvantages

should the Proposal proceed, as well as the alternatives available to Stellar and the position if the Proposal is not approved.

8.1 IMPACT OF THE PROPOSAL

1. If approved, the Proposal should generate an improvement in net assets attributable to the increase in Stellar's interest in the Project.
1. Implementation of the Proposal will have a dilutive impact on net asset backing per share. The dilutive effects of the Proposal on fair values are set out at Table 14. We note that the dilution in net asset backing will differ to the extent that the requirements of accounting standards result in the carrying value of net assets differing from our assessment of their fair values.
1. The existing shareholders' interests in the voting power of the Company will be reduced by between 25.8% and 28.6% if the Proposal is approved.
1. In our view, the Proposal potentially has a positive impact on earnings in the medium to long term.

8.2 NO CHANGE IN CONTROL

1. Whilst we have assessed that the Proposal is not fair, that assessment is undertaken on the basis of the value of a controlling interest, in accordance with ASIC guidelines. In other words, no "minority discount" or discount to reflect a "portfolio interest" was applied to the calculated fair value per share of Stellar shares to be issued to Gippsland.
1. However, in our view, Gippsland do not obtain practical control of Stellar as a result of the Proposal.
1. We note that Gippsland did not request as part of the Proposal any representation on Stellar's Board of Directors.

8.3 ADVANTAGES OF THE PROPOSAL

We consider the key advantages associated with the Proposal if approved are that:

Advantage	Comments
Potentially improvedavailability of funding	Finance providers have indicated to the Company that they may not considerinvesting in the Project whilst it is only 60% - 70% controlled by Stellar.Moving to 100% ownership will remove those impediments and enable theCompany to proceed with feasibility studies, capital raisings and potentialexpansion of the resource and development of the project.
Ease of management	Stellar can manage the Project without involving a junior partner.
Mitigation of risk in thelong term	The risks of having to fund a junior partner through the Project, with returnsonly obtained from the Project cashflows, are mitigated.
Potential share priceimprovement	The Proposal may lead to a re-rating of the Company and share priceimprovement if the market recognises and assesses the other advantages ofthe Proposal as being valuable

8.4 DISADVANTAGES OF THE PROPOSAL

We consider the key disadvantages of the Proposal are:

Disadvantage	Position	Comments
The Proposal is not fair	The issue of Consideration Shares and otherelements of the consideration are not fair.	The dilutive impact on the value ofStellar shares at our preferredvaluation is in the range of 4% to7%
Gippsland largestshareholder	Gippsland will be the largest shareholder andmay be in a position to exert influence in theCompany.	Whilst it is not compelled to do so,Gippsland may distribute some orall of the Consideration Shares toits own shareholders, therebyreducing the concentration invoting power in Stellar.

8.5 ALTERNATIVES

1. If the Proposal is not approved, Stellar will need to continue dealing with the Project as a joint venture.
1. Indications from Stellar are that funding the project under this arrangement may continue to be problematic. Accordingly, Stellar may need to abandon or sell its current interests in the Heemskirk Project and focus future expenditure and management efforts on the other mineral exploration projects in its portfolio.
1. The directors and Company advisors are not aware of any immediate alternative sources of funding that would be available in the absence of the Proposal being implemented.

8.6 CONCLUSION ON REASONABLENESS

Having regard to the impact of the Proposal, the advantages and disadvantages, and alternatives, we consider that the Proposal is reasonable.

9. OPINION ON THE PROPOSAL

On the basis of our analysis, and for the reasons outlined in the preceding sections, we consider that the Proposal is not fair but reasonable and the directors are justified in recommending that Shareholders vote in favour of the Proposal.

APPENDIX A

STATEMENT OF QUALIFICATIONS, INDEPENDENCE, DECLARATIONS AND CONSENTS

Qualifications

Nexia ASR Pty Ltd ("Nexia ASR") is a Melbourne based accounting, audit and business advisory practice and is a licensed investment adviser within the terms of the Corporations Act 2001. Senior partners at Nexia ASR specialise in and regularly perform corporate and asset valuations and advice on company restructures, acquisitions and proposals. Nexia ASR, acting through different partners also performs audit on the accounts of Australian companies.

The primary person responsible for preparing this report on behalf of Nexia ASR is Gary Graco (Dip. Bus Studies – Accounting, ACA) who has a significant number of years of experience in relevant corporate matters including valuations, independent expert reports and investigating accountant engagements.

Independence

Nexia ASR considers itself to be independent in terms of Regulatory Guide 112 issued by ASIC relating to independence of experts and has developed and issued an opinion and report on an unbiased basis.

Nexia ASR and its related entities or any of its Directors or Partners have not had within the previous two years, any shareholding in the Company. During the 2 year period prior to this report Nexia ASR has provided the following professional services to Stellar and its subsidiaries

Date	Entity	Nature of Work	Fee(excl. GST)$
Jul 2011	Stellar Resources Limited	General taxation and commercial advisory	1,000
Oct 2010 to Jan 2011	Stellar Resources Limited	Taxation advice in respect of employee shareoptions	4,605
May 2010	Stellar Resources Limited	General taxation and commercial advisory	495
Nov 2010, Nov 2011	Columbus Limited	Corporate secretarial support services	792
			6,892

None of Nexia ASR, Gary Graco, nor any other member, director, partner or employee of any of Nexia ASR has any interest in the opinion reached by Nexia ASR except that we are entitled to receive professional fees for the completion of this Report based on time incurred at normal professional rates. With the exception of these fees no parties will receive any other benefits, whether directly or indirectly, for or in connection with issuing this report.

Disclaimers

This report should not be used or relied upon for any purpose other than as an expression of Nexia ASR opinion of the Proposal. Nexia ASR expressly disclaims any liability to any person who relies on our report, or seeks to rely on the report for any other purpose and to any other party who relies or purports to rely on the report for any purpose.

Appendix C identifies the sources of information upon which this Report has been based. Whilst Nexia ASR has no reason to believe that such information is not reliable and accurate, it has not caused such information to be independently verified or audited in any way. Inquiry, analysis and review have brought nothing to our attention to indicate a material misstatement, omission or lack of reasonable grounds upon which to base our opinion.

The opinions given by Nexia ASR in this Report are given in good faith and in the belief on reasonable grounds that such statements and opinions are correct and not misleading. This Report has been prepared with care and diligence. However, no responsibility is accepted by Nexia ASR or any of its officers or employees for errors or omissions however arising in the preparation of this Report, provided that this shall not absolve Nexia ASR from consequences related to an opinion expressed recklessly or in bad faith.

Advanced drafts of this report were provided to the Directors of Stellar. Minor changes for factual content were made to this report. There was no alteration to the methodology or conclusions reached as a result of discussions related to drafts of the report.

Nexia ASR's opinion is based on prevailing conditions at the date of this report including market, economic and other relevant circumstances. These can change over relatively short time period and any subsequent changes in these conditions in the value either positively or negatively

Indemnity

Stellar has agreed that it will indemnify Nexia ASR and its employees and officers in respect to any or all losses, claims, damages and liabilities arising as a result of or in connection with the preparation of this report.

Consent

This Report has been prepared at the request of the Company and may accompany the Notice of Meeting to be given to shareholders.

Nexia ASR consents to the issuing of this Report and the form and context to which it is to be included with the Notice of Meeting. Other than the Report, Nexia ASR has not been involved in the preparation of the documents or other aspects of the Proposal or the Notice of Meeting to which this Report may be attached. Accordingly, we take no responsibility for the content of the Notice of Meeting or the Proposal as a whole. Neither the whole nor any part of this Report nor any reference thereto may be included in any other document without prior written consent of Nexia ASR as to the form and context to which it appears.

APPENDIX B

OVERVIEW OF VALUATION METHODOLOGIES

Discounted Cash Flow Based Analysis

This methodology recognises the present value (or today's dollar value) of the expected net cash flows which are forecast to be derived from future activities of the business and including a terminal value, which seeks to value the cash flows to perpetuity reflecting the ongoing life cycle of the business.

These future cash flows are discounted to current values by a discount rate recognising both the time value of money and the risks associated with the cash flow streams. Those risks can include general economic and sector risks and risks particular to the business.

This methodology is normally considered to be the most appropriate method in the calculation of the value where there is adequate information about likely future cash flows, usually over a finite term.

Capitalisation of Maintainable Earnings (CME)

This requires consideration of the following factors.

(a) Estimation of future maintainable earnings. The maintainable level of earnings is considered to be the level below which, in the absence of unforeseen and exceptional circumstances, the income stream flowing from the assets is unlikely to fall. Maintainable earnings can be influenced by a number of factors including the trend and consistency of historical performance, the stage of development of the business sensitivity to key industry risk factors and the general economic outlook, and the extent to which one-off or non-recurring transactions are reflected in the financial records ; and
(b) Determination of an appropriate capitalisation rate which will reflect a purchaser's required rate of return from the business. It should therefore reflect among other things:
- the operational risks of the business;
- the growth profile of the business;
- the working and long-term capital requirements of the business currently and requirement for funding growth;
- the nature of the environment in which the business operates;
- alternative investment opportunities; and
- a separate assessment of surplus or unrelated assets and liabilities, being those items which are not essential to producing the estimated future earnings.

This methodology is generally recognised as a surrogate for a discounted cash flow analysis (DCF). It is typically employed where an entity or asset has mature operations with a history of profits and an expectation that these will be maintained at similar levels in the future. It is considered a reliable methodology particularly where capital expenditure does not constitute a large part of the cash outflows of the business or where such outflows are generally of a replacement nature.

Comparable Market Transactions

This methodology requires research to ascertain details of any comparable transactions in the same industry for a similar entity to that being valued. If such transactions exist and the entity being valued is directly comparable to that being acquired then the assets, revenue or earnings multiples, or other measures employed in the actual transaction, can be utilised in the valuation.

The difficulty with this methodology is the sourcing of sufficient information involving the sale process to accurately analyse the consideration paid and to establish the comparability of the two businesses or entities.

Net Assets or Cost Based

In the absence of positive or very poor cash flows or earnings, the net asset value of an entity can be a reasonable indication of the minimum value for that entity. This involves the determination of the net realisable value of the assets of the business or company assuming an orderly realisation of those assets. This value includes a reduction in value to allow for the reasonable costs of carrying out the sale of assets and for the time value of money. It is not a valuation on the basis of a forced sale, where the assets might be sold at values materially different from their fair market value.

This approach is appropriate where the business or entity concerned is predominately a property or liquid investment entity, is not generating adequate returns and in certain circumstances where there are surplus non-operating assets.

APPENDIX C

DOCUMENTS AND INFORMATION RELIED UPON

1. Draft Notice of Meeting and Explanatory Memorandum (draft as 5 December 2011)
1. Stellar October 2011 management accounts
1. Stellar Annual Report for the financial year ended 30 June 2011
1. Technical Valuation Report dated 5 December 2011 and supporting financial models prepared by Mining One
1. Joint Venture Agreement in relation to the Heemskirk Project (dated 25 August 1977)
1. Joint Venture Interest Sale agreement between Gippsland Limited and Columbus Metals Limited and Stellar Resources Limited (dated 1 November 2011)
1. Reuters 2012 Base Metals Price Forecast published 19 October 2011 (www.reuters.com)
1. ITRI press release re 2011 industry review published 1 November 2011 (www.itri.co.uk)
1. Barclays Capital "Metals Magnifier" (dated 23 Nov 2011)
1. Numerous discussions and correspondence with Stellar management
1. Stellar shareholder spread and top shareholder data provided by the Company's share registry
1. Stellar announcements released to the ASX
1. www.asx.com.au; www.finance.yahoo.com; and various other websites and public domain information services.

APPENDIXD

IMPACT OF INCOME TAX AND THE GIPPSLAND ROYALTY

The Heemskirk Project (100%)

$000	NPV	Ye-1ar	Ye1ar	Ye2ar	Ye3ar	Ye4ar	Ye5ar	Ye6ar	Ye7ar	Ye8ar	Ye9ar

$TinPrice22000,

Net CF (x &GippslandRoalty)taprey	13483,	(105652),	(10338),	27547,	25675,	32215,	34315,	28233,	22754,	17722,	6,725	15000,
Tax	(12824),	-	-	-	-	(4,071)	(6,695)	(5,674)	(4,570)	(3,476)	-	-
Net CF px (cl.Gipland Ralty)osttaexpsoy	659	(105652),	(10338),	27547,	25675,	28144,	27620,	22955,	18184,	14246,	6,725	15000,

Gipland Ralty(incl tax i)actpsoymp	-	-	-	-	-	-	-	-	-	-	-	-

$TinPrice26000,

Net CF (x &GippslandRoalty)taprey	75909,	(105652),	66	42147,	39678,	46040,	47854,	40775,	34298,	26083,	11133,	15000,
Tax	(30343),	-	-	(339)	(9,434)	(10147),	(10757),	(9,436)	(8,033)	(5,984)	(374)	-
Net CF px (cl.Gipland Ralty)osttaexpsoy	45566,	(105652),	66	41808,	30244,	35893,	37097,	31338,	26265,	20099,	10760,	15000,

Gipland Ralty(incl tax i)actpsoymp	-	-	-	-	-	-	-	-	-	-	-	-

$TinPrice30000,

t CGNeF (x &ippslandRoalty)tapreyTa	134,4034765	(105652),	10471,	56177,669	52536,1329	58734,13955	60287,1448	52291,1289	44899,11213	33761,288	15181,588	15000,
x	(7),	-	-	(7,)	(2),	(),	(7),	(1),	(),	(8,)	(1,)
t CGipNeF px (cl.land Ralty)osttaexpsoy	86746,	(105652),	10471,	48507,	39245,	44779,	45800,	39400,	33685,	25473,	13593,	15000,

Gip()land Raltyincl tax iactpsoymp	(1)6,44	-	()1,348	()1,389	()1,400	(2)1,38	()1,353	()1,253	()1,154	()836	(1)44	-

Stellar's Interest (70%)

$000	NPV	Ye-1ar	Ye1ar	Ye2ar	Ye3ar	Ye4ar	Ye5ar	Ye6ar	Ye7ar	Ye8ar	Ye9ar

$TinPrice22000,

Net CF (x)tapre	10888,	(7)7545,	(7)7,23	22605,	18060,	22637,	24107,	19850,	16014,	12492,	4,795	10500,
Tax	(8,521)	-	-	-	-	(2)2,03	()4,713	()3,998	()3,225	()2,459	-	-
Net CF posttax	2,368	(7)7545,	(7)7,23	22605,	18060,	20605,	19394,	15852,	12789,	10033,	4,795	10500,

$TinPrice26000,

Net CF (x)tapre	54587,	(7)7545,	46	32826,	27862,	32315,	33585,	28629,	24095,	18345,	7,880	10500,
Tax	(5)2072,	-	-	-	()5,998	()7,129	()7,556	(2)6,63	()5,649	()4,215	()288	-
Net CF posttax	33861,	(7)7545,	46	32826,	21864,	25186,	26029,	21998,	18446,	14130,	7,592	10500,

$TinPrice30000,

Net CF (x)tapre	95532,	(457)75,	3297,	42646,	36862,	41201,	42288,	36691,	31516,	23720,	10714,	10500,
Tax	(32802),	-	-	()4,499	()9,330	()9,795	()10167,	()9,050	()7,875	(7)5,82	()1,138	-
Net CF posttax	62731,	(7)7545,	7,329	38147,	27532,	31406,	32121,	27641,	23640,	17892,	9,576	10500,

APPENDIX E

MINING ONE TECHNICAL VALUATION REPORT

STELLAR RESOURCES LTD

VALUATION

HEEMSKIRK TIN PROJECT

AND

EXPLORATION AREAS

Job No. 1674_M Mining One Pty Ltd Doc No. 2960v4 - 5th Dec 2011 Level 9, 50 Market Street Date: December 2011 Melbourne VIC 3000 Prepared by: TG Summons, P J Bremner Ph: 03 9600 3588 Fax: 03 9600 3944

		EXECUTIVE SUMMARY i
1		INTRODUCTION 1
	1.11.21.31.41.51.5.11.5.21.5.3	Commission and Scope 1Applicability of the VALMIN Code 1Independence, Qualifications and Experience 2Disclaimer 2Tenement Locations 2Tasmania 2New South Wales 2South Australia 3
2		VALUATION STRATEGY 6
3	2.12.22.32.42.5	Introduction 6Tasmanian Mineral Assets 6New South Wales Mineral Assets 6South Australia Mineral Assets 6Methodology 6GEOLOGY & EXPLORATION OVERVIEW 8
	3.13.23.3	Tasmania 8New South Wales 8South Australia 8
4		VALUATION RESULTS 10
	4.14.24.2.14.2.24.2.3	Heemskirk Tin Project 10Exploration Projects 10Tasmania 10New South Wales 10South Australia 10

Table 2-1:	Sn Prices / Tonne and Exchange Rates 7
Table 4-1:	Modified Kilburn Ratings – Tasmania Mineral Assets 11
Table 4-2:	Modified Kilburn Ratings – South Australian Mineral Assets 12

EXECUTIVE SUMMARY

Background

Mining One Pty Ltd was commissioned by Nexia ASR Pty Ltd, to review and value the mineral assets controlled by Stellar Resources Ltd as follows:

¾ The Heemskirk Tin Project and;
¾ The exploration tenements in Tasmania, New South Wales and South Australia.

Valuation

¾ The in situ tin resources in the Heemskirk Tin Project have been assessed by evaluation of the potentially mineable tin and producing a set of life of mine financial models for a range of tin prices. The pre tax NPV for these models is - $13.5M, $75.9M and $134.4M for tin prices of $22,000, $26,000 and $30,000 respectively.
¾ The technical value of the exploration tenements is estimated to be $3.18M

TG Summons P.J. Bremner Senior Resource Geologist Senior Mining Engineer

1 INTRODUCTION

1.1 Commission and Scope

Nexia ASR Pty Ltd (Nexia), acting on behalf of Stellar Resources Ltd (Stellar), has commissioned Mining One Pty Ltd (M1) to undertake a valuation of the following mineral tenements held, either partly or entirely by Stellar, as follows:

¾ The Heemskirk Tin Project in Tasmania, and;
¾ The various exploration projects situated in Tasmania, New South Wales and South Australia.

The purpose of the valuation is to assist Nexia in forming an opinion on the Proposal (as set out by Nexia in its report) for the purposes of Nexia's report to Stellar shareholders.

1.2 Applicability of the VALMIN Code

This valuation report has been prepared in accordance with the Code for the Technical Assessment and valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports, also referred to as the VALMIN Code (2005) (Ref. 1.).

NASR, as the Independent Expert, has indicated that it will obtain from Stellar, as the Commissioning Entity, a written agreement confirming it will comply with the requirements of Clauses 27-29 of the VALMIN Code. These clauses relate to independence of the Commissioning Entity from the Independent Expert and the Specialist (ie M1), and the transparency of all reporting by NASR and M1.

Other relevant sections of the VALMIN Code are as follows:

VALMIN Clause 12: this applies to the "Technical Assessment and/or Valuation of Mineral ….assets …for any independent Expert Report intended for public release ….."

VALMIN Clause 41 (a): The Commissioning Entity has confirmed in writing that "full, accurate and true disclosure of all Material information will be made to the Expert."

VALMIN Clause 42: The Expert and/or Specialists "must enter in to a written agreement with the Commissioning Entity,…..".

VALMIN Clause 49: Time and cost constraints "must not be permitted to compromise fundamental compliance with the requirements of the Code. Any restrictions so caused to the depth of analysis or the extent of detail required must be recorded in the report."

Whilst strict compliance with Clause 41(a) has not occurred, Stellar has given M1 verbal assurance about the extent of data provided, and has verbally explained the scope and purpose of the report. This aspect is not considered to be in contravention of Clause 41(A).

Regarding Clause 42, as indicated previously, NASR has undertaken to obtain such an agreement.

Regarding Clause 49, whilst Stellar has made available all relevant documentation, the opportunity to make site visits to the various projects was precluded by the short time frame available to complete the work. This aspect is not considered to be in contravention of Clause 49.

1.3 Independence, Qualifications and Experience

Mining One Pty Ltd is an independent private consulting company which has been providing consulting services to the international and local mining industry since 2005.

This valuation report has been prepared by Mr Tim Summons, and Mr Phil Bremner.

Mr Summons is a geologist (BSc, MSc) with 40 years of experience in the mining industry, and is a Member of the AIG.

Mr Bremner is a mining engineer (B. E. Mining). He has 30 years of experience in the mining industry, and is a Member of the AusIMM.

Both personnel have the appropriate relevant qualifications, experience and independence to qualify as Independent Experts as defined in the VALMIN Code for the purposes of valuing the assets of Stellar. Mr Summons also has the appropriate qualifications, experience and independence to act as a "Competent Person" as defined in the JORC Code (2004), (Ref. 2.).

Neither Summons nor Bremner have any significant pecuniary or beneficial interest in Stellar Resources Ltd, or in the outcome of the valuation.

1.4 Disclaimer

Statements made on or contained in this document, particularly those regarding capital expenditure, cash flows, costs, prices, merger and acquisition activity, are or may be forward looking statements. Actual results may differ from those expressed in such statements, depending on a variety of factors including future levels of industry product supply; demand and pricing; political stability and economic growth; development and use of new technology; actions of competitors; and natural disasters, wars and acts of terrorism.

This report was prepared using data and information which were available to the authors at the time of writing. It is based in part on Mineral Resources estimated in accordance with the JORC Code (2004).

This report is provided for the use of Stellar Resources Ltd, and should only be reproduced, pending relevant consent by M1, in whole and not in part.

1.5 Tenement Locations

1.5.1 Tasmania

The tenements in Tasmania are mainly Exploration Licences (EL), with a single Retention Licence (RL). They are shown in Figure 1, and are as follows:

Exploration Licences - Heemskirk (EL 46/2003), Ramsay (EL 1/2004), Rayne (EL 49/2004), Huskisson (26/2009), Heazlewood Hill (EL 40/210).

Retention Licence - Queen Hill (RL 5/1997).

1.5.2 New South Wales

The tenements in New South Wales are all Exploration Licences, and are shown in Figure 2. They are as follows:

Exploration Licences - Goldfinger (EL 4632) and Panama Hat (EL 6556).

1.5.3 South Australia

The tenements in South Australia are a mixture of Exploration Licences, Mining Licences (ML) and a Mineral Claim (MC). They are also shown in Figure 2, and are as follows:

Exploration Licences - Kingoonya (EL 3655), Stoney Top Hill (EL 4573), Cleanskin (3752), Long Creek (EL3753), Cowell (EL 3978), Midgee (EL 4242), Warrior (EL 4570), Carnding (EL 4707), Pinding (EL 4301), Cooladding (EL 3799), Tarcoola (EL 4167) and Hicks Hill (EL 4389).

Mining Licences – ML 4650, ML 4667, ML 5179 and ML 5300

Mineral Claim – MC 4195

Figure 1: Tasmanian Tenements

Figure 2: NSW & SA Tenements

2 VALUATION STRATEGY

2.1 Introduction

Mineral assets are defined in the VALMIN Code as occurring in one or more of the following categories:

¾ Exploration Areas properties where mineralisation may or may not have been identified, but where a Mineral Resource has not been identified.
¾ Advanced Exploration Areas properties where sufficient exploration has occurred to enable a good understanding of the type of mineralisation present, and for which the untested potential still warrants extra work. A Mineral Resource may or may not have been identified/estimated.
¾ Pre-Development Projects properties where Mineral Resources have been identified, but where a decision to proceed with development has not been made.
¾ Development Projects properties for which a decision to proceed with production has been made, but have not yet been commissioned.
¾ Operating Mines properties with fully commissioned and operating mines.

2.2 Tasmanian Mineral Assets

Pre-Development Project - the Heemskirk Tin Project at Queen Hill (RL 5/1997). This project has an in situ resource of tin mineralisation estimated in accordance with the JORC Code as a total Indicated and Inferred Resource of 4.36M tonnes grading 1.1% Sn (Ref. 3)

Exploration Areas - Heemskirk (EL 46/2003), Ramsay (EL 1/2004), Rayne (EL 49/2004), Huskisson (26/2009), Heazlewood Hill (EL 40/210).

2.3 New South Wales Mineral Assets

Exploration Areas - Goldfinger (EL 4632) and Panama Hat (EL 6556).

2.4 South Australia Mineral Assets

Advanced Exploration Areas - Cowell (EL 3978), Midgee (EL 4242), Tarcoola (EL 4167) and Hicks Hill (EL 4389).

Exploration Areas - Kingoonya (EL 3655), Stoney Top Hill (EL 4573), Cleanskin (3752), Long Creek (EL3753), Warrior (EL 4570), Carnding (EL 4707), Pinding (EL 4301), Cooladding (EL 3799); and ML 4650, ML 4667, ML 5179 & ML 5300; and MC 4195

2.5 Methodology

The technical value of the Exploration and Advanced Exploration Areas was assessed using a Geoscience Rating (Modified Kilburn) Method. The Kilburn Method is based on the area of a tenement, the Basic Acquisition Cost (BAC), and the mineralisation/prospectivity attributes. It is noted that this method is subjective and subject to intrinsic shortcomings.

The technical value of the exploration properties has been derived from a modified version of the Kilburn Geoscience Rating Method, which has been reviewed by Goulevitch & Eupene (Ref. 5), and Lawrence (Ref. 6).

The technical value of the Pre-Development Project (the Heemskirk Tin Project) was assessed using discounted cash flow/NPV analysis. In undertaking the valuation M1 has utilised its knowledge gleaned from the scoping study completed by M1 in August 2011(Ref.4) and has used this information to formulate a pre-tax NPV financial model based on converting all Indicated and Inferred Resource material to a mining inventory.

Mill recovery – 70%	M1's assessment based on the fine grain size of the cassiterite asproven through metallurgical test work.
Net smelter return –95% of revenue	M1's assessment based on previous studies related to similar Snprojects.
Discount rate – 10%	M1's assessment is based on a risk free rate of 4% and a creditmargin and risk return of 6% which has been used on similar miningprojects currently being investigated by M1
Tin price – ofUS$22,000	On instructions of Nexia
US$26,000 (preferred)and US$30,000
US$ / A$ exchangerate of 1:1	On instructions of Nexia

Other key inputs to the financial model are:

On instructions of Nexia M1's assessment is pre-tax. The range of values is set out at Table 2-1 below.

Sn Price	Exchange Rate	NPV	CumulativeNetCashInflows (per tax)
$26,000	1	$75.9 M	$197.4 M
$22,000	1	$13.5 M	$94.2 M
$30,000	1	$134.4 M	$293.7 M

Table 2-1: Sn Prices / Tonne and Exchange Rates

The full yearly summary for all 3 cases is shown in Appendix A.

3 GEOLOGY & EXPLORATION OVERVIEW

3.1 Tasmania

The various Stellar projects are all situated on the western side of Tasmania. The basement rocks in the projects are west of the Mt Read Volcanics, and are a mixture of siliciclastic, carbonate and basaltic types, interspersed with ultramafic-mafic complexes. All of these lithologies were later intruded by several granite bodies, which introduced/remobilised a wide variety of mineralisation including the following major deposits:

¾ Tin Renison Bell, Mt Bischoff & Cleveland
¾ Tunsten King Island and Kara
¾ Lead/Zinc/Silver Zeehan and Magnet
¾ Nickel Avebury

The Stellar exploration projects are well located with regard to existing deposits and mines, and have prospective geological patterns. Generally limited exploration to date has delineated numerous geophysical/geochemical targets, most of which require drill testing.

It is noteworthy that the Heemskirk tenement (EL 46/2003) contains the Alpine copper deposit and the St Dizier tin deposit.

3.2 New South Wales

The various Stellar projects are all situated on the western side of New South Wales, about 20km south of the mining centre of Broken Hill. The basement rocks here consist of basal metasedimentary gneisses, overlain by other metamorphosed sedimentary rocks and granite gneiss, in turn overlain by the "Mine Sequence".

The Mine Sequence consists of metamorphosed sedimentary rocks (incl. garnetiferous quartzitic psammite), banded iron formations and quartz-rich Pb-Zn-Ag lodes.

The Stellar exploration projects are located in garnetiferous metasedimentry sequences, similar to the host rocks of the Broken Hill orebodies. The Goldfinger prospect was identified as a gravity anomaly, later shown by drilling to be due to the combination of massive iron sulphides and meta-volcanic rocks. Broad intervals of low grade Pb-Zn mineralisation were also encountered in the drilling.

3.3 South Australia

The Stellar projects are scattered across central South Australia, from near Whyalla in the south to near Coober Pedy in the north. Basement rocks include granites, greenstones and banded iron formations, variably metamorphosed to gneisses, and intruded by numerous granites including the important Hiltaba Suite.

The Stellar exploration projects occur in and above both the Olympic Cu-Au Province (with IOCG style mineralisation), and the Central Gawler Au Province. The former province contains the giant Cu-Au-U deposit at Olympic Dam, while the later province contains the Tarcoola and Tunkilia gold deposits.

Much of the Stellar exploration tenement area occurs within the Central Gawler Au Province, around Tarcoola, where despite numerous exploration programs, there appears to be an absence of coherent, commercially-sized gold mineralisation.

Exploration tenements prospective for IOCG style mineralisation include those near Coober Pedy (Cleanskin EL 3752 & Long Creek EL 3753), and Whyalla (Cowell EL 3978 & Midgee EL 4242).

Unlike the other Stellar projects in Tasmania and New South Wales, the effects of regolith development in South Australia are important in the generation of secondary uranium mineralisation. Palaeochannel deposits of lignite, mud, silt and sand provide potential hosts to the redox/roll-front style of uranium mineralisation, which appears well developed around the Cowell (EL 3978) and Midgee (EL 4242) tenements.

4 VALUATION RESULTS

4.1 Heemskirk Tin Project

The valuation of the Heemskirk Tin Project is based on a scoping study completed by Mining One Pty Ltd in August 2011 (Ref. 4). The indicated and inferred resources for the project were converted to a mining inventory through a stope design process and scheduled out over the life of the mine. The schedule was used to create a financial model which calculated the revenue (smelter credits) and capital and operating costs for the mine. The revenue was then adjusted to account for a range of state royalties.

A range of pre tax NPV's for the project were calculated from the financial model using a discounted rate of 10% and Tin (Sn) prices of $22,000, $26,000 and $30,000 / tonne. The financial models for the three Sn prices have calculated pre tax NPV's of $13.5, $75.9M and $134.4M respectively. The yearly summary of cash flows are shown in Appendix A.

4.2 Exploration Projects

4.2.1 Tasmania

Table 1 depicts the technical valuation assessments of the Exploration Areas according to the Modified Kilburn Rating method. The highest values relate to the Heemskirk, Rayne and Ramsay tenements, reflecting the mix of geological/mineralisation address and the amount of exploration completed.

The estimated total technical value for the Tasmanian Exploration Areas, after rounding, is $970,000.

4.2.2 New South Wales

Table 1 also depicts the technical valuation assessments of the Exploration Areas according to the Modified Kilburn Rating method.

The estimated total technical value for the New South Wales Exploration Areas, after rounding, is $235,000.

4.2.3 South Australia

Table 2 depicts the technical valuation assessments of the Exploration Areas according to the Modified Kilburn Rating method. The highest values relate to the Advanced Exploration Areas (Cowell, Midgee, Tarcoola & Hicks Hill) tenements, reflecting the mix of geological/mineralisation address and new discoveries of uranium.

The estimated total technical value for the South Australian Exploration Areas, after rounding, is $1,975,000.

	STEESOURCESLLAR RLTD

			MODIFIEDKILBUR	N RATINGS	- TASM	ANIA M	INERALASSETS

ExplorationLic	ence		Curtren	BAC	Joint		Proximity to Off-Pertyrop:			Proper	ty Features		Explor'n	Technical
Name	No	RegisteredHolder	Area		Venture		Minlisationera	Geophys or	Min	lisationera	Geophys or	Geological	Results	Valionuat
			(sqr.km.)	($)	Factor	kran	alsmet	Geochem.	kran	alsmet	Geochem.	Patterns		($)
								Targets			Targets
					a	b		c	d		e	f	g

WhRiveyter	36/2003	Bass Metals Ltd &VentureMinerals Ltd	44	na	0	0		0	0		0	0		0

Heemskirk	46/2003	Rubicon Min TechVentP/L	142	36,182	1	1.5	Ni1Sn,	1	2.5	Sn,Cu	2	1.5	1	407,048
							Pb2
Ramsay	1/2004	RubiconMinTech VentP/L	71	21,680	1	2.5	Sn/Cu,Zn/	1.3	1.5	Sn,Cu/Zn/Pb	1.5	1.5	1	237,803
							Ni3
Rayne	49/2004	ntP/Rubicon Min TechVeL	28*	16,487	1	2.5	Sn,Zn/Cu/Pb,	1.3	1		2	2	1	214,331
Huskisson	26/2009	Rubicon Min TechVentP/L	39*	16,741	1	1.2		1	1		1.5	1.5	1	45,201

HeazlewoodHill	40/2010	Rubicon Min TechVentP/L	20*	16,302	1	1.8	4Sn/Cu,Ni/PGE	1	1		1.5	1.5	1	66,023

			* Minimivalent to50kmdumareaequsqruse											970,405
SRZExploration Awith "Drill tts identified"reasarge							1 : St Dizier& Avebury
							2 : Cleveland, MtBischoff &Magnet
							3 : RenisZeehan, Cuni &Aveburyon,
							4 : Cleveland& Hlewood UM clexeazomp



			MODIFIEDKILBURN RATI	NGS-	SONEWUTH	WA	LESSSETSMINERAL A

ExplorationLic	ence		Curtren	BAC	Joint		Proximity to Off-Pertyrop:				Proty Featper	ures		Technical
Name	No	isteRegredHolder	Area		Venture		Minlisationera	Geophys or	Min	lisationera	Geophys or	gicaGeolol	Explor'n	ionValuat
			(sqr.km.)	($)	Factor	kran	alsmet	Geochem.	kran	alsmet	Geochem.	Patterns	Results	($)
								Targets			Targets
					a	b		c	d		e	f	g


Goldfinger	4632	AngloGoldAshantiLtd&	35	38,938	0.8	1.5	Pb/Zn/Ag(BHill)	1.3	1.5	Cu,Pb, Zn	1.5	1.5	0.8	164,006
		CBHReLtdsources

PanHatama	6556	BalrHoldings P/Lone	38	40,475	1	1.5	Pb/Zn/Ag(BHill)	1.3	1.1	Au	1.5	1.1	0.5	71,626

														235,632

Table4-2:	ModifiedKilbuRatinSouthAualiMineralAsstrtsrngsanse–
-----------------------	-----------------------------------------------------------------------------------------------------------------------------------------

					STELLA	R R	ESOURCESLTD

			MODIFIED	KILBUR	N RATINGS	SOU-	THAUSTRALIAN MINERALASSETS

Explora	tionLicenc	e	Curtren	BAC	Joint		Proximity to Off-Pertyrop:				Proty Featperure	Technicals
Name	No	RegisteredHolder	Area		Venture		Minlisationera	Geophys or	Minera	lisation	Geophys or	Geological	Explor'n	Valuation
			(sqr.km.)	($)	Factor	kran	alsmet	Geochem.	kran	alsmet	Geochem.	Patterns	Results	($)
								Targets			Targets
					a	b		c	d		e	f	g

Kingoonya	3655	Hiltaba GoldP/L	376	40,910	1	1		1	1		1	1.1	1	45,001
Stony THillop	4573	Hiltaba GoldP/L	*149	32,520	1	1		1	1		1	1.1	1	35,772

Clekinans	3752	Hiltaba GoldP/L	216*	33,086	1	1.3	Cu/Au(O Dam)	1.1	1		1.3	1.5	1	92,260
Long Ckree	3753	Hiltaba GoldP/L	233*	33,230	1	1.3	Cu/Au(O Dam)	1.1	1		1.3	1.5	1	92,662

Cowell	3978-1	ba GP/LHiltaold	420	44,920	1	1.3	Cu/(O Dam)Au	1.1	1.3	Cu(U)	1.3	1.5	1	162,837
	3978-2		420	44,920	1	1.1	U (Blackbush)	1.1	1.3	U	1.3	1.3	1	119,414
Midgee	4242	Hiltaba GoldP/L	*134	32,393	1	2	U (Blackbush)	1.3	1.5	U	1.5	1.5	1	284,249

Warrior	4570	ba GP/LHiltaold	165*	32,655	1	1	Au(Tala)rcoo	1	1.1	U	1.3	1.3	0.5	30,353
Carnding	4707	Hiltaba GoldP/L	268*	33,526	1	1.3	Au(Tala)rcoo	1.1	1.3	Au	1.5	1.5	0.5	70,115
Pinding	4301	Hiltaba GoldP/L	*100	32,106	1	1.3	Au(Tala)rcoo	1.1	1.3	Au	1.5	1.5	0.5	67,146
Cooladding	3799	ba GP/LHiltaold	58*	31,751	1	1.3	(Tala)Aurcoo	1.1	1		1.1	1.1	0.5	27,469
Tarlacoo	4167-1	Hiltaba GoldP/L	624.5	66,484	1	1.1	Au(Tala)rcoo	1.1	2	Au	2	2	0.5	321,783
	4167-2		624.5	66,484	1	1	(Fe)	1	2	Fe	2	2	0.8	425,498
Hicks Hill	4389	Hiltaba GoldP/L	41*	31,607	1	1	(Fe)	1	1.5	Fe	2	2	0.8	151,714

		* Minimivalent to309umareaequkmdsqruse					Cu/Au(O dam)refetheOlympic Cu Ars touProvince							1,926,272
							Au(Tala) refertheCel Gawler AuPros tontrarcoo	vince

	MC
Tarlacoo	4195	LIDDS	41.47 ha	3,498	1	1		1	1.5	Au	2	2	1	20,988
Tarlacoo	ML4650	Hiltaba GoldP/L	1 ha15.6	2,379	1	1		1	1.5	Au	2	2	1	14,274
Tarlacoo	ML4667	Hiltaba GoldP/L	ha4.49	1,898	1	1		1	1.5	Au	2	2	1	11,388
Tarlacoo	ML5179	ba GP/LHiltaold	4.68ha	1,906	1	1		1	1.5	Au	2	2	1	11,436
Tarlacoo	ML5300	Hiltaba GoldP/L	2.89ha#	1,870	1	1		1	1.5	Au	2	2	1	11,220
			# Minimivalent toumareaequ
			3.84haduse											48,318
											Total SATeentsnem			1,974,590
SRZAdcedExploration Avanreas
SRZExploration Awith "Drillreasidentified"targets

5 REFERENCES

Ref. 1: VALMIN 2005: Code for the Technical Assessment and valuation of Minerals and Petroleum Assets and Securities for Independent Expert Reports. Prepared by the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Mineral Industry Consultants Association with the participation of ASIC, ASX, MCA, PESA and SAA.

Ref. 2: JORC 2004: Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Prepared by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

Ref. 3: McKeown MV,2011: Heemskirk Project, Zeehan Cassiterite Deposits Mineral Resource Report for Stellar Resources Ltd; unpub. Rep. Mining One Pty Ltd.

Ref. 4 :Bremner PJ, 2011: Heemskirk Tin Project, Scoping Study; Report for Stellar Resources Ltd; unpub. Rep. Mining One Pty Ltd.

Ref. 5: Goulevitch,J & Eupene GS 1994: Geoscience Rating for Valuation of Exploration Properties – Applicability of the Kilburn Method in Australia and Examples of its use; pp175-190, Mineral Valuation Methodologies; Proceedings of Sydney conference by The Australasian Institute of Mining and Metallurgy and Mineral Industry Consultants Association.

Ref. 6: Lawrence, MJ 1994: An Overview of Valuation methods for Exploration Properties; pp 205-223, Mineral Valuation Methodologies; Proceedings of Sydney conference by The Australasian Institute of Mining and Metallurgy and Mineral Industry Consultants Association.

Appendix A Heemskirk Financial Model

HeskirkFiialModelemnanc
SnPrice/ tonne	$22000,
	Ye-1ar	Ye1ar	Ye2ar	Ye3ar	Ye4ar	Ye5ar	Ye6ar	Ye7ar	Ye8ar	Ye9ar


SmeltCreditser	$ -	$58154250,,	$85585005,,	$86243,850,	$85146600,,	$83391,000,	$246,40077,	$71101,800,	$51496007,,	$27149218,,
Roaltiesy	$ -	$930,468	$1,369,368	$1,379,902	$1,362,346	$1,334,256	$1,235,942	$1,137629,	$823,962	$434,387
nflow /(outf)Net ch ilowas	$()105652,206,	$()10337,973,	$27546,907,	$25675,443,	$32214,996,	$34314,833,	$28232,648,	$22753,538,	$17721,883,	$6,725,447

NPV	$13483,312,

HeskirkFiialModelemnanc
SnPrice/ tonne	$26000,
	Ye-1ar	Ye1ar	Ye2ar	Ye3ar	Ye4ar	Ye5ar	Ye6ar	Ye7ar	Ye8ar	Ye9ar

SmCreeltditser	$ -	$68727,750,	$101,146500,	$101,924,550	$100627,800,	$98553,000,	$91291,200,	$84029,400,	$60860,800,	$32085,440,
Roaltiesy	$ -	$1,099,644	$2,330,000	$3,05737,7	$3,018,834	$2,956,590	$2,738,736	$2,520,882	$1,828245,	$962,563
Neh inflow /(outflow)t cas	$()105652,206,	$66351,	$42147274,,	$39678,308,	$46039,707,	$47854,499,	$40774,654,	$34297,884,	$26083,221,	$11133493,,

NPV	$75909,462,

irkFiialHeskModeemnanc	l
Sn/ tPriceonne	$30000,
	Ye-1ar	Ye1ar	Ye2ar	Ye3ar	Ye4ar	Ye5ar	Ye6ar	Ye7ar	Ye8ar	Ye9ar

SmeltCreditser	$ -	$79301,250,	$116707,500,	$117605,250,	$116109000,,	$113715,000,	$105336,000,	$96957,000,	$70224,000,	$37021,661,
Roaltiesy	$ -	$1,268,820	$3,861,522	$5,880,263	$5,805,450	$5,685,750	$5,266,800	$4,847,850	$3,511,200	$1,851,083
Neh inflow /(outflow)t cas	$ (105652,206),	$10470,675,	$56176375,,	$52536,482,	$58734,291,	$60283397,,	$52291,390,	$44898,516,	$33761,045,	$15181,194,

NPV	$134403,180,

Stellar Resources Limited

ABN 96 108 758 961

FOR ALL ENQUIRIES CALL:

(within Australia) 1300 737 760 (outside Australia) +61 2 9290 9600

FACSIMILE +61 2 9290 9655

ALL CORRESPONDENCE TO:

Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Australia

YOUR VOTE IS IMPORTANT

FOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE 10.30am on MONDAY 23RD JANUARY 2012

TO VOTE ONLINE

Your Address

This is your address as it appears on the company's share register. If this is incorrect, please mark the box with an "X" and make the correction on the form. Securityholders sponsored by a broker should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

Reference Number:

Please note it is important you keep this confidential

STEP 1 : VISIT www.boardroomlimited.com.au/vote/stellargm2012

STEP 2: Enter your holding/Investment type
STEP 3: Enter your Reference Number and VAC:

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 Appointment of Proxy

Indicate here who you want to appoint as your Proxy If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a security holder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

Proxy which is a Body Corporate

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an "Appointment of Corporate Representative" prior to admission. An Appointment of Corporate Representative form can be obtained from the company's securities registry.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company's securities registry or you may copy this form.

To appoint a second proxy you must:

(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
(b) return both forms together in the same envelope.

STEP 2 Voting Directions to your Proxy

You can tell your Proxy how to vote

To direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

STEP 3 Sign the Form

The form must be signed as follows**:**

Individual: This form is to be signed by the securityholder.

Joint Holding: where the holding is in more than one name, all the securityholders must sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 10.30am on Wednesday, 25th January 2012. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxies may be lodged using the reply paid envelope or:
BY MAIL Share Registry Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia
BY FAX + 61 2 9290 9655
IN PERSON Share Registry Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000 Australia

Vote online at:

www.boardroomlimited.com.au/vote/stellargm2012 or turnover to complete the Form

Attending the Meeting

If you wish to attend the meeting please bring this form with you to assist registration**.**

STEP 1 - Appointment of Proxy

I/We being a member/s of Stellar Resources Limited and entitled to attend and vote hereby appoint

the Meeting (mark with an 'X')

If you are not appointing the Chairman of the Meeting as your proxy please write here the full name of the individual or body corporate (excluding the registered Securityholder) you are appointing as your proxy.

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy at the General Meeting of Stellar Resources Limited to be held at the Christie Offices Conference Room, Lower Ground Floor, 454 Collins Street, Melbourne on Wednesday, the 25th of January 2012 at 10.30am and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit.

STEP 2 - Voting directions to your Proxy – please mark to indicate your directions

	Ordinary Business
Resolution 1	Approval of Issue of Consideration Shares
Resolution 2	Approval of previous Issue of Shares
Resolution 3	Approval of proposed Issue of Shares

The Chairman of the Meeting intends to vote undirected proxies in favour of each of the items of business.

*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3 - PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Securityholder 1	Securityholder 2	Securityholder 3


Sole Director and Sole Company Secretary	Director	Director/Company Secretary

Contact Name ……………………………….……	Contact Daytime Telephone ………………………………… Date	//

AI assistant

STELLAR RESOURCES LIMITED — Proxy Solicitation & Information Statement 2011

65860_rns_2011-12-19_236617b5-4691-413f-83ad-88050c3b5e73.pdf

THIS IS AN IMPORTANT DOCUMENT

AND REQUIRES YOUR ATTENTION

STELLAR RESOURCES LIMITED ABN 96 108 758 961

NOTICE OF GENERAL MEETING

and

EXPLANATORY MEMORANDUM

STELLAR RESOURCES LIMITED ABN 96 108 758 961

NOTICE OF GENERAL MEETING

1. RESOLUTION 1 – APPROVAL OF ISSUE OF CONSIDERATION SHARES

2. RESOLUTION 2 – APPROVAL OF PREVIOUS ISSUE OF SHARES

3. RESOLUTION 3 – APPROVAL OF PROPOSED ISSUE OF SHARES

4. VOTING RESTRICTIONS

5. VOTING ENTITLEMENT

6. HOW TO VOTE

7. VOTING IN PERSON OR BY ATTORNEY

8. VOTING BY PROXY

9. VOTING BY CORPORATE REPRESENTATIVE

STELLAR RESOURCES LIMITED

EXPLANATORY MEMORANDUM

1. INTRODUCTION

2. WHY THE MEETING IS BEING HELD

3. BACKGROUND

4. JOINT VENTURE INTEREST SALE AGREEMENT

5. REVISED CAPITAL STRUCTURE

6. RESOLUTION 1– APPROVAL OF ISSUE OF CONSIDERATION SHARES

Section 611 Corporations Act

Information required by item 7 of section 611 of Corporations Act

Information required by Draft updated ASIC Regulatory Guide 74 (Acquisitions approved by members)

7. RESOLUTION 2 – APPROVAL OF PREVIOUS ISSUE OF SHARES

8. RESOLUTION 3 – APPROVAL OF PROPOSED ISSUE OF SHARES

9. REASONS FOR DIRECTORS RECOMMENDATION THAT YOU VOTE IN FAVOUR OF RESOLUTION 1

10. ACTION TO BE TAKEN BY SHAREHOLDERS

11. INTERPRETATION

12. QUERIES

SCHEDULE

INDEPENDENT EXPERT'S REPORT PREPARED BY NEXIA ASR PTY LTD

INDEPENDENT EXPERT'S REPORT Acquisition of Gippsland Limited Interest in Heemskirk Tin Project

Nexia ASR Pty Ltd Financial Services Guide

1. About us

2. This Financial Services Guide

3. Financial services we are licensed to provide

4. General financial product advice

5. Fees, commissions and other benefits we may receive

6. Associations with issuers of financial products

7. Compensation

8. Complaints

9. Contact Details

GLOSSARY

Independent Expert's Report pursuant to Section 611 of the Corporations Act and Listing Rule 7.1 Acquisition of Gippsland Limited Interest in Heemskirk Tin Project

1. INTRODUCTION

1.1 BACKGROUND

1.2 TERMS OF THE PROPOSAL

(collectively "the Proposal").

1.3 PURPOSE AND SCOPE OF THIS REPORT

2. EXECUTIVE SUMMARY OPINION

2.1 GENERAL

2.2 FAIRNESS (QUANTITATIVE ASSESSMENT)

Value / Consideration Comparison

Basis of Assessment

Acquired Assets

Value of Stellar Shares

Control Value

2.3 REASONABLENESS (QUALITATIVE ASSESSMENT)

2.4 GENERAL DISCLOSURES AND LIMITATIONS

Changes in Market conditions

Individual shareholder circumstances

Entirety of Report

3. DISCLOSURES AND LIMITATIONS

4. REGULATORY FRAMEWORK

4.1 CORPORATIONS ACT – TAKEOVER PROVISIONS

4.2 ASX LISTING RULES – ISSUES EXCEEDING 15% OF CAPITAL

4.3 GUIDELINES ISSUED BY ASIC ON ACQUISITIONS AGREED TO BY SHAREHOLDERS

5. PROFILE OF STELLAR

5.1 COMPANY OVERVIEW AND PROJECTS

Heemskirk Tin Project (Stellar 60%)

Pirie Basin Uranium (Stellar 100%, joint venture partners earning interests)

Tarcoola Palaeochannel Uranium (Stellar 100%)

STELLAR RESOURCES LIMITED Proxy Solicitation & Information Statement 2011