Stellar Resources : Second Quarter Activities and Cash Flow Reports

ASX ANOUNCEMENT l ASX: SRZ

25 January 2022

For personal use only

Report for the Quarter ended 31 December 2021

Highlights

Heemskirk Tin Project

• 9-holePhase 1 diamond drilling program (~4,900m) targeting new areas of high-grade tin mineralisation commenced in June 2021, with 2 rigs on site including1,2:
• • Severn - 2 holes initially planned targeting depth extensions below the Severn tin resource which has now been increased to 4 holes based on the success of the first 2 holes.
  • Depth Extensions of key historic silver-lead-zinc mines - 7 holes initially planned targeting depth extensions below the historic silver-leadmines with typical grades mined ranging from 20 to 100 oz/t Ag1. Holes target depths where transition of silver-lead-zincmineralisation into cassiterite mineralisation may occur. Two of these holes have now been re-allocatedto further drilling at Severn.
  • A total of 6 holes completed at the end of the December Quarter, and 2 holes currently in progress, with a total of 3,283m drilled to 14 December 2021.

Phase 1 Severn Drilling

• Assay results received during the quarter for Severn extension drillholes ZS1403 and ZS1434 confirmed wide zones of tin mineralisation well below the Severn Mineral Resource:
• • ZS140 results confirmed multiple wide zones of tin (Sn) mineralisation with over 40 m of cumulative tin mineralisation intersected, approximately 240m down dip of the Severn Mineral Resource and
    750m below surface. Best significant intercepts included:
  • • 5.0 m @ 0.76% Sn from 777.0 m
    • 3.0 m @ 0.87% Sn from 797.0 m (included within 10.0 m @ 0.43% Sn from 794.0 m)
    • 2.0m @ 0.62% Sn from 820.0m
    • 1.1 m @ 2.24% Sn from 855.4 m
  • ZS143 results confirmed wide zones of high-grade tin (Sn) mineralisation with 20m of cumulative tin mineralisation approximately 100m down dip of the Severn Inferred Resource and 620m below surface. Best significant intercepts included:
  • • 6.0m @ 0.51% Sn from 586.0m
    • 5.0m @ 1.27% Sn from 601.0m
    • 9.0m @ 0.78% Sn from 629.0m
    • The 3 significant intercepts above between 586.0m and 638.0m have a cumulative length of 20.0m of tin mineralisation at 0.82% Sn.
• Results from ZS143 and ZS140 successfully demonstrate continuation of the tin system at depth confirming potential to significantly expand the Severn resource which remains open at depth and along strike.
• Daughter hole (ZS143W) commenced in December from a downhole depth of 247m in parent hole ZS143 and is designed to test in-between the Severn Inferred Resource and the ZS143 intercepts. Drilling of ZS143W is expected to be completed in late-January, with assay results expected in late-March.

Stellar Resources Limited ABN: 96 108 758 961

Level 4, 96-100 Albert Road, South Melbourne, Victoria, 3205, Australia

1. [phone] F: [phone] E: [e-mail] Web: www.stellar.com.au Twitter: @SRZ_Tin

Report for the Quarter ended 31 December 2021

• Two further drillholes at Severn added to the Phase 1 program in December targeting extension of the Indicated Mineral Resource. Expected to commence in late-January /early-February.

Phase 1 Drilling Targeting Depth Extensions of Key Historic Silver-Lead-Zinc Mines

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• Assay results received during the quarter for exploration drillholes ZM141A and ZO142 targeting depth extensions of key historic silver-lead-zinc mines5:
• • ZM141A, the first ever hole drilled beneath Zeehan's largest historic silver-lead mine, Montana No. 1, confirmed very high-gradesilver-lead-zinc fissure vein intercepts approximately 90m below the deepest historic mine workings and 320m below surface. Best significant intercepts included5:
  • • 1.2 m @ 31.8 Oz/t Ag, 23.9% Pb, 0.4% Zn and 0.1% Cu from 423.0 m
    • 0.4 m @ 15.4 Oz/t Ag, 12.2% Pb and 4.6% Zn from 411.0 m
    • 0.6 m @ 3.8 Oz/t Ag, 3.6% Pb and 0.4% Zn from 239.0 m
  • ZO142, the first Oonah drillhole (ZO142) in the 2021 Phase 1 program, included multiple zones of lower grade tin mineralisation and confirmed the continuation of tin mineralisation ~70m below the Oonah Inferred Resource5.
• ZO144, the second Oonah drillhole, and ZW145, the first drillhole targeting depth extensions of the Zeehan Western historic mine, were completed during the quarter with assay results pending4.
• ZQ146, the first drillhole targeting depth extensions of the Zeehan Queen No 4. historic mine commenced in December and is expected to be completed in early-February with assay results expected in early-April4.
• Magnetic and downhole electromagnetic (EM) inversion studies completed in November by Stellar's geophysical consultants have modelled a large magnetic and approximately coincident conductive target, below the depth of historic drilling at the southern extent of the Severn Mineral Resource ("South Severn Magnetic and Conductive Target")6. Stellar plans to drill this target as part of the Phase 2 drilling program.

Severn and Queen Hill Phase 2 Program and Heemskirk Tin Project Development

• Planning well underway for the Phase 2 drilling program to commence at the end of Phase 1 in 2022. Focus of the Phase 2 drilling program will be on Severn and Queen Hill, the two largest Heemskirk Tin Project deposits with a combined total Mineral Resource of 5.33Mt @ 1.0% Sn, of which 40% is Indicated and 60% Inferred8 and will include:
• • Severn resource extension drilling.
  • Infill drilling of the Severn and Queen Hill Inferred Resource.
  • A deep hole to test the South Severn magnetic and conductivity target6.
• Stellar is continuing review of other project work streams / studies required to advance the Heemskirk Tin Project to BFS completion.

Tin Market

• With the highest-grade undeveloped tin resource in Australia & 2nd highest globally8,9, a scoping study completed in 2019 confirming attractive economics10 and drilling to extend and confirm the Severn mineral resource now well underway, the Heemskirk Tin Project is well positioned to take advantage the booming tin market.
• Tin prices have continued to rise spectacularly with the LME spot tin price averaging ~US$38,962/t over the December Quarter (up 12% from the previous quarter) and climbing post quarter end to US$42,500/t on 18 January 20227. The current spot tin price of US$42,500/t, is over double the US$20,000/t price assumed in the 2019 Scoping Study.

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Report for the Quarter ended 31 December 2021

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North East Tasmania Gold Exploration Project

• 8 Exploration Licences (EL's) over a total area of 1,899 km2 were granted in August 202111.
• The granted EL's, and Stellar's remaining 4 EL applications in NE Tasmania (624 km2) are highly prospective for Victorian-style Orogenic Gold and for Intrusive Related Gold Systems (IRGS).
• Dr Josh Phillips (JP Geoscience) was engaged by Stellar in September 2021 as a technical consultant to lead Stellar's NE Tasmania exploration program. Dr Phillips is based in Tasmania, has a PHD in geochemistry and has substantial experience working in gold exploration and with large base metal porphyry deposits.
• During the quarter, Dr Phillips has completed a review of Stellar's EL's / EL applications including analysis of further historic soil and rockchip geochemical data recently captured by Stellar, and a review of all orogenic and IRGS gold exploration targets identified by Stellar's technical team. Additional targets were identified during Dr Phillips's review and all targets are now prioritised for field exploration.
• During September and October, Dr Phillips undertook initial field reconnaissance visits of the Back Creek target on EL12/2020 and the Blessington target on EL14/2020. Land access agreements and MRT work program approvals for soil sampling programs over these areas were progressed during the quarter and trial soil sampling was undertaken in both areas.
• A significant soil sampling program over the Back Creek target is planned to be undertaken in February 2022.
• Further reconnaissance visits and follow up field exploration are also being planned over Stellar's NE Tasmania EL's.

Corporate

• Cash balance at 31 December 2021 was $4.178 million.

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Report for the Quarter ended 31 December 2021

Heemskirk Tin Project

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Tin Market Outlook

Tin prices have continued to rise spectacularly with the LME spot tin price averaging ~US$38,962/t over the December Quarter (up 12% from the previous quarter) and climbing post quarter end to US$42,500/t on 18 January 20227.

Tin prices have more than doubled over the past 12 months to 18 Jan 2021 and now significantly exceed 10- year highs. The International Tin Association is now expecting tin prices to remain "stronger for longer"12.

This strong market for tin is due to strong physical global tin demand growth continuing to exceed global tin supply and is creating an extremely tight market for tin with LME tin stocks remaining at near record lows.

LME Spot Tin Prices (1 Jan 2010 to 18 Jan 2022) 6

Tin Demand

Physical tin demand is growing strongly as a result of:

• Covid and the rise of remote working: has boosted demand for computers and other home electronics devices. As tin solder is the 'glue' connecting everything electronic, this means increased demand for tin.
• Continued demand for tin in traditional uses (tinplate, chemicals, lead-acid batteries, alloys and other uses).
• Growing demand for use of tin in solar panels.

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Report for the Quarter ended 31 December 2021

Tin Supply

Global tin supply has fallen for each of the last 3 years to 2020 as a result of:

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• Myanmar (world's 3rd largest producer) production continuing to fall throughout 2021 due to the military coup and largely unreliable artisanal and small-scale mining.
• Many existing tin mines globally now have lower grade and diminishing resources.
• Limited exploration or investment in new tin projects with many projects either in risky jurisdictions and/or low grade deposits.

Covid related tin supply disruptions experienced globally in 2020 have now largely recovered to pre-covid levels, other than in Myanmar, however, there continues to be a supply - demand shortfall due to strong demand growth.

Tin - The Number 1 New Technology Metal

Tin ranked as the No. 1 metal best placed to benefit from new technology according to a survey undertaken by Boston's Massachusetts Institute of Technology (MIT) for Rio Tinto in 2018.

Approximately 50% of all tin is used as solder in electronics. Solder is the 'glue' that connects everything electronic together.

Our clean, new technology future is being driven by robotics, advanced computing, EV's, energy storage and renewables - these all require more electronics and semiconductors which all need more tin.

Growing research is also showing that tin may be a more effective anode material in Li-ion batteries.

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