UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~January 31, ~~2011~~ 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ~~_________________________~~______________________ to ~~__________________________~~______________________

Commission File number 0-51400

Stellar Resources Ltd.

(Exact name of registrant as specified in its charter)

Nevada	98-0373867
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

375 N. Stephanie Street, Suite 1411, Las Vegas, Nevada, 89014-1411

(Address of principal executive offices)

(702) 547-4614

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes~~ x Yes No o No

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	o	Accelerated filer	o
	Non- accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b(2) of the Exchange Act). ~~Yes~~ o No Yes x No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. x Yes o x No o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: The total number of shares of Common Stock, par value $0.001 per share, outstanding as of ~~December~~March 15, ~~2011~~2012 is 70,712,451.

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TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION		31
Item 1.	Financial Statements:	31
	Balance Sheets	42
	Statements of Operations	53
	Statements of Cash Flows	65
	Notes to Financial Statements	87
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	1413
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2119
Item 4	Controls and Procedures	21
Item 4.	Controls and Procedures	20
Item 4T.	Controls and Procedures.	2221
Part II – OTHER INFORMATION		2321
Item 1.	Legal Proceedings	2321
Item 1A.	Risk Factors.	2321
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2321
Item 3.	Defaults Upon Senior Securities	2321
Item 5.	Other Information	2322
Item 6.	Exhibits	2322
SIGNATURES		2423

2ii

Table of Contents

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements

STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

	OCTOBER 31,			JULY 31,
	JANUARY 31			JULY 31,
	2011			2011
	2012			2011
	(Unaudited)
ASSETS
Current
Cash	$	35,~~474~~278		$	1,221
Available for sale investment (Note 3)		~~151,320~~-			330,000
Note receivable (Note 4)		8060,000			-
		234,794			331,221
		65,278			331,221
Investment in EHHO (Note 8)		-			200,000
Investment in EHHO (Note 5)		-			200,000
Oil and gas properties, unproven (Note 6)		~~140,840~~-			134,720
Intangible asset (Note 7)		40,091			40,091
	$	~~415~~105,~~725~~369		$	706,032
LIABILITIES
Current
Accounts payable	$	~~103~~109,~~612~~097		$	64,292
Advances payable (Note 8)		108,346			108,346
Due to related parties (Note 9)		42,~~529~~324			46,559
Notes payable (Note 10)		25,~~400~~221			54,338
		279,887			273,535
		284,988			273,535
FUTURE INCOME TAX LIABILITY		30,000			30,000
DEFERRED INCOME TAX LIABILITY		-			30,000
		309,887			303,535
		284,988			303,535
STOCKHOLDERS’ EQUITY
Capital stock (Note 11)
Authorized:
200,000,000 common shares with a par value of $0.001 per share
Issued and outstanding:
70,712,451 common shares (July 31, 2011: 69,344,051 common shares)		70,712			69,343
Additional paid-in capital		2,165,476			2,119,543
Deficit accumulated during the exploration stage		(2,~~054~~408,~~197~~617	)		(1,778,022	)
Accumulated other comprehensive loss		(767,~~153~~190	)		(8,367	)
		105,838			402,497
		(179,619	)		402,497
	$	~~415~~105,~~725~~369		$	706,032

The accompanying notes are an integral part of these financial statements

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

							~~CUMULATIVE RESULTS OF OPERATIONS FROM APRIL 9, 1999 (INCEPTION)~~						CUMULATIVE RESULTS OF OPERATIONS FROM APRIL 9, 1999 (INCEPTION)
	THREE MONTHS ENDED						TOSIX MONTHS ENDED						TO
	OCTOBER 31,						OCTOBER 31,
	JANUARY 31,						JANUARY 31,						JANUARY 31,
	2011			2010			2011
	2012			2011			2012			2011			2012
Expenses
General and administrative	$	9,~~632~~854		$	2628,~~759~~582		$	~~248~~19,~~564~~486		$	55,341		$	258,418
Interest and finance fees (Notes 10 and 11)		1,604			642			24,608
Interest and finance fees (Notes 9 and 10)		627			611			2,231			1,253			25,235
Investor relations		-			-			~~17,989~~-			-			17,989
Management fees (Note 10)		3,000			21,233			825,410
Management fees (Note 9)		11,750			13,923			14,750			35,156			837,160
Professional fees		5512,~~648~~094			4020,~~376~~920			~~343~~67,~~846~~742			61,296			355,940
Property examination and expenditure costs		-			-			~~165,489~~-			-			165,489
Consulting - stock based compensation		~~4,950~~-			-			4,950			-			4,950
Loss before other items		(7434,~~834~~325	)	$	(8964,~~010~~036	)		(1109,~~630,856~~159	)		(153,046	)		(1,665,181	)
Other items
Management fee income		-			~~15,000~~-			~~15,000~~-			15,000			15,000
Loss on disposal of investment (Note 4)		(2,532	)		-			(2,532	)
Loss on disposal of investment (Note 3)		(195,375	)		-			(197,907	)		-			(197,907	)
Loss on settlement of note payable (Note 10)		(78,809	)		-			(78,809	)
Loss on settlement of note payable (Notes 3 and 10)		-			-			(78,809	)		-			(78,809	)
Gain (loss) on sale of EHHO (Note 5)		(120,000	)		-			184,689
Loss on impairment of note receivable (Note 4)		20,000			-			20,000			-			20,000
Dilution loss from EHHO		-			-			(196,000	)
Gain (loss) on sale of EHHO (Note 5)		-			-			(120,000	)		-			184,689
Impairment loss on EHHO		-			-			(314,908	)
Dilution loss from EHHO		-			-			-			-			(196,000	)
Loss from equity interest in EHHO		-			(612	)		(30,781	)
Impairment loss on EHHO		-			-			-			-			(314,908	)
Net loss for the period		(276,175	)		(74,622	)		(2,054,197	)
Loss from equity interest in EHHO		-			(987	)		-			(1,599	)		(30,781	)
Other comprehensive loss
Write down of oil and gas properties (Note 6)		(134,720	)		-			(134,720	)		-			(134,720	)
Revaluation of available for sale investments to market value		(71,312	)		-			(71,312	)
Loss before income taxes	$	(384,420	)	$	(65,023	)	$	(660,595	)	$	(139,645	)	$	(2,438,617	)
Realized loss on sale of investment reclassified to income		2,532			-			2,532
Foreign currency translation adjustment		894			(344	)		(7,373	)
Comprehensive loss for the period	$	(344,061	)	$	(74,966	)	$	2,130,350
Basic and Diluted Net Loss Per Common Share	$	(0.01	)	$	(0.01	)
Weighted Average Number of Common Shares Outstanding – Basic and Diluted		69,577,841			39,060,650

Continued

The accompanying notes are an integral part of these financial statements

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Unaudited)

													CUMULATIVE RESULTS OF OPERATIONS FROM APRIL 9, 1999 (INCEPTION)
	THREE MONTHS ENDED						SIX MONTHS ENDED						TO
	JANUARY 31,						JANUARY 31,						JANUARY 31,
	2012			2011			2012			2011			2012

Recovery of deferred income taxes		30,000			-			30,000			-			30,000

Net loss for the period	$	(354,420	)	$	(65,023	)	$	(630,595	)	$	(139,645	)	$	(2,408,617	)

Other comprehensive loss

Foreign currency translation adjustment		283			(292	)		1,177			(636	)		(7,190	)
Comprehensive loss for the period	$	(354,357	)	$	(65,315	)	$	(629,418	)	$	(140,281	)	$	(2,415,807	)

Basic and Diluted Net Loss Per Common Share	$	-		$	-		$	-		$	-

Weighted Average Number of Common Shares Outstanding – Basic and Diluted		70,712,451			39,097,017			70,145,146			39,078,834

The accompanying notes are an integral part of these financial statements

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

							CUMULATIVE RESULTS OF OPERATIONS FROM APRIL 9, 1999 (INCEPTION)
	THREE MONTHS ENDED						TO
	SIX MONTHS ENDED						TO
	OCTOBER 31,						OCTOBER 31,
	JANUARY 31						JANUARY 31
	2011			2010			2011
	2012			2011			2012
Cash Flows from Operating Activities
Net loss	$	(~~276~~660,~~175~~595	)	$	(74139,~~622~~645	)	$	(2,~~054~~408,~~197~~617	)
Adjustments to reconcile net loss to net cash used in operating activities:
Realized foreign exchange losses on settlement of notes payable		~~(1,384~~511	)		~~647~~-			1113,~~134~~029
Unrealized foreign exchange		~~511~~(1,871	)		-786			42,~~456~~074
Stock-based compensation		4,950			-			754,950
Accrued interest		~~627~~1,255			~~641~~1,252			23,~~313~~941
Gain on disposal of investments		2,532			-			2,532
Loss on disposal of investments		197,907			-			197,907
Loss on settlement of note payable		78,809			-			78,809
Share of loss of equity investment		-			612			30,781
Loss on impairment of note receivable		20,000			-			20,000
Gain (loss) on disposal of EHHO		120,000			-			(184,689	)
Share of loss of equity investment		-			1,599			30,781
Loss (gain) on disposal of EHHO		120,000			-			(184,689	)
Impairment of EHHO		-			-			314,908
Dilution loss		-			-			196,000
Write off of oil and gas properties		134,720			-			104,720
Changes in operating assets and liabilities:
Amounts receivable					~~(15,000~~-	)		-
Prepaid expenses		-			37,~~933~~328			-
Accounts payable and accrued liabilities		3944,~~320~~805			3460,~~809~~997			~~103~~109,~~612~~097
Net cash used in operating activities		(3059,~~810~~509	)		(4867,~~980~~683	)		(~~718~~747,~~391~~090	)
Cash Flows from Financing Activities
Proceeds from issuance of common stock, net		42,352			-13,750			1,101,374
Proceeds from (repayment of) notes payable		-			-			114,300
Advances payable		-			-			108,346
Advances from related parties		(3,~~169~~411	)		~~500~~-			38,~~485~~243
Net cash provided by financing activities		3938,~~183~~941			~~500~~13,750			1,362,~~505~~263
Cash Flows from Investing Activities
Acquisition of oil and gas properties		~~(6,120~~-	)		(4,080	)		(~~262~~256,~~840~~720	)
Acquisition of Intellectual property		-			-			(2,800	)
Proceeds from sale of investments		24,625			-			24,625
Investment in EHHO		-			-			(375,000	)
		(6,120	)		(4,080	)		(640,640	)
Net cash provided by investing activities		24,625			(4,080	)		(609,895	)
Net Increase (Decrease) in Cash		24,~~253~~057			(5258,~~560~~013	)		35,~~474~~278
Cash, Beginning		1,221			58,300			-
Cash, Ending	$	35,~~474~~278		$	~~5,740~~287		$	35,~~474~~278

Continued…

The accompanying notes are an integral part of these financial statements

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

					CUMULATIVE RESULTS OF OPERATIONS FROM APRIL 9, 1999 (INCEPTION)
	THREE MONTHS ENDED				TO
	SIX MONTHS ENDED				TO
	OCTOBER 31,				OCTOBER 31,
	JANUARY 31				JANUARY 31
	2011		2010		2011
	2012		2011		2012
Supplemental Disclosures of Cash Flow Information and Non-Cash Investing and Financing Activities
Cash paid for:
Interest	$	-	$	-	$	110
Income taxes	$	-	$	-	$	-
Common shares issued on settlement of notes payable and accrued interest	$	-	$	-	$	102,573
Common shares issued on acquisition of intellectual property	$	-	$	-	$	37,291
Common stock of Deloro received as part proceeds on partial disposal of EHHO (Note 4)	$	-	$	-	$	330,000
Common stock of Deloro received as part proceeds on partial disposal of EHHO (Note 5)	$	-	$	-	$	330,000
Common shares issued on acquisition of EHHO and FBHO	$	-	$	-	$	240,000
Future income tax liability on property acquisition	$	-	$	-	$	30,000

The accompanying notes are an integral part of these financial statements

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

1.	NATURE OF CONTINUED OPERATIONS AND BASIS OF PRESENTATION

The Company was incorporated in the State of Nevada on April 9, 1999 and is in the exploration stage.

On June 10, 2010, the Company completed the acquisition of 100% of Elk Hills Heavy Oil, LLC (“EHHO”) and Four Bear Heavy Oil, LLC. (“FBHO”). EHHO’s assets consist of oil and gas leases in Carbon County, Montana, and FBHO’s asset ~~consists~~consisted of oil and leases in Park County, Wyoming. On July 7 2010, the Company’s interest in EHHO was diluted to 50% as a result of EHHO issuing 90,000 units of capital to Elk Hills Petroleum Canada Inc. (“EHPC”). On May 4, 2011, the Company entered into a letter agreement with Deloro Resources Ltd. (“Deloro”), EHPC and EHHO whereby Deloro may acquire up to a 1/3rd interest (being 60,000 ownership units) in EHHO. As at July 31, 2011 Deloro has acquired a 1/6 interest in EHHO pursuant to this agreement, and the Company held a 41.67% interest in EHHO. On October 25, 2011, the Company disposed of its remaining 75,000 units of capital in EHHO to EHPC and received in exchange a non-interest bearing promissory note ~~for $1,000,000~~ which falls due on April 30, 2012. (Note 4). During the six month period ended January 31, 2012, the FBHO abandoned its oil and gas leases as the Company was unable to fund the annual lease payments required.

On September 23, 2011 the Company entered into a binding agreement, subject to due diligence, to acquire 100% of American Microbial Labs LLC., which holds technology designed for cleaning produced water generated from the recovery of oil and gas wells asand ~~well as~~ oil spills located both on land and in water. Due to lack of financing the Company was unable to complete the acquisition.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. This contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business. To date, the Company has not generated any revenues from operations and ~~had~~has a working capital deficit of $45199,~~093~~710 and an accumulated deficit of $2,~~054~~408,~~197~~617 at ~~October~~January 31, ~~2011~~2012. The Company’s continuance of operations is contingent on raising additional working capital, and on the future development of its potential resource property interests. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently negotiating with parties to provide equity financing sufficient to finance corporate operations and provide working capital for the next twelve months. Although there is no assurance that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue operating as a going concern.

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Regulation S-K. They do ~~may~~ not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended July 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal and recurring adjustments have been made. Operating results for the ~~three~~six months ended ~~October~~January 31, ~~2011~~2012 are not necessarily indicative of the results that may be expected for the year ending July 31, 2012.

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States and are presented in United States dollars.

The consolidated financial statements include the results of the Company and the results of its wholly-owned subsidiaries, FBHO, a company incorporated in Washington State on February 28, 2010 and Core54 Petroleum Canada Ltd. (“Core54”), a company incorporated in British Columbia on March 9, 2010. All intercompany balances and transactions have been eliminated in the consolidation.

~~The Company previously recorded its interest in EHHO using the equity method of accounting; however, on October 25, 2011 the Company disposed of its remaining 75,000 units of capital in EHHO. (Note 5)~~7

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

2.	RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Standards Not Yet Adopted

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

3.	INVESTMENT

	OCTOBER 31			JULY 31
	JANUARY31			JULY 31
	2011			2011
	2012			2011
Deloro – 2,000,000 common shares at market value (July 31, 2011 – 3,000,000 common shares)		$	151,320		$	330,000
Deloro – Nil common shares at market value (July 31, 2011 – 3,000,000 common shares)		$	-		$	330,000

Pursuant to a letter agreement dated May 4, 2011 between the Company, Deloro, EHPC and EHHO whereby Deloro can acquire up to a 1/3 ownership of EHHO (Note 5), the Company received 3,000,000 common shares of Deloro with a fair value of $330,000. ~~During the three months ended October 31, 2011 the Company recorded an unrealized loss of $68,680 in other comprehensive income.~~

As at July 31, 2011, the Company had pledged 1,000,000 common shares of Deloro as security against a note payable which became due on September 1, 2011. On September 1, 2011, the Company was unable to repay the loan and the security of 1,000,000 common shares with a fair value of $107,468 ~~was~~were transferred to the ~~noteholder~~note holder in full and final settlement of the note, resulting in a loss of $2,532 on disposal of the shares. (Note 10)

On January 19, 2012, the Company sold its 2,000,000 common shares of Deloro for aggregate proceeds of $ 24,625 (Cdn$25,000) and realized a further loss of $195,375.

4.	NOTE RECEIVABLE

	OCTOBER 31			JULY 31
	JANUARY 31			JULY 31
	2011			2011
	2012			2011
Promissory note receivable		$	8060,000		$	-

On October 25, 2011, the Company ~~transferred~~sold ~~its~~ remaining 75,000 units of capital in EHHO to EHPC in exchange for a non-interest bearing promissory note with a face value of $1,000,000 which falls due on or before April 30, 2012.

~~The~~EHPC ~~purchaser~~ holds 4,000,000 common shares of the Company, which have been pledged as collateral for the promissory note. The 4,000,000 shares are the subject of an option agreement between the purchaser and a 3rd party, whereby the third party can acquire the shares, subject to certain conditions, in tranches of 1,000,000 shares at an exercise price of $0.25 per share. Should the option be exercised, the Company will receive the proceeds from the exercise of the option in satisfaction of the promissory note. On April 30, 2012, any remaining shares held as collateral will be transferred to the Company in full and final settlement of the promissory note. As a result, the initial recognition fair value of the promissory note has been estimated at $80,000 being the ~~current~~ market value of the underlying 4,000,000 shares of collateral, and the Company has recorded this amount as proceeds for this transfer.

9At January 31, 2012 the note was impaired by $20,000 to $60,000 being the market value of the underlying 4,000,000 shares of collateral at January 31, 2012.

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

5.	INVESTMENT IN EHHO

On July 7, 2010, the Company entered into an agreement with EHPC, which resulted in the dilution of the Company’s interest in EHHO to a 50% equity holding. On May 4, 2011, the Company entered into a letter agreement with Deloro, EHPC and EHHO, allowing Deloro to acquire up to a 1/3rd interest (being 60,000 ownership units) in EHHO in stages as follows:

On or before May 11, 2011, Deloro will issue 3,000,000 common shares each to the Company (received) and to EHPC. As consideration both the Company and EHPC will transfer 15,000 units of capital of EHHO to Deloro immediately and an aggregate of 30,000 ownership units of EHHO (15,000 from the Company and 15,000 from EHPC) will be placed into escrow until the completion of Deloro’s obligations described below.

ii)

On or before May 13, 2011, Deloro shall make a capital contribution of Cdn$150,000 to EHHO (received).

iii)

On or before September 30, 2011, Deloro will make further capital contributions aggregating Cdn$450,000 to EHHO in either cash or approved exploration expenditures (not received).

Upon fulfilling the capital contribution obligations, Deloro will have earned the 30,000 ownership units held in escrow and they shall be released to Deloro.

In the event Deloro completes the share issuance component of the transaction but does not fully complete Cdn$600,000 in aggregate capital contributions then Deloro shall retain 30,000 ownership units in EHHO, and the ownership units held in escrow shall be returned to the Company and EHPC respectively.

Deloro completed conditions (i) and (ii) above, but did not complete condition (iii), and accordingly Deloro earned an aggregate of 30,000 ownership units of EHHO and the Company’s interest in EHHO was reduced from 50% to 41.67%.As a result, during the year ended July 31, 2011, the Company recorded a gain on the disposal of 15,000 units of capital of EHHO amounting to $304,689, as follows:

Sale proceeds received
3,000,000 common shares of Deloro	$	330,000
Carrying value of 15,000 capital units sold to Deloro		(89,924	)
Gain on disposal of 15,000 capital units of EHHO		240,076

Share of capital contribution to EHHO by Deloro		64,613

Total gain on disposal of 15,000 capital units of EHHO	$	304,689

~~Transfer~~ Sale of remaining 75,000 capital units

On October 25, 2011, the Company sold ~~transferred~~ its remaining 75,000 capital units in EHHO to EHPC~~. Refer~~ to (Note 4). As a result, the Company recorded a loss on disposition of its interest of $120,000 as follows:

Initial recognition on promissory note	$	80,000
Carrying value of 75,000 capital units		(200,000	)

Total loss on disposal of 75,000 capital units of EHHO	$	(120,000	)

109

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

6.	OIL AND GAS PROPERTIES

	OCTOBER 31			JULY 31
	JANUARY 31			JULY 31
	2011			2011
	2012			2011
Unproved properties
Acquisition costs	$	~~128~~134,~~000~~720		$	~~128~~134,~~000~~720
Annual lease costs		12,840			6,720
Write down of property		(134,720	)		-
	$	~~140,840~~-		$	134,720

During the six month period ended January 31, 2012, the Company abandoned all its interests in the oil and gas properties held, and recorded a write down of the oil and gas properties of $134,720 and a future income tax recovery of $30,000.

7.	INTANGIBLE ASSET

On July 14, 2011, the Company purchased from its President the rights to ZeroGap Intellectual Property, which comprises a patent pending with the US Patent office. The Company has acquired all right, title and interest in the ZeroGap Intellectual Property, free of any encumbrances or royalties.

ZeroGap stands for “Zero Emission Refine Onsite with Gas Assisted Production”. The technology is still in the research and development stage, and is expected to have the potential to upgrade oil reserves in situ thereby potentially increasing the recovery and extraction of existing oil reserves.

The Company issued 30,000,000 common shares with a fair value of $3,000,000 to the President as consideration for the Intellectual Property. As this is a related party transaction, the Intellectual Property was recorded at the related party cost of $37,291. The difference between the fair value of the shares issued and the related party cost, being $2,962,709, was recorded as a reduction of additional paid-in capital.

Related party transfer cost	$	37,291
Other costs		2,800
Balance July 31, 2011 and October 31, 2011	$	40,091
Balance January 31, 2012 and July 31, 2011	$	40,091

8.	ADVANCES PAYABLE

At October 31, 2011, an amount of $108,346 (July 31, 2011 - $108,346) was owing to a former president of the Company for cash advances and expenses paid on behalf of the Company. The amounts are unsecured, non-interest bearing and have no specific terms of repayment.

9.	RELATED PARTY TRANSACTIONS

In addition to the related party transactions disclosed elsewhere in these financial statements the Company incurred the following balances and transactions during the year:

	OCTOBER 31		JULY 31
	2011		2011
Balance Sheet items
i) Due to Directors
Amounts payable for reimbursement of corporate expenses	$	4,569	$	1,463
Amounts payable for management fees		-		6,277
ii) Other
Note payable (Cdn$35,000) including accrued interest to Director, unsecured bearing interest at 6% per annum. The loan was due on July 25, 2011. There are no default charges and interest continues to accrue.		37,960		38,819
	$	42,529	$	46,559

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

9.	RELATED PARTY TRANSACTIONS (Continued)

	THREE MONTHS ENDED
	JANUARY 31		JULY 31
	OCTOBER 31,
	2012		2011
	2011		2010
Balance Sheet items
Income Statement Items
i) Due to Directors
iii) Interest paid or accrued
Amounts payable for reimbursement of corporate expenses	$	4,327	$	1,463
Interest accrued on promissory note owing to Director	$	523	$	542
Amounts payable for management fees		-		6,277
iv) Management fees
ii) Other
Charged to EHHO	$	-	$	15,000
Note payable (Cdn$35,000) including accrued interest to Director, unsecured bearing interest at 6% per annum. The loan was due on July 25, 2011. There are no default charges and interest continues to accrue.		37,997		38,819
Fees paid to two (2010 – three) Directors for services rendered	$	3,000	$	21,233
	$	42,324	$	46,559

	SIX MONTHS ENDED
	JANUARY 31,
	2012		2010
Operating Statement Items

iii) Interest paid or accrued
Interest accrued on promissory note owing to Director	$	1,047	$	1,049

iv) Management fees
Charged to EHHO	$	-	$	15,000

Fees paid to two (2010 – three) Directors for services rendered	$	14,750	$	35,156

10.	NOTES PAYABLE

As at ~~October~~January 31, ~~2011~~2012 $1817,~~158~~926 (July 31, 2011 - $18,832) was due on third party demand promissory notes bearing interest at the Bank of Canada prime rate plus 2% (3.25% as of ~~October~~January 31, ~~2011~~2012), and $7,~~241~~295 (July 31, 2011 - $7,358) of accrued interest is payable.

During the ~~three~~six month period ended ~~October~~January 31, ~~2011~~2012 the Company recorded a foreign exchange transaction gain of $~~894~~1,177 (~~October~~January 31, ~~2010~~2011 –- loss of $~~344~~636) in connection with these notes payable and accrued interest payable as a result of fluctuations in the foreign exchange rate.

At ~~October~~January 31, ~~2011~~2012, $nil (July 31, 2011 - $28,148 (Cdn$26,905)) was due on a secured third party promissory note. The Company received a loan for Cdn$25,000 and provided the lender a promissory note redeemable on or before September 1, 2011 for Cdn$28,000 including loan fees and interest. The loan was settled through the security pledged. (Note 3) resulting in a realized loss of $78,809.

11.	CAPITAL STOCK

Authorized

The Company’s capitalization is 200,000,000 authorized common shares with a par value of $0.001 per share.

~~b) Issued~~11

On August 17, 2011 the Company accepted a share subscription for 187,300 common shares at $0.10 per share for aggregate proceeds of $18,730 (Cdn$18,000).

On October 25, 2011 the Company accepted a share subscription for 1,181,100 common shares at $0.02 per share for aggregate proceeds of $23,622 (Cdn$24,000).

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STELLAR RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~JANUARY 31, ~~2011~~2012

(Unaudited)

11.	CAPITAL STOCK (Continued)

Issued

On August 17, 2011 the Company accepted a share subscription for 187,300 common shares at $0.10 per share for aggregate proceeds of $18,730 (Cdn$18,000).

On October 25, 2011 the Company accepted a share subscription for 1,181,100 common shares at $0.02 per share for aggregate proceeds of $23,622 (Cdn$24,000).

Stock Options

On October 5, 2011, the Company granted 100,000 stock options to a consultant with an exercise price of $0.10 per share for a term of three years and which vested immediately. The options have a fair value of $4,950, as calculated by the Black-Scholes option pricing model assuming an average expected remaining life of 3 years, a risk-free interest rate of 0.43%, a nil dividend yield and an expected volatility of 257%. The remaining life is 2.92 years.

The following is a summary of the stock option activity during the ~~three~~six month period ended ~~October~~January 31, ~~2011~~2012 and the year ended July 31, 2011.

THREE MONTHS ENDED

YEAR ENDED

SIX MONTHS ENDED

YEAR ENDED

OCTOBER 31, 2011

JULY 31, 2011

JANUARY 31, 2012

JULY 31, 2011

Weighted

Number

Average

Number

Average

Exercise

Price

Outstanding, beginning of period

Granted

100,000

0.10

Outstanding, end of period

100,000

0.10

12. ~~PROPOSED~~SUBSEQUENT ~~ACQUISITION~~EVENT

OnThe ~~September 23, 2011 the~~ Company ~~entered~~received ~~into a binding agreement~~Cdn$30,000 ~~subject~~from toa ~~due~~director ~~diligence,~~and toissued ~~acquire~~a ~~100%~~promissory ofnote ~~American Microbial Labs LLC (“AML”)~~ which ~~holds~~is ~~technology~~repayable ~~designed~~upon ~~for~~demand ~~cleaning produced water generated from the recovery of oil~~ and ~~gas~~bears ~~wells~~interest asat ~~well~~6% asper ~~oil spills located both on land and in water~~annum.

~~The Company may acquire 100% ownership of AML for the following consideration:~~12

a) 500,000 common shares of the Company at $0.25 per share;

b) $150,000 cash to be paid out on the closing date.

On execution of a definitive asset purchase agreement, the Company will also enter into employment agreements with two parties on terms and conditions as shall be negotiated and agreed, including but not limited to the following matters:

a) Duration of the term;

b) Base salary not to exceed Cdn$60,000 per annum;

b) Incentive compensation not to exceed Cdn$200,000 including base salary for the first two years.

The agreement will close on or before January 31, 2012.

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Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations

Our actual results could differ materially form those reflected in these forward-looking statements as a Statements we make in the following discussion that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including general economic and business conditions and industry trends, the continued strength or weakness of the contract land drilling industry in the geographic areas in which we operate, decisions about onshore exploration and development projects to be made by oil and gas companies, the highly competitive nature of our business, the availability, terms and deployment of capital, the availability of qualified personnel, and changes in, or our failure or inability to comply with, government regulations, including those relating to the environment. We have discussed many of these factors in more detail elsewhere in this report, including under the headings “Special Note Regarding Forward-Looking Statements” in the Introductory Note to Part I and “Risk Factors” in Item 1A. These factors are not necessarily all the important factors that could affect us. Unpredictable or unknown factors we have not discussed in this report or could also have material adverse effect on actual results of matters that are the subject of our forward-looking statements. All forward-looking statements speak only as the date on which they are made and we undertake no duty to update or revise any forward-looking statements. We advise our shareholders that they should (1) be aware that important factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements.

From inception on April 9, 1999 to ~~October~~January 31, ~~2011~~2012 we have expended $~~248~~258,~~564~~418 on general and administration expenses; $2425,~~608~~235 on interest and finance fees; $17,~~898~~989 on investor relations; $~~825~~837,~~410~~160 on management fees of which $750,000 relates to non-cash to stock-based compensation; $~~343~~355,~~846~~940 on legal, audit and accounting fees; $165,489 on resource property examination and exploration and $4,950 on non-cash stock based compensation arising upon the valuation of stock options granted to a consultant. Stellar Resources Ltd. (the "Issuer") has also charged management fees of $15,000 to Elk Hills Heavy Oil LLC (“EHHO”) for services rendered; incurred a loss on dilution of its equity interest in EHHO to 50% of $196,000 as a result of EHHO issuing stock from treasury to a third party; recorded a gain on sale of its holding of EHHO of $184,689; a loss on disposal of investments of $2197,~~532~~907; a loss on settlement of promissory note of $78,809, an impairment loss against EHHO of $314,908; and finally recorded the Company’s share of losses of EHHO amounting to of $30,781. ~~The~~and ~~Company~~finally ~~has~~recorded ~~also~~a ~~unrealized~~write ~~losses~~down onof its ~~investment~~oil and gas properties of $71104,~~312,~~720. The ~~and~~Company has also unrealized foreign currency translation losses of $7,~~373~~190.

To date, we have not generated any revenues from operations and had a working capital deficit of $45219,~~093~~710 and an accumulated deficit of $2,~~054~~408,~~197~~617 at ~~October~~January 31, ~~2011~~2012. Our continuance of operations is contingent on raising additional working capital, and on the future development of its potential resource property interests. Accordingly, these factors raise substantial doubt about our ability to continue as a going concern. We are currently negotiating with several parties to provide equity financing sufficient to finance additional exploration work and provide working capital for the next twelve months. Although there is no assurance that management’s plans will be realized, management believes that we will be able to continue operations in the future.

OVERVIEW

We have been in the pre-exploration stage since our formation on April 9, 1999, and are not operators of any mines or wells nor are we engaged in any mineral or oil and gas production or sales activities. We have a minimum amount of cash and have not yet developed any producing resource properties. We have no history of any earnings. There is no assurance that we will be a profitable company. We presently operate with minimum overhead costs and need to raise additional funds in the next 12 months, either in the forms of loans or issuance of equity, in order to continue our operations. We are primarily an oil and gas technology and exploration and development

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need to raise additional funds in the next 12 months, either in the forms of loans or issuance of equity, in order to continue our operations. We are primarily an oil and gas technology and exploration and development company. We are committed to developing and acquiring oil and gas technologies that have high impact on the profitability of oil and gas projects. Our strategy is to apply these high profit impact technologies our own oil and gas exploration and production projects.

We follow the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by-country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using current prices less estimated future expenditures plus the lower of cost and fair value of unproved properties within the cost centre.

The carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. We recognize impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. Impairment on the properties with unproved reserves is evaluated by considering criteria such as future drilling plans for the properties, the results of geographic and geologic data related to the unproved properties and the remaining term of the property leases.

Asset retirement obligations (“ARO”) associated with the retirement of tangible long-lived assets, including natural gas and oil properties, are recognized as liabilities in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated assets. The cost of tangible long-lived assets, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the assets. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted fair value is accreted to the expected settlement value.

The fair value of the ARO is measured using expected future cash flow, discounted at our credit-adjusted risk-free interest rate. As of ~~October~~January 31 ~~2011~~2012, we have determined that it does not have any asset retirement obligation.

We currently do not have any research and development activities planned for the next 12 months.

We currently have no plans to purchase or sell any additional property or significant equipment in the next 12 months.

We do not expect any significant changes in the number of employees over the next 12 months. During 2010 the Company’s focus changed to oil and gas ~~property,~~ exploration and development. We presently operate with minimum overhead costs and need to raise additional funds in the next 12 months, either in the forms of loans or issuance of equity, in order to continue our operations. We are primarily an oil and gas technology and exploration and development company. We are committed to developing and acquiring oil and gas technologies that have high impact on the profitability of oil and gas projects. Our strategy is to apply these high profit impact technologies our own oil and gas exploration and production projects.

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The Company has ~~focused~~disposed ~~its~~all it oil and gas ~~operations principally approximately 6~~properties,~~400~~ ~~acres~~by way of ~~oil~~sale ~~and~~or ~~gas~~lease ~~leases~~expiration inor ~~Park~~non-renewal ~~County,~~of ~~Wyoming~~leases. Stellar plans to operate a majority of its projects through the drilling and production phases. The Company intends to leverage the risks associated with drilling by obtaining industry partners to share in the costs of drilling. However, in some cases Stellar will retain a controlling interest in the prospects it drills.

Oil and Gas Technologies

On July 14, 2011 the Company acquired from its’ President, Mr. Ray Jefferd, all right, title and interest to the ZeroGap intellectual property, free of any encumbrances or royalties.

ZeroGap stands for Zero Emission Refining Onsite with Gas Assisted Production. The ZeroGap technology is still in the research and development stage but shows significant promise based on existing proven technologies of hydrocracking and hydrotreating for upgrading and refining crude oil.

A key benefit of the ZeroGap technology is its promise of upgrading oil in-situ. The second key benefit is the potential to significantly increase the recovery of oil-in-place, particularly low API crude oil. ZeroGap is also an environmentally friendly technology with a small footprint and potential for near zero toxic emissions. The technology involves the use of a gasifier to produce injection gases that will be used to upgrade underground crude oil and enhance its extraction/recovery.

The purchase price for the acquisition had a stated valued of $3,000,000 which the Company has satisfied by the issuance of 30,000,000 of its restricted common shares to Mr. Jefferd. The shares have been recorded at the exchange amount of $37,291 being the legal fees incurred by Mr. Jefferd in developing the Intellectual Property.

Stellar has acquired this technology as part of its ongoing strategic plan to be in the business of oil and gas exploration and production, technological development, and the accumulation of oil and gas reserves. The Company obtained an independent expert fairness opinion on July 11, 2011 prepared by Dr. Michael Tenhover prior to finalizing the acquisition of ZeroGap outlining the inherent value and validity of the technology. Dr. Tenhover, has over 30 years of experience in the oil and gas industry and is the former chief scientist for advanced materials at BP. Dr. Tenhover has 36 issued US patents, 3 invited review chapters for scientific books, 89 publications in peer reviewed scientific publications and has given numerous invited scientific lectures at conferences and major universities around the world.

The following are excerpts from the Fairness Opinion written by Dr. Michael Tenhover.

ZeroGap is a “Platform Technology” – the various embodiments constitute a wide range of uses, applications and methods.”

In principal, ZeroGap can address all the oil production opportunities mentioned in Enhanced Crude Oil Extraction. These relate to heavy and extra heavy crude oils.

In addition, two other markets may be of interest for this technology. These may be of near term interest since in these cases, the wells have already been drilled and production is in place. ZeroGap may be able to recover and enhance their existing production.

1.	Stranded oil – After production, a large amount of the oil remains in the formation. In North America as much as 60% of the oil will be left after conventional production. ZeroGap may be used here in mobilizing and in-situ upgrading this oil.

2.	Transition zone oil – A lot of oil is left behind at the oil-water interface. Due to the higher mobility of water, recovery is difficult. ZeroGap may be useful here to apply the appropriate gas chemistry to increase the mobility of the oil phase and decrease the mobility of the water phase”.

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American Microbial Labs

On September 26, 2011 Stellar entered into a binding agreement, subject to due diligence, to acquire 100% of American Microbial Labs LLC (“American Microbial).

The Company may acquire 100% ownership of AML for the following consideration:

a) 500,000 common shares of the Company at $0.25 per share;

b) $150,000 cash to be paid out on the closing date.

a) Duration of the term;

b) Base salary not to exceed CDN$60,000 per annum;

bc) Incentive compensation not to exceed CDN$200,000 including base salary for the first two years.

The agreement ~~will~~was to close on or before January 31, 2012. The agreement to acquire American Microbial did not close as required. Consequently Stellar and American Microbial are no longer bound by the agreement. The parties remain in discussion with the view to entering into a new agreement upon mutually acceptable terms.

American Microbial has 33 species of specialized microbes. These microbes have an affinity for hydrocarbons such as crude oil, diesel fuel and kerosene. They are particularly effective at consuming hydrocarbons in both waters and soils. American Microbial Labs has the proven technology to grow, harvest, stabilize and package the microbes in commercial quantities.

The Company, upon closing, intends to increase the production of the microbes by adding new production equipment in Alabama. The company intends to build a services business based on using the microbes for cleaning produced water and for oil spill clean-up.

Produced Water

Stellar sees a large and growing market for produced water clean-up in the oil and gas business. Many oil wells produce more water than oil, often a lot more water than oil. Regulatory bodies worldwide are tightening rules on the disposal of produced water. New regulations are planned throughout the world and when they come into effect the current practice of simply pumping untreated produced water into disposal wells will be severely curtailed. Meeting new standards for treating and disposing of produced water will demand new solutions. Without cost effective methods and technologies for treating produced water many existing mature oil fields will simply become uneconomical to operate.

Testing

The Company sees the Alberta Oil Sands as a large potential market to utilize the microbes to treat the tailings ponds from heavy oil recovery and upgrading facilities. Further, the microbes have proven effective in cleaning up oil spills on land. Clean-up can be achieved in-situ without the requirement of excavating the soil, allowing for better and lower cost clean-up for large and small oil spills.

Oil and Gas Properties

Elk Hills, Montana

In the spring of 2011, Loring Tarcore of Calgary, AB completed its testing of the cores from the Bauwens and Paugh wells. Notwithstanding earlier positive analysis the Company concluded that the low gravity of the oil and porosity and permeability were not sufficient to justify continued investment in the project by the Company.

17On October 25, 2011, the Company transferred its remaining 75,000 units of capital in EHHO to EHPC in exchange for a non-interest bearing promissory note with a face value of $1,000,000 which falls due on or before April 30, 2012. The purchaser holds 4,000,000 common shares of the Company, which have been pledged as collateral for the promissory note. The 4,000,000 shares are the subject of an option agreement between the purchaser and a 3rd

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On October 25, 2011, the Company transferred its remaining 75,000 units of capital in EHHO to EHPC in exchange for a non-interest bearing promissory note with a face value of $1,000,000 which falls due on or before April 30, 2012. The purchaser holds 4,000,000 common shares of the Company, which have been pledged as collateral for the promissory note. The 4,000,000 shares are the subject of an option agreement between the purchaser and a 3rd party, whereby the third party can acquire the shares, subject to certain conditions, in tranches of 1,000,000 shares at an exercise price of $0.25 per share. Should the option be exercised, the Company will receive the proceeds from the exercise of the option in satisfaction of the promissory note. On April 30, 2012, any remaining shares held as collateral will be transferred to the Company in full and final settlement of the promissory note. As a result, the initial recognition fair value of the promissory note has been estimated at $80,000 being the current market value of the underlying 4,000,000 shares of collateral, and the Company has recorded this amount as proceeds for this transfer. Should the Company receive payments on the promissory note in excess of the $80,000 such excess will be recorded as a gain on settlement at the time of receipt. As a result, the Company recorded a loss on disposition of its interest in EHHO during the period of $120,000.

Four Bear Property, Wyoming

Four Bear Heavy Oil LLC, a wholly owned subsidiary of Stellar, ~~owns~~has ~~more~~chosen ~~than~~not ~~5,800~~to ~~acres~~renew ofits oil and gas leases on 5,800 acres in Park County, Wyoming, USA. ~~There~~Stellar was not able to negotiate access to produced water treatment facilities owned and operated by nearby production companies as these facilities are ~~three~~being ~~potential~~fully ~~drilling~~utilized. Stellar ~~areas~~determined onit was prudent to not renew the leases due to the high costs of building its own produced water treatment facilities and the fact that the Four Bear Heavy Oil leases had only one year remaining. Further the adjoining property owners had no interest in acquiring the leases from Stellar for the same reasons. Accordingly Stellar wrote down its interests of the leases and recorded a charge of $104,720 during the quarter ended January 31, 2012.

~~1. Willow~~Results ~~Draw~~of ~~Field~~Operations for the Six Months Ended January 31, 2012

~~The~~We ~~Willow~~have ~~Draw~~not ~~field~~generated isany ~~adjoining~~revenues ~~one~~from ofoperations ~~the~~since ~~Four~~our ~~Bear~~incorporation ~~leases~~on April 9, 1999 through January 31, 2012. ~~Within~~During ~~500~~the ~~meters~~six ofmonth period ended January 31, 2012 the ~~Four~~Company ~~Bear~~incurred ~~Leases~~a ~~more~~net ~~than~~loss ~~150~~of $630,~~000~~595, ~~barrels~~and a comprehensive loss of ~~oil~~$629,418. The ~~has~~loss ~~been~~for ~~produced~~the ~~from~~comparable three ~~wells~~month period of the prior year was $139,645 and the comprehensive loss was $140,281. OnDuring ~~March~~the 23six month period ended January 31, 2012 we incurred management fees of $14,750 (2011 - $35,156). Professional ~~Legacy~~fees, ~~Energy~~comprising aslegal, ~~subsidiary~~accounting ofand ~~Nimin~~audit ~~Energy~~costs ~~Corp~~increased to $67,742 ~~the~~(2011 ~~operators~~- of$61,296). Interest ~~the~~expense ~~Willow~~increased ~~Draw~~to ~~field~~$2,231 ~~received~~(2011 ~~permits~~- $1,253). The interest increased due to ~~drill~~the ~~three~~Company being charged late payment interest on overdue accounts payable and the Company taking on an additional ~~new~~loan ~~wells~~from ~~all~~a Director with ~~1000~~an ~~meters~~interest rate of 6% in the ~~Four~~latter ~~Bear~~part ~~Leases~~of the prior year which is denominated in Canadian dollars. ~~Geological~~The ~~work~~interest ~~indicates~~on ~~that~~ the ~~Willow~~notes ~~Draw~~payable ~~field~~is ~~continues~~based ~~onto~~on ~~the~~a ~~Four~~Canadian ~~Bear~~dollar ~~leased~~denominated ~~property~~loan and interest charges have increased slightly as a result of increasing foreign exchange rates. ~~Four~~Stock ~~Bear~~based ~~has~~compensation ~~potentially~~of at$4,950 ~~least~~(2011 ~~one~~- ~~and~~$nil) aswas ~~many~~recorded as ~~ten~~a ~~offsetting~~result ~~wells~~of ~~that~~valuing ~~can~~stock beoptions ~~drilled~~granted onto a consultant in the ~~Four~~period. General ~~Bear~~and ~~Leases~~administrative ~~that~~expenses ~~adjoin~~which ~~the~~include ~~Legacy~~travel, ~~Energy~~filing ~~leases~~fees, office expenses and realized foreign exchange gains and losses amounted to $19,486 (2011 - $55,341).

The ~~following~~Company isalso ~~except~~recorded ~~from~~management anfee ~~announcement~~income of $nil (2011 - $15,000) which in the comparative period was charged to EHHO for management services provided by ~~Nimin~~the ~~Energy:~~Company; recorded a loss on sale of its holding of EHHO of $120,000 (2011$ - nil) as the Company disposed of its remaining 75,000 capital units of EHHO to EHPC in the period; a loss on disposal of investment of $197,907 (2011 - $nil) which related to the disposition of the Deloro Resources Ltd. shares for Cdn$25,000; a loss on settlement of promissory note of $78,809 (2011 - $nil), recorded a write down of its oil and gas properties of $104,720 (2011 - $nil); recorded a write down of $20,000 on the note receivable and finally recorded the Company’s share of losses EHHO amounting to of $nil (2011 - $1,599).

~~“Nimin~~Included ~~Energy~~in ~~Corp.~~comprehensive ~~owns~~loss ~~and~~is ~~operates~~the atrecognition anof ~~average~~the 97reduction ~~percent~~in ~~working~~market ~~interest~~value of its investment in ~~four~~Deloro ~~mature~~of ~~heavy~~$197,907 ~~oil~~(2011 ~~fields~~- ~~located~~$nil) inand ~~Park~~the ~~County~~transfer ~~Wyoming~~of ~~which~~the itlosses ~~acquired~~realized inupon ~~December~~sale of ~~2009.~~the ~~The~~investment ~~fields~~to ~~which~~the ~~were~~income ~~discovered~~statement ~~between~~of ~~1966~~$197,907 ~~and~~(2011 ~~1971,~~- ~~have~~$nil). The ~~produced~~Company ~~over~~also ~~nine~~experienced ~~million~~unrealized ~~barrels~~foreign exchange gains of ~~oil~~$1,177 ~~since~~(2011 ~~discovery~~- loss of $636) in the period.

The fields are part of the Basin Margin Anticline play on the Western side of the Big Horn Basin and produce from the Tensleep Sandstone of Pennsylvanian age and the Phosphoria limestone of Permian age. Oil gravities range from 14 to 18 degrees API from an approximate reservoir depth of 3,500 to 4,500 feet.17

The Company believes the fields to have significant infill drilling potential and plan to drill multiple development wells in the fields. Offset fields in the basin have already been infill drilled and have shown a significant increase in oil recovery and production rates due to the drilling. The company anticipates several years of drilling activity as it develops this core set of assets. While drilling these development wells the company will be studying the feasibility of implementing its CMD technology (see technology section) on the fields for future enhanced oil recovery.”

2. Section 2

Section 2 is 558 Acres (225 hectares) in Township 47 North, Range 103 West, Section 2, Park County, Wyoming.

Four wells with cumulative production of 361,000 barrels of oil from three producing zones are located within one mile of the Project. The nearest well to the proposed drilling location is 0.6 miles (1 kilometer) distant. Total production within five miles (8 kilometers) is more than 5 million barrels from more than 50 wells.

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3. Undrilled Structures nearby

Four Bear also owns leases covering more than 1,500 acres that is approximately two kilometers to the east this is a potential structure, undrilled, similar in size to the Willow Draw field and the original Four Bear Field.

Results of Operations for the Three Months Ended October 31, 2011

We have not generated any revenues from operations since our incorporation on April 9, 1999 through October 31, 2011. During the three month period ended October 31, 2011 the Company incurred a net loss of $276,175, and a comprehensive loss of $344,061. The loss for the comparable three month period of the prior year was $74,622 and the comprehensive loss was $74,966. During the three month period ended October 31, 2011 we incurred management fees of $3,000 (2010 - $21,233). Professional fees, comprising legal, accounting and audit costs increased to $55,468 (2010 - $40,376). Interest expense increased to $1,604 (2010 - $642). The interest increased due to the Company being charged late payment interest on overdue accounts payable and the Company taking on an additional loan from a Director with an interest rate of 6% in the latter part of the prior year which is denominated in Canadian dollars. The interest on the notes payable is based on a Canadian dollar denominated loan and interest charges have increased slightly as a result of increasing foreign exchange rates Stock based compensation of $4,950 (2010 - $nil) was recorded as a result of valuing stock options granted to a consultant in the period. General and administrative expenses which include travel, filing fees, office expenses and realized foreign exchange gains and losses amounted to $9,632 (2010 - $26,759).

The Company also recorded management fee income of $nil (2010 - $15,000) which in the comparative period was charged to EHHO for management services provided by the Company; recorded a loss on sale of its holding of EHHO of $120,000 (2010$ - nil) as the Company disposed of its remaining 75,000 capital units of EHHO to EHPC in the period; a loss on disposal of investments of $2,532 (2010 - $nil); a loss on settlement of promissory note of $78,809 ( 2010 - $nil), and finally recorded the Company’s share of losses EHHO amounting to of $nil (2010 - $612). An unrealised loss on its investment of $71,312 (2010 - $nil) arose in the period and the Company experienced unrealized foreign exchange gains of $894 (2010 - loss of $344) in the period.

Sales and Marketing Expenses: We have incurred no sales and marketing expenses since the date of inception due to the fact that we are in the pre-exploration stage of our business.

Our activities have been financed from proceeds of shareholders, related or third party subscriptions and loans. We do not anticipate earning revenues until such time as we have entered into commercial production of any mineral claims. We are presently in the pre-exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on any properties, or if such resources are discovered, that we will enter into commercial production of any claims.

19Results of Operations for the Three Months Ended January 31, 2012

~~Table~~We have not generated any revenues from operations since our incorporation on April 9, 1999 through January 31, 2012. During the three month period ended January 31, 2012 the Company incurred a net loss of ~~Contents~~$354,420, and a comprehensive loss of $285,357. The loss for the comparable three month period of the prior year was $65,023 and the comprehensive loss was $65,315. During the three month period ended January 31, 2012 we incurred management fees of $11,750 (2011 - $13,923). Professional fees, comprising legal, accounting and audit costs decreased to $12,094 (2011 - $20,920). Interest expense increased to $627 (2011 - $611). The interest increased due to the Company being charged late payment interest on overdue accounts payable and the Company taking on an additional loan from a Director with an interest rate of 6% in the latter part of the prior year which is denominated in Canadian dollars. The interest on the notes payable is based on a Canadian dollar denominated loan and interest charges have increased slightly as a result of increasing foreign exchange rates. General and administrative expenses which include travel, filing fees, office expenses and realized foreign exchange gains and losses amounted to $9,854 (2011 - $28,582). The Company also recorded a loss on disposal of investment of $195,375 (2011 - $nil) which related to the disposition of the Deloro Resources Ltd. shares for Cdn$25,000; and recorded a write down of its oil and gas properties of $104,720 (2011 - $nil); recorded a write down of $20,000 on the note receivable and finally recorded the Company’s share of losses EHHO amounting to of $nil (2011 - $987).

Included in comprehensive loss is the recognition of the reduction in market value of its investment in Deloro of $126,595 (2011 - $nil) and the transfer of the accumulated losses realized upon sale of the investment to the income statement of $195,375 (2011 - $nil). The Company also experienced unrealized foreign exchange gains of $283 (2011 - loss of $292) during the period.

Sales and Marketing Expenses: We have incurred no sales and marketing expenses since the date of inception due to the fact that we are in the pre-exploration stage of our business.

Liquidity and Further Capital Resources

At ~~October~~January 31, ~~2011~~2012, we had assets of $~~415~~105,~~725~~369 comprising cash of $35,~~474, an investment of 2,000,000 common shares of Deloro Resources Ltd. valued at $151,320~~278; a note receivable recorded at $8060,000, ~~oil~~ and ~~gas properties in Wyoming of $140,840 and~~ an investment in the ZeroGap technology recorded at $40,091. Total stockholders’ ~~equity~~deficiency was $~~105~~159,~~838~~619 at ~~October~~January 31, ~~2011~~2012. We are a pre-exploration and exploration stage company and, since inception, have experienced significant changes in liquidity, capital resources and shareholders’ equity.

To finance our operations we have relied upon cash on hand, sources internally generated from management, advances from shareholders and financing via loans, debt and equity financing.

As of ~~October~~January 31, ~~2011~~2012, we have unsecured, non-interest bearing advances payable of $108,346 (~~2010~~July 31, 2011 - $108,346) relating to advances received from the former President.

As at ~~October~~January 31, ~~2011~~2012, the Company had the following balances owing to related parties:

	OCTOBER 31		JULY 31
	2011		2011
Balance Sheet items
i) Due to Directors
Amounts payable for reimbursement of corporate expenses	$	4,569	$	1,463
Amounts payable for management fees		-		6,277
ii) Other
Note payable (Cdn$35,000) including accrued interest to Director, unsecured bearing interest at 6% per annum. The loan was due on July 25, 2011. There are no default charges and interest continues to accrue.		37,960		38,819
	$	42,529	$	46,559

During the three month periods ended October 31, 2011 and 2010 the Company incurred the following transactions with related parties:

	THREE MONTHS ENDED
	OCTOBER 31,
	2011		2010
Income Statement Items
iii) Interest paid or accrued
Interest accrued on promissory note owing to Director	$	523	$	542
iv) Management fees
Charged to EHHO	$	-	$	15,000
Fees paid to two (2010 – three) Directors for services rendered	$	3,000	$	21,233

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Debt financing received at October 31, 2011 from third parties secured by Promissory Notes together with accrued interest amounted to $26,099 (Cdn$26,190). Interest is calculated on the basis of a 365 or 366 day year on the unpaid principal balance from day to day and computed from the date of the Promissory Note until the principal amount is paid completely at Bank of Canada prime rate per annum plus two percent. These notes are payable upon demand. If we are not able to get further financing, we may not be able to continue as a going concern and we may have to delay exploration or cease our operations and liquidate our business.

	JANUARY 31		JULY 31
	2012		2011
Balance Sheet items

i) Due to Directors
Amounts payable for reimbursement of corporate expenses	$	4,327	$	1,463
Amounts payable for management fees		-		6,277

ii) Other
Note payable (Cdn$35,000) including accrued interest to Director, unsecured bearing interest at 6% per annum. The loan was due on July 25, 2011. There are no default charges and interest continues to accrue.		37,997		38,819
	$	42,324	$	46,559

During the six month periods ended January 31, 2012 and 2011 the Company incurred the following transactions with related parties:

	THREE MONTHS ENDED
	January 31,
	2012		2011
Income Statement Items

iii) Interest paid or accrued
Interest accrued on promissory note owing to Director	$	1,047	$	1,049

iv) Management fees
Charged to EHHO	$	-	$	15,000

Fees paid to two (2010 – three) Directors for services rendered	$	14,750	$	35,156

Debt financing received at January 31, 2012 from third parties secured by Promissory Notes together with accrued interest amounted to $25,221 (Cdn$25,324). Interest is calculated on the basis of a 365 or 366 day year on the unpaid principal balance from day to day and computed from the date of the Promissory Note until the principal amount is paid completely at Bank of Canada prime rate per annum plus two percent. These notes are payable upon demand. If we are not able to get further financing, we may not be able to continue as a going concern and we may have to delay exploration or cease our operations and liquidate our business.

During the period from August 1, 2011 to date the Company has raised the following amounts by way of equity issuances:

On August 17, 2011 the Company accepted a share subscription for 187,300 common shares at $0.10 for aggregate proceeds of $18,730.

On October 25, 2011 the Company accepted a share subscription for 1,181,100 common shares at $0.02 for aggregate proceeds of $23,622.

On October 5, 2011, the Company granted to a consultant 100,000 stock options exercisable at $0.10 per share until October 5, 2014, which vested immediately.

Item 3. Quantative and Qualitive Disclosures Above Market Risk.

Not applicable.

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Item 4. Controls and Procedures

As of ~~October~~January 31, ~~2011~~2012, the end of our third fiscal quarter covered by this report, we carried out an evaluation, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of ~~October~~January 31, 2011. This evaluation was carried out under the supervision and with the participation of our Chief Financial Officer, Mr. Luigi Rispoli. Based upon that evaluation, our Chief Financial Officer concluded that, as of ~~October~~January 31, 2011, our disclosure controls and procedures are satisfactory for the size and nature of the company, although such controls may not be sufficient for complex areas of GAAP, disclosures and certain fair value determinations. In such instances the Company seeks external advice and expertise as considered necessary. There have been no changes in our internal controls over financial reporting during the quarter ended ~~October~~January 31, 2011. Effective June 1, 2010, we adopted an Audit Committee Charter and formed an Audit Committee comprised of Ray Jefferd, Luigi Rispoli and Panfilo Rosatone.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures, designed to ensure that information required to be disclosed in our reports filed under the Exchange Act in accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Effective October 5, 2011 the Company formed its Technical Advisory Board comprised of Ray Jefferd, Luigi Rispoli, Panfilo Rosatone and Dr. Michael Tenhover.

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Technical Advisory Board Charter

PURPOSE

The primary function of the Technical Advisory Board (TAB) is to provide advice and input to the executive on technology issues and opportunities relating to the oil and gas business. The TAB shall be an advisory committee and shall not have any authority to act on behalf of the Company.

COMPOSITION AND TERM

The TAB shall consist of at least one member appointed by the Board of Directors of the Company and two or more persons who may be staff or consultants to the Company. All members of the TAB shall be appointed by the Chief Executive Officer of the Company. Term of membership shall be for one year with the expectation that additional annual appointments.

MEETINGS

The TAB shall meet at least annually, although meeting may be scheduled as deemed necessary or useful by the Chief Executive Officer of the Company. Meeting may be held electronically, voice and video conferences, so long as all members can communicate with each other during the meeting. The TAB shall keep minutes of its meetings and report regularly about its activities to the executive and the board of directors of the Company. Members shall be expected to make themselves generally available for discussions through electronic means at other times.

KEY RESPONSIBILITIES

The TAB is expected to:

1. Provide advice and feedback to the Executive of the Company on technology plans and projects;

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2. Make the Company aware of technology opportunities related to the Company’s core mission;

3. Promote and advocate for Company’s technologies and mission.

REMUNERATION

The Chief Executive Officer shall set the remuneration for the members of the TAB consistent with the member’s qualifications and expected contributions in assisting the Company achieve its key goals and objectives. Remuneration may be in the form of per diem fees or stock based compensation or both.

Item 4T. Controls and Procedures

Not applicable.

22PART II - OTHER INFORMATION

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not aware of any pending litigation nor do we have any reason to believe that any such litigation exists. Further, our officers and directors know of no legal proceedings against us, or our property contemplated by any governmental authority.

Item 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On December 1, 2010 we issued 45,833 common shares at $0.30 for aggregate proceeds of $13,750.

On February 11, 2011 we issued 101,215 common shares at $0.20 for aggregate proceeds of $20,243. The Company paid a cash finders fee of $1,026 pursuant to this financing.

On February 25, 2011 we issues 136,353 common shares at $0.15 for aggregate proceeds of $20,453.

On July 14, 2011, the Company issued 30,000,000 common shares to the President in consideration for the acquisition of the Zerogap Intellectual Property.

On August 15, 2011 the Company issued 187,300 common shares at $0.10 per share for aggregate proceeds of $18,730.

On October 25, 2011, the Company entered into a subscription agreement for 1,181,100 common shares at $0.02 per share for aggregate proceeds of $23,622.

Item 3. Defaults Upon Senior Securities

None.

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Item 5. Other Information

None.

Item 6. Exhibits

	31.1	Certification of Ray Jefferd, Chief Executive Officer of Stellar Resources Ltd. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of Luigi Rispoli, Chief Financial Officer of Stellar Resources Ltd. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of Ray Jefferd, Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of Luigi Rispoli, Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~December~~March 2021, ~~2011~~2012

STELLAR RESOURCES LTD.

	By:	/s/ Ray Jefferd
		Ray Jefferd
		President and Chief Executive Officer


	By:	/s/ Luigi Rispoli
		Luigi Rispoli
		Director and Chief Financial Officer


	By:	/s/ Michael Rezac
		Michael Rezac
		Director

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