FOR PERIOD ENDING 30 SEPTEMBER 2014

ASX Code: FAS

Contact Details

Unit 3, 136 Main Street, Osborne Park WA 6017

PO Box 1520

Osborne Park WA 6916

T: 08 9242 5111

F: 08 9242 5677

E: [email protected]
W: www.fairstarresources.com

ABN 38 115 157 689

Capital Structure

29th October 2014

Ordinary Shares on issue: 1,903 M

Share price: $ 0.004

Estimated market capitalisation: $ 7.61 M

Directors

Kevin J Robertson MAICD

Managing Director

John-Pierre Reifler

Chairman Non Executive

Con Markopoulos

Director Non Executive

David Allan Rossiter

Director Non Executive

Company Secretary

Madhukar Bhalla

Highlights for the September 2014 Quarter:

• Tenement Performance Bonds retired from DMP, as per the Mines Rehabilitation Fund entry

• Continued progress on achieving funding for the

Steeple Hill Iron Project

• Data entry and validation for the Kurnalpi project has continued and nears completion

• Company enters into Convertible Note Agreement totalling AUD 10,000,000

During the June Quarter, FairStar submitted all environmental tenement disturbance data into the Department of Mines & Petroleum's (DMP), Mine Rehabilitation Fund (MRF).
With this data submitted and all required rehabilitation work satisfactorily completed, the DMP, through the MRF have retired all current performance bonds which were in place for the Steeple Hill Iron Project tenements.

Previously reported, the Company has been compiling an extensive database for the Kurnalpi Gold Project. The data being entered into the database and then verified has consisted of the Company's historic exploration data for the whole Kurnalpi area. The data entry and validation is nearing completion with Kurnalpi East and Kurnalpi South completed and only the Kurnalpi North - Halfway Hill data to be completed. With this data correctly entered and verified, future exploration can be accurately and efficiently planned which will enable the best use of exploration funds.

Quarterly Report for period ending 30 September 2014

During the Quarter, the Company has continued to aggressively pursue, with the assistance of Creafin & Associates, the required financing to enable the project to move forward into production.
Due to circumstances beyond the Company's control, the pilot test work on the SHIP ore has not yet commenced. It is envisaged that during the coming Quarter, this test work will commence which will enable the Company to continue with the necessary planning and engineering of the process plant for the Steeple Hill Iron Project.
As a matter subsequent to 30th September 2014, FairStar is pleased to confirm that the Company has signed a Convertible Note
Agreement with I-World International Group Limited (I-World), of Taiwan. They have committed to invest up to

$ 10,000,000.00 over the coming weeks. In negotiating the Agreement and I-World seeking to convert their investment into equity, the Company reached a difficult situation given the current share price. FairStar persisted in providing I-World with a deeper understanding of the Steeple Hill Iron Project and the future prospects for FairStar. In the end, the Company is pleased to report, that I-World have agreed to convert the first 5 million at a rate of 1.6 cents per share and the second 5 Million at 2.0 cents per share. This should provide the Company's shareholders with an indication of the potential, viability and promise that the Steeple Hill Iron Project returns to us all. The issue of the Notes to enable I-World to convert to shares is subject to shareholder approval, which the Company is seeking, as announced on 28 October in the Notice of Annual General Meeting.

FairStar will use the funds, from I-World, for working capital purposes, retirement of debt and development of the Steeple Hill Iron
Project.
During October, the Company became aware that four Plaints had been lodged against the Steeple Hill Iron Project tenements. The Company would like to take this opportunity to assure its Shareholders that all necessary procedures have been taken, to protect the Company's interests and will inform of the outcome in due course. Further to this, the Company confirms that all necessary reporting and expenditure requirements have been satisfied as required by the DMP.
All other tenements held by or managed by the Company are in good standing, as per the requirements of the DMP.

Photograph: Hematite rich gravel on surface at SHIP

2

Quarterly Report for period ending 30 September 2014

Name of Project Ownership Name of Prospect Tenement Number

Steeple Hill FairStar Lindsay's Dam E28/1672, E28/1766,

Iron Project M28/373,

L28/38-40 (P), L28/43(P), E28/1997

Kurnalpi-Randalls FairStar Kurnalpi North (Halfway Hill) E28/1749, P28/1134 &

& South (Area 9) P28/1135

Jurangie Hill E28/1687

Kurnalpi East - Colour Dam E28/1561

FairStar 90%/Westex 10% Kurnalpi East - Colour Dam E28/1748, P28/1131, P28/1133

Alan Rudd Duchess of York M25/349

Hampton Hill E25/393

Mt Padbury FairStar Old Trilbar E51/1147

Tenement Portfolio consists of the following:

19 Tenements: 9 Exploration, 4 Prospecting, 2 Mining, 4 Miscellaneous Licences - Pending

About FairStar Resources

Background, FairStar - A New Horizon:

FairStar was listed in October 2006 and is a unique Perth-based uranium and gold explorer; and upon discovering Iron mineralisation at Lindsay's Dam commenced with its major Steeple Hill Iron Project (SHIP) that is strategically located near existing transport infra-structure with a clear and unencumbered path to production for relatively low capital expenditure.

FairStar will fast track development and production of its high-value Steeple Hill Iron Project with significant Indicated Resource estimate of hematite rich gravels, which produces a hematite fraction of Direct Shipping Ore to deliver immediate and substantial cash flows.

Significantly, FairStar believes it will be cash flow positive from its first year of production at SHIP.

This will be used to increase shareholder value and fund further high-value projects such as the gold tenements at Kurnalpi and Duchess of York

- Hickmans Find, along with uranium at Mt Padbury.

FairStar has an extensive portfolio of projects straddling 562 Km2 and remains committed to an aggressive expansion campaign to bolster its resource inventory and quickly transition the company from a junior explorer to a highly competitive producer of iron ore, gold and uranium.

3

AppendixsB Mining exploration entity and oil and gas exploration entity quarterly report

Appendix 58

Rule 5·5

Mining exploration entity and oil and gas exploration entity quarterly report

Name of entity

jFairstar Resources Limited

ABN

Quarter ended ("current quarter")

138 115 157 689 130 September 2014

Consolidated statement of cash flows

Cash flows related to operating activities

1.1 Receipts from product sales and related debtors

1.2 Payments for (a) exploration & evaluation

(b) development

(c) production

(d) administration

1.3 Dividends received

1.4 lnterest and other items of a similar nature received

1.5 lnterest and other costs of finance paid

1.6 Incarne taxes paid

1.7 Other- Net GST (paid)/ refunded

Net Operating Cash Flows

+ See chapter 19 for defined terms. m/os/2013 Appendix sB Page 1

AppendixsB

Mining exploration entity and oil and gas exploration entity quarterly report

Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities

Current quarter

$A'OOO

1.23 Aggregate amount of payments to the parties included in item 1.2 33

1.24 Aggregate amount of loans to the parties included in item 1.1O

1.25 Explanation necessary far an understanding of the transactions

Directors fees and salaries in norma! course of trading and consulting fees paid to

Directors & related parties.

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a materia! effect an consolidated assets and liabilities but did not involve cash flows

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

+ See chapter 19 for defined terrns.

Appendix sB Page 2 01/os/2o13

AppendixsB Mining exploration entity and oil and gas exploration entity quarterly report

Financing facilities available

Add notes as necessary foran understanding ofthe position.

3.1 Loan facilities

3.2 Credit standby arrangements

...

(a) As at the date of th1s report, the followmg short term secured fmancmg facillt1es are payable:

Description AmountDue

Other unsecured loan (former convertible noteho/ders) Loan previously secured by shares in listed company Loan secured by PPSA Security interest

Loan secured over mining lease

1,100,000

1,190,000

2,380,000

3,325,000

7,995,000

(b) Fairstar has a non exclusive standby subscription agreement with Gurney Capita/ Nominees Pty Ltd. The total facility, of which drawdowns can be made subject to certain terms and conditions, is $15 million. Shares are issued at a price representing 80% of the 5 day VWAP for the period immediately prior to the issue of a drawdown notice to Gurney.

(c) In October 2014 Fairstar entered into a Convertible Note agreement in order to raise $10 million. Full details are contained in ASX announcement dated 27 October 2014.

Estimated cash outflows for next quarter

4.1 Exploration and evaluation

4.2 Development

4.3 Production

4.4 Administration

+ See chapter 19 for defìned terms.

01/os/2013 Appendix sB Page 3

Appendix5B

Mining exploration entity and oil and gas exploration entity quarterly report

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Changes in interests in mining tenements and petroleum tenements

6.1 lnterests in mining tenements and petroleum tenements relinquished, reduced or lapsed

6.2 lnterests in mining tenements and petroleum tenements acquired or increased

lssued and quoted securities at end of current quarter

Description inc/udes rate of interest and any redemption or conversion rights together with prices and dates.

+ See chapter 19 for defined terms.

Appendix sB Page 4 m/os/2013

Appendix5B Mining exploration entity and oil and gas exploration entity quarterly report

7.3 +Qrdinary securities

7.4 Changes during quarter (a) lncreases through issues

(b) Decreases through returns of capitai, buy- backs

7.12 Unsecured notes (totals only)

+ See chapter 19 for defined terms.

m/os/2013 Appendix sB Page 5

AppendixsB

Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

2 es /does not* (delete one) give a true and fair view of the

lfised.

Sign here:

Print name: Kevin J Robertson

Notes

Date: 31 October 2014

1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. lf the entity is involved in a joint venture agreement and there are conditions precedent which will change its

percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 lssued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Minerai Resources and AASB 107: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of lnternational Financial Reporting Standards for foreign entities. lf the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

-- --------

+ See chapter 19 for defìned terms.

Appendix sB Page 6 01/os/2013