Quarterly Report - Fairstar Resources · This report covers Fairstar ... 4m @ 17.5g/t Au ... The Company named the discovery “Mahendra’s Find” The Company has a 100% interest

FOR PERIOD ENDING 30 SEPTEMBER 2008

This report covers Fairstar’s exploration related activities for the quarter ended 30thSeptember 2008.

Highlights of September Quarter• Drilling at PEP 165 Oil & Gas Project in the on-shore Murray

Basin in Victoria concluded on 13th July

• The drill program confirmed the presence of a high quality,developed reservoir containing hydrocarbon as C1(methane) natural gas in the Project area

• At the Area 9 prospect at the Kurnalpi-Randalls Gold Project,gold mineralisation in the range of 90,000 to 93,000t @ 6.0to 7.0g/t gold was estimated (at 1.0g/t cut-off). “Thisestimate both in quantity and grades, is conceptual only innature.”

• At the Mahendra’s Find iron discovery 216 grab sampleswere collected and analysed for iron (Fe) and relatedelements. Results of 178 samples were received at Quarter’send.

• Hematite outcrop from the iron discovery area was assayed at 65.99% Fe (with 2.2 % SiO2, 0.63 % Al2O3, 0.011% P, and2.03 % LOI)

Quarterly Report

Contact DetailsUnit 3, 136 Main Street,Osborne Park WA 6017PO Box 1520Osborne Park WA 6916T: 08 9242 5111F: 08 9242 5677E: [email protected]: www.fairstarresources.com

ABN 38 115 157 689

Capital Structure27 October 2008Ordinary Shares on issue: 379.8 MOptions on issue: 72.3 MShare price: $0.051 Options price: $0.012Estimated market capitalisation: $ 19.4 M

Board Directors

Vaz HovanessianChairman Non Executive

Kevin J Robertson Managing Director Executive

Mahendra Pal M. Sc, FAusIMM (Australia), MSGAT (India)

Director Executive - Exploration &Technical

Alan Rudd B.App.Sc

Director Non Executive

Harold J PaikerB.Juris LLB LLM

Director Non Executive

Alan Thomas Company Secretary

ASX Code: FAS, FASO

Kurnalpi (South) Gold Project – Area 9

BackgroundThe Kurnalpi South group of prospects are located 5 km south-west of the Kurnalpi Townsite (Figure 1). Previous drilling at the

Area 9 Prospect intersected several gold intercepts greater than 2 metres, varying from 3.5g/t gold to 19.6g/t gold.

As a result of this encouraging information, the Company drilled a total of 2379 metres of RC percussion along 25 holes during

March and April. From this drilling, samples at 1 metre intervals were collected and analysed for gold, at the Kalassay Group’s

Kalgoorlie laboratory.

Estimation of Gold MineralisationDuring the reporting period a study of all available information on the Area 9 Prospect (using a “cross-sectional approach”) to

estimate the extent of gold mineralisation at the Prospect was undertaken by experienced Australian gold industry consulting

geologist, L J Molloy.

MineralisationThe gold mineralisation at Area 9 occurs in discrete lenses with limited continuity. The mineralisation has a north-south trend,

dipping to the west and plunging to the north west over a strike length of 250 metres with a width of 80 metres. (However, moving

from south to north the mineralisation appears to flatten in dip).

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Quarterly Report for period ending 30 September 2007

Estimation criteriaThe following points define the criteria used for this mineralisation assessment. The assumptions made and limitations placed on

the data are also given.

• The assessment results are based upon a cross-sectional interpretation of 38 holes (3,362 metres RC and 50 metres RABpercussion) drilled by Fairstar Resources and earlier explorers up to 30 September 2008.

• The analytical procedures are those generally followed by Western Australia’s gold exploration and mining industry. All assaysresults are reported on a grams per tonne (g/t) gold basis unless otherwise stated.

• Oblique drilling results of earlier explorers were projected on to the nearest cross section.

• Cross sections used are 20 metres apart

• The sectional influence used is half-way distance to the adjacent section

• The estimate is based on a tonnage factor of 2.5t/m3. Depending on the host rock condition (fresh or weathered) this tonnagefactor may be slightly high or slightly low. However, one exception to this rule was mineralisation in drill hole FKL24 wheregold (22.93g/t) is associated with massive sulphide. In this case tonnage factor of 3.5t/m3 was used.

Comments

• “This estimate has been prepared as a progress report and both in quantity and grade, is conceptual only in nature.”Further, it is based on sharp (clean) boundaries between the various material types in contact with the gold mineralisation.

• The estimated mineralised mass is not a resource estimate and “both in quantity and grade, is conceptual only in nature.”

• The reported mineralised mass is the mass of material, in place, that meets the cut-off criteria.


4m @ 17.5g/t Au

1m @ 22.9g/t Au

1m @ 40.1g/t Au

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Figure 2: Area 9 drill hole location plan

Estimated Mineralised MassUsing the above parameters, at a cut-off of 1.0g/t gold, the total mass of gold mineralisation for Area 9 is estimated to be in the

range of 90,000 to 93,000t @ 6.5 to 7.0g/t gold.

At a cut-off of 0.5g/t gold the mass of gold mineralisation for the same area is estimated to be in the range of 90,000 to 95,000t

@ 6.0 to 6.68g/t gold. In practical terms, the estimates at two different cut-offs are very close and fall within the error of estimation.

Proposed workThe gold intercepts intersected both by previous and current Fairstar exploration drilling at Area 9 are highly encouraging.

Moreover, the gold mineralisation is open down dip at depth and along strike. In view of the encouraging results of 2008 drilling,

to test the down plunging strike extension of the gold mineralisation, a programme of 2,200 metres (2000 metres RC percussion

and 200 metres diamond) is planned for the area.

On completion of this drilling the Company plans to complete a JORC compliant resource estimation for the Prospect.

Iron discovery at Kurnalpi Project

Fairstar’s iron discovery is located about 110km east of Kalgoorlie (in tenement E28/1672) and is part of the Company’s Kurnalpi

Project in WA’s Eastern Goldfields. The area has previously been well known for its gold prospectivity.

This iron discovery is the first of its kind in the area. The discovery is in close proximity to major rail infrastructure, with the Trans

Australian Railway passing 23km south of the tenement area (Figure 1). The Company named the discovery “Mahendra’s Find”

The Company has a 100% interest in E28/1766 and in regards to E28/1672 holds the precious metal rights and retains a first to

last rights of refusal to purchase for all other minerals.

GeologyThe host rock of the iron discovery is a banded iron formation (BIF) confined to the Steeple Hill Syncline and is in excess of 15km

in length and has a north-south orientation. It is highly folded and faulted. To date four bands of BIFs varying from 10 metres to

100 metres in width have been identified (Figure 3). The area is highly weathered and extensively covered by colluvium and

laterite. As a result rock outcrops in the area are limited.

Work performedThe work carried out during the reporting period included; reconnaissance field visits and collection and analysis of 216 grab/rock

chip samples for iron (Fe) and related elements. Results of 178 samples received to date are shown in Table 1.

Proposed workDuring coming months, the Company will continue with further rock chip sampling and will also conduct more confirmatory work,

via the acquisition and analysis of available open file data, geological and regolith mapping. It will also engage geophysical

consultants to undertake airborne magnetic and radiometric survey and data interpretation.

This activity will be followed by a drilling program and then a resource estimation.

Quarterly Report for period ending 30 September 2007Quarterly Report for period ending 30 September 2008

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Figure 3: Discovery - geology and some sampling results

Table 1: Rock chip sampling results – Mahendra’s Find (E28/1672)

----------------Grade (%)----------------Sample No Northing Easting Fe SiO2 Al2O3 P LOI

LD024 6586013 437660 42.82 25.92 6.03 0.016 5.28

LD025 6586502 437657 42.16 24.39 5.9 0.25 7.44

LD026 6588793 437497 25.68 58.99 1.2 0.077 2.68

LD027 6589556 437449 46.96 14.81 9 0.263 7.37

LD028 6590301 437374 41.69 20.72 7.76 0.328 9.48

LD029 6590668 437479 6.01 87.29 1.57 0.018 1.31

LD030 6591160 437494 38.65 34.57 4.02 0.129 4.13

LD031 6591774 437295 49.63 17.22 2.88 0.384 8

LD032 6591944 437154 44.88 19.17 6.57 0.32 8.38

LD033 6592131 436987 5.61 88.14 1.75 0.017 1.38

LD034 6592365 437057 33.76 45.06 2.52 0.055 3.1

LD035 6592657 436982 44.97 19.92 6.43 0.295 8.61

LD036 6592792 437169 48.59 19.75 6.23 0.025 4.38

LD037 6592775 437501 38.74 37.37 2.99 0.089 3.87

LD038 6591120 436391 48.64 14.74 5.93 0.035 6.98

LD039 6594246 437974 54.45 8.39 5.49 0.034 7.47

LD040 6594446 438108 53.87 11.11 4.85 0.053 6.39

LD041 6594583 438174 60.25 5.9 3.88 0.031 3.73

LD042 6594772 438239 34.03 47.37 2.05 0.033 1.69

LD043 6594913 438182 36.19 38.18 4.47 0.052 4.32

LD044 6595091 438187 55.44 8.06 3.6 0.207 7.77

LD045 6595657 438350 35.45 41.71 4.16 0.057 3.67

LD046 6595848 438329 41.36 36.13 2.08 0.067 1.89

LD047 6596092 438298 37.37 41.98 2.49 0.04 2.01

LD048 6596360 438266 50.51 11.23 5.05 0.528 9.13

LD049 6596669 438127 28.3 51.52 3.9 0.025 2.7

LD050 6597040 438310 36.6 40.22 3.6 0.02 3.11

LD051 6597202 438308 34.29 43.27 3.83 0.024 3.01

LD052 6597344 438233 49.34 23.92 2.56 0.026 2.33

LD053 6597550 438272 38.78 38.61 3.15 0.043 2.82

LD054 6597700 438265 37.91 40.3 3.4 0.026 2.34

LD055 6597942 438342 32.51 47.81 2.67 0.019 2.22

LD056 6598072 438495 34.5 46.47 1.97 0.024 1.5

LD057 6598177 438690 60.57 5.54 3.19 0.025 3.88

LD058 6598341 438702 59.91 6.68 4.5 0.035 2.83

LD059 6597964 438095 53.48 11.45 5.35 0.023 4.29


Table 1: Rock chip sampling results – Mahendra’s Find (E28/1672) cont


LD060 6598332 438933 35.45 23.88 15.42 0.023 9.57

LD061 6598212 439011 35.31 41.72 3.87 0.058 2.99

LD062 6598099 439017 35.96 42.92 3 0.026 2.07

LD063 6597705 439146 37.78 41.08 2.91 0.032 2.38

LD064 6597616 439131 47.71 20.72 2.95 0.251 7.27

LD065 6597281 439522 45.5 17.98 3.4 0.031 4.05

LD066 6596740 439735 51.75 11.11 3.68 0.444 9.97

LD067 6597045 439665 53.94 10.3 5.62 0.022 3.6

LD068 6593813 439951 45 23.13 4.32 0.086 7.08

LD069 6592398 439937 50.04 15.47 3.28 0.216 9.03

LD070 6592051 439867 44.99 22.28 7.22 0.031 5.76

LD071 6580567 440697 50.35 7.97 7.61 0.239 11.38

LD072 6581210 442628 52.12 9.74 3.86 0.272 10.63

LD073 6581099 442312 43.97 26.3 1.97 0.094 7.5

LD074 6581289 441264 54.18 6.92 3.74 0.138 10.35

LD075 6581976 441420 59.52 3.98 1.31 0.027 8.05

LD076 6581978 441635 45.34 13.21 10.66 0.041 10.12

LD077 6581768 441892 65.99 2.2 0.63 0.011 2.03

LD078 6581568 442517 50.8 9.86 5.98 0.111 9.94

LD079 6581665 442569 52.53 10.69 2.72 0.637 10.13

LD080 6582369 440650 50.18 11.82 7.66 0.022 7.93

LD081 6583555 440450 37.35 37.72 1.61 0.136 6.15

LD082 6584043 440159 39.99 23.51 8.79 0.099 8.98

LD083 6584014 440282 19.87 67.6 0.43 0.115 3.03

LD084 6584512 440207 35.77 31.89 7.78 0.152 8.11

LD085 6584917 440469 38.6 35.85 1.84 0.339 6.46

LD086 6585172 441226 51.08 10.09 4.8 0.312 10.18

LD087 6585873 441564 43.47 8.44 3.52 0.019 4.27

LD088 6585489 439543 30.68 48.16 1.64 0.138 4.97

LD089 6585304 438554 40.75 31.47 3.69 0.058 5.68

LD090 6586226 438889 38.83 36.79 3.53 0.024 3.27

LD091 6586058 440081 39.6 17.99 15.75 0.022 7.64

LD092 6586359 441227 41.8 21.63 6.64 0.167 9.92

LD093 6586541 440347 43.85 20.43 6.78 0.159 8.81

LD094 6586516 440222 51.1 9.17 4.69 0.561 11.03

LD095 6586557 438985 44.14 23.3 5.34 0.109 6.8




LD096 6586495 437953 39.97 27.82 6.69 0.144 7.84

LD097 6586768 434460 32.05 25.23 17.23 0.011 8.37

LD098 6587364 433989 55.22 3.79 4.2 0.462 9.91

LD099 6587051 435219 1.86 91.86 2.53 0.008 0.99

LD100 6586736 435831 45.85 15.82 6.53 0.156 9.52

LD101 6586922 436415 49.62 11.57 4.61 0.069 10.89

LD102 6587070 438560 24.91 40.75 14.44 0.03 8.61

LD103 6587142 440131 52.37 10.12 3.14 0.451 9.81

LD104 6587272 440212 53.59 8.52 3.12 0.44 10.36

LD105 6586941 441143 43.91 24.68 3.72 0.013 6.97

LD106 6587040 441389 39.72 34.68 1.77 0.052 5.95

LD107 6586987 442066 55.69 5.13 3.83 0.025 4.76

LD108 6587061 442147 56.59 7.8 2.68 0.022 8.34

LD109 6587372 442501 53.19 7.15 3.82 0.426 10.72

LD110 6587551 440470 16.49 71.38 1.87 0.034 2.94

LD111 6587651 439252 38.42 25.98 11.23 0.022 7.45

LD112 6588061 440511 41.31 26.9 4.67 0.409 7.4

LD113 6587813 436771 43.78 19.92 6.36 0.098 10.14

LD114 6587944 434872 30.73 26.88 18.22 0.038 9.02

LD115 6587761 434152 43.92 3.71 22.59 0.025 8.02

LD116 6587802 433861 35.28 4.35 27.06 0.044 15.37

LD117 6588139 434205 44.3 21.71 4.93 0.538 7.71

LD118 6588245 437488 32.2 37.69 8.19 0.065 6.8

LD119 6588373 439340 53.08 8.99 4.37 0.025 9.95

LD120 6588308 440181 54.38 5.77 4.91 0.196 9.79

LD121 6588095 441721 53.58 6.05 4.09 0.085 3.46

LD122 6588710 442352 53.58 7.53 3.94 0.205 10.52

LD123 6588806 441628 48.37 15.83 3.98 0.024 3.51

LD124 6588696 440151 42.72 17.67 11.57 0.025 6.69

LD125 6588529 439684 54.48 8.06 1.74 0.383 10.24

LD126 6588670 439391 41.41 35.52 2.62 0.013 1.91

LD127 6588924 438395 38.55 28.82 7.61 0.049 7.66

LD128 6588995 439420 41.98 33.45 1.97 0.113 3.88

LD129 6588935 439653 56.71 6.06 3.99 0.2 7.9

LD130 6588875 440516 43.78 20.24 6.6 0.299 8.15

LD131 6589823 442470 44.06 25.38 3.3 0.178 6.74




LD132 6589649 442159 7.37 83.65 0.41 0.013 4.14

LD133 6589761 441665 45.01 18.48 4.7 0.015 3.97

LD134 6589623 440893 38.33 23.89 11.18 0.019 9.08

LD135 6589729 440476 44.89 18.56 5.84 0.177 9.72

LD136 6589518 440348 18.18 63.76 2.34 0.008 2.24

LD137 6589625 439686 56.07 4.24 2.56 0.522 10.7

LD138 6589547 439412 58.15 5.52 4.15 0.025 4.95

LD139 6588397 435384 28.9 37.94 11.86 0.012 7.58

LD140 6588635 433082 43.27 17.13 12.76 0.015 7.4

LD141 6588712 432482 20.98 45.55 14.27 0.024 7.74

LD142 6589359 429844 31.14 32.54 12.9 0.018 6.73

LD143 6589007 436526 50.33 13.05 4.16 0.289 9.34

LD144 6589594 437590 20.89 64.81 1.87 0.012 2.53

LD145 6589369 436282 29.08 36.5 12.62 0.073 7.23

LD146 6589786 439446 40.89 27.06 3.79 0.029 7.36

LD147 6589805 439731 54.35 6.03 3.8 0.418 10.69

LD148 6589803 440908 35.04 29.13 9.37 0.073 9.49

LD149 6590170 441532 52.43 8.57 3.05 0.024 4.11

LD150 6590190 440682 52.8 13.58 1.92 0.061 7.09

LD151 6590176 439692 58.13 5.88 2.85 0.116 7.3

LD152 6590109 439482 43.4 31.53 2.42 0.081 4.02

LD153 6590083 437050 50.35 16.07 3.66 0.085 7.37

LD154 6590032 436844 24.64 41.19 14.51 0.008 7.66

LD155 6590068 436341 47.15 18.24 2.9 0.619 8.32

LD156 6590180 436143 48.33 18.73 2.75 0.025 8.59

LD157 6590557 436291 24.91 45.16 12.27 0.009 6.07

LD158 6590677 437567 49.74 13.28 3.87 0.515 9.94

LD159 6590661 439506 53.9 11.1 3.16 0.021 3.4

LD160 6590515 440456 20.44 59.51 3.45 0.024 2.66

LD161 6590594 440786 47.84 17.31 3.94 0.191 9.07

LD162 6590698 441113 27.34 32.55 18.64 0.009 8.49

LD163 6590613 441912 49.74 9.75 2.24 0.017 4.61

LD164 6591028 442724 54.7 6.51 4.29 0.08 10.11

LD165 6591184 441901 46.32 13.93 2.65 0.027 3.11

LD166 6591014 441074 43.58 16.77 10.94 0.036 9.08

LD167 6591081 440684 34.79 39.93 2.7 0.187 6.8




LD168 6591222 440352 46.09 16.32 5.85 0.437 9.98

LD169 6591036 439594 46.3 23.24 3.97 0.212 6.19

LD170 6591045 437699 32.62 25.87 17.98 0.01 8.59

LD171 6590952 436387 45.92 20.99 3.89 0.054 8.35

LD172 6591433 436292 46.09 25.02 2.93 0.034 4.97

LD173 6591738 436807 6.88 87.47 0.51 0.031 1.29

LD174 6591718 437047 42.53 19.4 8.54 0.346 9.39

LD175 6591439 442590 49.23 12.51 4.51 0.277 10.85

LD176 6591423 441909 50.95 7.77 3.23 0.049 3.01

LD177 6591503 440870 54.4 9.39 2.85 0.241 8.12

LD178 6591532 440683 52.6 8.65 4.61 0.248 10.55

LD179 6591559 440587 46.59 12.42 8.11 0.124 10.91

LD180 6591473 440171 51.25 7.92 4.7 0.572 10.86

LD181 6591563 439655 49.26 18.69 2.47 0.239 7.66

LD182 6591916 436307 50.97 15.88 3.82 0.045 5.31

LD183 6592147 437161 37.98 39.91 2.16 0.042 2.69

LD184 6592080 439825 48.79 20.33 2.22 0.344 7.1

LD185 6591991 440377 46.8 14.98 5.49 0.344 9.49

LD186 6592092 441368 25.13 43.95 13.07 0.021 6.02

LD187 6592122 441963 45.88 14.97 7.12 0.013 3.68

LD188 6592247 442506 28.56 36.56 11.93 0.01 6.59

LD189 6592606 441988 50.96 8.57 5.85 0.067 7.09

LD190 6592360 441969 54.21 8.06 3.99 0.029 4.16

LD191 6592506 441673 37.12 29.61 10.31 0.022 4.74

LD192 6592534 439970 52.54 9.67 4.13 0.374 10.04

LD193 6592447 437009 45.66 22.9 3.18 0.209 7.83

LD194 6592741 436682 9.13 82.99 1.02 0.011 1.66

LD195 6592561 436561 37.53 35.56 4.1 0.058 4.67

LD196 6592781 436236 40.24 32.97 2.64 0.018 6.15

LD197 6593063 436378 36.29 42.03 2 0.164 3.55

LD198 6593114 436480 11.89 79.13 1.12 0.018 2.09

LD199 6593038 437547 34.54 44.19 3.26 0.057 2.94

LD200 6593123 437724 55.77 5.96 3.32 0.16 10

LD201 6593046 442125 45.35 18.5 5.11 0.37 8.78


Legend

Material Types Grade %

Direct Shipping Ore Fe > 60% DSO

Super-High-Grade Fe >65%

High-grade Fe >60 <65%

Diluent Fe 55-60%

Beneficiable Material Fe 30-55% BM

Low-grade high alumina Fe < 55%

BIF Fe >30 <50%

Low-grade BIF Fe<30%

Waste Fe<25%

Miscellaneous


DSO

BM

Plate 1: Hematite outcrops

Plate 2: Goethitic hematite outcrops

Plate 3: Canga outcrops

Plate 4: Scree iron

Plate 5: BIF outcrops


Oil and Gas Exploration

BackgroundOn 3rd July 2007, Fairstar entered into a Farm-in Agreement with Knight Industries Pty Ltd (Knight) for oil and gas exploration in

Section 1 of Knight’s Petroleum Exploration Permit (PEP) 165 near the town of Sea Lake in north west Victoria (Figures 4 and 5).

The first Well was named Sea Lake 1 Well (Figure 5).

Hunt Energy and Mineral Co Australia Pty Ltd and Robert L Williams Jr, (a Certified Petroleum Geologist (AAPG-DPA 4563) of

Imperial Oil Properties Inc, USA) were responsible for drilling operations and geological supervision respectively.

Drilling of Sea Lake 1 Well commenced on 22nd June 2008 and drilled to a depth of 606 metres before drilling ceased on 13 July

2008.

AnticipationThe drilling site for Sea Lake 1 Well was based on a survey conducted by Knight Industries using Knight’s owned and developed

the KDLS Mark 32 remote sensing equipment. The mapping indicated the presence of twin reservoirs over an aerial extent of a

minimum of 910 hectares with a total oil pay zone ranging from 142 metres to 191 metres in thickness (average was 159 metres).

The survey suggested the reservoirs were trapped in a faulted anticline at a relatively shallow depth. Knight Industries determined

pay elevations around the perimeter of the Sea Lake Prospect (as shown in Figures 6 and 7).


Source: DPI Victoria

Figure 4: Location of PEP 165 in Murray Basin - Victoria

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Figure 5: Location of Sea Lake 1 Well

Source: Knight Industries

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Figure 7: Anticipated geological

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Progress During the reporting period, the Sea Lake 1 Well progressed from 335 metres to 606 metres, for a total progression of 271 metres.

Due to drilling difficulties the drilling operation was terminated at 606m.

Geological Column DrilledThe geologic section drilled in Sea Lake 1 is composed of Siluro/Devonian crystalline rocks as a base, capped withmetasediments, primarily welded quartzite, and then covered with a thin veneer (at 320+ metres) of Paleocene/Eocene and thenMiocene strata. The Cainozoic (tertiary) strata were almost entirely composed of clastics with the exception of some very thinlimestones found between 180 metres and 190 metres and again from 270 metres to 295 metres.

ReservoirThe drilling operation intersected several sandy packages, which were seen as potential hydrocarbon zones, from 230 metres to290 metres. In general, the major part of this sandy interval was less developed. However, within this segment, from 240 metresto 257 metres, a high quality, developed reservoir in the Warina Sand (Renmark) was intersected.

The base of the 12 ¼” drilling interval was located directly within the Warina Sand section, but due to adverse hole conditions,at 180 metres, the drilling operators were unable to case-off the hole. This exposed the drilling to mud invasion, cementcontamination and a hole-diameter change. A subsequent mechanical failure resulted in the Warina Sandstone remaininguntested.

Reservoir CharacteristicThe Warina Sandstone is extraordinarily clean and friable, and is mostly fine to medium grained with some coarse, sub-angularto sub-rounded, partly frosted (with some translucent to transparent) well-sorted quartz sandstone. It also contains somesiliceous cement. It has very good visible inter-granular porosity, and is highly permeable (at least in part, locally).

A modest but definite show of C1 (methane) natural gas was registered on the gas chromatograph whilst drilling. This gas showmaximised at slightly over 100ppm at 242 metres and disappeared when the drill finished at 257 metres. The thickness of thetotal Warina Sand, with gas show, was around 17 metres. With the exception of a trace of coal found at 215 metres, no othervalid hydrocarbon shows were detected in the Sea Lake 1 Well. Also, no oil staining, free oil or odour was present, and nofluorescence was detected.

ConclusionsFrom the drill program at Sea Lake 1 Well the following conclusions were drawn:

• Drilling at Sea Lake 1 Well intersected a hydrocarbon zone containing C1 (methane) natural gas at a shallower depth (240metres to 257 metres) than was anticipated.

• The presence of hydrocarbon in the form of methane in the Warina Sand (Reservoir) is highly significant.

• Seal required for hydrocarbon preservation is present in the form of Geera Clay, intersected at 70 metres in the Sea Lake 1Well. As per available information, the Geera Clay is ubiquitous in the area.

• Based on the evaluation of the Warina Sandstone characteristics, it was concluded (by Robert L Williams Jr.) that the WarinaSandstone is a high quality, developed reservoir in the Sea Lake Prospect area.

OutlookRobert L Williams Jr. provided the following comments on the prospect of finding a quality hydrocarbon reservoir in the area:

Further drilling in the area may prove even thicker sequences in the geologic time interval. The C1-methane "show" found at SeaLake 1 was, at best, a modest indicator of hydrocarbons within the system. The "show" never exceeded 200 part per millionwhich is not even 1 unit on the Geoservices Log scale. Measurable gas flows would not be expected from this interval and iftested would almost certainly be “TSTM" (too small to measure). However, the presence of methane in the Warina Sand ishighly significant and should not be dismissed or discounted.

The report on the drilling operations will be studied over the coming months and an appropriate future course of action will beplanned.



Other Tenements

Fairstar’s exploration activities for the Quarter in review were confined to those referred to in this report. However, the Company

can report that all other tenements remain in good standing and meet statutory requirements.

Proposed Work Program for Q3, 2008

For Q4, 2008 the following activities are planned:

• Study and discussion of proposed geophysical options for the Company’s tenements proposed by the Southern GeoscienceConsultants Pty Ltd

• Geological and regolith mapping and additional rock chip sampling at the company’s Lindsay Dam iron discovery (E28/1672)and environs

• Planning for a drilling programme for approximately 7,000m RC percussion drilling and 300m diamond drilling to testanticipated deep extensions of gold mineralisation at the Area 9, Halfway Hill and Jones Find prospects at the Kurnalpi-Randalls Gold Project. This drilling is aimed at extending the gold mineralisation in the area

• Data entry and validation of 2006–2008 drilling data

• Preparation of geological plans and sections

• Continue ground radiometric survey at the Mount Padbury Uranium Project area

• Review of data from other tenements

• Reconnaissance field visits

The information reported herein is based on information compiled by Mr Mahendra Pal who is a Fellow of the Australasian

Institution of Mining and Metallurgy, Australia and a Member of the Society of Geoscientists and Allied Technologists, India. Mr

Pal is an employee (Executive Director - Exploration & Technical) of Fairstar Resources and has sufficient experience relevant to

the style of mineralisation and deposit type under consideration, and to the activity which he is undertaking to qualify as a

Competent Person as defined in the 2004 Edition of the “Australian Code for the Reporting of Exploration Results, Mineral

Resources and Ore Reserves”. Mr. Pal consents to the inclusion of this report of the matters based on his observations in the form

and context in which it appears.

Yours faithfully

KEVIN J. ROBERTSONManaging Director

Fairstar Resources Limited

About Fairstar ResourcesFairstar Resources is a Perth-based multi-commodity exploration company which listed on the ASX in October 2006. TheCompany has project interests in Gold, Iron, base metals, Uranium and Oil and Gas.

It currently has four core projects; Kurnalpi-Randalls Gold Project in the Eastern Goldfields of Western Australia, Lindsay DamIron discovery at the Kurnalpi-Randalls project area, Mt Padbury Uranium Project near Meekatharra in the Murchison region ofWA, and a farm-in agreement with Knight Industries Pty Ltd in respect of an oil and gas project in the on-shore Murray Basin innorth west Victoria.

Documents

Quarterly Report - Fairstar Resources · This report covers Fairstar ... 4m @ 17.5g/t Au ... The Company named the discovery “Mahendra’s Find” The Company has a 100% interest