Mr. Frank Oakes reports

STELLAR BIOTECHNOLOGIES ADOPTS NEW SHAREHOLDER RIGHTS PLAN

Stellar Biotechnologies Inc. has adopted a new shareholder rights plan, which will become effective on Feb. 14, 2014, concurrent with the termination of the current shareholder rights plan of Stellar.

The company adopted both the original rights plan and the new rights plan to ensure, to the extent possible: (i) that all shareholders are treated fairly in connection with any takeover offer for the company, and (ii) in the event of an unsolicited bid, to ensure that the board of directors is provided with a sufficient period of time to evaluate unsolicited takeover bids and to explore and develop alternatives to maximize shareholder value. Under the terms of the new rights plan, one right will be issued by the company for each outstanding common share at the close of business on Feb. 14, 2014, and for each common share issued in the future (subject to the terms of the new rights plan). The rights issued under the new rights plan become exercisable only if an offeror acquires or announces its intention to acquire 20 per cent or more of the common shares of the company without complying with the permitted bid provisions of the new rights plan or without the approval of the board.

Permitted bids must be made to all holders of common shares of Stellar by way of a takeover bid circular prepared in compliance with applicable securities laws and, among other things, must be open for acceptance for a minimum of 60 days. If, at the end of 60 days, at least 50 per cent of the outstanding common shares other than those owned by the offeror and certain related parties have been tendered and not withdrawn, the bidder may take up and pay for the shares but must extend the bid for a further 10 days to allow other shareholders to tender to the bid.

If a takeover bid does not meet the permitted bid requirements of the new rights plan, the rights will entitle Stellar shareholders, excluding the shareholder or shareholders making the takeover bid, to purchase additional common shares of the company at a substantial discount to the market price of the common shares at that time.

The new rights plan is similar to the type of rights plans adopted by other Canadian incorporated public companies and is substantially similar to the current shareholder rights plan. The new rights plan is not being adopted in response to any actual or threatened takeover bid or other proposal from a third party to acquire control of the company. Stellar expects to seek shareholder approval and ratification of the new rights plan at its coming annual general and special meeting of shareholders to be held on Feb. 13, 2014. If the new rights plan is not ratified at the meeting, the new rights plan and all rights issued thereunder will terminate.

A copy of the new rights plan is available under Stellar's profile on SEDAR.

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