PRAIRIE LITHIUM LIMITED — Board/Management Information 2012

Jul 1, 2012

ASX RELEASE 2 nd July 2012

MBILA UPDATE

DRILLING AND BFS

• Phase one of the infill drilling programme has been completed
  • o identifies a continuation of the coal seams between the known S Block and Msebe Block deposits
  • o anticipated to increase the Mbila project's resource
• Structural and geotechnical drilling programmes have been completed
  • o provided improved definition of the geotechnical structures and increased confidence in the resource model
  • o may allow for a more economical mine design
• 3D modelling of the Mbila resource and its structure is being conducted
  • o previous resource modelling was 2D (2-dimensional)
  • o includes a review of all the historical data
• Updated Competent Persons Report ("CPR") and resource statement is due by end of August 2012
• The BFS is being reviewed to incorporate the results of the drilling programmes and the 3D modelling which has resulted in a delay to its formal completion until Q3 2012
  • o all other components of the BFS are continuing as planned
  • o the overall project development plan remains on schedule

ZYL Limited ("ZYL" or the "Company") (ASX: ZYL), the Perth-based emerging anthracite producer with key projects in development in South Africa, is pleased to provide the market with an update regarding its Mbila project located in Kwa-Zulu Natal province, South Africa.

Phase one of the infill drilling programme and the structural and geotechnical programmes announced 2 March 2012 have been completed. The infill drilling between the Mbila project's S-Block and the Msebe Mining Right Application area has identified a continuation of the coal seams between these two known deposits, whilst the structural and geotechnical drilling programme has increased the confidence in the Mbila resource. The first of two batches of laboratory analysis have

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been received and the results are currently being evaluated, the second batch of analysis is imminent.

ZYL has supplemented the existing 2D resource modelling at the Mbila project by undertaking a 3D modelling process. This modelling is based on both the data received when ZYL purchased the Mbila asset and the results of the recent drilling programmes. The process has highlighted some surveying discrepancies in the historical data which is being resolved in the new resource model. This data is being reviewed by the Bankable Feasibility Study ("BFS") manager, RSV Enco, for inclusion in the BFS.

Infill drilling

Recent infill drilling between the Mbila project's S-Block and the Msebe Mining Right Application area has identified a continuation of the coal seams between these two known deposits (see figure 1 below).

Figure 1. Recent infill drilling between S Block and Msebe Block

Phase one of the infill drilling programme comprising of 11 diamond drill holes totalling 1,870 metres, to identify additional resources between Mbila S Block and the adjacent Msebe exploration permit area (see figure 1 above), was completed in June. The drilling targeted the B3 seam of the Beaufort group; the first batch of results indicates a yield of 65 – 70% at 15% ash with an average seam thickness of 3.02 metres. The second batch of results is imminent and the planning of phase two of the infill drilling programme will begin once all results are received.

CEO Ian Benning said, "We are seeking to clarify the exact quantum of the likely Mbila resource upgrade which has the potential to be material".

Figure 2. Mbila Mining Permit with identified Mineralisation Blocks and Msebe Prospecting Permit Area

Structural and geotechnical drilling

Two structural definition drilling programmes consisting of 44 percussion drill holes totalling 2,999 metres were completed on the G and A Block during March. The programmes were undertaken to enhance the structural knowledge of the reserve and enhance confidence in the mine design.

The geotechnical drilling programme at S Block was completed during April and comprised of 13 diamond drill holes totalling 1,409 metres. This programme was designed to investigate the possibility of mining the B1 seam, in addition to the B3 seam, of the Beaufort series. If determined to be a viable option this would allow for an increase in the ROM tonnes available within the S Block. The final results of the geotechnical test work will be integrated into the final mine design.

These latest drilling programmes have improved the definition of the geological structures and confidence in the resource model.

3D modelling

RSV Enco is undertaking the 3D modelling of the Mbila resource which is expected to be completed at the end of July. This process has highlighted some discrepancies in the surveying of historical borehole collars which happened prior to ZYL's interest in the project and occurred when the historical data was transferred from the previous manual Cape grid system to modern WGS84 digital grid system. RSV Enco has completed a resurveying program of these holes and this information is being incorporated into the new resource model.

The 3D model will provide significantly more confidence in the interpretation of the geology and the resource model which will allow for better accuracy in the mine design, which in turn will provide a better platform for mine planning and optimisation.

Figure 3 (below) shows a schematic section of the thick Beaufort coal seams in the S-Block. It has been established that these seams continue into the area where the infill programme has been conducted.

Figure 3. Typical schematic section through the Beaufort coal seams

BFS update

The results of the various drilling programmes and the 3D modelling are currently being incorporated into the updated Competent Persons Report (CPR), resource model and mine design by RSV Enco. The CPR is the last component for the finalisation of the BFS. All other aspects of the BFS are on schedule or have been completed.

Despite updating the CPR causing a delay in the signoff of the BFS the date of first production remains on schedule, subject to the outstanding project permitting being granted as previously announced.

CEO Ian Benning said, "We are extremely pleased with the work being undertaken by RSV Enco and the detailed review and analysis of the resource model, together with the extension to the Prospecting permit. While we are disappointed with the delay, we believe when the BFS is completed and the resource analysis incorporated, the study will allow for the company to proceed with project financing."

"Consumers are already aware of the cost savings in using anthracite rather than metallurgical coke as anthracite does not require a coke battery, saving them approximately US$140/t. In addition to Mbila's convenient location in relation to end users and rail infrastructure, the potential cost-saving benefits to end users has attracted EOIs some 400% in excess of Mbila's planned saleable production under the current BFS scope."

Board changes

With immediate effect, Mr Bevan Tarratt will step down as Executive Chairman to take on the role of Executive Director. Mr Glenn Whiddon has accepted the role of Non-Executive Chairman. The board would like to thank Mr Tarratt for his contribution as chairman.

New website

The Company also wishes to inform shareholders that it has a new website with increased usability; the link to the website is http://www.zyllimited.com.au/.

ENDS

Contact:

Ian Benning, CEO, ZYL LIMITED T: +27 (0) 87 350 2751 M: +27 (0) 83 702 8221 E: ian.benning@zyllimited.co.za Phillipe Lalieu, Commercial Director, ZYL Limited

• T: +27 (0) 11 245 9800
• M: +27 (0) 83 455 6867
• E: plalieu@zyllimited.co.za

Media - Australia

Annette Ellis, Purple Communications

• T: +61 (0) 8 6314 6300
• M: +61 (0) 458 200 039
• E: aellis@purplecom.com.au

Media - South Africa Pam Wolstenholme, Russell and Associates

• T: +27 (0) 11 880 3924
• E: pam@rair.co.za

About ZYL Limited

ZYL Limited is listed on the Australian Securities Exchange (ASX) and aims to become one of the world's leading anthracite coal producers. The mission of ZYL is to develop high-margin metallurgical coal deposits for domestic and export markets. Flagship projects are the Mbila and Kangwane projects in South Africa, located close to rail, port, power and water infrastructure.

Important information

The information in this announcement is an overview and does not contain all information necessary to make an investment decision. To the extent permitted by law, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this announcement, any of which may change without notice. This document is not a prospectus, disclosure document or offering document under Australian law or under any other law. It does not constitute an offer or invitation to apply for securities. It is for information purposes only. This announcement is not an offer of securities for subscription or sale in the United States or any other jurisdiction in which such an offer or solicitation is not authorised or to any other person to whom it is unlawful to make such an offer or solicitation. Some of the information contained in this announcement constitutes forward-looking statements that are subject to various risks and uncertainties, not all of which may be disclosed. These statements discuss future objectives or expectations concerning results of operations or financial condition or provide other forward-looking information. Prospective investors should make their own independent evaluation of an investment in the securities. The material contained in this document does not take into account the investment objectives, financial situation or particular needs of any particular investor. No recommendation to investors regarding the suitability of the securities has been made and the recipient must make its own assessment and/or seek independent advice on financial, legal, tax and other matters, including the merits and risk involved. This announcement and its contents have been distributed to you, in confidence, solely for your information and may not be retransmitted or otherwise reproduced or disclosed to third parties or made public in any way, in whole or in part, for any purpose without written permission.

Competent Persons Report

"Information in this presentation that relates to exploration results, minerals resources or ore reserves is based on information compiled by: Mr Dawie van Wyk in respect of Kangwane Central and Kangwane South; and Mr Petrus Meyer in respect of Kangwane Central; and Mrs Liz de Klerk in respect of Mbila. Messrs van Wyk and Meyer and Mrs de Klerk are consultants to the Company. Mr van Wyk is a member and fellow of the Geological Society of South Africa and South African Council for Natural Scientific Professions, a Recognised Overseas Professional Organisation. Mr Meyer is a member of the Geological Society of South Africa. Mrs de Klerk is a member and on the council of the Geological Society of South Africa. Messrs van Wyk, Meyer and Mrs de Klerk have sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activities they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the 'Australian Code of Reporting of Exploration, Mineral Resources and Ore Reserves'. Messrs van Wyk and Meyer and Mrs de Klerk consent to the inclusion in this presentation of the matters based on their information in the form and context in which it appears."