PRAIRIE LITHIUM LIMITED — Capital/Financing Update 2012

Aug 28, 2012

ASX RELEASE 29 August 2012

MBILA RESOURCE UPGRADE

• 23% increase in gross resource at the Mbila Mining Right and Msebe Mining Right Application areas, to 154Mt from 124.7Mt
  • o Measured resource increase of 46% to 36Mt from 24Mt
• Technical team reviewing draft Competent Person's Report and updated Reserve Statement, finalisation expected in September 2012

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 announce an increase in the resource at the Mbila Project to 154Mt.

Resource details

As announced to the market in early July, the independent manager of the Mbila project, RSV Enco ("RSV"), has been overseeing the geological remodelling process and the anticipated resource increase following the infill drilling carried out in March this year. The infill drilling comprised 11 diamond drill holes totalling 1 870 meters and was completed to identify additional resources between the Mbila S Block and the Msebe Block.

The remodelling process, which also incorporated structural and geotechnical drilling, has resulted in a resource increase at Mbila (Table 1 below), and also a substantial increase in the confidence of the geological model.

Mbila Project: JORC Compliant Resource Estimate – Gross tonnes in situ (GTIS) Mt
	Previous GTIS Mt13 Dec 2011	Current GTIS Mt29 August 2012
Total measured coal resource	24.8	36.2
Total indicated coal resource	67.1	23.2
Total inferred coal resource	32.8	94.8
Total JORC-compliant coal resource	124.7	154.2

Table 1: Mbila JORC compliant resource estimate (Mbila Mining Right & Msebe Mining Right Application)

Corporate Office:

Level 8, 225 St Georges Terrace, Perth 6000,Western Australia Tel: +61 8 9486 4036 Email: info@zyllimited.com.au PO Box 7653, Cloisters Square, Perth 6850, Western Australia Fax: +61 8 9486 4799 Web: www.zyllimited.com.au

Figure 1: Location of the ECCA and Beaufort group formations, including the continuation of the coal seams between the S Block and Msebe Block.

CEO Ian Benning stated, "Identifying the continuation of the Beaufort coal seams combined with the results of the remodeling process, in particularly the 46% increase to the Measured resources, have further improved our knowledge of and confidence in the Mbila project. The continuation of the coal seam also demonstrates the potential upside of the area which we will further explore during Phase 2 of the infill drilling programme, planned for 2013".

Remodelling process

During the remodelling process RSV co-ordinated the conversion of the historical geological models from 2D to 3D providing a number of benefits to the company including; providing increased confidence in the resource, increased mine design accuracy, mine planning improvements and scheduling optimization.

As announced previously the remodelling process highlighted some surveying discrepancies in the historical borehole locations. RSV has resolved these discrepancies by undertaking a Lidar survey, a digital laser survey which builds a very accurate high resolution model of the terrain surface and the features present on it. All borehole data is now accurately captured on the digital datum line system and will allow for more reliable resource mapping and mine planning in the future.

"The Lidar surveying and 3D modeling process has been a huge benefit to ZYL and RSV. It has allowed our technical team, in conjunction with RSV, to progress with the mine design and optimization with full confidence", stated Benning.

The remodelling has been completed and approved by the ZYL technical team; the company does not expect any further delays to the BFS completion which is expected in October 2012.

Competent Persons Report

RSV has completed the draft Competent Persons Report (CPR) for the Mbila Project. Following the completion of the final mine design and resource modelling RSV will release the final CPR which will include an updated Reserves estimate.

ENDS

Contact:

Ian Benning, CEO, ZYL LIMITED

• T: +27 (0) 10 591 0634
• M: +27 (0) 83 702 8221
• E: ian.benning@zyllimited.co.za

Head Office - Perth Australia

• T: +61 (0) 8 9486 4036
• E: info@zyllimited.com.au

Media - Australia

Annette Ellis, Purple Communications

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

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.

Mbila product coal specifications – washed1
	Ecca Seam	Beaufort primary product	Beaufort secondary product
Yield %	64.3	51.2	17.3
Ash content %	9.7	14.9	22.0
Phosphorus %	0.008	0.012	-
Sulphur %	1.04	0.65	0.84
Inherent moisture %	2.1	1.1	1.0
Volatile matter %	5.1	5.8	5.5
Fixed carbon %	83.1	78.2	71.4
Gross calorific value MJ/kg	31.58	29.45	25.40

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 report that relates to exploration results and minerals resources is based on information compiled by Mr Peet Meyer, who is a consultant to the company. Mr Meyer, a member of the Geological Society of South Africa, a Recognised Overseas Professional Organisation, has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activities he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australian Code of Reporting of Exploration, Mineral Resources and Ore Reserves'. Mr Meyer consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

1 The updated Mbila product coal specifications will be reflected in the Bankable Feasibility Study to be released in October 2012