PROSPECT RESOURCES LIMITED — Board/Management Information 2012

Jan 23, 2012

Ethan Minerals Limited

(Subject to Deed of Company Arrangement)

ACN 124 354 329

Suite 6, 245 Churchill Ave. Subiaco WA 6008 Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006

Shareholder Update

Dear Shareholder,

On 3 January 2012 Messrs Hugh Warner, Jonathan Pager and Michael Pollak were appointed as Directors of Ethan Minerals Limited ( Ethan or the Company ) and Mr Ken Fitzgerald and Ms Julie Glanville resigned as Directors of the Company. Mr Neil Hackett has also been appointed Company Secretary.

Your new Directors are the proponents of Pager Partners, who’s proposal to recapitalise the Company (the Proposal ) was approved by the Company’s creditors. A summary of the Proposal is set out as at Appendix 1.

A Deed of Company Arrangement ( DOCA ) has been executed and once all conditions of the DOCA are either met or waived, we believe the Company will be released from external administration, debt free and be in a position to seek reinstatement to trading on ASX.

The next stage in the recapitalisation of the Company is to receive shareholder approval to, amongst other things, raise $2,151,500 via the issue of new equity in the Company and ratify our appointment as Directors. A notice of meeting will be posted to shareholders in the coming days with a proposed meeting date of 28 February 2012.

Subject to shareholders passing all resolutions and following completion of the Proposal the proposed capital structure of the Company is summarised below:

Capital Structure	Shares	Unlisted Options
Completion of all the Resolutions	372,593,287	72,349,000

Following the payment of $950,000 for the benefit of the Ethan creditors and the costs of the Proposal, the Company will also have cash funds in excess of $1,000,000 for future exploration, project development and working capital.

Under the terms of the Proposal, the Company will retain its Australian mineral exploration licences and mining access agreements with owners of the Queen Victoria Crown Grants. It was suggested during the bidding process that interests in the Company’s Zambian ventures be retained by the Deed Administrators for the benefit of the Company’s creditors, and accordingly the Company’s subsidiary Allegra Mining Zambia Limited will be transferred to the Ethan Creditors Trust pursuant to the DOCA.

Ethan Minerals Limited

(Subject to Deed of Company Arrangement)

ACN 124 354 329 Suite 6, 245 Churchill Ave. Subiaco WA 6008 Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006

Once the Company is reinstated to trading on ASX, it is our intention to explore any opportunities or rights that Ethan may have in Zambia including leveraging the Company’s former relationships in an attempt to identify suitable manganese and other mineral opportunities. We do not intend, at this stage, to re-visit the Company’s former operations in Indonesia.

The Company also intends to continue to develop its Northampton mineral assets including the Company’s Mary Springs Project which hosts a JORC compliant Mineral Resource of contained lead as follows: Indicated 240,311t @ 6.6% Pb and Inferred 154,108t @ 6.2% Pb for a total of 394,419t @ 6.5% Pb. Of a particular interest to the current Directors will be to investigate the iron ore potential of the licences, as identified by the Company’s former consulting geologist.

An indicative timetable to complete the recapitalisation of the Company is outlined below.

Event	Date
Dispatch of the Notice and ExplanatoryStatement	27January2012
Shareholders Meeting	28 February2012
Notification to the ASX of the results of the Meeting	28 February2012
Lodgment of the Prospectus in relation to the CapitalRaising
	2 March 2012
Closingdate of the Capital Raising	March 2012
Reinstatement to officialquotation on the ASX	March 2012

Notes:

1. Dates are indicative only and may change without notice

2. There will be no trading in the Company’s Securities until the Company has been reinstated to official quotation.

Finally, we look forward to putting the problems of the Company’s past behind us, and working with all shareholders towards rebuilding shareholder value.

Yours faithfully Ethan Minerals Limited (Subject to Deed of Company Arrangement)

Hugh Warner Director

Ethan Minerals Limited

(Subject to Deed of Company Arrangement)

ACN 124 354 329

Suite 6, 245 Churchill Ave. Subiaco WA 6008 Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006

Appendix 1

1. A summary of the terms of the Pager Partners Proposal (Proposal)

The Proposal involves:

• (a) The Syndicate arranging for the injection of approximately $2,151,500 of cash into the Company in return for an issue of Shares in the Company representing an interest of approximately 77.83% of the total issued capital of the Company (as well as 60,000,000 Options) ( the Capital Raising ).

• (b) The retention of certain assets, including but not limited to its existing fully and partly owned Western Australian exploration licences and those licenses the subject of mining access agreements, within the Company to ensure it can continue its existing business.

• (c) The entry by the Company into a creditors trust deed for the purposes of satisfying approved Creditor claims ( the Creditors Trust ).

• (d) The Company making available any cash at bank, its rights in its sundry debtors, its claims against its Subsidiaries and shares in its Subsidiaries (as well as any other assets not purchased by the Syndicate) for the benefit of the Creditors of the Company pursuant to the terms of the DOCA.

• (e) The payment of $950,000 in cash to the Deed Administrators for the benefit of the Creditors Trust in return for the Company’s Creditors releasing all claims against the Company and participating as creditors of the Creditors Trust, with all other liabilities and obligations of the Company being compromised under the DOCA.

• (f) The Company will complete the Capital Raising by way of the following placements (which will be made pursuant to a prospectus):

  • (i) 100,000,000 Shares to be issued to the Syndicate (or its nominees) at an issue price of $0.0025 per First Placement Share to raise $250,000, and 60,000,000 Options to be granted to the Syndicate (or its nominees) at an issue price of $0.000025 per First Placement Option exercisable at $0.015 per First Placement Option on or before 30 June 2015 to raise $1,500.

  • (ii) A public placement of up to 190,000,000 Shares at an issue price of $0.01 per Second Placement Share to raise up to $1,900,000.

• (g) After payment of the $950,000 to the Creditors Trust and before the costs of the Proposal, the Company will have $1,201,500 in working capital.

• (h) All Options on issue in the Company, being 12,349,000 Unlisted Options, remain unchanged.

Ethan Minerals Limited

(Subject to Deed of Company Arrangement)

ACN 124 354 329

Suite 6, 245 Churchill Ave. Subiaco WA 6008 Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006

• (i) The Directors of the Company at the time of executing the DOCA (being, Mr Kenneth Fitzgerald and Ms Julie Glanville) having resigned and Messrs Hugh Warner, Jonathan Pager and Michael Pollak having been appointed to the Board as the new Directors of the Company (which occurred on 3 January 2012).

2. A summary of the conditions of the Proposal

The Proposal is also subject to the following general conditions:

• (a) The Company’s liabilities and long term commitments being released and compromised under the DOCA, with the DOCA being wholly effectuated and the appointment of the Deed Administrators terminating simultaneously with the payment of the cash consideration of $950,000 into the Creditors Trust.

• (b) The Creditors of the Company being bound by the DOCA and being required to prove in accordance with the terms of the DOCA and the Creditors Trust, with no creditor having the right to claim payment against the Company.

• (c) The Subsidiaries of the Company being excised from the Company and dealt with by the Deed Administrators in accordance with the DOCA.

• (d) The employment of all employees of the Company (if any), being terminated at no cost to the Company following effectuation of the DOCA.

• (e) During the term of the DOCA, any transfers of Shares and any alteration in the status of Shareholders or the issue of Shares being void, except so far as a Court otherwise orders.

• (f) The ASX providing written confirmation to the Company that it will lift the suspension on the trading of the Securities of the Company without the need to recomply with Chapters1 and 2 of the ASX Listing Rules.

• (g) If Shareholders do not approve the Resolutions contained in the Notice at the Meeting, the DOCA may terminate in which case the Company shall be placed in liquidation.