PROSPECT RESOURCES LIMITED — Capital/Financing Update 2010

Oct 26, 2010

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ZAMBIAN MANGANESE PROJECT UPDATE

Perth based explorer, Ethan Minerals Limited (ASX:ETH) is pleased to update the market on its Zambian manganese (Mn) operations.

HIGHLIGHTS

• Maiden manganese ore production

• Additional Projects acquired

• Discussions regarding an offtake agreement with a major Chinese steel manufacturer.

1. Manganese Ore sales

The Company will be sending a trial shipment of 1000 MT manganese ore this week, which will generate approximately USD $400,000. If the trial shipment is successful, a long term contract will be entered into for approximately 10 000 MT per month for a number of years.

2. Project Acquisition

The Company recently announced on October 22, the granting of additional leases of 2,000sq kms within the famous Zambian Copper Belt, as well as leases of 416 sq kms for manganese. The terms and conditions of the granting of these leases are set out in the most recent ASX announcement. Within the new manganese leases granted, is the Kampumba mine. The Company has reached an agreement with the local interests to acquire an 80% interest in this operating manganese mine. The remaining 20% will be a free carried interest to the local community. The cost of acquiring the 80% interest in the Kampumba mine is approximately USD $40,000 for environmental and community contributions, (of which USD $20,000 has already been paid). Plus the Zambian Mines Department fees, outlined in the 22[nd] October announcement, 2010. The 80% acquisition agreement is now in the final stages of formal documentation.

The Project is located in Central Zambia, approximately 80 kilometres east of Kabwe and is close to the Great North Road, the main artery for road transport infrastructure. The Kampumba Project has been in production for the past 50 years and is currently operating at a rate of approximately 650,000MT of manganese ore annually. The operation is an open cut mine with a run of grades which are typically above 50% and as high as 61% Mn (see later). There has been recent illegal mining activity, and these operators have been evicted from the site. The local interests will act as security and will also provide a labour force. Ethan has been informed the titles will be confirmed by the Zambian Mines Department on Friday, 29[th] October.

T: +61 8 9472 5502 F: +61 8 9362 2805 E: enquiries@ethanminerals.com.au

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

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Several occurrences of graphite and manganese are reported from the project area, notably the Kampumba manganese mine, with reported historical production of approximately 3 million MT of manganese ore grading above 50% Mn. The ore is closely associated with lenticular bodies of dolomite and dolomite limestone, which form part of the tightly folded schists of the Lower Division of the Basement Complex. The deposits are believed to have been formed through the oxidation of primary manganese-bearing minerals, which are found as veins cutting across the calcareous rock. The manganese orebodies occur over a distance of 2.5 kilometres along the top of the Kampumba Hills, and form a residual capping over strongly folded manganiferous dolomites, intercalated with schists, gneisses and quartzites. The manganese content of the ore varies from 38% to 61% Mn. The true thicknesses reach is a maximum of 30 metres. Reliable estimates of resources and reserves are not currently available. The Company will complete exploration to define JORC Compliant Resources at the Project.

3. Offtake Agreement

The Company has commenced discussions with a major Chinese steel producer to implement an offtake agreement; the intended term will be for a number of years. Ethan will target initial production of 10,000 MT of manganese ore per month, ramping up to a target of 50,000 MT per month in the future.

In describing these promising events for Ethan Minerals, Ken Fitzgerald, Executive Director, Ethan Minerals, said ,

“These developments represent a significant milestone and bodes well for Ethan’s future plans to commercialise the Company’s manganese operations. The takeover of an established operating manganese mine that is capable of producing 650,000 MT PA for a nominal sum should enable the Company to significantly expand its Zambian manganese production and generate income”.

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Figure-1, Photo of previous open pit at Kampumba Manganese mine.

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----- Start of picture text ----- Mkushi ProjectKampumba Mine----- End of picture text -----

Figure- 2 Map of Mkushi Project and Kampumba Mine

T: +61 8 9472 5502 F: +61 8 9362 2805 E: enquiries@ethanminerals.com.au

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

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Figure 3- Mukonchi area (Kampumba Mine)

Figure 4 - Mukonchi area

The information in this update pertaining to mineral resources and exploration results was compiled by Mr. M P Sullivan who is a Member of the Australasian Institute of Mining and Metallurgy. Mr. Sullivan is a consultant to Ethan Minerals Limited and has sufficient experience which is relevant to the style of mineralization and the type of deposit that is under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Sullivan consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

T: +61 8 9472 5502 F: +61 8 9362 2805 E: enquiries@ethanminerals.com.au

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

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For more information please visit www.ethanminerals.com.au

Or contact: Mr Ken Fitzgerald

Mr Rod North

Executive Director Ethan Minerals Limited Tel: +61 8 9472 5502 Mob: +61 (0)417 099 167

Managing Director Bourse Communications Pty Ltd Tel: +61 3 9510 8309 Mob: +61 (0)408 670 706

About Ethan Minerals Limited

Ethan Minerals Limited (“Ethan”) successfully listed fully oversubscribed on the ASX on 4[th] December, 2009 having raised over $5 million dollars. Ethan is an Australian-based exploration company focused on the successful discovery and development of quality base and precious metals deposits in Western Australia, focussing initially on its Northampton Project, north of Geraldton. The Company’s strategy is to develop its lead project, the Mary Springs Project, where a JORC Compliant Inferred Resource of 394,419 MT at 6.5% Pb has been quoted by Independent Consultants, MineMap. Ethan will also look to secure projects that have attractive project economics or prior exploration activity, offering a robust exploration model and are thereby essentially ’drill ready’. Utilising advanced exploration models, coupled with proven analytical and geophysical techniques Ethan will identify and delineate additional drill targets within the Northampton Project in an effort to develop new, commercial base metal projects. Ethan is currently targeting additional prospective opportunities for investment in Africa and Indonesia.

T: +61 8 9472 5502 F: +61 8 9362 2805 E: enquiries@ethanminerals.com.au

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329