PROSPECT RESOURCES LIMITED — Capital/Financing Update 2010

Aug 17, 2010

==> picture [594 x 101] intentionally omitted <==

----- Start of picture text ----- ASX Media Release18 August, 2010.----- End of picture text -----

ETHAN MINERALS PROJECT UPDATE ON ZAMBIAN BASED KAFWA MANGANESE PROJECT

The Directors of Perth based explorer, Ethan Minerals Limited (ASX: ETH) are pleased to provide a Project Update on the Zambian based, Kafwa Manganese Project.

HIGHLIGHTS

• Exploration work at Kafwa to date has focused on re-sampling the original +100 test pits. The depths of these pits range from 1-15 metres, with samples from 103 of the test pits being analysed. Two dominant styles of manganese mineralisation have been identified:

  • Massive subvertical, (fracture/fault hosted) veins which are commonly +100m in length, +1.5m in width and with unknown depth extents

  • Tabular sheets (sub parrallel to bedding) of massive to disseminated manganese mineralisation are also evident

• Based purely on the preliminary observations (mapping and test pit sampling) made within outcropping areas to date, there is likely to be an exploration potential of +0.5Mt manganese mineralisation within the Kafwa project area.

• Ethan Minerals is currently in the process of converting these manganese exploration leases into mining leases.

• Ethan Minerals is already in the process of developing previously identified outcrops of manganese, with negotiations underway to sell existing stockpiles.

In May 2010, Ethan Minerals announced it had signed a Joint Venture, via its wholly owned subsidiary Allegra Mining, with Zambian based company ‘Eagle Eye’ to develop a Zambian based manganese project. Under the terms of the JV, Allegra Mining would derive 70 per cent of net revenues existing in identified prospects and any future prospects offered by Eagle Eye to Allegra Mining.

Allegra Mining has now commenced exploration and development at the Kafwa Project and has constructed a 12 kilometre haul road linking the Project with the Great North Highway. The Allegra Mining Concession contains a number of potentially economic scale manganese deposits, some of the larger scale deposits are denoted in Figure-1. Mr Jazzman Chikwakwa is currently in the process of converting these manganese exploration leases into mining leases.

Figure-1, Google Image displaying ‘approximated’ tenement outline (pink), known manganese project areas (red stars) and the newly constructed haul road (yellow) linking the Kafwa project to the Great North Highway(red).

Exploration work at Kafwa to date has focused on re-sampling the +100 test pits dug by British Colonial Explorers in the 1950s. The depths of these pits range from 1-15 metres, with samples from 103 of the test pits currently being analysed in South Africa. A schematic location map of these pits, together with local geology is shown in Figure-3.

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

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

==> picture [594 x 101] intentionally omitted <==

----- Start of picture text ----- ASX Media Release18 August, 2010.----- End of picture text -----

Two dominant styles of manganese mineralisation have been identified within the Kafwa project area:

• Massive subvertical, (fracture/fault hosted) veins, which are commonly +100 metres in length, +1.5 metres in width and with unknown depth extents.

• Tabular sheets (sub parrallel to bedding) of massive to disseminated manganese mineralisation are also evident, this style of manganese mineralisation is possibly the result of manganese mineralisation being bled out into the country rocks from the primary veins into physically and chemically suitable conduit/host units.

Supergene enrichment is also likely to have played a key role in enhancing manganese grades in the area and would have been particularly effective in more porous deformed rocks in topographically amenable areas. Although mapping and sampling within the Kafwa area is ongoing, some preliminary trends and controls on the manganese mineralisation are being seen (Figure-3). In addition, the Kafwa area remains open, both along and across strike and also potentially at depth below the laterite profile. A large proportion of the area is also hidden below recent soils.

Combined with results from the Test Pit Sampling, ongoing mapping and sampling and the upcoming drill programs, there will be sufficient data to generate indicated and measured JORC compliant resource estimates and also open pitable mining reserves in the very near future. Based purely on the preliminary observations (mapping and test pit sampling) made within outcropping areas to date, there is likely to be an exploration potential of +0.5Mt manganese mineralisation within the Kafwa project area. The potential quality and grade is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the delineation of a Mineral Resources. At this stage the project area currently represents a potentially significant exploration target.

Ethan Minerals is already in the process of developing previously identified outcrops of manganese from the Kafwa Project. Negotiations are underway to sell existing stockpiles of manganese ore as shipments on a trial basis to prospective customers.

In commenting on these promising results, Ken Fitzgerald, Executive Director, Ethan Minerals, said,

“These preliminary observations indicate the potential for a considerable manganese deposit. Accordingly, Ethan Minerals will now concentrate on fast tracking an indicated and measured JORC compliant resource estimate for the Kafwa Project.”

“Ethan Minerals views the conversion of the manganese exploration leases into mining leases as a significant step forward for the Kafwa Project, as we see this Project develop beyond explorative status and into a serious mining and cash flow stage.”

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

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

==> picture [594 x 101] intentionally omitted <==

----- Start of picture text ----- ASX Media Release18 August, 2010.----- End of picture text -----

For more information please visit the Company website, www.ethanminerals.com.au

For more information contact:

Mr Ken Fitzgerald Mr Rod North Executive Director Managing Director Ethan Minerals Limited Bourse Communications Pty Ltd Tel: +61 8 9472 5502 Tel: +61 3 9510 8309 Mob: +61 (0)417 099 167 Mob: +61 (0)408 670 706

The information in this update that relates to the exploration results is based on information compiled by Mr. Seldon Mart who is a Member of the Australasian Institute of Mining and Metallurgy. Mr. Mart, an Executive Director of MineMap Pty. Ltd., has sufficient relevant experience in respect of the style of mineralization, the type of deposit under consideration and the activity being undertaken to qualify as a Competent Person within the definition of the 2004 Edition of the AusIMM’s “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Mart consents to the inclusion in this announcement of the matters that are based on this information in the form and context in which it appears.

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

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

==> picture [594 x 101] intentionally omitted <==

----- Start of picture text ----- ASX Media Release18 August, 2010.----- End of picture text -----

Figure-2 Google Image of Zambia and project location.

Figure-3, Kafwa Project showing test pit locations and generalised local geology.

Image-1, Examples of the two dominant styles of manganese mineralisation seen within the Kafwa project area subvertical vein style (red) and ‘tabular’ bedding parrallel mineralisation (blue).

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

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329

==> picture [594 x 101] intentionally omitted <==

----- Start of picture text ----- ASX Media Release18 August, 2010.----- End of picture text -----

==> picture [199 x 157] intentionally omitted <==

----- Start of picture text ----- Image-2, Haul road construction----- End of picture text -----

==> picture [199 x 157] intentionally omitted <==

----- Start of picture text ----- Image -4, Massive manganese veins----- End of picture text -----

==> picture [200 x 158] intentionally omitted <==

----- Start of picture text ----- Image -3, Small scale pit excavations atKafwa----- End of picture text -----

==> picture [111 x 9] intentionally omitted <==

----- Start of picture text ----- Image -5, Test pit re-sampling----- End of picture text -----

About Ethan Minerals Limited

Ethan Minerals Limited successfully listed fully oversubscribed on the ASX on the 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 145,000 tonnes at 11.5%Pb has been quoted by Independent Consultants, MineMap. Ethan will also look to secure projects that have attracted 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 has a MOU at the Kapuas alluvial gold project within the Gold Tiger Mining Concession Areas in Central Kalimantan, Indonesia. The project covers 125,000 hectares, with the areas indicating potentially significant exploration targets. Ethan also has a Joint Venture with a Zambian company, Eagle Eye Mining Zambia Limited, to develop potential manganese prospects in Zambia. The Joint Venture has already identified a prospect in the Mkushi district of Zambia.

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

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia

ETHAN MINERALS Limited ACN 124 354 329