PROSPECT RESOURCES LIMITED — Capital/Financing Update 2011

Mar 16, 2011

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ASX/MEDIA RELEASE 17 MARCH 2011

ETHAN’S ZAMBIAN LEASES RESTRUCTURED

MANGANESE MINING COMMENCES AND WATERSHED SALES CONTRACT EXECUTED

Perth based explorer, Ethan Minerals Limited (ASX: ETH) (“Ethan”) or (“the Company”) seeks to clarify the reasoning for the recent voluntary trading halt and subsequent automatic suspension from trading and therefore provides the following information. Ethan is pleased to announce that its wholly owned subsidiary Allegra Mining Zambia Limited (“Allegra”) has entered into an agreement with Mr Jazzman Chikwakwa (“Jazzman”) of Zambia whereby Jazzman has agreed to sell all of his prospecting and mining rights and interests (“properties”) in the following areas in Zambia to Allegra.

HIGHLIGHTS

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• Ownership of Zambian Mn, gold/copper leases restructured

• Manganese (Mn) ore mining recommences

• Contract for Mn ore sale signed with Jinchuan Group of China

• Geological team active in Zambia.

ZAMBIAN LEASES

Ethan Minerals has now restructured its agreement of October 9, 2010 with Jazzman into a Joint Venture (JV) where upon, Ethan will obtain:

1. 15 small mining and prospecting leases/licences in the Mkushi areas

2. General Kampumba area under PLLS 131

3. Mansa areas.

The maps outlining the location of these leases and a list of the leases are located on the following pages of this announcement. Under the restructured Jazzman agreement, all leases held by him or his interests will ultimately be transferred to Ethan’s wholly owned subsidiary, Allegra Mining Zambia Limited (“Allegra”). This is anticipated to occur over the next few weeks.

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Lease HQ-LPL-8453

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----- Start of picture text ----- Lease 1456-HQ-SPP Lease PLLS-131----- End of picture text -----

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In return for these properties, Ethan will pay to Jazzman a total of $5 million USD as follows:

$1,500,000 payable within 4 to 6 weeks of signing the agreement

$1,000,000 payable within 6 months thereafter

• $2,500,000 payable within 12 months thereafter.

In addition to the above monies, Ethan will issue 1,000,000 fully paid ordinary shares in Ethan (subject to shareholder approval) to Jazzman within 6 to 8 weeks of the agreement, and 25% of the issued capital in Allegra to Jazzman.

The agreement supercedes the previous agreement entered into with Jazzman on 9th October 2010 which allowed for a payment of $400,000 USD, a motor vehicle and a royalty of $30/tonne for each tonne of Manganese produced and weighed at the production point.

In addition, the current agreement covers an additional 6 leases/licences in Mkushi to those described in the announcement of 16 February 2011 as well as the Kampumba and Mansa areas which were not included in the superceded agreement.

Under the terms of the Joint Venture, Ethan has substantially increased its ground holding by more than 700km[2 ] in the areas, listed in Table 1. The tenements are a mix of prospecting and mining leases. The Projects and their areas are summarised in Table 1.

Project	Area(km2)
Kafwa	360
Mkushi West	129
Kampumba	230
Mansa	2
Total	721

The Directors are pleased with this outcome as the non ownership of Mansa 2 leases and areas of interest was proving to be an impediment to negotiations to raise a loan or equity capital with which to develop the Total 721 interests and progress mining from simple labour intensive extraction Table 1, Ethan’s Zambian Project Areas to a more mechanised mining operation.

Ken Fitzgerald will be working in Zambia for the next 6 months, working closely with Jazzman, who was recently appointed as the Deputy Minister of Mines in Zambia and is specifically in charge of large mining leases. Ken Fitzgerald recently met with the President of Zambia, Mr Rupiah Banda and other senior members of the Zambian Government. Jazzman has also signed a service agreement with Allegra, to implement the development of these mining operations.

A General Meeting of Shareholders will be required to approve the allotment of the shares referred to above.

Image 1, Ken meeting with Zambian Government Image 2, Ken meeting with Zambian President Mr Rupiah Banda

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MN MINING AND IMMEDIATE SALES OF MN ORE

The transfer of the Jazzman leases will enable Ethan/Allegra to immediately commence manual mining and subsequently generate a positive cash flow for Ethan. Allegra has commenced manual mining at a current rate of approximately 6,000 Mt per month. It may be possible to expand production to 20,000 Mt per month by using additional available labour. It is Ethan’s intention to seek trade finance to enable it to purchase mining equipment to allow an increase in future production of Mn.

A contract for the immediate sale of 6,000 MT of Mn has been signed with South Africa Jin Chuan Resources (Pty) Ltd; a wholly owned subsidiary of China based Jinchuan Group Ltd. This is one of the largest non-ferrous producers in the world with a turnover of approximately $14 Billion, (www.jnmc.com). The 6,000 Mt has been sold from an accumulated stockpile. It is intended that as Mn is mined/produced similar sales to organizations will be made on a weekly basis. The sales are at “mine gate” so that Ethan does not have to fund working capital for transport etconly the nominal cost of the manual mining.

ONGOING GEOLOGICAL WORK

The Company’s geological team is continuing geological mapping and sampling of the outcrops of manganese ore on the Projects.

On completion of this work, a program of shallow drilling will be completed to establish a JORC compliant resource estimate of the manganese ore.

REASON FOR RECENT SUSPENSION OF TRADING IN ETHAN’S SHARES

Ethan was concerned that whilst there was a degree of uncertainty regarding the finalisation of the acquisition of the leases that the investment community could not be properly informed in relation to Ethan’s position in Zambia. This resulted in the Company requesting voluntary trading halt and subsequent automatic suspension from trading until the acquisition could be finalised. Ethan believes that this announcement provides the necessary information to enable Ethan to apply to the ASX to re commence trading in the Company’s shares.

In commenting on the recent events leading up to this announcement, Ken Fitzgerald, Executive Director, Ethan Minerals, said,

“Ethan is pleased to have finally resolved the issues surrounding the structure of the Zambian leases and to report to the market the watershed sales contract with the Jinchuan Group. We look forward to formally recommencing trading on the ASX.”

Or 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

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Image 3, Map of Ethan’s Project Areas, Zambia

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Image 4, Kafwa Project Location Map

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Image 5, Location Map of Concession Area

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Image 6, Mineral Export Permit

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

About Jinchuan Group

Jinchuan Group is the fourth biggest producer of Nickel, second biggest producer of Cobalt in the world and the largest producer of Copper in North China. Further details are available from www.jnme.com.