PROSPECT RESOURCES LIMITED — Capital/Financing Update 2014

Aug 20, 2014

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Prospect Resources Limited

ABN

30 124 354 329

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to be issued Fully paid ordinary shares
• 2 Number of +securities issued or to be issued (if known) or maximum number which may be issued
• 3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

71,916,533 fully paid ordinary shares

71,916,533 fully paid ordinary shares

+ See chapter 19 for defined terms.

4	+securities rank equally inDo the+issueall respects from thedate+classwith anexistingof quoted+securities?	Yes
	+securities do notIf the additionalrank equally, please state:the date from which they dothe extenttowhichtheyparticipateforthenextdividend, (in the case of a trust,distribution)orinterestpaymentthe extent to whichthey do notrank equally, other than inrelation to the next dividend,distribution or interest payment
5	Issue price or consideration	1.5centspersharetoraise$1,078,748(equivalent to US$1,000,000)
6	Purpose of the issue(If issued as consideration for theacquisitionofassets,clearlyidentify those assets)	Placementtoanon-relatedsophisticatedinvestorasannouncedbytheCompanyon21August 2014.Funds raised will be used:1.for general working capital;2.to fund exploration of the Company'sZimbabwe gold assets; and3.to progress the litigationpreviouslyannouncedbytheCompanyon29November 13.
6a	+eligible entity thatIs the entity anhasobtainedsecurityholderapproval under rule 7.1A?If Yes, complete sections6b–+securities thein relation to thesubject of this Appendix 3B, andcomply with section 6i	Yes6h
6b	Thedatethesecurityholderresolution under rule 7.1A waspassed	29 November 2013
6c	+securitiesNumberofissuedwithout security holder approvalunder rule 7.1
6d	+securities issued withNumber ofsecurity holder approval under rule7.1A

+ See chapter 19 for defined terms.

• 6e Number of +securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)
• 6f Number of +securities issued under an exception in rule 7.2
• 6g If +securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.
• 6h If +securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
• 6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements
• 7 +Issue dates

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

71,916,533 fully paid ordinary shares (Resolution 7 passed at the Extraordinary General Meeting held on 14 May 2014)

See Annexure 1

14 August 2014

+ See chapter 19 for defined terms.

		Number	+Class
8	+classNumberandofall+securitiesquotedonASX+securities in(includingthesection2 if applicable)	680,509,820	Fullypaidordinaryshares
		Number	+Class
9	+classNumberandofall+securities not quoted on ASX+securities in(includingthesection2 if applicable)	134,500,000	Unlistedoptionsexpiring 30/06/2015

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests) N/A

Part 2 - Pro rata issue

11	Is securityholderapprovalrequired?
12	Is the issue renounceable or nonrenounceable?
13	+securities willRatio in which thebe offered
14	+Class of+securities to which theoffer relates
15	+Recorddatetodetermineentitlements
16	Will holdings on different registers(or subregisters) be aggregated forcalculating entitlements?
17	Policy for deciding entitlements inrelation to fractions

+ See chapter 19 for defined terms.

18	Names of countries in which theentity has security holderswho willnot be sent newofferdocuments
	Note: Security holders must be told how theirentitlements are to be dealt with.Cross reference: rule 7.7.
19	Closingdateforreceiptofacceptances or renunciations
20	Names of any underwriters
21	Amount of any underwriting fee orcommission
22	Names of any brokers to the issue
23	Fee or commission payable to thebroker to the issue
24	Amount of any handling fee payableto brokers who lodge acceptancesorrenunciationsonbehalfofsecurity holders
25	If the issue is contingent on securityholders' approval, the date of themeeting
26	Date entitlement and acceptanceform andoffer documentswill besent to persons entitled
27	If the entity has issued options, andthe terms entitle option holders toparticipate on exercise, the date onwhich notices will be sent to optionholders
28	Date rights trading will begin (ifapplicable)
29	Date rights trading will end (ifapplicable)
30	How do security holders sell theirentitlementsin fullthroughabroker?

+ See chapter 19 for defined terms.

31	How do security holders sellpartoftheir entitlements through a brokerand accept for the balance?
32	How do security holders dispose oftheir entitlements (except by salethrough a broker)?
33	+Issuedate

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of +securities (tick one)
• (a) +Securities described in Part 1
• (b) All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the + securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders
• 36 If the + securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

37 A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

38	+securities for whichNumber of+quotation is sought
39	+Class+securitiesofforwhichquotation is sought
40	+securities rank equally in allDo the+issuerespects from thedate with an+class of quoted+securities?existing
	+securities do notIf the additionalrank equally, please state:the date from which they dothe extenttowhichtheyparticipate for the next dividend,(inthecaseofatrust,distribution) or interest paymentthe extent to which they do notrankequally,otherthaninrelation to the next dividend,distribution or interest payment
41	Reason for request for quotationnow
	Example: In the case of restricted securities, end ofrestriction period
	(ifissueduponconversionof+security, clearly identifyanother+security)that other
		Number	+Class
42	+class of all+securitiesNumber andquotedonASX(includingthe

+securities in clause 38)

Number	+Class

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the +securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:

............................................................ Date: 21 August 2014

Company secretary

Print name: Andrew Whitten

+ See chapter 19 for defined terms.

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1–Issues exceeding 15% of capitalStep 1: Calculate "A", the base figure from which the placementcapacity is calculated
Addthe following:
+ordinary securities•Number of fully paidissued in that 12 month period under anexception in rule 7.2	95,000,000 (issued on 21 January 2014,ratified on 14 May 2014)
+ordinary securities•Number of fully paidissued in that 12 month period withshareholder approval	75,000,000 (issued on 26 May 2014)71,916,533(issued 14 August 2014)
+ordinary•Number of partly paidsecurities that became fully paid in that12 month period
Note:•Include only ordinary securities here–other classes of equity securities cannotbe added•Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
+ordinarySubtractthe number of fully paidsecurities cancelled during that 12 monthperiod	Nil
"A"	676,509,820

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
"A" by 0.15Multiply	101,476,473
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
+equity securities issuednumber ofInsertor agreed to be issued in that 12 monthperiodnot countingthose issued:	4,000,000 (issued on 24 July 2014)
•Under an exception in rule 7.2
•Under rule 7.1A
•With security holder approval under rule7.1 or rule 7.4
Note:•This applies to equity securities, unlessspecifically excluded–not just ordinarysecurities•Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
"C"	Nil
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15	101,476,473
Note: number must be same as shown inStep 2
Subtract"C"	4,000,000
Note: number must be same as shown inStep 3
Total["A" x 0.15]–"C"	97,476,473
	[Note: this is the remaining placementcapacity under rule 7.1]

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A–Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
"A"	676,509,820
Note: number must be same as shown inStep 1 of Part 1
Step 2: Calculate 10% of "A"
"D"	0.10
	Note: this value cannot be changed
Multiply"A" by 0.10	67,650,982
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
+equity securities issuedInsertnumber ofor agreed to be issued in that 12 monthperiod under rule 7.1A	Nil
Notes:•This applies to equity securities–notjust ordinary securities•Include here–if applicable–thesecurities thesubject of the Appendix3B to which this form is annexed•Do not include equity securities issuedunder rule 7.1 (they must be dealt within Part 1), or for which specific securityholder approval has been obtained•It may be useful to set out issues ofsecurities on different dates as separateline items
"E"	Nil

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remainingplacement capacity under rule 7.1A
"A" x 0.10	67,650,982
Note: number must be same as shown inStep 2
Subtract"E"	Nil
Note: number must be same as shown inStep 3
["A" x 0.10]–"E"Total	67,650,982
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.