PROSPECT RESOURCES LIMITED — Capital/Financing Update 2016

May 3, 2016

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)

117,695,663 fully paid ordinary shares

Fully paid ordinary shares

+ See chapter 19 for defined terms.

4	Do the +securities rank equallyin all respects from the +issuedate with an existing +classofquoted +securities?If the additional +securities do	Yes
	not rank equally, please state:the date from which they dothe extent to which theyparticipateforthenextdividend, (in the case of atrust,distribution)orinterest payment
	the extent to which they donot rank equally, other thaninrelationtothenextdividend,distributionorinterest payment
5	Issue price or consideration	Issue price of $0.005 per share.
6	Purpose of the issue(If issued as consideration forthe acquisition of assets, clearlyidentify those assets)	Pro-rata non-renounceable rights issue toprovide funds for:1.Workingcapitalbufferinanticipation of the commencementof gold production2.General working capital3.Expenses of the offer
		FurtherdetailsareprovidedintheEntitlement Issue Prospectus dated 5 April2016.
		As announced by the Company on 4 May2016,oversubscriptionsreceivedfromnon-related sophisticated investors underrights issue issued utilising the Company'sissue capacity under ASX Listing Rule 7.1.
6a	Is the entity an +eligible entitythathasobtainedsecurityholder approval under rule 7.1A?	Yes
	If Yes, complete sections 6b – 6hin relation to the +securities thesubject of this Appendix 3B, andcomply with section 6i

+ See chapter 19 for defined terms.

• 6b The date the security holder resolution under rule 7.1A was passed
• 6c Number of +securities issued without security holder approval under rule 7.1
• 6d Number of +securities issued with security holder approval under rule 7.1A
• 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

+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.

20 November 2015

14,537,898 fully paid ordinary shares

N/A

N/A

103,157,765 fully paid ordinary shares

N/A

N/A

See Annexure 1

4 May 2016

• See chapter 19 for defined terms.

7

Appendix 3B New issue announcement

		Number	+Class
8	+classNumberandofall+securitiesquotedonASX+securities(includingtheinsection 2 if applicable)	1,046,115,545	Fully paid ordinaryshares

		Number	+Class
9	+classNumberandofall+securities not quoted on ASX+securities(includingtheinsection 2 if applicable)	65,000,000	Unlisted andunvested options,each exercisable at0.5 cents per option,which vests whenthe 20 day VWAPof the Company'sshare price is 1 centor above, expires on14 December 2018

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

Part 2 - Pro rata issue

11	Issecurityholderapprovalrequired?	No
12	Is the issue renounceable or nonrenounceable?	Non-renounceable
13	Ratio in which the +securitieswill be offered	One (1) share for every nine (9) shares heldby eligible shareholders.
14	+Class of +securities to which theoffer relates	Fully paid ordinary shares
15	+Recorddatetodetermineentitlements	11 April 2016
16	Willholdingsondifferentregisters(orsubregisters)beaggregatedforcalculatingentitlements?	No

+ See chapter 19 for defined terms.

17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. Nil 19 Closing date for receipt of acceptances or renunciations 29 April 2016 20 Names of any underwriters DJ Carmichael Pty Ltd 21 Amount of any underwriting fee or commission 6% of the underwritten amount 22 Names of any brokers to the issue N/A 23 Fee or commission payable to the broker to the issue N/A 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders N/A 25 If the issue is contingent on security holders' approval, the date of the meeting N/A 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled 11 April 2016 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 7 April 2016 28 Date rights trading will begin (if applicable) N/A 29 Date rights trading will end (if applicable) N/A

Rounded up to the nearest whole number

04/03/2013 Appendix 3B Page 5

+ See chapter 19 for defined terms.

Appendix 3B New issue announcement

30	How do security holders selltheir entitlements in full through	N/A
	a broker?
31	How do security holders sell partof their entitlements through abrokerandacceptforthebalance?	N/A
32	How do security holders disposeof their entitlements (except bysale through a broker)?	N/A
33	+Issue date	4 May 2016

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

+ See chapter 19 for defined terms.

5,001 - 10,000 10,001 - 100,000 100,001 and over

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

Entities that have ticked box 34(b)

38	Number of +securities for which+quotation is sought
39	+Class of +securities for whichquotation is sought
40	Do the +securities rank equally inall respects from the +issue datewith an existing +class of quoted+securities?
	If the additional +securities do notrank equally, please state:the date from which they dotheextenttowhichtheyparticipateforthenextdividend, (in the case of atrust, distribution) or interestpaymentthe extent to which they donot rank equally, other than inrelation to the next dividend,distributionorinterestpayment
41	Reason for request for quotationnow
	Example: In the case of restricted securities, endof restriction period
	(if issued upon conversion ofanother +security, clearly identifythat other +security)

+ See chapter 19 for defined terms.

		Number	+Class
42	+classNumberandofall+securitiesquotedonASX(including the +securities in clause38)

+ 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.

4 May 2016 Sign here: ............................................................ Date: .........................

Company secretary

Andrew Whitten

Print name: .........................................................

• 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 capital
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
Insert number of fully paid +ordinarysecurities on issue 12 months before the+issue date or date of agreement to issue	687,424,820
Add the following:	163,365,062 (issued 21 September 2015)
Number of fully paid +ordinary securities•	35,755,000 (issued 14 December 2015)
issued in that 12 month period under anexception in rule 7.2	103,157,765 (issued 4 May 2016)
Number of fully paid +ordinary securities•issued in that 12 month period withshareholder approval
Number of partly paid +ordinary•securities 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
Subtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod	Nil
"A"	989,702,647

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15	148,455,397
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issued	1,875,000 (issued 12 January 2016)
or agreed to be issued in that 12 monthperiod not counting those issued:	40,000,000 (issued 21 March 2016)
•Under an exception in rule 7.2	14,537,898 (issued 4 May 2016)
•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"	56,412,898
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity underrule 7.1
"A" x 0.15	148,455,397
Note: number must be same as shown inStep 2
Subtract "C"	56,412,898
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"	92,042,499
	[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"	989,702,647
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	98,970,264
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
Insert number of +equity securities issuedor 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 the subject 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	98,970,264
Note: number must be same as shown inStep 2
Subtract "E"	Nil
Note: number must be same as shown inStep 3
Total ["A" x 0.10] – "E"	98,970,264
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.