PROSPECT RESOURCES LIMITED — Capital/Financing Update 2016

Apr 6, 2016

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7 April 2016

Dear Optionholder

PROSPECT RESOURCES LIMITED - PRO-RATA NON-RENOUNCEABLE RIGHTS ISSUE

Prospect Resources Limited (ACN (124 354 329)) ( PSC or Company ) is undertaking a 1:9 pro rata non-renounceable rights issue ( Rights Issue or Offer ) of approximately 103,157,765 fully paid ordinary shares ( New Share ) to raise approximately $515,789. The price of New Shares under the Offer is $0.005 each ( Issue Price ). The Company lodged a prospectus for the Offer ( Prospectus ) with ASIC and ASX on 5 April 2016.

The Offer is fully underwritten by DJ Carmichael Pty Limited ( Underwriter ). The Company must pay the Underwriter an underwriting fee of 6% of the total amount raised pursuant to the Offer. The Company must also reimburse the Underwriter for costs incidental to the Offer.

The Company’s proposed use of funds raised under the Offer is as follows:

Item	Proceeds of the Offer	FullSubscription($)	%
1.	Workingcapitalbufferinanticipationofthecommencementofgoldproduction	320,000	44.8%
2.	Expenses of the Offer	50,000	7.0%
3.	General working capital	345,000	48.2%
	Total	715,000	100%

The Offer is being made to all shareholders of the Company ( Shareholders ) named on its register of members at 5:00pm (WST) on 11 April 2016, whose registered address is in Australia or New Zealand.

New Shares will rank equally with all fully paid ordinary shares in the capital of the Company ( Shares ) already on issue.

Following completion of the Offer, the Company will have issued approximately 103,157,765 New Shares resulting in total Shares on issue of approximately 1,031,577,647.

Prospect Resources Limited | ACN 124 354 329 Suite 6, 245 Churchill Ave. Subiaco WA 6008 | Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006 Website: prospectresources.com.au | Email: info@prospectresources.com.au

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3848-04/1456829_1

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Optionholders

The terms and conditions of the options you currently hold do not entitle you to exercise your options until certain price milestones have been met. You will not be able to participate in the Rights Issue unless this milestone is satisfied and you exercise your options in time for new shares to be allotted and to be entered on the Company’s register of members on or before 5:00pm (WST) on 11 April 2016 ( Record Date ).

Subject to satisfaction of the milestone, to exercise your options and thereby participate in the Rights Issue, you will need to deliver the following to the Company at Suite 6, 245 Churchill Street, Subiaco WA 6008:

• (a) A notice of exercise of options (attached to this letter);

• (b) An option certificate (where the options are certificated) or a copy of a holding statement (where the options are uncertificated) in respect of those options to be exercised; and

• (c) Payment for the exercise price in respect of those options to be exercised by way of a cheque made payable to “Prospect Resources Limited – Entitlement Issue Account”.

To ensure that your new shares are allotted prior to the Record Date, the above must be received by Prospect Resources Limited no later than 5:00pm (WST) on 8 April 2016. If received after this date, allotment of new shares prior to the Record Date cannot be assured.

Before deciding whether to exercise any or all of your options, you should read the Prospectus in its entirety.

This notice is important and requires immediate attention. If you have any queries concerning the Rights Issue, please contact your financial adviser or Chris Hilbrands on +61 8 9217 3300.

Yours sincerely

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Hugh Warner Executive Chairman

Prospect Resources Limited | ACN 124 354 329 Suite 6, 245 Churchill Ave. Subiaco WA 6008 | Phone: +61 8 9217 3300 | Fax: +61 8 9388 3006 Website: prospectresources.com.au | Email: info@prospectresources.com.au

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