PROSPECT RESOURCES LIMITED — Capital/Financing Update 2016

Apr 6, 2016

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7 April 2016

Dear Shareholder

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

Prospect Resources Limited (ACN (124 354 329)) ( PSC ) is undertaking a 1:9 pro rata nonrenounceable 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.

A copy of the Prospectus is available on ASX’s and PSC’s website. Eligible Shareholders will be mailed a Prospectus together with an Entitlement and Acceptance Form no later than 13 April 2016. Your entitlement will be set out on the personalised Entitlement and Acceptance Form accompanying the Prospectus.

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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For the purposes of calculating each Eligible Shareholders’ entitlement, fractions of entitlements have been rounded up to the nearest whole number of New Shares.

Actions required of Eligible Shareholders

There are a number of actions Eligible Shareholders may take:

• You may wish to accept all of your rights to subscribe for New Shares pursuant to the Prospectus ( Entitlement ). To take up all or some of your Entitlements you will need to ensure your application money for the Entitlements you wish to take up is received by Security Transfer Registrars Pty Ltd ( Share Registry ) by no later than 5:00pm (WST) on 22 April 2016, by completing and returning your Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the amount indicated on the Entitlement and Acceptance Form OR making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form.

• You may wish to accept part of your Entitlement. To take up part of your Entitlement you will need to ensure your application money for the Entitlements you wish to take up is received by the Share Registry by no later than 5:00pm (WST) on 22 April 2016, by completing and returning your Entitlement and Acceptance Form by filling in the number of New Shares you wish to accept in the space provided on the Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the appropriate application monies OR making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form (at $0.005 per New Share).

• You may wish to apply for New Shares above your entitlement under the Shortfall Offer ( Shortfall Shares ). You may apply for Shortfall Shares by completing the prescribed area on the Entitlement and Acceptance Form. Whilst the Directors will endeavour to give you priority under the Shortfall Offer, the Shortfall to the Offer is to be issued at the absolute discretion of the Directors and as such there is no guarantee that any Shortfall Shares applied for will be issued to you.

• You may do nothing. If you choose to do nothing with your Entitlements, while you will continue to hold the same number of Shares, your interest in the Company will be diluted and you will receive no value for your Entitlement.

Key dates for the Offer

	Event	Proposed Date
	Prospectus and Appendix 3B lodged with ASX	5 April 2016
	Notice of Rights Issue sent to security holders	7 April 2016
	Existing shares quoted on an ‘ex’ basis	8 April 2016
	Record date	11 April 2016
	Despatch of Rights Issue Documents to Eligible ShareholdersOffer Period Opens	13 April 2016
	Offer Period Closes	22 April 2016

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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Securities quoted on a deferred settlement basis.	26 April 2016
Notification of under-subscriptions to ASX (if any)	28 April 2016
Shares IssuedHolding statements despatched	2 May 2016

If you have any queries concerning the Rights Issue, or the action you are required to take to subscribe for New Shares, 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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