PROSPECT RESOURCES LIMITED — Capital/Financing Update 2017

Oct 17, 2017

ARCADIA TRIAL MINING SAMPLING DELIVERS AVERAGE GRADES OF 2.5% Li2O

Highlights:

• Exceptional results generated from grade control/channel sampling of the Main Pegmatite at Arcadia
  • Average grade of 2.51% Li2O from all samples, with a maximum grade of 4.69% Li2O
  • Average grade of 108ppm Ta2O5 from all samples, with a maximum grade of 520ppm Ta2O5
• Trial mining of Main Pegmatite at Arcadia now complete with over 260t of material being generated:
  • Additional 8t of material delivered to Johannesburg for additional DMS and flotation test work
• Offtake and project financing discussions continuing

Prospect Resources Ltd (ASX: PSC) (the "Company") is pleased to announce the results from its in pit grade control sampling program completed at the Arcadia Lithium Project in Zimbabwe. Trial Mining has now been completed with some 260t of Main Pegmatite being generated to supply additional material for ongoing metallurgical test work in Johannesburg, as well as to provide feed to the lithium carbonate pilot plant that has been established by the Company in Zimbabwe. The Company has also made good progress with a number of potential offtake investors as well as with financial investors, debt providers and EPC (Engineering, Procurement and Construction) companies.

Mr Hugh Warner (Chairman) was extremely encouraged by the results - "The results from the trial mining sampling are very significant in that it confirms Arcadia's pedigree as a significant high grade lithium deposit. The additional material mined will be utilised to further enhance our metallurgical recoveries work in parallel with providing feed for our inhouse lithium carbonate pilot plant in Zimbabwe.

I am also happy to say that we continue to make good progress on our various offtake and financing discussions.".

Trial Mining Sampling

Trial mining has focused on the western part of the existing Open Pit that exposes the Main Pegmatite at Arcadia (Figure 1). Approximately 260t of Main Pegmatite was generated from three 1.2m benches and following completion of the blast and cleaning of bench faces, 3 x 3kg samples were hand chipped along 1m channels at a 1m spacing along all the bench faces. An average grade of 2.51% Li2O was defined from all the samples taken, including:

• 13% greater than 4% Li2O
• 34% greater than 3% Li2O
• 56% greater than 2% Li2O
• A maximum grade of 4.69% Li2O

Figure 1 – Location of Trial Mining and Sampling over the Main Pegmatite

These results are considered significant in that these in situ average grades are considerably higher than the Mineral Resource estimate block model generated (please refer to Announcement 3 August 2017) that defines an average grade of 1.51% Li2O. As expected tantalum grades averaged 108ppm Ta2O5 with a maximum grade of 520ppm Ta2O5.

Suite 6, 245 Churchill Ave. Subiaco WA 6008 | Phone: +61 8 9217 3300 | Email: info@prospectresources.com.au

Metallurgical Test work

An additional 8t of Main Pegmatite has been submitted to FT Geolabs in Johannesburg for additional flotation testwork as well as to DMS suppliers for process optimisation. Remaining material will be used as feed to the Company's lithium carbonate pilot plant that has been established in Kwekwe, Zimbabwe.

For further information, please contact:

Hugh Warner	Harry Greaves
Prospect Resources	Prospect Resources
Executive Chairman	Executive Director
Ph: +61 413 621 652	Ph: +263 772 144 669

Competent Person's Statement

The information in this announcement that relates to Exploration Targets and Exploration Results, is based on information compiled by Mr Roger Tyler, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy and The South African Institute of Mining and Metallurgy. Mr Tyler is the Company's Chief Geologist. Mr Tyler has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Tyler consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

JORC Code, 2012 Edition – Table 1 report template

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteiar	JORCCodelantioexpan	Cotammenry
Salingmphniqtecues	Nad qlif sling(hals,dohipturtyt ce anuaoampegcunneranmcs,or•ificialisedindudad mlsiatrytanttootespecspecssreasuremenapproprheinelsdeinvigionh adoholetotttmraunresasucswngamma,dehadheldXRFins).Thelesholdtruts,tcsons,ornmeneseexampsubekelimiinghebrd mingf slingttattnon asoaeanoampIncludeferkeleivitotatottyreencemeasuresnensuresamprepresen•dheialibrionf alsttetttootemanapproprcaaonymeasuremenorsyssd.useAsfhedeinaionf minelisaionhaMaialhetsttertttt atertotpecomorare•PublicRet.porInhe'indudad' wkhabedohisldbetrytantcases wressrorsennewou•laivelyimle('reirclaiondrillingdbin1tttotarespegverse cuwasuseolesfrohichkglveisedduha3to30 gmsampmasprproceacrgewwu').forfireInhelanionbeired,ttassayor casesmore expamayrequh aheheisldhahainhelingtttt ssucsrerecoarsegosrenampwblemUnl cdiiesinelisaion(tttypros.usuaommoor mrapesegbminedules)disclosfdeiledinforionttatsuarnomawarranure omay	hediajduinghebulk slingiseimly300kgAArProttt,ttecaecrampexercapproxa•f mial wblasdfrohed ofheld piheinTtertettertt.oaasmwesn enomapurposedulforbulk mllurlk.fh ofheiaicaA4totertatest wtertwasprocemaegoreacblasdduheial,helydfacled.tstottertuseprocemanewexposeesweresampkgleshad chipdfrod vical chals;3 x31m1mttsampwerenpemspaceernnea•lls.lesllecdlf whh wforicainSainipicaicttertetrte,tvervamperecoone oassenwlveizingd ainginddiionllerleinedforferttotapuranssayaa smasamprereence,dlogingangfdferlsdudbyfhabublanksCeiieReMaia(CRM)AMIS oJotterrenceprocennesrg,•dfielddulicainsdinh slebah.%flbeing(5testetotctotaanpwereereacampoblanks,fielddulicadlabodulicahis wCRMs5%5%5%).Ttestotespanrarypas,dobyimlabshodekheleionll ablank adZtoottnewunrsamppreparaaswesn,CinsiondeinsionfroRMProRettrutterunrcmspecsources.,hed wi adi,TAMISCRMsAMIS0339 ;2.15%LAMIS0340 ;1.43%Luseere;,n•ll saleskeinCoimlabslaboinAZHatatrattotompwerenmpanynsporraryrare,•hehelveizedduhadhedisphedby30gttottcwreywerepurproceacrge annahabull saleslydbyllemierALSJoAi-eICPtottcournnesrg.mpereanasemenwufofouS61,llowingiddissluionOvlimilihiumlydby(ME-Mttstr acoeronanaseihodfouiddigionihfinishLOG63 m(ICP oAAS),ttter aceswr
Drillinghniqtecues	(Drillirclaion-hlehairtyttarpeegcore,reverse copenommerroauy•,,blasBakaic,)ddeils(diamiplet,tctatertraugerngsoneanegcoree,,,ffacdadbedehdiamdils,lingbihetantuttat otorsrpoone-sampr or,heheisiend adif sbyhahod,).tyttet mttcpe,wr coreorno,wee	N/A•
Drill sleamprecovery	Mhod of rdingd aingd chipleiesteecoranssesscore ansamprecover•d rld.tsanesassesseuMkeimiseled etatoeasuresnmasamprecoveryannsurex•ivefhelestatturtrepresennae osampWhehelaionhipisbeled gdetttstwr aresexeen samprecoveryanra•ferdhehelebiashadduialttotanr sampmayveoccurreepreenw	Chiplesbaddirelyinhefield.ttsampwereggec•helesheifflelidubsalesimfieldT3 s(tttosamperenrspprocempaprary•wu,ferf adulicad rle)imly3kgh.tetepaneencesampopproxaeacial slarlyhodlaionhiphabededMaterttecteeemsgemogenous,annoressen•bedddelfrohelabdulinizeRe2icatwtstteseengrasanassayegrasumpfrofdheilled cinheha3 slesholaionPtetttgenerammoreseampswa correo

Criiater	JORCCodelaniotexpan	Cotammenry
	los/ginffine/cial.tersaooarsema	ddedbiasfleshahichisided95%,10%,tt coverananunr reaosnwnoonsreial.terma
Loinggg	Whehed chipleshabelogicallydtr core ansampveengeoan•fhnicallylogdlevl odeiliatectotatot ategeogeaesupporpproprMinelReimioniningdiesd mlluricaltttutarasourceesamsaneg,diestusCo(Whehelogingisliiveiiveinttatttatturrgquaor quannae.reor•hal,)hohyteatctogcosn,cnneeprapThellenh ad pfhelevinionlogd.totattagtttertgnercene oreansecsge•	lefhehipheddinedinll plasicbaChipAttatsampocs werewasanresmags.•leshabelogicallylogd ainls,ihdadedin1mtterttasampveengeogevawrecorfordsheingdadized cdeSale wighistt utant,tutent,spreaemassos.mpemoreconrlihologiesinduionlionidaiond minelisaionttexturtruturtterttte,sce,raaaoxanra,,,ded.wererecorThekisdekedingProRe'dadtatottanorunnaccospecsourcess•wrrrdud picehich ainlineihinionlbeicedtttertt ptproceresanracs,wrewnaasracan,byheheidehahelevl ofdeilCoPe(CP).TCP cttentttttaoverseenmpersononsrsefd qlihekis aiaheMinelRetyttetotttanuaoworpproprsupporcurrenrasourceimionttesa
Sub-lingsamphniqtecuesd sleanampiontprepara	If chehedhehehalf oll ctt otterore,r cr sawn anr quarr aorewuw•,ketan.If nheheiffled,beled,lidttutart,tcon-corewr rsamproyspean•,heheleddrytt or sampwerwFoll slehelid aiafhetytturtytentr aamppesnae,quaanppropress o•,leionhniqttecsamppreparaueQulil pdudodforll sb-lingtytrotetagtoaconroceres apausampses•imiseivif slesttymarepresenoampxMkehahelingisivefheintatottttatteasuresnensuresamprepreseno•iial cllecd,includingforinslforfieldtutertetantssmaoceresudulica/sd-half slingtepeconampWheheleizeiaheinizefheialttetottterr sampss areapproprgrasoma•beingled.samp	boldebrokeinllerfraingledghaLartotsgeurs werensmagmenusasemmer•ffSalesliing3-sileliihhre3kglesbeingt utagtterttmpwerespsae rspwe,samp•,llecd pinl.ial winedinkpile.1mExctetertertatoccoervaessmaasrea sielddulicadud eh sle.F20testpwereproceveryamp•he3kglesheddilled90%,heimlabsT(75µ)Zttsampwerecrusanmpassma•-bolpdulicablanksd sdad mialdudbyLaPu(AMIS)totestanterrary.panraproce,ddel pkehelesl salesforinsiniica20 ntettstotwereernacsampone perormamp,fhheblanks,dadsdlabdulicahisdodeheTttantesteacosranpwasneunrisionf alified glogisiend ghnicianfroProt otectsupervoquaeor experceeomspecResources.
Quliftyaodataassaydanlabotorraytests	Thelid aiafheingdturtytentnae,quaanppropress oassayan•labodud adhehehehniqisidedtortttecraproceres usenrueconsreywial ol.ttotaparrFohyicalls,hadheldXRFinstootrotertruts,tc,r geopsspecmes,nmene•hedindeininghelyisincludinginstterterttrutparames usemanasmenked mdel,dingimlibrionfaclied adheirtttortmaanoreaescaass appn,deivaionttc.re,Naf qlil pdudod(dadsblanksturtytrotetane ouaconroceres apegsr•,,dulicallaboheks)dheheblelevlstestertorttapexnarayccanwr accepe,f a(ielack ofbias)d pisionhabeblished.taoccuracyanrecveenes	ll sleslydbyli-elemCS61OvlimiAIP(ME-M).tttsampwereanasemueneron•lihiumlydbyihod,ffouiddissluionll aLOG63 mAtttertwereanaseear acossaysford aALSVatwerepermencouver.fQQC a10%lerC&dulicalid.Ohe2FoARMtotetsttetranceonpresuwas perm•fielddulicadblank allfell wihinblelimiCRMs22testtatspanaccep,helushadeddd,labsleTionisALS aisiZimttconcccuracconsregooansamp•yionduble.ttapreparaprocereswereaccep

Criteiar	JORCCodelantioexpan	Cotammenry
ffVeiicaiontrolingdsampaningassay	Theificaionf sigificainionbyiheindedettterttt overonnsecserpennr•livel.tertanacompanpersonneyThefinndholestwseoeu•Doionf pimdadadudatatta,tatrytacumenorarenproceres,y•ificaionda(hyical ad elecic)ls.ttatortrotocversagepsnnproo,Discdjdatmttota.uss anyausenassay•	'ChiefGelogisiduingfhedrillingdProRett wtet otspecsourcesoasonsrmosan•leionheigificainiond glogical wlsoTtttertsamppre-preparasnnsecs aneoereaff.hoZimbabwGelogicalSutotaswneorvesyllhad ciesfdained ahelorionfficeAProReExptatattttropoarerespecsourceaos.•ll elecicdaideinlforhefficedekihbak-uAExc™trotat ottotnressemanosp,wcpsfe,ined ohad-driveindinAc™dabaindaloudtatatarensa saanancessseacrffsite.oingd adad elecicallyldshedLoExc™taturtrot,gganssaycapenonanespreaean•bslyimdinAc™dabattetotasuequenporancessse.ll ald ai pd olimidjdAL(5,000p)%,tstetste>ssayresureporspmanverpmasaus•heid ed ai2imilarly,dinLO%.STatottstesameunanxpressesassays arereporbud aO5O3din%.TaFe2t eteppm,xpressesassays wererepor2
fLoiontcaodaintatspo	Acd qlif sdlocdrillholes(llardtytotecuracyanuaourveys useacoan•),do-hleheinekingd ohelociontrettwnosurvesncs,mors anrasywdinMinelReimionttuserasourceesaSpificaionfheid sd.tttemecogrysuse•Qulid adefhicl.tytoptroaanquacyoograpcon•	heholeiincludinghed sledinhis eisedTt,ttertwpwesn enampxercweresurveye•,ingighfrodirahehyinheHTaDGPS sFuSuTttemtotusargeysmnrveys.pograp,jd30cingica1600GS.LeDPtert atogreaproecreawassurveyemaccuracyusaferbehabed oiPet stete.rmanenurveyreenceaconsveenerecn sll sudohedadd sbslyAinWGS84iUTM36S,ttumtrves wereneongranequen•yudC190daAR5tetotumconver
Daingtaspacdandisibuiontrt	DaingforingfExlorionReltattts.spacreporopasu•Whehehedaingddisibuionisfficienblishhetttatrtttotatrspacansues•f gfordelogical ad gdeinuiiaheMinelttytetgree oeonraconapproprraRedOrReimiondu()dttsourceaneserve esaproceresanflasiicaionlied.tcss appWheheleiinghabelied.ttr sampcompossenapp•	hals wled a1minls.Ctternneeresampva•
Orienionftatodaintalaionttorelogicalgeotrutursce	Wheheheienionf slinghievbiasd slingftttatroroampacesuneampo•ibledhehichhisisknideingtruturttenttotpossscesanexwown,consrhedeitttypospe.fIhelaionhipbehedrillingieniondheieniontttwttatttatreseenoranor•fkeinelised sisidedhaindud atruturtotrooymracesconsrevecef mlingbiashisholdbed ad rdiial.ttetersampsassesseneporau,	ld shallowdhwhodMineiseiping(10° n)itruturttttesteracesaresporespegmas•ihinbalhehalsledlarinlsTtta-ts.tterwmesacnneweresampareguvadicularhedip.hohheihoidebleTtotttart pttesperpenuggeegmacan swconsrainelogical adlesdeiaionhelogislaivelytotent gtttmranaser exravargeoyre,imle.sp
Salempitysecur	Thekeleitatoty.measuresnensuresampsecur•	leslacdinledbad mixinginimlSaMtot mt ampwerepeseagsprevenovemenna•dolesdhlesioniSainictte.tratepreparaasneon smperensporcompanvewwyiedbyiorhnicianheionlaboimlabs(Z)tectotttoaccompanasenpre-prepararary

Criteiar	OCCoJRdelantioexpan	Cotammenry
Auditsoriewrevs	Thelf adiiewf slinghniqddatststecta.resuonyauorrevs oampues an•	fTheMinelReimCP(MsGaleHa)DMS,isinullyttetrasource esanssenocona•ydiinglingdlogingicettausampangpracs.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criiater	JORCCodelaniotexpan	Cotammenry
Minelradtent aemennlandtenuretatuss	Tyfer/nbelociond ohipincludingtpe,reencenameumr,aanwners•ialissihhird piesh ajintsterttttagreemenormaues warsucsohipidingliesiveileinturtnettttterts,venesparrss,overrroanaesy,,hisical siildeionl pk ad eiroltortesttawrness or naaarnnvnmen,ingttses.Theifheheld aheimf ringlonih atyttentttttsecurouree oeporagnyw•knimdimbiningliceinhetstotatotetownpeenoanceoperaarea.	dialaimisheldbyixinvbeArH,ExaJVProRetmts,twtcacmeseneenspecsources•90%dlocl plChimbodz()Patneanaarrua.irol olandileissimdimificaf alNoEIAtattts.tteenvnmenrues orpeenceropprova•dbyheirolll ofheEnMaAgCo'stettattotgranvnmennagemenency,cover ampanylorioniviiestttexpaacld piihinlfarland –fallowffecivelydefunialfarOt wttt cruramecommercm.•,
Exloriontpadobyhetneoriestpar	Acknledgd aisal of elorionbyheiest atttowmennppraxpaor par•	fdshisicaldrillingdohreholesdrilledin1969TwTEXTtoo rounorwereneewere•ih sfrohelogicalfimbabwheifhehisicGeSuZttttttettowuppormorveyoe,asorihelogilable,dhelihologiesbsd aisihhaTt.tttent wtttpses areavaanoervereconsby'drillingProRetseenspecsourcesheif alea1ioulydrilledizedboholeshalsobeT0NQtesttsosprevssreveaen•defdhefld.hedeled rdsfhhabelosiiieinieTiis pButttatt.tnecororogrammeveenhekdoinhela190'sbydinededbyheGelogical7RaMtttetwornens,was recoroinibullein,heimfis rded.Su1989Ha18Mtstttetrveyrarewreanesaoecor
Gelogoy	f mDeilogical singd sleinelisaionttytttytpospe,geoeanora•	hedebef phodbalfheTiiseiint cttesteta-tstposomprs anumr oegmasmesao•ionihinheGrlArFoHaBeturttttot.cusrmawrareeensneheibelonhelibclasfhelemiTPeRaEttestottatett pttepegmagsus ore-enegma•delasdbelonhefamly.iLCT piit ctottteposs angegmaheilydelydbuicallyT(ttestotett strpegmaarepoormorazonenoymmeor•icallyd adhaheinlihiumbeinginels).Ttrtztasymmezonenvenoquarcoremaarmradolyld sduh sb-odd minaiiinaiinottatettette,aremnpeanpomenereucrypanrwu,bikiiddiiondissinadliis pGainels aIntate.ttetantatet.tz,aemresennguemrarequar,lkalifeldsd mite.aparsanuscovTheiike045° addip10°hehwttestrttottt.pegmasnanoes•rheiddledinheldiishehickinT5 –7mMattettttpegmaexposeansampop•iPette.gma
DrillholeInforiontma	f aforfAllinionialhededinghettertottantsummaryomamaunrso•lorionlincludingbulaionfhefollowinginforionttstatttexparesuaomaforllMaialdrillholestera:ingd nhingfhedrillholellarttteasanorocoo	N/A•

Criteiar	JORCCodelantioexpan	Cotammenry
	(levionRLRedudLel –levionbolevlintteaorceveeaaveseaeo)fhedrillholellartertmesocofdipd aimhheholettanozuodoholelenh adiniondehtterttwngnceppoholelenh.tgoffforfIhelusionhisinionisjiied ohebaishahettttttttexcomausns•inforionisMaial adhislusiondodefrotttertttratmanonexcesnocmfCohededinghehePehold clealyttantt,ttentnrsorepormperson sruulainhyhisishettexpwcase
Dataiontaggregahodstme	IningExlorionRelighinginghniqttts,ttecreporpasuweaveragues,•/o(fimdinimdeioninghightrutttmaumanr mumgrancasegcoxude)d cff gdellyMaial ad sholdbed.t-otertategrasanuras areusuanusWheinincholenhsfhigh gdetetertstettreaggregaceporporasrgora•fldlonlenhslowdelhedudtstts,tresuangergograresuprocereuseforh aionholdbed ad sical elesfttatetysucggregasusnomepxampoh aionholdbehoindeil.ttasucggregas suswnforf mTheiondingl eivalenluetttat vassumps useanyreporoeqasu•holdbelealyd.tatesucrs	N/A•
Relaionhiptsbetweeninelisaiontmraidhsdtwanintertceplenhstg	Thelaionhipicularlyiminheingftttantttseress areparporreporo•ExlorionReltts.pasuffIheheinelisaionih rhedrillholettrytttttotgeomeomraespecw•leiskniholdbed.tsturteangown,nae sureporIfiisknd olyhedoholelenhsd,hetttttetnoown annwngarereporre•ffec(holdbeleahis'doholelenh,tatemttottttrusacr seneegwngeuidh nkn').ttwoown	ll chals wled wihodelibebiasinlsdicularA1mtttetternneeresampuraavaperpen•hedip.tot
Diagrams	Apiad sion(ih sles)dbulaionftetttatproprmaps anecswcaans o•forfinholdbeincludedigiicadiscbeingtertstcepsanysnnoveryudTheholdincludebubelimidlaniewftet nttetoreporsesuoa pvo,drillholellarlociond aiaionl viewttetcoas anpproprsecas.	d ahedinhebodyfheMattactttps anreaorepor•
Balandceingtrepor	Wheheiveingf allExlorionRelistttstrecomprensreporopasuno•icable,iveingfbohlowdhigh gdettatttpracrepresenreporoanras/odidhsholdbeicedid misleadingingftttotanr wsupracavoreporoExlorionReltts.pasu	TheCohall relhabed ad clyihbalandtatestt atstetmpanyssuveenrepornompwce•ingtrepor

Criiater	JORCCodelaniotexpan	Cotammenry
Ohetrbsivetantsuloriontexpadata	Oheloriondaif mingful ad mial,holdbedttta,terter expaeannasreporu•including(bulimid)logical obsionhyicalt nttetoto: geoervas;geopslheical slbulk slesizedts;ts;surveresugeocmurveresuampsanyy–hod oflluricallbulkdeittretmt;tatest rts;ty,meaenmegesunsdwhnical ad rk chaisicsialtertecterttentgrounageonocracpo;,deleiouinaingbstertamttans or consuces.	iorhehafdrillingddefineheinelimPr5 pMRetottottte,sesouserasource esa•hal salinghadbeied ohrohoheld piioulyinedttttt,cnnempencaugoprevsmrruuinhe190sCoinu1mleshal saled adhad sled7ttnoussampwerecnnempnnamplonlineheifacimlykgles2mAp3tttteagcus,everyonpe.proxasampwerefllecd,d ad aALS ahingd millingZimlabsAstettertcoanssaecrusanasays wereyincdinheinelimMRetetottte.orporarasource esalogl mdekedo-dd alonkefhedhaGeicaingipiitatrtt aoappasunrnwnangsopns•wbeincdinheMinelReimtetotttte.enorporacurrenrasource esail salingienionlinehadudlihiumheical anlieshaSotattttmporsveprocegeocmoma•deh sb-ofheinciiingjionittcrttttescooppproecs opegmawuu
Fuhektrr wor	(Thed slef plandfurhekforlalturtteststernae ancaoner worega•iondehionlarledrilling).tenttenteptexss orpexss orge-scas-ouDiaglealyhighlighinghef pibleiontttenramscrareasoossexss,•includingheinlogicaliniondfudrillingttertatturmageopres aneareas,idedhisinforionisiallyiivettt ctprovmanoommercsens	fFollowingheleionhelluricalk ohebulk slesttttatest wtcompomegornamp•llecdduinghistetcor