PROSPECT RESOURCES LIMITED — Capital/Financing Update 2018

Nov 18, 2018

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)

60,000,000 fully paid ordinary shares

60,000,000 fully paid ordinary shares at an issue price of $0.005 per share

+ See chapter 19 for defined terms.

4	Do the +securities rank equallyin all respects from the +issuedate with an existing +classofquoted +securities?	Yes
	If the additional +securities donot 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	$0.005 per fully paid ordinary share
6	Purpose of the issue(If issued as consideration forthe acquisition of assets, clearlyidentify those assets)	Exercise of options
6a	Is the entity an +eligible entitythathasobtainedsecurityholder approval under rule 7.1A?If Yes, complete sections 6b – 6hin relation to the +securities thesubject of this Appendix 3B, andcomply with section 6i	Yes
6b	The date the security holderresolution under rule 7.1A waspassed	13 November 2017
6c	Number of +securities issuedwithout security holder approvalunder rule 7.1	N/A
6d	Number of +securities issuedwith security holder approval	N/A

under rule 7.1A

+ 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) N/A
• 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.

8 Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable)

Number	+Class
2,046,114,971	Fully paid ordinaryshares

60,000,000 fully paid ordinary shares (exception 4)

N/A

N/A

See Annexure 1

19 November 2018

+ See chapter 19 for defined terms.

		Number	+Class
9	Number and +class of all +securitiesnot quoted on ASX (includingthe+securities in section 2 if applicable)	65,000,000	Unlisted options,each exercisable at$0.05 per option,expiring on31/12/2018.
		115,000,000	Unlisted options,each optionexercisable at 1.5cents each, expireson 15/06/2019
		20,000,000	Unlisted options,each optionexercisable at 10cents each, expireson 06/02/2019
		45,000,000	Unlisted optionseach exercisable at6 cents per option,expires on12/05/2022.

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?	N/A
12	Is the issue renounceable ornon-renounceable?	N/A
13	Ratio in which the +securitieswill be offered	N/A
14	+Class of +securities to whichthe offer relates	N/A
15	+Recorddatetodetermineentitlements	N/A

+ See chapter 19 for defined terms.

16	Willholdingsondifferentregisters (or subregisters) beaggregatedforcalculatingentitlements?	N/A
17	Policy for deciding entitlementsin relation to fractions	N/A
18	Names of countries in whichthe entity has security holderswho will not be sent new offerdocumentsNote: Security holders must be told how their	N/A
	entitlements are to be dealt with.Cross reference: rule 7.7.
19	Closingdateforreceiptofacceptances or renunciations	N/A
20	Names of any underwriters	N/A
21	Amount of any underwritingfee or commission	N/A
22	Names of any brokers to theissue	N/A
23	Fee or commission payable tothe broker to the issue	N/A
24	Amount of any handling feepayable to brokers who lodgeacceptancesorrenunciationson behalf of security holders	N/A
25	If the issue is contingent onsecurity holders' approval, thedate of the meeting	N/A
26	Dateentitlementandacceptanceformandofferdocumentswillbesenttopersons entitled	N/A
27	If the entity has issued options,and the terms entitle optionholderstoparticipateonexercise, the date on whichnotices will be sent to option	N/A

+ See chapter 19 for defined terms.

holders

28	Date rights trading will begin(if applicable)	N/A
29	Date rights trading will end (ifapplicable)	N/A
30	How do security holders selltheirentitlementsinfullthrough a broker?	N/A
31	How do security holders sellpartoftheirentitlementsthrough a broker and accept forthe balance?	N/A
32	Howdosecurityholdersdispose of their entitlements(exceptbysalethroughabroker)?	N/A
33	+Issue date	N/A

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

+ See chapter 19 for defined terms.

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

Entities that have ticked box 34(b)

38	Number of +securities for which+quotation is sought	N/A
39	+Class of +securities for whichquotation is sought	N/A
40	Do the +securities rank equally inall respects from the +issue datewith an existing +class of quoted+securities?	N/A
	If the additional +securities donot rank 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 thaninrelationtothenextdividend,distributionorinterest payment
41	Reason for request for quotationnow	N/A
	Example: In the case of restricted securities,end of restriction period
	(if issued upon conversion ofanother +security, clearly identifythat other +security)

+ See chapter 19 for defined terms.

	Number	+Class
+class42Numberandofall+securitiesquotedonASX+securities(includingtheinclause 38)	N/A	N/A

+ 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.

19 November 2018 Sign here: ............................................................ Date: .........................

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 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	1,594,128,296
Add the following:Number of fully paid +ordinary securities•issued in that 12 month period under anexception in rule 7.2Number of fully paid +ordinary securities•issued in that 12 month period withshareholder approvalNumber of partly paid +ordinary•securities that became fully paid in that12 month periodNote:•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 itemsSubtract the number of fully paid +ordinary	10,000,000 fully paid ordinary shares (issued14 December 2017)14,853,840 fully paid ordinary shares (issued6 February 2018, ratified 29 March 2018)160,412,829 fully paid ordinary shares(issued 6 February 2018, ratified 29 March2018)35,053,339 fully paid ordinary shares (issued12 February 2018, ratified 29 March 2018)166,666,667 fully paid ordinary shares(issued 29 March 2018)5,000,000 fully paid ordinary shares (issued11 October 2018)60,000,000 fully paid ordinary shares (issued19 November 2018)Nil
securities cancelled during that 12 monthperiod
"A"	2,046,114,971

+ 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	306,917,245
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:	45,000,000 unlisted and unvested options(issued 13 May 2018)
•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	306,917,245
Note: number must be same as shown inStep 2
Subtract "C"	45,000,000
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"	261,917,245
	[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"	2,046,114,971
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	204,611,497 (rounded down)
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	204,611,497
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"	204,611,497
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.