PROSPECT RESOURCES LIMITED — Interim / Quarterly Report 2010

Jan 31, 2011

Suite 24, 443 Albany Highway Victoria Park WA 6100 Australia PO Box 596 Victoria Park WA 6979 Australia T: +61 8 9472 5502 F: +61 8 9362 2805 www.ethanminerals.com.au

ASX Release

1st February, 2011

Following is an amended Appendix 5B

The forecast exploration expenditure of $3.055m in the Appendix 5B lodged on 31/1/2011 assumed an expanded exploration program on the Mary Springs project. The Directors, however, are committed in the short term to re-establish production at the Mkushi project in Zambia.

It is expected that this in turn will provide adequate funding of an expanded exploration program in due course.

As previously noted in the Activities Report lodged 31/1/2011 the Company has received project approval from local chieftans. Furthermore, Directors are anticipating formal Ministerial approval any day.

The reduced exploration forecast of $417k reflects the level of activity indicated in the Activities Report.

Yours Sincerely

zgaral

Ken Fitzgerald Managing Director Ethan Minerals Ltd

Rule 5.3 Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96; Origin: Appendix 8; Amended 1/7/97, 1/7/98, and 30/9/2001.

Name of entity

ETHAN MINERALS LIMITED

ABN

30 124 354 329

Quarter ended ("current quarter")

Year to date

6 months

31 December 2010

Current quarter

$A'000

Consolidated statement of cash flows

	Cash flows related to operating activities
--	--------------------------------------------	--	--	--

			$A'000
1.1	Receipts from tax returns and related debtors
1.2	Payments for
	(a) exploration and evaluation	(1,259)	(2, 868)
	(b) development	(366)	(366)
	(c) production
	(d) administration	(365)	(845)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	24	36
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (GST to be recouped)	(17)
	Net operating cash flows	(1,983)	(4,043)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a) prospects
	(b) equity investments
	(c) other fixed assets	(1)	(10)
1.9	Proceeds from sale of:
	(a) prospects
	(b) equity investments
	(c) other fixed assets
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other (state if material)
	Net investing cash flows	(1)	(10)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (broughtforward)	(1,984)	(4,053)
	Cash flows related to financing activities
1.14	Proceeds from shares /shares to be issued	2,101	2,143
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings
1.17	Repayment of borrowings
1.18	Proceeds from release of tenement bond
1.19	Other (Cost of Capital Raising/Prospectus)	(105)	(105)
	Net financing cash flows	1,996	2,038
	Net increase (decrease) in cash held	12	(2,015)
1.20	Cash at beginning of quarter/year to date	858	2,885
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter	870	870

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	122
1.24	Aggregate amount of loans to the parties included in item 1.10	NIL
1.25	Explanation necessary for an understanding of the transactions

All transactions involving Directors and associates were on normal commercial terms.

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

NIL

$2.2$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

NIL

+ See chapter 19 for defined terms.

Financing facilities availableAdd notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
$\sim$ 3.1	Loan facilities	NIL	NIL
3.2	Credit standby arrangements	NH	$\rm NIL$

Estimated cash outflows for next quarter

		$A'000
4.1	Exploration and evaluation
		417
4.2	Development
4.3	Production
4.4	Administration
		350
	Total	$767-$

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at hank	870	858
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	870	858

Changes in interests in mining tenements

		Tenementreference	Nature ofinterest(note (2))	Interest atbeginning of quarter	Interest atend ofquarter
6.1	Interests in miningtenements relinquished.reduced or lapsed	NII.

+ See chapter 19 for defined terms.

$6.2,$ Interests in mining tenements acquired or $NIL$ increased

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total	Number	Issue price per	Amount paid up per
		number	quoted	security (see	security (see note 3)
				note 3) (cents)	(cents)
7.1	Preference +securities(description)
7.2	Changes during quarter
	(a) Increases through issues
	(b) Decreases through returns
	of capital, buy-backs,redemptions
7.3	+ Ordinary securities	82,593,287	72,093,287		Fully paid
7.4	Changes during quarter
	(a) Increases - through issues	10,773,037	10,773,037	$0.195	Fully paid
	Increases - transferred from		6,500,000		Fully paid
	escrow
	(b) Decreases through returns
	of capital, buy-backs
7.5	+ Convertible debt securities
	(description)
7.6	Changes during quarter
	(a) Increases through issues
	(b) Decreases through securities
	matured, converted
7.7	Options (description andconversion factor)	9,701,500		Exercise price$0.20	Expiry date18/10/2012
		857,500		$0.20	5/11/2013
		1,000,000		$0.23	3/12/2011
		1,402,000		$0.23	8/12/2011
		2,000,000		$.023	30/07/2012
7.8	Issued during quarter
7.9	Exercised during quarter
7.10	Expired during quarter
7.11	Debentures
	(totals only)
7.12	Unsecured notes (totals only)

Compliance statement

$\mathbf{1}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

+ See chapter 19 for defined terms.

This statement does /does-not* (delete one) give a true and fair view of the matters disclosed.

Wzgawaf

Sign here:

$\overline{2}$

....................................... (Director)

Date: 31 January 2011

Print name:

Kenneth James Fitzgerald

Notes

• $\mathbf{1}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{c}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• $\overline{\mathbf{3}}$ Issued and quoted securities - The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• $\overline{4}$ The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
• 5 Accounting Standards - ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

= == == == == =

+ See chapter 19 for defined terms.