PROSPECT RESOURCES LIMITED — Interim / Quarterly Report 2010

Jan 30, 2011

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 Quarter ended ("current quarter")

30 124 354 329 31 December 2010

Year to date

Current quarter

Consolidated statement of cash flows

Cash flows related to operating activities		$A'000	6 months
			$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 nature	24	36
	received
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 (brought
	forward)	(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)
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	858	2,885
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 available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities	NIL	NIL
3.2	Credit standby arrangements	NIL	NIL

Estimated cash outflows for next quarter

4.1	Exploration and evaluation	$A'000
		3,095
4.2	Development	-
4.3	Production
4.4	Administration	-
		350
	Total	3,445-

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 bank	870	858
5.2Deposits at call		-	-
5.3	Bank overdraft	-	-
5.4Other (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	NIL

+ See chapter 19 for defined terms.

6.2	Interests in miningtenements acquired orincreased	NIL

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.

		Totalnumber	Numberquoted	Issue price persecurity (seenote 3) (cents)	Amount paid up persecurity (see note 3)(cents)
7.1	Preference +securities(description)
7.2	Changes during quarter(a) Increases through issues(b) Decreases through returnsof capital, buy-backs,redemptions
7.3	+Ordinary securities	82,593,287	72,093,287		Fully paid
7.4	Changes during quarter(a) Increases - through issuesIncreases – transferred fromescrow	10,773,037	10,773,0376,500,000	$0.195	Fully paidFully paid
	(b) Decreases through returnsof capital, buy-backs
7.5	+Convertible debt securities(description)
7.6	Changes during quarter(a) Increases through issues(b) Decreases through securitiesmatured, converted
7.7	Options (description andconversion factor)	9,701,500857,5001,000,0001,402,0002,000,000		Exercise price$0.20$0.20$0.23$0.23$.023	Expiry date18/10/20125/11/20133/12/20118/12/201130/07/2012
7.8	Issued during quarter
7.97.10	Exercised during quarterExpired during quarter
7.11	Debentures(totals only)
7.12	Unsecured notes (totals only)

Compliance statement

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.

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

Sign here: ............................................. Date: 31 January 2011

(Director)

Print name: Kenneth James Fitzgerald

Notes

• 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.
• 2 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.
• 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*.*
• 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.