PROSPECT RESOURCES LIMITED

ACN 124 354 329

NOTICE OF MEETING

EXPLANATORY STATEMENT

PROXY FORM

TIME: 11:00 am (WST)

DATE: 23 September 2013

PLACE: Suite 6 245 Churchill Avenue Subiaco, Western Australia 6008

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting. Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 2) 8072 1400.

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CONTENTS PAGE

Notice of Extraordinary General Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	14
Glossary	44
Proxy Form	47
Annexure A – Terms of Options	51
Annexure B – Terms of Management Options	53
Annexure C – Independent Expert Report	55

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The Extraordinary General Meeting of the Shareholders to which this Notice of Meeting relates will be at 11:00 am (WST) on 23 September 2013 at:

Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008

YOUR VOTE IS IMPORTANT

The business of the Extraordinary General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Extraordinary General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and either:

(a) deliver the proxy form:
- (a) by hand to Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008; or
- (b) by post to PO Box 1273, Subiaco, Western Australia 6904; or
(b) by facsimile to (+61 8) 9388 3006

so that it is received not later than 11:00 am (WST) on 21 September 2013.

Proxy Forms received later than this time will be invalid.

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is hereby given that an Extraordinary General Meeting of Shareholders of Prospect Resources Limited will be held at 11:00 am (WST) on 23 September 2013 at Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Extraordinary General Meeting. The Explanatory Statement forms part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders of the Company at 11:00 am (WST) on 21 September 2013. Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

ORDINARY RESOLUTIONS

Part A: Change of scale to activities and issue of securities pursuant to subscription agreements

1. RESOLUTION 1 – APPROVAL OF CHANGE TO SCALE OF ACTIVITIES

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"Subject to the passing of Resolutions 2 to 5 (inclusive), for the purposes of Listing Rule 11.1.2 and for all other purposes, the Company be authorised to make a significant change in the scale of its activities as set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 1 by:

(a) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(b) an associate of any person described in (a).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

2. RESOLUTION 2 – APPROVAL OF FUTURE ISSUE OF SHARES TO A GROUP OF INVESTORS CALLED THE CONSORTIUM

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of section 611 (item 7) of the Corporations Act, clause 2 of the Consortium Subscription Agreement and for all other purposes, the shareholders approve the issue and allotment of 325,000,000 fully paid ordinary shares at 1.2 cent ($0.012) per share to the Consortium (or each of their nominees) in consideration for $3,900,000.00, in accordance with the terms of the Consortium Subscription Agreement dated 15 July 2013 and otherwise on the terms set out in the Explanatory Memorandum which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 2 by:

(a) The Consortium;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

3. RESOLUTION 3 – APPROVAL OF FUTURE ISSUE OF SHARES TO SIRIUS TRUSTEES

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 7.1, clause 1 of the Sirius Subscription Agreement and for all other purposes, the shareholders approve the issue and allotment of 8,333,333 fully paid ordinary shares at 1.2 cent ($0.012) per share to Sirius Trustees (or its nominee) in consideration for $100,000.00, in accordance with the terms of the Sirius Trustees Subscription Agreement dated 15 July 2013 and otherwise on the terms set out in the Explanatory Memorandum which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 3 by:

(a) Sirius Trustees;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

4. RESOLUTION 4 – APPROVAL OF FUTURE ISSUE OF SHARES TO INVESTEC ZIMBABWE RECAPITALISATION FUND LIMITED

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 7.1, clause 1 of the Investec Zimbabwe Recapitalisation Fund Limited Subscription Agreement and for all other purposes, the shareholders approve the issue and allotment of 41,666,667 fully paid ordinary shares at 1.2 cent ($0.012) per share to Investec Zimbabwe Recapitalisation Fund Limited (or its nominee) in consideration for $500,000.00, in accordance with the terms of the Investec Recapitalisation Fund Limited Subscription Agreement dated 15 July 2013 and otherwise on the terms set out in the Explanatory Memorandum which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 4 by:

(a) Investec Zimbabwe Recapitalisation Fund Limited;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Part B: Issue of securities pursuant to exclusivity agreement

5. RESOLUTION 5 – APPROVAL OF FUTURE ISSUE OF SHARES TO CONTINENTAL MINERALS LIMITED

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 7.1, clause 9 of the Placement Exclusivity Agreement dated 15 July 2013 and for all other purposes, the shareholders approve the issue and allotment of 42,600,000 fully paid ordinary shares at a deemed issue price of 1.2 cent ($0.012) per share to Continental Minerals Limited (or its nominee) for non-monetary consideration as outlined in the Placement Exclusivity Agreement dated 15 July 2013, to in accordance with the terms of the same agreement and otherwise on the terms set out in the Explanatory Memorandum which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 5 by:

(a) Continental Minerals Limited;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

6. RESOLUTION 6 – APPROVAL OF FUTURE ISSUE OF SHARES AND OPTIONS TO PAUL WEST

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 7.1 and for all other purposes, the shareholders of the Company approve the issue of the following securities to Paul West (or his nominee):

1. 2,000,000 fully paid ordinary shares at a deemed issue price of 1.2 cent ($0.012) per share for services rendered with respects to the Company's entry into the Zimbabwe Transaction Documents; and
2. 2,000,000 options at an exercise price of 1.5 cent ($0.015) per option for services rendered with respects to the Company's entry into the Zimbabwe Transaction Documents,

and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 6 by:

(a) Paul West;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Part C: Issue of directors', managements' and advisors' incentives

7. RESOLUTION 7 – APPROVAL OF FUTURE ISSUE OF 42,500,000 MANAGEMENT OPTIONS

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"That, for the purposes of ASX Listing Rule 7.1, the shareholders approve the issue of 42,500,000 options to key management personnel of the Company for no consideration at an exercise price of 1.5 cent ($0.015) per option as announced by the Company on 15 July 2013 and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 7 by:

(a) a person who is proposing to participate in the issue;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

8. RESOLUTION 8 – RELATED PARTY APPROVAL – HUGH WARNER

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 10.11, section 208(1) of the Corporations Act and for all other purposes, the shareholders of the Company approve the issue of the following securities to Hugh Warner (or his nominee), a current director of the Company:

1. 12,500,000 Management Options to at an exercise price of 1.5 cent ($0.015) per option for no consideration as announced by the Company on 15 July 2013,

and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 8 by:

(a) Hugh Warner;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

9. RESOLUTION 9 – RELATED PARTY APPROVAL – HARRY GREAVES

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 10.11, section 208(1) of the Corporations Act and for all other purposes, the shareholders of the Company approve the issue of the following securities to Harry Greaves (or his nominee), a current director of the Company:

1. 14,400,000 fully paid ordinary shares at a deemed issue price of 1.2 cent ($0.012) per share for non-monetary consideration as outlined in the Placement Exclusivity Agreement dated 15 July 2013; and
2. 12,500,000 Management Options at an exercise price of 1.5 cent ($0.015) per option for no consideration as announced by the Company on 15 July 2013,

and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 9 by:

(a) Harry Greaves;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

10. RESOLUTION 10 – RELATED PARTY APPROVAL – ZED RUSIKE

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 10.11, section 208(1) of the Corporations Act and for all other purposes, the shareholders of the Company approve the issue of the following securities to Zed Rusike (or his nominee), who is likely to become a director of the Company in the foreseeable future:

1. 3,000,000 fully paid ordinary shares at a deemed issue price of 1.2 cent ($0.012) per share for non-monetary consideration as outlined in the Placement Exclusivity Agreement dated 15 July 2013; and
2. 7,500,000 Management Options at an exercise price of 1.5 cent ($0.015) per option for no consideration as announced by the Company on 15 July 2013,

and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 10 by:

(a) Zed Rusike;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

11. RESOLUTION 11 – RELATED PARTY APPROVAL – GERRY FAHEY

To consider and, if thought fit, to pass without amendment, the following resolution as an ordinary resolution:

"For the purposes of ASX Listing Rule 10.11, section 208(1) of the Corporations Act and for all other purposes, the shareholders of the Company approve the issue of the following securities to Gerry Fahey (or his nominee), a current director of the Company:

1. 5,000,000 Management Options at an exercise price of 1.5 cent ($0.015) per option for no consideration as announced by the Company on 15 July 2013,

and otherwise on the terms set out in the Explanatory Statement which accompanies and forms part of the Notice of Meeting."

Voting exclusion statement: The Company will disregard any votes cast on Resolution 11 by:

(a) Gerry Fahey;
(b) a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed; and
(c) an associate of any person described in (a) or (b).
(i) it is cast by a person acting as a proxy for another person entitled to vote, in accordance with the direction on the proxy form; or
(ii) it is cast by the person chairing the meeting ("the Chair") as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Extraordinary General Meeting to be held at 11:00 am (WST) on 23 September 2013 at Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008.

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in this Notice of Meeting.

If you are in any doubt about what to do in relation to the Resolutions contemplated in this Notice of Meeting and this Explanatory Statement, it is recommended that you seek advice from an accountant, solicitor or other professional advisor.

Full details of the business to be considered at the Extraordinary General Meeting are set out below.

Part A: Change of scale in activities and issue of securities pursuant to subscription agreements

Background

Capital raising by the Company

On 15 July 2013, the Company announced, inter alia, that it had secured $4,500,000.00 from a number of strategic investors (depicted in table below) through the execution of conditional subscription agreements.

Strategic investors	$ Committed
Entity controlled by a consortium of investors constituting of the Singapore-basedBlumont Group Ltd., Pacific Advisers Pte. Ltd. and Hong Kong-based mining executive,Alexander Molyneux (collectively known as the Consortium) (ConsortiumSubscription Agreement)	$3,900,000.00
Africa-based Investec Zimbabwe Recapitalisation Fund Limited (Investec SubscriptionAgreement)	$500,000.00
Sirius Trustees Ltd, as trustee of the Abangane (Sirius Trustees SubscriptionAgreement)	$100,000.00
Total	$4,500,000.00

(Collectively, the agreements known as Subscription Agreements and the strategic investors known as Subscribers)

These Subscription Agreements are one of a number of key developments announced by the Company on 15 July 2013. In order to fully appreciate the significance of the Company's entry into these Subscription Agreements, it is important that shareholders are made aware of all the key developments as announced by the Company on 15 July 2013.

Formation of strategic relationships into Zimbabwe

The Board intends to build by acquisition, application and farm-in a broad portfolio of mineral assets in Zimbabwe and its surrounding region.

The Company has successfully liaised with the Zimbabwe Investment Authority, and subject to a number of conditions, the Company has, through its wholly owned UK-based subsidiary (Prospect UK) acquired the right to a controlling 70% interest in Hawkmoth Mining Exploration (Pvt) Limited (Hawkmoth), a Zimbabwean based mining company, for US$50,000.00. The remaining balance (30%) of Hawkmoth is owned by Farvic Consolidated Mining (Pvt) Ltd (Farvic), another Zimbabwean based mining company, whose management team represents over 100 years of combined experience operating in Africa.

Hawkmoth has in turn:

(a) entered into a senior exploration and mining agreement with Martin Gunning Investments (Private) Limited (Zimbabwean based private company) (MGI) and Falcon College Trust (Zimbabwean based trust) (Falcon Trust), providing Hawkmoth with the right to explore and mine the historic Bushtick Gold Mine and surrounding acerage (Bushtick Project) including the in situ tailings dumps in consideration for an upfront fee of US$50,000.00 and a 5% royalty of net gold revenues. Hawkmoth must fund a feasibility study and reach a decision to mine within 5 years and pay an annual prospecting fee of US$50,000 until royalties are payable (up to a maximum of US$200,000);
(b) acquired 4 claims comprising the Chisanya Phosphate Project within the Chisanya Carbonatite, South East Zimbabwe (Chisanya Project); and
(c) acquired a controlling 100% interest in Coldawn Investments (Pvt) Limited (Coldawn), another Zimbabwean based mining company that legally and beneficially owns 100% of the mining tenements comprising the Penhalonga Gold Project (Penhalonga Project) in consideration for a fee of US$20,000.00 and a commitment to fund exploration up to completion of a feasibility study within 5 years to produce 25,000 oz of gold per annum for a period of 10 years.

Whilst these agreements represent a significant development for the Company into the mining industry of Zimbabwe, more importantly, the Company has been able to form strategic relationships with key persons from the Farvic management team who possess intimate knowledge of the local areas in Zimbabwe and neighbouring lands and provide necessary "in country" expertise (Zimbabwe Team).

The Company's Zimbabwe Team:

(a) is led by Duncan (Harry) Greaves (who, as announced by the Company on 15 July 2013 was appointed to the Board as a Non-Executive Director), Zed Rusike, Chris Rees, Roger Tyler and Andrew Halstead and includes both indigenous and nonindigenous Zimbabweans;
(b) are a practical mix of operations, geology, engineering and financial personnel who collectively have over 100 years of experience operating in Africa;
(c) has demonstrated that it is capable of identifying strategic ground positions for the acquisition of corresponding tenements; and
(d) since 2009, has designed, built and operated 4 gold mines in Zimbabwe.

In order to take advantage of the synergies available to the Company and the Zimbabwe Team, and also align its collective interests for the future performance of all parties involved, the Company entered into a Placement Exclusivity Agreement (Exclusivity Agreement) with Continental Minerals Limited (CML), a private company based in Zimbabwe which consisted of shareholders and management personnel from Farvic (and therefore the Zimbabwe Team). The Exclusivity Agreement is further detailed in Part B of the Explanatory Statement of this Notice of Meeting.

These strategic relationships place the Company in a strong position to establish gold exploration and mining operations in Zimbabwe and neighbouring lands.

Capital raising to fund revised growth objectives of the Company

As noted previously, the Company has raised $4,500,000.00 from the Subscribers through the aforementioned Subscription Agreements. Resolutions 2, 3, and 4 are concerned with the issue of fully paid ordinary shares to these Subscribers.

These funds, together with the strategic relationships in place will allow the Company to move towards its revised growth objectives, which are to:

(a) build the most competent Zimbabwe Team available;
(b) target owners of mines in specific geographic regions of interest which are tailored by the Zimbabwe Team;
(c) acquire equity interests in existing gold projects, both currently producing and historic gold mines;
(d) generate early cashflows from operations with a view to reinvesting the generated cashflows to further develop mining projects; and
(e) build and nurture relationships with other local mining operators who have a demonstrated history of successful in-country operations, in Zimbabwe and its surrounding region.

The Company plans to utilise all funds raised (in particular the $4,500,000.00) as follows:

Project Name	Description	EstimatedExpenditure
Bushtick Project	Re-enter underground workings and commence a drillingprogrammeComplete sampling of historic waste dumpsCommence airborne survey of above ground targets	$1,400,000.00
PenhalongaProject	Commence in-fill drill programme to generate first JORCreportable Mineral Resource	$900,000.00
NorthamptonProject	Gold exploration programme based upon historical goldmineralisation both within the closed mines and new areasbased on the regional geochemical databaseContinue base metal exploration, primarily known around theknown mineralisation at Mary Springs and Northampton,focusing on copper mineralisation	$100,000.00
General WorkingCapital	General working capital	$2,100,000.00

(contents known as Funding Use Table)

ORDINARY RESOLUTIONS

RESOLUTION 1 – APPROVAL OF CHANGE TO SCALE OF ACTIVITIES

Information Required by ASX Listing Rule 11.1.2

Background to Change of Scale Activities – Acquisition of controlling interest in Hawkmoth and subsequent transactions entered into by Hawkmoth

On 15 July 2013, the Company announced that its wholly owned subsidiary, Prospect UK had entered into an agreement to acquire a controlling 70% interest in Hawkmoth (Hawkmoth Acquisition Agreement).

It is the expectation of the Board that this is the first of a number of acquisitions for the Company as it seeks to build a broad portfolio of mineral assets in Zimbabwe and its surrounding region.

Under the laws of Zimbabwe, all operating companies must be either 51% owned by indigenous parties or have the capability to be 51% owned by indigenous parties. The Zimbabwe Investment Authority approved the Company's application to own a 70% equity interest (via Prospect UK) in Hawkmoth on the following conditions, which were incorporated into the final drafting of the Hawkmoth Acquisition Agreement:

(a) Prospect UK to fund all exploration costs and upon commencement of production, fund all development costs;
(b) Funding to be arranged via secured loans to the subsidiaries carrying a commercial rate of interest having regard to operating risks of the company;
(c) All loans have priority for repayment in front of any payments of dividends;
(d) After repayment of all loan funds, dividends may be payable; and
(e) Farvic has the right to claw back a 21% equity interest in Hawkmoth from Prospect UK. Funds to be used for the purchase of these shares must be from dividend payments from Hawkmoth and the valuation per share shall be "market value" or a valuation calculated as 5x EBIT (whichever is higher).

Material terms of the Hawkmoth Acquisition Agreement are as follows:

(a) Prospect UK to subscribe for 234 new fully paid ordinary shares in Hawkmoth, which represents a 70% shareholding in Hawkmoth, in consideration for US$50,000.00.
(b) The following condition precedents must be satisfied for this acquisition of shares in Hawkmoth to proceed:
- a. Approval in writing from all relevant and appropriate authorities in Great Britain, Australia and Zimbabwe;
- b. Shareholder approval pursuant to this Notice of Meeting has been obtained by the Company;
- c. Farvic and Prospect UK are to have entered into a shareholders agreement with respects to the governance of their shareholdings in Hawkmoth; and
- d. Prospect UK must be satisfied that agreements acquiring prospective mining rights in Bushtick Project and Penhalonga Project have been entered into by Hawkmoth and the respective vendors of those rights.
(c) Farvic has an option to purchase up to a further 21% of shares in Hawkmoth from Prospect UK. Funds to be used for the purchase of these shares must be from

dividend payments from Hawkmoth and the valuation per share shall be "market value" or a valuation calculated as 5x EBIT (whichever is higher).

Furthermore, as announced by the Company on 15 July 2013, concurrently with the execution of the Hawkmoth Acquisition Agreement:

(a) Farvic and Prospect UK entered into a shareholders agreement with respects to the governance of their shareholdings in Hawkmoth (Hawkmoth Shareholders Agreement);
(b) Hawkmoth entered into a senior exploration and mining agreement granting it the right to explore and mine the Bushtick Project (Bushtick Project Agreement);
(c) Hawkmoth entered into a share sale agreement to acquire the shares in Coldawn which in turn owns prospective mining rights in the Penhalonga Project (Penhalonga Project Agreement); and
(d) The Company entered into the Exclusivity Agreement with CML, details of which are covered in Part B and Resolution 5 of the Explanatory Statement to this Notice of Meeting.

(Collectively, together with the Hawkmoth Acquisition Agreement, the agreements known as Zimbabwe Transaction Documents)

Bushtick Project

The Bushtick Project is a dormant mine situated 8km NNE of Esigodini in the Esigodini Greenstone belt, in the grounds of Falcon Trust (the grantor of the rights to Hawkmoth). The mine was historically a major producer as testified by the large tailings dumps. The surrounding ground of approximately 25km2 is very prospective and has not been the subject of any modern prospecting.

The deposit which strikes 120°, dips 80° north, is formed by the silicification, carbonatisation and brecciation of mafic volcanics along a wide shear zone near the edge of the Essexvale Tonalite. Greenstones of intermediate to basic composition are the predominant rock type, underlain by granodiorites.

Historical production from four shafts; down to 12 level or approx 300m was 15,000 kg (+- 470,000 oz Au. with a cut-off grade of 5.4 g/t.)

Penhalonga Project

The Penhalonga Project consists of a number of shear and vein hosted gold deposits along the southern side of the Penhalonga Valley covering an area of approximately 1.8km2 , including the historic Battersea Gold Mine and the dormant Penhalonga Gold Mine, 5km north of Mutare. It is situated in the Mutare Greenstone belt which extends eastward into Mozambique.

In terms of gold production per unit area, the Mutare Greenstone belt at 122kg Au/km2 is one of the richest belts within Zimbabwe. Historical production from the Penhalonga Valley between 1897 and 1937 amounted to: Gold 1.3m oz, Silver 1.6m oz, Lead 7,258 tonnes and Copper 5.2 tonnes.

Coldawn also owns a number of lead tenements within the Mutare Greenstone belt all of which have been acquired by Hawkmoth.

Chisanya Project

The Chisanya Project is an un-exploited phosphate deposit within the Chisanya Carbonatite, South East Zimbabwe. The deposit is a series of phosphate in apatite-magnetite lenses in carbonatite. It is one of 5 known phosphate bearing carbonatites in Zimbabwe.

Pro-forma balance sheet

An unaudited pro forma balance sheet of the Company incorporating the change to scale of the Company's activities is set out in clause 5.4 of the IER which is contained in Annexure C of this Notice of Meeting.

Detailed use of funds

Please refer to the Funding Use Table in Part A of the Explanatory Statement to this Notice of Meeting.

Advantages of the change to scale of Company's activities

The Board believes that the Company's entry into the Zimbabwe Transaction Documents offers a number of advantages to Shareholders of the Company. Without limitation, some of these advantages may include:

(a) Potential for profit: The Bushtick Project and Penhalonga Project (collectively the Gold Projects) both offer a unique opportunity for Shareholders of the Company as the surrounding grounds of the Bustick Project is believed to be very prospective for gold and the belt on which the Penhalonga Project is situated upon has historically attractive gold production figures.
(b) Diversification: The addition of the Gold Projects and the Chisanya Project to the Company's overall asset portfolio allows the Company to diversify its mining interests into different commodity classes including gold, lead, silver and phosphate, thereby reducing risk and lowering variance across its portfolio.
(c) Local expertise and management team: The Company's Zimbabwe Team is rich with local knowledge and expertise, attributes which will play an important role in advancing the prospects and profitability of the Gold Projects. The Exclusivity Agreement also ensures that the Company is able to take advantage of further mining opportunities in the region as they emerge. Collectively, the Zimbabwe Team has over 100 years of experience operating in Zimbabwe and neighbouring countries.

Disadvantages and risks of the change to scale of Company's activities

The Board believes that the Company's entry into the Zimbabwe Transaction Documents offers a number of disadvantages and risks to Shareholders of the Company. Without limitation, some of these disadvantages and risks may include:

(a) Objectives of Shareholders: The Company will be changing the scale of the Company's activities, which may not be consistent with the objectives of all Shareholders.
(b) Use of Funds: A significant future outlay of funds will be used by the Company towards the exploration and development of the Gold Projects. There is no guarantee that the use of funds towards these Gold Projects will result in a positive economic outcome for the Company. If the Gold Projects are ultimately decided to be not commercially viable, losses will be incurred by the Company.
(c) Sovereign Risk: As the Gold Projects and the Chisanya Project are located in Zimbabwe, there are political and economic risks associated with the change of

scale. It remains that there exists a significant sovereign risk, which could potentially expose the Company to difficulties in enforcing its rights under various agreements within the foreign jurisdiction of Zimbabwe.

(d) Commodity Risk: With the acquisition of further mining interests, this will naturally expose the Company to the risk inherent in the volatilities of commodity prices. It is possible that the prices may fluctuate to levels that would cause the mining of certain commodities to be economically unfeasible, even if deposits are discovered and/or acquired in the future.
(e) Exploration Success: Further to the Commodity Risk outlined above, generally, mining exploration and development are high-risk undertakings as there can be no assurance that exploration of the Gold Projects and the Chisanya Project, or any other tenements that may be acquired in the future by the Company, will result in the discovery of economically feasible deposits. The future mining exploration and development activities of the Company may be affected by a range of factors outside the control of the Company such as geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents and changing government regulations.
(f) Future Capital Requirements: Significant future funding will be required by the Company to develop the Gold Projects, the Chisanya Project and other tenements that may be acquired in the future by the Company. There is no guarantee that such funding will be available to be Company on satisfactory terms, if at all.

Directors' recommendation

The Board currently consists of Hugh Warner (Executive Chairman), Harry Greaves (Non-Executive Director) and Gerry Fahey (Non-Executive Director).

The Board notes that the Directors have varying degrees of direct material interest in the outcome of the Resolutions in this Notice of Meeting.

Mr Warner does not make a recommendation on Resolution 8 as he has a direct material interest in its outcome.

Mr Greaves does not make a recommendation on Resolutions 1, 2, 3, 4, 5 and 9 as he has a direct material interest in their outcomes.

Mr Fahey does not make a recommendation on Resolution 11 as he has a direct material interest in its outcome.

Each of Mr Warner and Mr Fahey does not have a direct material interest in the Company's entry into the Zimbabwe Transaction Documents and events which lead to the change to scale of Company's activities as outlined in this Resolution. Mr Warner and Mr Fahey considers that the Company's entry into the Zimbabwe Transaction Documents and acquisition of the Gold Projects is in the best interests of the Company and recommend that Shareholders vote in favour of Resolutions 1, 2, 3, 4 and 5.

The Board unanimously recommends that Shareholders vote in favour of Resolutions 6, and 7.

The Board's recommendations with respects to Resolutions 8, 9, 10 and 11 (Related Party Approvals) will be considered separately in the Explanatory Statement for Resolutions 8, 9, 10 and 11.

Forward looking statements

The forward looking statements in this Notice of Meeting are based on the Company's current expectations about future events. They are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company and its Board of Directors, which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by the forward looking statements in this Notice of Meeting. These risks include but are not limited to, the risks referred to above. Forward looking statements include those containing words such as "anticipate", "estimates", "should", "will", "expects", "plans" or similar expressions.

Competent person

The information in this Notice of Meeting that relates to exploration results and mineral resources is based on information compiled by Mr Roger Tyler. Mr Tyler has been appointed as Chief Geologist of the Company.

Mr Tyler is a member of the Australasian Institute of Mining and Metallurgy. He 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 2004 Edition of the "Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Tyler consents to the inclusion of the matters based on his information in the form and context in which it appears.

RESOLUTION 2 – APPROVAL OF FUTURE ISSUE OF SHARES TO A GROUP OF INVESTORS CALLED THE CONSORTIUM

On 15 July 2013, the Company announced that it had secured $3,900,000.00 through a placement and subscription agreement with a group of investors that constituted of Blumont Group Ltd. (Blumont), Pacific Advisers Pte. Ltd. (Pacific Advisers) and Mr Alexander Molyneux (collectively known as the Consortium). The Consortium is proposing to take a significant investment stake in the Company in consideration of 325,000,000 fully paid ordinary shares at 1.2 cent ($0.012) per share (Consortium Placement).

The Consortium will make an investment in the Company through a newly incorporated entity (Newco). Blumont will own at least 60% of the total equity interest in Newco. Newco has not yet been incorporated and any announcements to this end will be disclosed to the market as they become known to the Board.

The projected split of the subscription price of $3,900,000.00 amongst the Consortium is as follows:

Consortium Investor	Subscription Amount ($)	Share Subscription Amount
Blumont	$2,340,000.00	195,000.000
Pacific Advisers	$780,000.00	65,000,000
Alexander Molyneux	$780,000.00	65,000,000
Total	$3,900,000.00	325,000,000

Blumont is a Singapore based investment manager that operates in transferrable securities, sterilisation and polymerisation services and property development. Recently, Blumont has made significant inroads into the mining sector acquiring and/or subscribing for substantial holdings in ASX listed companies such as Celsius Coal Ltd, Cokal Limited and Singapore based Hudson Minerals Holdings Pte. Ltd.

Pacific Advisers is a Singapore based private equity investment manager that finances and invests in public and private companies across a number of industries including mining and energy, technology, luxury consumer goods and media.

Alexander Molyneux is a Hong Kong based specialist resources investment expert who serves on the board of a number of public and private companies.

Other material terms of the Consortium Subscription Agreement are as follows:

(a) Shares to be issued to Newco in accordance with the Consortium Placement by the Company, subject to obtaining shareholder approval.
(b) The following condition precedents must be satisfied on or before 30 October 2013:
- a. The Company must reasonably satisfy the Consortium that the Zimbabwe Transaction Documents have been validly executed and the condition precedents in the Zimbabwe Transaction Documents have been satisfied or waived by the respective parties;
- b. Shareholder approval has been obtained by the Company; and
- c. Investec Asset Management or its nominee is to have executed an agreement to subscribe for no less than 33,000,000 fully paid ordinary shares in the Company.
(c) In the event that Shareholder approval is obtained by the Company:
- a. The Company agrees to form a New Board that will comprise of no more than 6 directors and for every 16.7% of the Company's shares held by Newco, the Consortium will be granted a right to appoint 1 director to the Board of the Company. If the parties agree to a different overall board structure, the parties will work together to agree an arrangement that reflects to spirit of this clause; and
- b. Provided that the Consortium legally and beneficially owns at least 20% of the Company's shares, the Consortium will, subject to the Company obtaining all relevant and applicable shareholder and regulatory approval, grant a right of first refusal (Consortium Right) to the Consortium to participate in any and all subsequent capital raisings (if any) conducted by the Company on equal terms and conditions to other prospective and invited investors (Subsequent Capital Raising).
(d) The Consortium Right will lapse and cease to exist where:
- a. Shareholder approval has not been obtained by the Company;
- b. Regulatory approval (if any) has not been obtained by the Company;
- c. The Consortium notifies the Company that it will not be participating in the Subsequent Capital Raising and following completion of the Subsequent Capital Raising, the Consortium's ownership percentage of the Company's shares is less than 30%;
- d. The Consortium does not agree to participate in the Subsequent Capital Raising within 14 days of being provided reasonably detailed information with respects to the terms of the Subsequent Capital Raising by the Company; or
- e. 5 years has passed since the commencement of the Consortium Subscription Agreement.
(e) It is the intention of Blumont and the Company to enter into a binding strategic alliance agreement that will primarily focus on the parties' actual and potential interests in Zimbabwe. The principal terms of the alliance agreement will be:
- a. The Company will be Blumont's exclusive partner in Zimbabwe and will not compete for acquisitions and investments against the Company;
- b. The Company will seek additional acquisitions and investments in Zimbabwe natural resources sector and Blumont will support such acquisitions via the provision of additional equity finance and/or loan financing, subject to commercial terms be agreed together with commercial and technical input as required;
- c. If the Company identifies an asset that is too large for the Company to acquire as determined by the Directors (excluding any directors nominated by Blumont) the asset will be offered to the Company on an 'arms-length' introductory fee, joint bid, free carried participation or such other structure that benefits all parties;
- d. The Consortium will pass on to the Company all Zimbabwe investment opportunities introduced by third-parties for the Company to acquire and/or invest in; and
- e. In the event the Company decides to dispose of any interest in an asset or assets in Zimbabwe where the estimated proceeds would be in excess of 20% of the Company's market capitalisation, it will notify Blumont and give Blumont 4 weeks exclusive period to make an offer, other than where there is

a conflict with the Bushtick Project Agreement, in which case the Bushtick Project Agreement shall prevail to the extent of the inconsistency.

(f) Agreement to remain in force until 30 October 2013, unless agreed to be terminated earlier in writing by the parties.

As announced by the Company on 15 July 2013, the Company proposes to raise $4,500,000.00 for general working capital and to fund projects in accordance with the Funding Use Table. The funds raised through the Consortium Placement will be dedicated towards these purposes.

The effect of this Resolution is to provide shareholder consent to the issue of the shares, and for the issue of shares to fall within an exception to Listing Rule 7.1, which will therefore allow the Directors to issue these shares without using the Company's annual 15% placement capacity.

Complimentary Information Pursuant to ASX Listing Rule 7.3

Whilst the Company is not seeking to obtain Shareholder approval under ASX Listing Rule 7.1, as it is seeking an exception pursuant to ASX Listing Rule 7.2 (Exception 16), the following information in relation to the Shares is provided to shareholders:

(a) The maximum number of Shares to be issued is 325,000,000.
(b) The Shares are to be issued at 1.2 cent ($0.012) per share.
(c) The allottees are investors who have subscribed for Shares pursuant to the Consortium Placement.
(d) The Shares will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company.
(e) The Company intends to issue the Shares to raise general working capital and to fund projects in accordance with the Funding Use Table.

Information Required pursuant to Chapter 6 of the Corporations Act

Section 606(1) of the Corporations Act states that a person must not acquire a relevant interest in the issued voting shares in a listed company if the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person and because of the transaction, that person's or someone else's voting power in the Company increases:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%

The voting power of a person in a body corporate is determined in accordance with section 610 of the Corporations Act. The calculation of a person's voting power in a Company involves determining the voting shares in the Company in which the person and the person's associates have a relevant interest.

Item 7 of section 611 of the Corporations Act provides an exception to the prohibition, whereby a person may make an otherwise prohibited acquisition of a relevant interest in a company's voting shares with shareholder approval.

The following information is required to be provided to shareholders pursuant to the Corporations Act and ASIC Regulatory Guide 74 in respect of obtaining shareholder approval under the exception for the passing of this Resolution. Shareholders are also referred to Independent Expert's Report (IER) contained in Annexure C of this Notice of Meeting.

Why is approval under the exception in item 7 of 611 of the Corporations Act needed?

Shareholder approval under item 7 of 611 of the Corporations Act is required for the proposed issue of shares to Newco as following completion of the Consortium Placement, the Consortium (through Newco) will have a relevant interest in the Company that will exceed 20% of the total issued capital in the Company.

Relevant interests, voting power and proposed capital structure of the Company

The Company seeks approval for the issue and allotment of 325,000,000 fully paid ordinary shares in the capital of the Company to Newco under the Consortium Placement. The following is a table depicting the percentage of ordinary shares Newco may hold in the Company if certain Resolutions are approved by shareholders under this Notice of Meeting:

Current and proposed Shareholders	Only if Resolution 2is approved	If certainResolutions areapproved
Current issued ordinary shares	372,593,287	372,593,287
The Consortium/Newco (Resolution 2)	325,000,000	325,000,000
Sirius Trustees (Resolution 3)	-	8,333,333
Investec (Resolution 4)	-	41,666,667
CML (Resolution 5 including Shares issued to Harry Greavesand Zed Rusike under the CML Placement)	-	60,000,000
Paul West (Resolution 6)	-	2,000,000
Total	697,593,287	809,593,287
Possible % of fully paid ordinary shares owned by theConsortium	46.6%	40.1%

As depicted in the table above, the effect of shareholders passing this Resolution would be to increase Newco's ownership of the Company's fully paid ordinary shares and subsequent voting power in the Company from 0% to more than 20%, thereby satisfying section 606(1)(a) of the Corporations Act and generally prohibiting Newco from acquiring the relevant interest in the Company.

Intentions of the Consortium/Newco

The Company understands that, in the event that this Resolution is passed by shareholders::

(a) provided that the granting of the Consortium Right is approved both by shareholders and regulatory authorities (where applicable), Newco intends to maintain its equity percentage of the Company by participating inSubsequent Capital Raisings, as failure to do so may result in the absolute forfeiture of the Consortium Right;
(b) Blumont intends to enter into a binding strategic alliance agreement with the Company that will, inter alia, ensure that the Company, as Blumont's exclusive partner in Zimbabwe, will be able to take advantage of further acqusition and investment opportunities in the Zimbabwe natural resources sector; ;
(c) The Consortium intends to exercise its right to appoint 1 Director to the Board of the Company for every 16.7% of the Company's shares owned by Newco at any pertinent time; and
(d) It is not Newco's current intention to either transfer any property between the Company and any person associated with it or change the Company's existing policies in relation to financial matters.

Independent Expert's Report

The Corporations Act provides that an IER on the transaction must be provided to shareholders. The IER provides an opinion as to whether the acquisition of the voting power and interest referred to in this Explanatory Statement for Resolution 2 by Consortium is fair/not fair and reasonable/not reasonable to the non-associated shareholders of the Company.

Accordingly, the Board has appointed Stantons International Audit & Consulting Pty Ltd (Stantons), a professional services firm based in West Perth, Western Australia as an independent expert to produce the IER. The IER is contained in Annexure C of this Notice of Meeting.

Stantons has concluded that the acquisition of the voting and interest by Consortium may on balance collectively be considered to be fair and reasonable to the non-associated shareholders of the Company, as of the date of the IER (5 August 2013).

The advantages and disadvantages of the acquisition of the voting power and interest by Consortium are outlined in the IER and are provided to enable non-associated shareholders of the Company to determine whether they are better off if the acquisition of the voting power and interest proceeds as opposed to if it did not proceed.

Shareholders are urged to carefully read the IER before deciding how to vote on Resolution 2.

Directors' Recommendation

Mr Greaves does not make a recommendation on this Resolution as he has a direct material interest in its outcome.

Each of Mr Warner and Mr Fahey does not have a direct material interest in this Resolution.

Mr Warner and Mr Fahey considers that it is in the best interests of the Company that the Consortium Placement is permitted to complete as it provides the Company an influx of significant funds that will allow the Company to explore the Gold Projects and Chisanya Project.

Professional Advice

If you have any doubt or do not understand this Resolution, it is strongly recommended that you seek advice from an accountant, solicitor or other professional advisor.

RESOLUTION 3 – APPROVAL OF FUTURE ISSUE OF SHARES TO SIRIUS TRUSTEES

As one of the Subscribers, Sirius Trustees Ltd, as trustee of the Abangane (Sirius Trustees) is proposing to take an investment stake in the Company in consideration of 8,333,333 fully paid ordinary shares at 1.2 cent ($0.012) per share (Sirius Trustees Placement).

Other material terms of the Sirius Trustees Subscription Agreement are as follows:

(a) Shares to be issued to Sirius Trustees Ltd in accordance with the Sirius Trustees Placement by the Company, subject to obtaining shareholder approval.
(b) Agreement to remain in force until 30 October 2013, unless agreed to be terminated earlier by the parties.

As announced by the Company on 15 July 2013, the Company proposes to raise $4,500,000.00 for general working capital and to fund projects in accordance with the Funding Use Table. The funds raised through the Sirius Trustees Placement will be dedicated towards these purposes.

Information Required by ASX Listing Rule 7.3

The following information in relation to the Shares is provided to shareholders for the purposes of ASX Listing Rule 7.3:

(a) The maximum number of Shares to be issued is 8,333,333.
(b) The Shares will be issued by 23 December 2013.
(c) The Shares are to be issued at 1.2 cent ($0.012) per share.
(d) The allottees are investors who have subscribed for Shares pursuant to the Sirius Trustees Placement
(e) The Shares will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company.
(f) The Company intends to issue the Shares to raise general working capital and to fund projects in accordance with the Funding Use Table.

RESOLUTION 4 – APPROVAL OF FUTURE ISSUE OF SHARES TO INVESTEC ZIMBABWE RECAPITALISATION FUND LIMITED

As the last of the Subscribers, Investec Zimbabwe Recapitalisation Fund Limited (Investec) is proposing to take a significant investment stake in the Company in consideration of 41,666,667 fully paid ordinary shares at 1.2 cent ($0.012) per share (Investec Placement).

Investec is an African investment specialist manager controlled by Investec Bank, a South African based investment banking and asset management company (through its subsidiary, Investec Asset Management (Pty) Ltd) that is listed on the Johannesburg Stock Exchange and the London Stock Exchange.

Other material terms of the Investec Agreement are as follows:

(a) Shares to be issued to Investec in accordance with the Investec Placement by the Company, subject to obtaining shareholder approval.
(b) The following condition precedents must be satisfied on or before 30 October 2013:
- a. Company must reasonably satisfy Investec that the Zimbabwe Transaction Documents have been validly executed and the condition precedents in the Zimbabwe Transaction Documents have been satisfied or waived by the respective parties;
- b. Shareholder approval has been obtained by the Company; and
- c. The Company must reasonably satisfy Investec that it has raised at least $4,300,000.00 by way of executed subscription agreements between the Company and relevant parties (including Investec Placement in accordance with the Investec Subscription Agreement).
(c) In the event that Shareholder approval is obtained by the Company, the Company agrees to form a New Board that will comprise of no more than 6 directors and for every 16.7% of the Company's shares held by Investec, it will be granted a right to appoint 1 director to the Board of the Company.
(d) Subject to the Company obtaining all relevant and applicable shareholder and regulatory approval, up until 15 July 2018, the Company will:
- a. Provide reasonable notice to Investec of any and all subsequent capital raisings (if any) conducted by the Company (Subsequent Capital Raising);
- b. Provide an opportunity to Investec to participate, pro rata to its shareholding in the Company at the time, in the Subsequent Capital Raising, on equal terms and conditions to other prospective and invested investors (as the case may be) of the Subsequent Capital Raising; and
- c. If the Company undertakes a Subsequent Capital Raising at a price that is lower than 1.2 cent ($0.012) (Price Specific Capital Raising), the Company will grant to Investec a right of first refusal to participate, pro rata to its shareholding in the Company at the time, in any such Price Specific Capital Raising, on equal terms and conditions to other prospective and invited investors (as the case may be) of the Price Specific Raising, in order to allow Investec to maintain its ownership percentage of the Company's shares following completion of the Price Specific Capital Raising.
(e) The Company will use its best endeavours to not issue any shares or options in the Company with an exercise price lower than 1.2 cent ($0.012) to Harry Greaves, Hugh Warner or any other existing or future member of the Board of the Company.

(f) Agreement to remain in force until 30 October 2013, unless agreed to be terminated earlier by the parties.

As announced by the Company on 15 July 2013, the Company proposes to raise $4,500,000.00 for general working capital and to fund projects in accordance with the Funding Use Table. The funds raised through the Investec Placement will be dedicated towards these purposes.

Information Required by ASX Listing Rule 7.3

The following information in relation to the Shares is provided to shareholders for the purposes of ASX Listing Rule 7.3:

(a) The maximum number of Shares to be issued is 41,666,667.
(b) The Shares will be issued by 23 December 2013.
(c) The Shares are to be issued at 1.2 cent ($0.012) per share.
(d) The allottees are investors who have subscribed for shares pursuant to the Investec Placement.
(e) The Shares will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company.
(f) The Company intends to issue the Shares to raise general working capital and to fund projects in accordance with the Funding Use Table.

Part B: Issue of securities pursuant to exclusivity agreement

Background

On 15 July 2013, the Company announced, inter alia, that it had entered into a Placement Exclusivity Agreement (Exclusivity Agreement) with Continental Minerals Limited (CML), a mining company based Zimbabwe.

Pursuant to the Exclusivity Agreement:

(a) Harry Greaves, Roger Tyler and Chris Rees (the Introducing Parties) have agreed for a period of 3 years, to exclusively present all new mining opportunities that they become aware of in Zimbabwe to the Company;
(b) There are four current opportunities (specified in the Exclusivity Agreement but confidential for the purposes of this Notice of Meeting) that the Introducing Parties and the Company have determined are outside this Exclusivity Agreement due to the timing of when such opportunities were presented to them, two of which are the Bushtick Project and the Penhalonga Project. If any of these other two specified opportunities results in an acquisition by the Company (through Prospect UK), a performance fee shall be payable to the Introducing Parties, subject to negotiation; and

(c) In consideration, the Company has agreed to issue 60,000,000 of its fully paid ordinary shares to CML (or its nominees) at a deemed price of 1.2 cent ($0.012) per share (CML Placement).

CML has advised the Company to issue all the shares that it may receive under the CML Placement to the below list of parties or their nominees:

Proposed recipientsundertheCMLPlacement	Proposed percentage of sharesunder the CML Placement	Proposed number of CompanyShares under the CML Placement
Harry Greaves	24%	14,400,000
Andrew Halsted	24%	14,400,000
Roger Tyler	7%	4,200,000
Zed Rusike	5%	3,000,000
Other parties	40%	24,000,000
Total	100%	60,000,000

The issue of the Company's Shares to each of Harry Greaves and Zed Rusike will be dealt with under Resolutions 9 and 10 of this Notice of Meeting as they are related parties to the Company.

As referred to in Part A of this Explanatory Statement and as announced by the Company on 15 July 2013, the Exclusivity Agreement is the part of a wider strategic venture entered into by the Company, whereby its UK-based 100% owned subsidiary Prospect UK has entered into a number of key agreements known as the Zimbabwe Transaction Documents that solidifies its position as a mining operator in Zimbabwe and surrounding lands.

The Exclusivity Agreement places the Company in a position to take advantage of mining opportunities as they emerge, by engaging personnel (who form an integral part of the Zimbabwe Team) who have a deep understanding of the local mining industry.

Paul West played an instrumental role in procuring the Company's entry into the Zimbabwe Transaction Documents via the introduction of the Zimbabwe Team to the Company and has agreed to be remunerated for his services in the form of securities issued by the Company. The issue of these securities will be dealt with in Resolution 6 of this Notice of Meeting.

RESOLUTION 5 – APPROVAL OF FUTURE ISSUE OF SHARES TO CONTINENTAL MINERALS LIMITED

In exchange for the issue of the Company's Shares under the CML Placement, the nonmonetary consideration received by the Company are the contractual obligations of CML, for a period of 3 years, to exclusively present all mining opportunities that it becomes aware of in Zimbabwe to the Company.

As noted above, Shareholder approvals for the issue of the Company's Shares to each of Harry Greaves and Zed Rusike (that totals 17,400,000 fully paid ordinary shares) will be dealt with under Resolutions 9 and 10 of this Notice of Meeting.

This Resolution seeks approval for the issue of the remaining balance of the total of Company's Shares under the CML Placement, being 42,600,000 fully paid ordinary shares to CML's nominees.

Information Required by ASX Listing Rule 7.3

The following information in relation to the Shares is provided to shareholders for the purposes of ASX Listing Rule 7.3:

(a) The maximum number of Shares to be issued is 42,600,000.
(b) The Shares will be issued by 23 December 2013.
(c) The Shares are to be issued at a deemed price of 1.2 cent ($0.012) per share.
(d) The allottees are Harry Greaves, Andrew Halstead, Roger Tyler, Zed Rusike and other nominees of CML.
(e) The Shares will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company.
(f) The Company intends to issue the Shares to advance the Company's interests in Zimbabwe, some of which are outlined in the Funding Use Table.

RESOLUTION 6 – APPROVAL OF FUTURE ISSUE OF SHARES AND OPTIONS TO PAUL WEST

In consideration for procuring the Company's entry into the Zimbabwe Transaction Documents, subject to shareholder approval, Paul West will be issued with 2,000,000 fully paid ordinary shares at a deemed price of 1.2 cent ($0.012) per share and 2,000,000 options at an exercise price of 1.5 cent ($0.015) per option.

Information Required by ASX Listing Rule 7.3

The following information in relation to the Shares and Options is provided to shareholders for the purposes of ASX Listing Rule 7.3:

(a) The maximum number of Shares to be issued is 2,000,000.
(b) The maximum number of Options to be issued is 2,000,000.
(c) The Shares and Options will be issued by 23 December 2013.
(d) The Shares are to be issued at a deemed price of 1.2 cent ($0.012) per share.
(e) The allottee is Paul West.
(f) The Company intends to issue the Shares and Options to remunerate Mr West for services provided to the Company in relation to the Transaction Documents.
(g) The Shares will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company.
(h) The full terms of the Options are set out in Annexure A.

Part C: Issue of directors', managements' and advisors' incentives

Background

On 15 July 2013, the Company announced that, inter alia, it had entered into agreements with CML, the Subscribers and parties to the Zimbabwe Transaction Documents (which includes key members of the Zimbabwe Team). The effect of all these agreements would be as follows:

(a) A significant capital raising in the form of an injection of $4,500,000.00 into the Company in exchange for 375,000,000 fully paid ordinary shares; and
(b) The establishment of a revised set of growth objectives for the Company with a focus on the acquisition of new mineral projects via acquisition, farm-in or application within the mineral resources industry of Zimbabwe and neighbouring lands. Mineral projects targeted are expected to cover the spectrum from exploration to currently producing assets.

The Company is set for a new phase in its development, and accordingly, the Company has proposed to establish a new composition for the Company's Board (New Board).

This process has already commenced, as announced by the Company on 15 July 2013. Flowing on from the Company's formation of strategic relationships into Zimbabwe with particular emphasis on the engagement of the Zimbabwe Team, the Company has recently appointed Harry Greaves and Gerry Fahey as Non-Executive Directors to the Board with both Jonathan Pager and Michael Pollak resigning on 15 July 2013.

As a result, the Board currently consists of Hugh Warner (Executive Chairman), Harry Greaves (Non-Executive Director) and Gerry Fahey (Non-Executive Director).

New Board of the Company

In light of the Company's capital raising as detailed in this Notice of Meeting and revised growth objectives, the Board has resolved, subject to all Resolutions under this Notice of Meeting being approved by Shareholders, to form a new board that will consist of no more than 6 Directors with the following breakdown (New Board):

ProposedDirector of theNew Board	Current Relevant Interests inthe Company	Proposed issue of Securitiespursuant to Resolutions inthis Notice of Meeting	Proposed positionon the New Board
Hugh Warner	 61,300,300 fully paidordinary shares 16,000,000 unlisted options	 12.500,000 ManagementOptions	Executive Chairman
Harry Greaves	Nil	 14,400,000 fully paidordinary shares 12,500,000 ManagementOptions	Executive Director
Zed Rusike	Nil	 3,000,000 fully paid ordinaryshares 7,500,000 ManagementOptions	Non-ExecutiveDirector
Gerry Fahey	Nil	 5,000,000 ManagementOptions	Independent NonExecutive Director

It is anticipated that the New Board will consist of 4 Directors, although it is expected that a further 2 Directors will be appointed to the Board as suitable candidates are identified.

The Company proposes to issue 80,000,000 options in the Company (collectively Management Options) to the Directors of the New Board, key management personnel and advisors of the Company. These Management Options will align the long term goals of the Management Optionholders with that of Shareholders and will incentivise the Management Optionholders to provide ongoing dedicated services to the Company. These Management Options are intended to link directors, management and advisors to the future performance of the Company.

In addition to the Management Options that will be issued (in accordance with the table above), the Company proposes to issue Management Options to Roger Tyler, Chris Hilbrands, Chris Rees and Paul Struijk.

Biographies of the proposed Directors of the New Board

Hugh Warner (Mr Warner) is currently the Executive Chairman of the Board. He is an Australian resident and holds a Bachelor of Economics from the University of Western Australia. He has been a director of a number of companies listed on the ASX and AIM, with a particular focus on companies engaged in the mining industry.

Duncan (Harry) Greaves (Mr Greaves) is currently a Non-Executive Director of the Company. Mr Greaves is a fourth generation Zimbabwean and a resident of Zimbabwe. He holds a Bachelor of Science (Agriculture) from the University of Natal. He is also the founding shareholder of Farvic, with whom the Company co-owns Hawkmoth. In addition to the Farvic gold mines, Farvic also operates the Prince Olaf and Nicolson gold mines in southern Zimbabwe, all of which he brought back into production over the last 10 years including the design and construction of two milling facilities. He was also the driving force behind the acquisition of the Bushtick Project and the Penhalonga Project, both of which form an integral part of the Company's revised growth objectives. Mr Greaves is a wellrespected and well-known individual of the Zimbabwe mining fraternity.

Zivanayi (Zed) Rusike (Mr Rusike) is a qualified accountant and resident of Zimbabwe. He was previously the Managing Director of United Builders Merchant before being promoted to Group Managing Director for Radar Holdings Limited, a large quoted company on the Zimbabwe Stock Exchange. He retired from the Radar Group of companies to pursue personal interests and currently sits on the board of Cairns Holdings, TSL Limited, Dulux Paints Limited and Halsted Brothers (Pvt) Limited to name a few. Mr Rusike is a former President of and current Chairman of the board of the Confederation of Zimbabwe Industries.

Gerry Fahey (Mr Fahey) is currently a Non-Executive Director of the Board. Mr Fahey has over 35 years' global experience in the mining industry. He is a specialist in mining geology, mine development and training. He previously worked as the Chief Geologist for Delta Gold for over 10 years, where he was actively involved in the development of the Eureka, Chaka, Globe and Phoenix gold mines in Zimbabwe and the Kanowna Belle, Golden Feather, Sunrise and Wallaby gold projects in Australia. Mr Fahey currently serves as a Director of CSA Global Pty Ltd and Focus Minerals Ltd. He is also a member of the Joint Ore Reserve Committee (JORC)

RESOLUTION 7 – APPROVAL OF FUTURE ISSUE OF 42,500,000 MANAGEMENT OPTIONS

As noted previously, the Company proposes to issue 80,000,000 Management Options in total, to the Directors of the New Board, key management personnel and advisors of the Company, for no consideration and at an exercise price of 1.5 cent ($0.015) per option. The total number of Management Options that will be issued to each Management Optionholder or their nominee is depicted in the table below.

Recipient	Proposed role in the Company	Management Options
Hugh Warner	Executive Chairman of the New Board	12,500,000
Harry Greaves	Executive Director of the New Board and member of theZimbabwe Team	12,500,000
Andrew Halsted	Co-founder of Farvic and significant business figure withinZimbabwe and the surrounding region and member of theZimbabwe Team	12,500,000
Zed Rusike	Non-Executive Director of the New Board and member of theZimbabwe Team	7,500,000
Roger Tyler	Chief Geologist of the Company and member of the ZimbabweTeam	7,500,000
Chris Hilbrands	Current Chief Financial Officer of the Company and proposedto continue in the same role	7,500,000
Chris Rees	Proposed Chief Operating Officer of the Company andmember of the Zimbabwe Team	7,500,000
Paul Struijk	Mergers & Acquisitions advisor to Blumont and PacificAdvisers	7,500,000
Gerry Fahey	Independent Non-Executive Director of the New Board	5,000,000
Total		80,000,000

For the avoidance of any doubt, it should be noted that both Andrew Halsted and Paul Struijk are intended to be advisors and not part of day to day management of the Company.

Shareholder approvals for the issue of Management Options to the current Directors of the Board (Mr Warner, Mr Greaves and Mr Fahey) proposed Directors of the New Board (Mr Warner, Mr Greaves, Mr Rusike and Mr Fahey) which total 37,500,000 Management Options will be dealt with under Resolutions 8, 9, 10 and 11 of this Notice of Meeting.

This Resolution seeks approval for the issue of the remaining balance of the total of Management Options, being 42,500,000 Management Options to key management personnel of the Company.

The effect of this Resolution is to provide shareholder consent to the issue of the options, and for the issue of options to fall within an exception to Listing Rule 7.1, which will therefore allow the Directors to issue these options without using the Company's annual 15% placement capacity.

Information Required by ASX Listing Rule 7.3

The following information in relation to these Management Options is provided to shareholders for the purposes of ASX Listing Rule 7.3:

(a) The maximum number of Management Options to be issued under this Resolution is 42,500,000. The issue of Management Options to Hugh Warner, Harry Greaves, Zed Rusike and Gerry Fahey is considered in Resolutions 8 – 11.
(b) These Management Options will be issued by 23 December 2013.
(c) The allottees are key management personnel and advisors of the Company.
(d) No consideration is payable for the Management Options being issued to the key management personnel and advisors of the Company.
(e) The full terms of the Management Options are set out in Annexure B.

RESOLUTION 8, 9, 10 and 11 – RELATED PARTY APPROVAL

Listing Rule 10.11 provides that a listed company must not issue equity securities to a related party without shareholder approval.

A "related party" for the purposes of the Listing Rules is widely defined and includes a director of a public company or a spouse of a director of a public company. The definition of 'related party' also includes (section 228(6) of the Corporations Act) a person whom there is reasonable grounds to believe will become a 'related party' of a public company.

Mr Warner is the current Executive Chairman of the Board and a proposed Director of the New Board and therefore a related party for the purposes of Chapter 2E of the Corporations Act and this Notice of Meeting.

Mr Greaves is the current Non-Executive Director of the Board and proposed Director of the New Board and therefore a related party for the purposes of Chapter 2E of the Corporations Act and this Notice of Meeting.

Mr Rusike is a proposed Director of the New Board and therefore a related party for the purposes of Chapter 2E of the Corporations Act and this Notice of Meeting.

Mr Fahey is the current Non-Executive Director of the Board and proposed Director of the New Board and therefore a related party for the purposes of Chapter 2E of the Corporations Act and this Notice of Meeting.

RelevantDirectors	Current Relevant Interests inthe Company	Proposed issue of Securitiespursuant to Resolutions inthis Notice of Meeting	Proposed positionon the New Board
Hugh Warner	 61,300,000 fully paidordinary shares 16,000,000 unlisted options	 12.500,000 ManagementOptions	Current ExecutiveChairman of theBoard and proposedExecutive Chairmanof the New Board
Harry Greaves	Nil	 14,400,000 fully paidordinary shares (part of CMLPlacement) 12,500,000 ManagementOptions	Current NonExecutive Director ofthe Board andproposed ExecutiveDirector of the Board
Zed Rusike	Nil	 3,000,000 fully paid ordinaryshares (part of CMLPlacement) 7,500,000 ManagementOptions	Proposed NonExecutive Director ofthe New Board
Gerry Fahey	Nil	 5,000,000 ManagementOptions	Current NonExecutive Director ofthe Board andproposed NonExecutive Director ofthe New Board

(Collectively known as Relevant Directors)

For the purposes of Chapter 2E of the Corporations Act, the issue of securities to each of the Relevant Directors constitute the giving of a financial benefit.

Resolution 8 seeks shareholder approval for the issue of the following securities to Mr Warner (or his nominee):

(a) 12,500,000 Management Options at an exercise price of 1.5 cent ($0.015) per Option as announced by the Company on 15 July 2013.

Resolution 9 seeks shareholder approval for the issue of the following securities to Mr Greaves (or his nominee):

(a) 14,400,000 fully paid ordinary shares at a deemed issue price of 1.2 ($0.012) per Share as announced by the Company on 15 July 2013; and
(b) 12,500,000 Management Options at an exercise price of 1.5 cent ($0.015) per Option as announced by the Company on 15 July 2013.

Resolution 10 seeks shareholder approval for the issue of the following securities to Mr Rusike (or his nominee):

(a) 3,000,000 fully paid ordinary Shares at a deemed issue price of 1.2 cent ($0.012) per Share as announced by the Company on 15 July 2013; and
(b) 7,500,000 Management Options at an exercise price of 1.5 cent ($0.015) per Option as announced by the Company on 15 July 2013.

Resolution 11 seeks shareholder approval for the issue of the following securities to Mr Fahey (or his nominee):

(a) 5,000,000 Management Options at an exercise price of 1.5 cent ($0.015) per Option as announced by the Company on 15 July 2013.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

(a) the giving of the financial benefit falls within one of the nominated exceptions to the provisions; or
(b) prior shareholder approval is obtained to the giving of the financial benefit.

The Board believe that the issue of Shares to the Mr Greaves and Mr Rusike could fall within the "arms length terms" exception set out in section 210 of the Corporations Act. The Board have based their belief on the following facts:

(a) Mr Greaves and Mr Rusike are being issued Shares through the CML Placement, therefore on the same terms that are being offered to other equity shareholders of CML, most of who are not related parties of the Company.
(b) Mr Greaves and Mr Rusike are being issued Shares at a deemed issue price of 1.2 cent ($0.012). The Company's shares are currently being traded at 0.5 cent ($0.005) (as of 5 August 2013) and since reinstatement on the ASX, the Company's Share price has fluctuated between 0.5 and 1.1 cent ($0.005 - $0.011). Therefore, the price at which the Shares are being issued pursuant to the CML Placement is at a significant premium to the historical closing Share prices of the Company.

Notwithstanding this, the Board considered it prudent to seek related party approval for the issue of Shares to Mr Greaves and Mr Rusike.

Information Required by ASX Listing Rule 10.13

(a) The following information in relation to the securities is provided to Shareholders for the purposes of ASX Listing Rule 10.13:The maximum number of Options to be issued to Mr Warner as Management Options is 12,500,000.
(b) The maximum number of Shares to be issued to Mr Greaves under the CML Placement is 14,400,000.
(c) The maximum number of Options to be issued to Mr Greaves as Management Options is 12,500,000.
(d) The maximum number of Shares to be issued to Mr Rusike under the CML Placement is 3,000,000.
(e) The maximum number of Options to be issued to Mr Rusike as Management Options is 7,500,000.
(f) The maximum number of Options to be issued to Mr Fahey as Management Options is 5,000,000.
(g) The deemed issue price of each Share being issued to Mr Greaves and Mr Rusike is 1.2 cent ($0.012).
(h) The Shares to be issued to Mr Greaves and Mr Rusike will be fully paid on issue and rank equally in all aspects with all existing ordinary shares previously issued by the Company. The full terms of the Shares issued to each of Mr Greaves and Mr Rusike (as part of the CML Placement) are set out in the Explanatory Statement for Resolution 5.
(i) No consideration is payable for the Management Options being issued to the Relevant Directors. The full terms of the Management Options are set out in Annexure B.The Shares and Management Options to the Relevant Directors will occur no later than one month from the date of this Extraordinary General Meeting.

Information Required by Chapter 2E of the Corporations Act

The related party to whom the proposed Resolutions would permit the financial benefit to be given

The Relevant Directors are each a related party of the Company to whom Resolutions 8, 9, 10 and 11 would permit the financial benefit to be given.

The nature of the financial benefit and other remuneration of the Relevant Directors

(a) The nature of the financial benefit to be given to Mr Warner is the issue of 12,500,000 Management Options.
(b) The nature of the financial benefit to be given to Mr Greaves is the issue of 14,400,000 fully paid ordinary Shares in the Company and 12,500,000 Management Options.
(c) The nature of the financial benefit to be given to Mr Rusike is the issue of 3,000,000 fully paid ordinary Shares in the Company and 7,500,000 Management Options.
(d) The nature of the financial benefit to be given to Mr Fahey is the issue of 5,000,000 Management Options.
(e) In addition to the financial benefit outlined above in paragraphs (a) (d), the Relevant Directors will also receive other remuneration in the form of a base salary as follows:
(a) Mr Warner: A$220,000 per annum (inclusive of superannuation);
(b) Mr Greaves: A$220,000 per annum (inclusive of superannuation);
(c) Mr Fahey: A$60,000 per annum (inclusive of superannuation); and
(d) Mr Rusike: A$60,000 per annum (inclusive of superannuation).
(f) The full terms of the Shares under the CML Placement to be issued to Mr Greaves and Mr Rusike are set out in the Explanatory Statement for Resolution 5.
(g) The full terms of the Management Options to be issued to the Relevant Directors are set out in the Explanatory Statement for Resolution 7.

Directors recommendation and basis of financial benefit

(a) The Board currently consists of Mr Warner (Executive Chairman), Mr Greaves (Non-Executive Director) and Mr Fahey (Non-Executive Director).
(b) Mr Greaves will not be making a recommendation about Resolution 9 (insofar as it relates to the issue of Shares pursuant to the CML Placement to him) as Mr Greaves has a direct material interest in the outcome of Resolution 9. As noted previously, as Shares pursuant to the CML Placement will be issued to Mr Greaves on the same terms offered to other participants under the CML Placement, of which the majority are not related parties to the Company, Mr Warner and Mr Fahey believes that the issue of these Shares to Mr Greaves could arguably fall within the "arms length terms" exception set out in section 210 of the Corporations Act. For the same reasons, the Board believes that the issue of these Shares to Mr Rusike could arguably fall within the same aforementioned exception.
(c) Mr Warner will not make a recommendation about Resolution 8 as has a direct material interest in the outcome of Resolution 8. Mr Greaves and Mr Fahey believes that the issue of 12,500,000 Management Options to Mr Warner will align the long term goals of Mr Warner with that of Shareholders and will incentivise Mr Warner to provide ongoing dedicated services to the Company. In reaching this recommendation and belief, Mr Greaves and Mr Fahey has taken into consideration the fact that Mr Warner is proposed to take on a demanding executive role with the Company as the New Board's Executive Chairman.
(d) Mr Greaves will not make a recommendation about Resolution 9 (insofar as it relates to the issue of Management Options) as he has a direct material interest in the outcome of Resolution 9. Mr Warner and Mr Fahey believes that the issue of 12,500,000 Management Options to Mr Greaves will align the long term goals of Mr Greaves with that of Shareholders and will incentivise Mr Greaves to provide ongoing dedicated services to the Company. In reaching this recommendation and belief, Mr Warner and Mr Fahey has taken into consideration the fact that Mr Greaves is currently a key management personnel of the Zimbabwe Team and is also proposed to take on a demanding executive role with the Company as the New Board's Executive Director.
(e) Mr Fahey will not make a recommendation about Resolution 11 as he has a direct material interest in the outcome of Resolution 11. Mr Warner and Mr Greaves believes that the issue of 5,000,000 Management Options to Mr Fahey will align the long term goals of Mr Fahey with that of Shareholders and will incentivise Mr Fahey to provide ongoing dedicated services to the Company. In reaching this recommendation and belief, Mr Warner and Mr Greaves has taken into consideration the fact that Mr Fahey is proposed to take on an important directorship role with the Company as the New Board's Non-Executive Director.
(f) The Board believes that the issue of 7,500,000 Management options to Mr Rusike will align the long term goals of Mr Rusike with that of Shareholders and will incentivise Mr Rusike to provide ongoing dedicated services to the Company. In reaching this recommendation, the Board has taken into consideration the fact that Mr Rusike is proposed to take on an important directorship role with the Company as the New Board's Non-Executive Director.
(g) Under the Company's current circumstances, the Board (only including Directors of the Board who have not abstained from making a recommendation) consider that the incentives noted above in paragraphs (c) – (f) are a cost effective and efficient reward and incentive to be provided to the Relevant Directors of the Company, as opposed to alternative forms of incentive, such as the payment of cash consideration.
(h) The Board (only including Directors of the Board who have not abstained from making a recommendation) recommend that Shareholders vote in favour of Resolutions 8, 9 and 11.
(i) The Board unanimously recommend that Shareholders vote in favour of Resolution 10.
(j) The Company intends to use the funds raised from the exercise of the Management Options (if exercised at all) for general working capital and to fund projects in accordance with the Funding Use Table.

Capital Structure if all Resolutions are approved by Shareholders

Capital Structure	Shares	Unlisted Options
Current issued capital	372,593,287	60,857,500
Shares issued to Subscribers	375,000,000	-
Shares issued to CML	60,000,000	-
Securities issued to Paul West	2,000,000	2,000,000
Management Options offered to the Relevant Directors	N/A	37,500,000
Management Options offered to others	N/A	42,500,000
Total	809,593,287	142,857,500

If all of the Relevant Directors' 37,500,000 Management Options were exercised into Shares, the effect would be to dilute the shareholding of the existing Shareholders by approximately (assuming that all Resolutions are approved by Shareholders and other options remain unexercised) 4.43%.

Existing relevant interests

(a) Mr Warner currently, either directly or indirectly, owns 61,300,300 fully paid ordinary shares and 16,000,000 unlisted Options in the Company.
(b) Each of Mr Greaves, Mr Rusike and Mr Fahey do not currently, either directly or indirectly, hold any Shares or Options in the Company.
(c) The following is a table that will outline each of the directors' interests in the Company in the event that certain events materialise.

ProposedDirector of theNew Board	All Resolutions areapproved byShareholders and allOptions remainunexercised(a)	All Resolutions areapproved by Shareholdersand all Relevant Directorsexercise their ManagementOptions(b)	All Resolutions areapproved byShareholders and allOptions are exercised(c)
Hugh Warner	7.57%	8.71%	9.44%
Harry Greaves	1.79%	3.18%	2.83%
Zed Rusike	0.37%	1.59%	1.42%
Gerry Fahey	0.00%	0.59%	0.53%
Total	9.73%	14.07%	14.22%

Notes:

(a) These percentages are based on a total sum of 809,593,287 Company shares, which has been calculated as follows:

372,593,287 (current shares in issue) + 325,000,000 (shares pursuant to Consortium Placement) + 8,333,333 (shares pursuant to Sirius Trustees Placement) + 41,666,667 (shares pursuant to Investec Placement) + 60,000,000 (shares pursuant to CML Placement) + 2,000,000 (shares to be issued to Paul West)

(b) These percentages are based on a total sum of 847,093,287 Company shares, which has been calculated as follows:

Calculation in (a) above + 37,500,000 (total sum of options issued to the Relevant Directors being Mr Warner (12,500,000), Mr Greaves (12,500,000), Mr Rusike (7,500,000) and Mr Fahey (5,000,000))

Calculation in (a) above + 60,000,000 (current listed options in issue) + 42,500,000 (balance remaining of Management Options) + 2,000,000 (options to be issued to Paul West)

Trading history

The following table gives various details of the closing market price of the Company's Shares trading on the ASX since reinstatement to Official Quotation on 19 July 2012.

Description	Date	Closing price
Reinstatement	19 July 2012	$0.011
Highest price	19, 26, 27 July 2012,10 August 2012,21 March 2013, 11 July 2013	$0.011
Lowest price	30 April 2013	$0.005
Current price	As of 5 August 2013	$0.005

Preliminary valuation of the Management Options

The Management Options are not quoted on ASX. The Company has valued the Management Options to be granted to the Relevant Directors or their nominees using the Black and Scholes Option Pricing model on a preliminary basis. The Management Options will need to be valued formerly once Shareholder approval has been obtained by the Company to issue these Management Options. The following assumptions have been made regarding the inputs required for the option pricing model:

(a) Underlying share price of 1.2 cent ($0.012) which is the price at which the Subscribers were offered Shares in the Company.
(b) Dividend yield of nil as the Company has not forecast any future dividend payments.
(c) Risk free rate of 2.61%.
(d) Fair volatility rate of 75%.
(e) Expiry date of 30 June 2015.
(f) Exercise price of 1.5 cent ($0.015).

Based on the above assumptions, the Management Options to be granted to the Relevant Directors under Resolutions 8, 9, 10 and 11 have been valued on a preliminary basis as follows:

Description	ExpiryDate	ExercisePrice	Volatility	Value perManagement Option
ManagementOptions	30 June2015	$0.015	75%	$0.003128

Allottee	Number of ManagementOptions	Value of ManagementOptions
Hugh Warner	12,500,000	$39,100.00
Harry Greaves	12,500,000	$39,100.00
Zed Rusike	7,500,000	$23,460.00
Gerry Fahey	5,000,000	$15,640.00

As noted above, these are preliminary valuations and are subject to change, depending on the closing market price of the Company's Shares at the date on which Shareholder approval is obtained by the Company (if at all).

ENQUIRIES

Shareholders are asked to contact Mr Andrew Whitten, Company Secretary, on (+61 2) 8072 1400 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

ACN means Australian Company Number.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by it, as the context requires, of 20 Bridge Street, Sydney, NSW 2000.

ASX Listing Rules means the official listing rules of the ASX and any other rules of the ASX which are applicable while the Company is admitted to the official list of the ASX, as amended or replaced from time to time, except to the extent of any express written waiver by the ASX.

Blumont means Blumont Group Ltd. of 298 Tiong Bahru Road, #20-02/03 Central Plaza, Singapore 168730.

Board means the current board of Directors of the Company.

Bushtick Project means the mining area as governed by the Bushtick Project Agreement.

Bushtick Project Agreement means the senior exploration and mining agreement entered into by Hawkmoth, MGI, Falcon Trust and the Company as announced by the Company on 15 July 2013.

Business Day means a day on which trading takes place on the stock market of ASX.

Chisanya Project means the mining area comprising 4 phosphate exploration licences owned by Hawkmoth;

CML means Continental Minerals Limited of 6 Douglas Road, Workington, Harare, Zimbabwe.

CML Placement means the offer of 60,000,000 Shares at 1.2 cent ($0.012) per Share pursuant to the Exclusivity Agreement between the Company and CML as announced by the Company on 15 July 2013.

Coldawn means Coldawn Investments (Private) Limited (Company Registration Number 15909/2006) of 1 Douglas Road, Workington, Harare, Zimbabwe.

Company means Prospect Resources Limited (ACN 124 354 329) of Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008.

Constitution means the Company's constitution.

Consortium means the group of investors constituted of Blumont, Pacific Advisers and Mr Alexander Molyneux.

Consortium Placement means the transaction governed by the Consortium Subscription Agreement where Newco is to subscribe for $3,900,000.00 worth of the Company's Shares at 1.2 cent ($0.012) per share.

Consortium Subscription Agreement means the subscription agreement entered into by the Company and the Consortium as announced by the Company on 15 July 2013.

Corporations Act means the Corporations Act 2001 (Cth) as amended or replaced from time to time.

Director means a current director of the Company.

Dollar or "$" means Australian dollars.

Exclusivity Agreement means the placement exclusivity agreement entered into by CML and the Company as announced by the Company on 15 July 2013.

Explanatory Statement means the explanatory statement accompanying this Notice of Meeting.

Extraordinary General Meeting means the meeting of the Company's members convened by this Notice of Meeting.

Falcon Trust means Falcon College Trust (Registration Number 05773/75/166) of Falcon College, Esigodini, Matabeleland, Zimbabwe.

Farvic means Farvic Consolidated Mines (Private) Limited (Company Registration Number 20/2003) of Cleveland Ranch, Colleen Bawn, Zimbabwe.

Gold Projects means the Bushtick Project and the Penhalonga Project.

Hawkmoth means Hawkmoth Mining and Exploration (Private) Limited (Company Registration Number 7555/2007) of 1 Douglas Road, Workington, Harare, Zimbabwe.

Hawkmoth Acquisition Agreement means the subscription agreement entered into by Farvic, Prospect UK and Hawkmoth as announced by the Company on 15 July 2013.

Hawkmoth Shareholders Agreement means the shareholders agreement entered into by Farvic, Prospect UK and Hawkmoth as announced by the Company on 15 July 2013.

IER means the Independent Expert Report contained in Annexure C of this Notice of Meeting.

Investec means Investec Zimbabwe Recapitalisation Fund Limited of Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius.

Investec Placement means the transaction governed by the Investec Subscription Agreement where Investec is to subscribe for $500,000.00 worth of the Company's Shares at 1.2 cent ($0.012 per share.

Investec Subscription Agreement means the subscription agreement entered into by the Company and Investec as announced by the Company on 15 July 2013.

Management Options means the Options that will be issued, subject to shareholder approval, to the Directors of the Company's New Board, key management personnel and advisors of the Company.

Management Optionholder means a person holding a Management Option.

MGI means Martin Gunning Investments (Private) Limited (Company Registration Number 201/88) of Falcon College, Esigodini, Matabeleland, Zimbabwe.

New Board means the proposed board of Directors of the Company constituted of 6 Directors that will convene if all Resolutions under this Notice of Meeting is passed by Shareholders.

Newco means the investment vehicle that is to be incorporated by the Consortium for the purposes of taking the Consortium Placement to completion.

Notice of Meeting or Notice of Extraordinary General Meeting means this notice of extraordinary general meeting dated 23 September 2013 including the Explanatory Statement.

Option means an option to acquire a Share.

Optionholder means a holder of an Option.

Pacific Advisers means Pacific Advisers Pte. Ltd. of 116 Lavendar Street, #04-10 Chuan Building, Singapore 338730.

Penhalonga Project means the mining area as governed by the Penhalonga Project Agreement.

Penhalonga Project Agreement means the share sale agreement entered into by Farvic, Hawkmoth, Coldawn and Prospect UK as announced by the Company on 15 July 2013.

Prospect means the Company.

Prospect UK means Prospect Resources (UK) Limited (Company Number 08379571), One America Square, Crosswall, London EC3N 2SG.

Proxy Form means the proxy forma attached to this Notice of Meeting.

Relevant Directors means Hugh Warner, Harry Greaves, Zed Rusike and Gerry Fahey.

Resolutions means the resolutions set out in this Notice of Meeting, or any one of them, as the context requires.

Securities mean Shares and/or Options (as the context requires).

Sirius Trustees means Sirius Trustees Ltd, as trustee of the Abangane, an entity based in Switzerland.

Sirius Trustees Placement means the transaction governed by the Sirius Trustees Subscription Agreement where Sirius Trustees is to subscribe for $100,000.00 worth of the Company's Shares at 1.2 cent ($0.012) per share.

Sirius Trustees Subscription Agreement means the subscription agreement entered into by the Company and Sirius Trustees as announced by the Company on15 July 2013.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Stantons means Stantons International Audit & Consulting Pty Ltd (ACN 84 144 581 519) of 2/1 Walker Avenue, West Perth, Western Australia 6005.

Subscribers means the Consortium, Investec and Sirius Trustees.

Subscription Agreements means the subscription agreements entered into by the Company with the Subscribers.

WST means Western Standard Time as observed in Perth, Western Australia.

Zimbabwe Team means the key personnel from Farvic who will join the Company in various capacities.

Zimbabwe Transaction Documents means the Hawkmoth Acquisition Agreement, Hawkmoth Shareholders Agreement, Bushtick Project Agreement, Penhalonga Project Agreement and Exclusivity Agreement.

This page has been left blank intentionally.

Prospect Resources Limited

ACN 124 354 329

Proxy Form

STEP 1: APPOINT A PROXY TO VOTE ON YOUR BEHALF

Full name of security holder(s):……………………………………………………………

Address:…………………………………………………………………………………...

I/We being a member/s of Prospect Resources Limited (ACN 124 354 329) ("Company") and entitled to attend and vote at the meeting of the Company to be held at 11:00 am (WST) on 23 September 2013 appoint:

(mark box)

the Chairman of the meeting.

OR	
	(mark box)

…………………………………………… (Full name of proxy or the office of the proxy)

or if the person or body corporate named above fails to attend the meeting, or if no person/body corporate is named, the Chairman of the meeting as my/our proxy to attend that meeting and vote on my/our behalf at that meeting and any adjournment or postponement of that meeting in accordance with the following directions (or if no directions have been given, as the proxy sees fit). If two proxies are appointed, the proportion of voting rights this proxy represents is ……...%.

If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of all the relevant resolutions, please place a mark in the box.

(mark box)

By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has interest in the outcome of all the relevant resolutions and that votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

As proxy holder for all undirected proxies, the Chair of the meeting intends to vote in favour of ("For") all the relevant resolutions.

If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on all the relevant resolutions and your votes will not be counted in calculating the required majority if a poll is called on all the relevant resolutions.

STEP 2: VOTING DIRECTIONS ON ALL RESOLUTIONS

I direct that my proxy vote in the following manner (please mark relevant boxes with () to indicate your directions):

Resolution		For	Against	Abstain*
1	Approval of Change of Scale ofActivities			
2	Approval of Future Issue of Shares toa Group of Investors called theConsortium			

3	Approval of Future Issue of Shares toSirius Trustees			
4	Approval of Future Issue of Shares toInvestec Zimbabwe RecapitalisationFund Limited			
5	Approval of Future Issue of Shares toContinental Minerals Limited			
6	Approval of Future Issue of Sharesand Options to Paul West			
7	Approval of Future Issue of42,500,000 Management Options			
8	Related Party Approval – HughWarner			
9	Related Party Approval – HarryGreaves			
10	Related Party Approval – Zed Rusike			
11	Related Party Approval – GerryFahey			

* Please note if you mark abstain, you are directing your proxy not to vote on that Resolution.

STEP 3: SIGNATURE OF SECURITYHOLDER(S)

	Individual or Securityholder 1	Securityholder 2	Securityholder 3


	Sole Director and Sole CompanySecretary	Director	Director/Company Secretary
Date:	//	//	//

In addition to signing this Proxy Form, please provide the following information in case we need to contact you:

Contactname	Contact daytime telephone
---------------------	---------------------------	--

STEP 4: LODGING YOUR PROXY FORM

You must lodge your Proxy Form by 11:00 am (WST) on 21 September 2013.

Please read carefully and follow the instructions overleaf.

How to complete this Proxy Form

For your proxy vote to be effective, your completed Proxy Form must be received by 11:00 am (WST) on 20 July 2013.

Step 1: Appointing a proxy

If you are entitled to attend and vote at the meeting, you may appoint a proxy to attend the meeting and vote on your behalf. A proxy can be an individual or a body corporate and need not be a securityholder. You may select the Chairman of the meeting as your proxy.

Appointing a second proxy: You can appoint up to two proxies. If you appoint two proxies, you must specify the proportion or number of votes each proxy may exercise. If no percentage is specified, each proxy may exercise half of your votes. Fractions of votes will be disregarded. A separate Proxy Form must be used for each proxy.

Default to the Chairman of the meeting: Any directed proxies that are not voted on a poll at the meeting will automatically default to the Chairman of the meeting, who is required to vote those proxies as directed.

Additional Proxy Forms: You can obtain additional Proxy Forms by telephoning the Company or you may copy this Form. Please lodge both Proxy Forms together.

Step 2: Voting directions

You may direct your proxy how to vote by placing a mark () in one of the boxes opposite each item of business. All your securities will be voted in accordance with your directions. If you mark the "Abstain" box for an item, you are directing your proxy not to vote on that item. If you mark more than one box for an item, your vote on that item will be invalid.

Voting a portion of your holding: You may indicate that only a portion of your voting rights are to be voted on any item by inserting a percentage or the number of securities you wish to vote in the appropriate box or boxes. The total of votes cast, or the percentage for or against, an item must not exceed your voting entitlement or 100%.

No directions: If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses.

Step 3: Signing instructions

Individual: The Proxy Form must be signed by the securityholder personally or by Power of Attorney (see below).

Joint holding: The Proxy Form must be signed by each of the joint securityholders personally or by Power of Attorney (see below).

Power of Attorney: To sign under Power of Attorney, you must have already lodged the Power of Attorney with the Company. If you have not previously lodged that document, please attach a certified copy of the Power of Attorney to this Proxy Form when you return it.

Companies: For a corporate securityholder, if the company has a sole director who is also the sole company secretary, that person must sign this Proxy Form. If the company does not have a company secretary (under section 204A of the Corporations Act 2001 ("Act")), its sole director must sign this Proxy Form. Otherwise, a director must sign jointly with either another director or a company secretary in accordance with section 127 of Act. Please indicate the office held by signing in the appropriate place.

Corporate representative: If a representative of a corporate securityholder or proxy is to attend the meeting, the appropriate Certificate of appointment of Corporate Representative must be produced before the meeting. A form of the certificate may be obtained by telephoning the Company**.**

Step 4: Lodging your Proxy Form

This Proxy Form must be received by Prospect Resources Limited by 11:00 am (WST) on 21 September 2013. Any Proxy Form received after that time will not be effective for the meeting. You can return this Proxy Form (and any Power of Attorney under which it is signed):

by post to PO Box 1273, Subiaco, Western Australia 6904;
by facsimile to (+61 8) 9388 3006; or
by hand delivery to Suite 6, 245 Churchill Avenue, Subiaco, Western Australia 6008.

ANNEXURE A – TERMS OF OPTIONS

(a) The Options will be issued by 23 December 2013.
(b) The Options will expire at 5:00pm (AEST) on 30 June 2015 (Expiry Date). Any option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
(c) The amount payable upon the exercise of each Option will be 1.5 cent ($0.015) (Exercise Price).
(d) The Options may be exercised in whole or in part, and if exercised in part, multiples of 100,000 must be exercised on each occasion.
(e) Optionholders may exercise their options by lodging with the Company, before the Expiry Date:
- (a) a written notice of exercise of Options specifying the number of options being exercised; and
- (b) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised.

(Exercise Notice)

(f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
(h) The Options are freely transferrable.
(i) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.
(j) The Company may apply for quotation of the Options on ASX. However, the Company will apply for quotation of all Shares allotted pursuant to the exercise of the Options on ASX within 10 Business Days after the allotment of those Shares.
(k) If at any time the issued capital of the Company is reconstructed, all rights of the Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
(l) There are no participating rights or entitlements inherent in the Options and the Optionholder will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give the Optionholder the opportunity to exercise the Options prior to the date for determining entitlements to participate in any such issue.
(m) In the event the Company proceeds with a pro rata issue (except a bonus issue) of securities to Shareholders after the date of issue of the Options, the exercise price of the Options may be reduced in accordance with the formula set out in ASX Listing Rule 6.22.2.
(n) In the event the Company proceeds with a bonus issue of securities to Shareholders after the date of issue of the Options, the number of securities over which a Option is exercisable may be increased by the number of securities which the Optionholder

would have received if the Option had been exercised before the record date for the bonus issue.

(o) In the event the Options are exercised by the Optionholders, the Company intends to use the funds raised for general working capital and to fund projects in accordance with the Funding Use Table.

ANNEXURE B – TERMS OF MANAGEMENT OPTIONS

(a) The Management Options will be issued by 23 December 2013.
(b) The Management Options will expire at 5:00pm (AEST) on 30 June 2015 (Expiry Date). Any option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
(c) The amount payable upon the exercise of each Management Option will be 1.5 cent ($0.015) (Exercise Price).
(d) The Management Options may be exercised in whole or in part, and if exercised in part, multiples of 100,000 must be exercised on each occasion.
(e) Management Optionholders may exercise their options by lodging with the Company, before the Expiry Date:
- (a) a written notice of exercise of Management Options specifying the number of options being exercised; and
- (b) a cheque or electronic funds transfer for the Exercise Price for the number of Management Options being exercised.

(Exercise Notice)

(f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
(h) The Management Options are freely transferrable.
(i) All Shares allotted upon the exercise of Management Options will upon allotment rank pari passu in all respects with other Shares.
(j) The Company may apply for quotation of the Management Options on ASX. However, the Company will apply for quotation of all Shares allotted pursuant to the exercise of the Management Options on ASX within 10 Business Days after the allotment of those Shares.
(k) If at any time the issued capital of the Company is reconstructed, all rights of the Management Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
(l) There are no participating rights or entitlements inherent in the Management Options and the Management Optionholder will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Management Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give the Optionholder the opportunity to exercise the Management Options prior to the date for determining entitlements to participate in any such issue.
(m) In the event the Company proceeds with a pro rata issue (except a bonus issue) of securities to Shareholders after the date of issue of the Management Options, the exercise price of the Management Options may be reduced in accordance with the formula set out in ASX Listing Rule 6.22.2.
(n) In the event the Company proceeds with a bonus issue of securities to Shareholders after the date of issue of the Management Options, the number of securities over which a Management Option is exercisable may be increased by the number of securities which the Management Optionholder would have received if the Management Option had been exercised before the record date for the bonus issue.
(o) In the event the Management Options are exercised by the Management Optionholders, the Company intends to use the funds raised for general working capital and to fund projects in accordance with the Funding Use Table.

ANNEXURE C – INDEPENDENT EXPERT REPORT

PO Box 1908 West Perth WA 6872 Australia

Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

ABN: 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

5 August 2013

The Directors Prospect Resources Limited Suite 6, 245 Churchill Street SUBIACO WA 6008

Summary of Opinion

For the purposes of section 611 (item 7) of TCA, in relation to the approval to issue 325,000,000 Consortium Subscription Shares to the Consortium (or their nominees), in our opinion taking into account the factors noted elsewhere in this report including the factors (positive, negative and other factors) noted in section 7 of this report, the proposal as outlined in paragraph 1.1 and Resolution 2 may on balance collectively be considered to be fair and reasonable at the date of this report.

Dear Sirs

RE: PROSPECT RESOURCES LIMITED ("PROSPECT" OR "THE COMPANY") (ACN 124 354 329) ON THE PROPOSAL THAT SHAREHOLDERS APPROVE THE ISSUE OF 325,000,000 SHARES AT 1.2 CENTS EACH TO A CONSORTIUM AS NOTED BELOW AND IN RESOLUTION 2 TO RAISE $3,900,000. MEETING PURSUANT TO SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT 2001 ("TCA").

1. Introduction

1.1 We have been requested by the Directors of Prospect to prepare an Independent Expert's Report to determine the fairness and reasonableness relating to the proposal to issue a total of 325,000,000 ordinary shares ("Consortium Subscription Shares") in Prospect at an issue price of 1.2 cents each to raise a gross $3,900,000 to a consortium comprising of Blumont Group Limited ("Blumont") (Singaporean company), Pacific Advisers Pte Ltd ("Pacific Advisers") (Singaporean company) and Alexander Molyneux ("AAM") of Hong Kong ("the Consortium"). Resolution 2 in the Notice of Meeting ("Notice") and the Explanatory Statement attached to the Notice refers to further details. The proposed issue of 325,000,000 shares to Consortium is referred to in this report as the "Consortium Subscription" as part of a $4,500,000 capital raising as noted below. The Consortium plans to use a nominee company to take up the 325,000,000 Consortium Subscription Shares of which Blumont will have not less than 60% of the shares in the nominee company.

The projected split of the subscription price of $3,900,000 amongst the Consortium is as follows:

Consortium Investor	Subscription Amount ($)	Share Subscription Amount
Blumont	$2,340,000	195,000,000
Pacific Advisers	$780,000	65,000,000
Alexander Molyneux	$780,000	65,000,000
Total	$3,900,000	325,000,000

manager that finances and invests in public and private companies across a number of industries including mining and energy, technology, luxury consumer goods and media. Alexander Molyneux is a Hong Kong based specialist resources investment expert who serves on the board on a number of public and private companies.

1.2 On 15 July 2013, the Company announced, inter alia, that it had secured $4,500,000 from a number of strategic investors (depicted in table below) through the execution of conditional subscription agreements.

Strategic investors	$ Committed
Entity controlled by a consortium of investors constituting of the Consortium(Consortium Subscription Agreement)	$3,900,000
Africa-based Investec Zimbabwe Recapitalisation Fund Limited (Investec SubscriptionAgreement)	$500,000
Sirius Trustees Ltd, as trustee of the Abangane (Sirius Trustees SubscriptionAgreement)	$100,000
Total	$4,500,000

(Collectively, the agreements are known as Subscription Agreements and the strategic investors are known as the Subscribes)

Formation of strategic relationships into Zimbabwe

The Company has successfully liaised with the Zimbabwe Investment Authority, and subject to a number of conditions, the Company has, through its wholly owned UK-based subsidiary (Prospect UK) acquired the right to a controlling 70% interest in Hawkmoth Mining Exploration (Pvt) Limited ("Hawkmoth"), a Zimbabwean based mining company, for US$50,000. The remaining balance (30%) of Hawkmoth is owned by Farvic Consolidated Mining (Pvt) Ltd ("Farvic"), another Zimbabwean based mining company.

Hawkmoth has in turn:

(a) entered into a senior exploration and mining agreement with Martin Gunning Investments (Private) Limited (Zimbabwean based private company) ("MGI)" and Falcon College Trust (Zimbabwean based trust) ("Falcon Trust**"), providing Hawkmoth with the right to explore and mine the historic Bushtick Gold Mine and surrounding acreage ("Bushtick Project"**) including the in situ tailings dumps in consideration for an upfront fee of US$50,000 and a further US$200,000 on a deferred settlement basis and a 5% royalty of gold revenues;
(b) acquired 4 claims comprising the Chisanya Phosphate Project within the Chisanya Carbonatite, South East Zimbabwe ("Chisanya Project"); and
(c) acquired a controlling 100% interest in Coldawn Investments (Pvt) Limited ("Coldawn**"**), another Zimbabwean based mining company that legally and beneficially owns 100% of the mining tenements comprising the Penhalonga Gold Project ("Penhalonga Project") in consideration for a fee of US$20,000 and a commitment to fund exploration up to completion of a feasibility study within 5 years to produce 25,000 oz of gold per annum for a period of 10 years.

The Zimbabwe Team is led by Duncan (Harry) Greaves (who, as announced by the Company on 15 July 2013) was appointed to the Board as a Non-Executive Director), Zed Rusike, Chris Rees, Roger Tyler and Andrew Halstead and includes both indigenous and non-indigenous Zimbabweans.

In order to take advantage of the synergies available to the Company and the Zimbabwe Team, and also align its collective interests for the future performance of all parties involved, the Company entered into a Placement Exclusivity Agreement ("Exclusivity Agreement") with Continental Minerals Limited ("CML"), a private company based in Zimbabwe which consisted of shareholders and management personnel from Farvic (and therefore the Zimbabwe Team). The Exclusivity Agreement is further detailed in Part B of the Explanatory Statement.

On 15 July 2013, the Company announced, inter alia, that it had entered into a Placement Exclusivity Agreement with CML.

Pursuant to the Exclusivity Agreement"

(a) Harry Greaves, Roger Tyler and Chris Reaves ('Introducing Parties") have agreed for a period of 3 years, to exclusively present all new mining opportunities that they becomes aware of in Zimbabwe to the Company; and
(b) There are four current opportunities (specified in the Exclusivity Agreement but confidential for the purposes of the Notice of Meeting) that the Introducing Parties and the Company have determined are outside the Exclusivity Agreement due to the timing of when such opportunities were presented to them, two of which are the Bushtick Project and Penhalonga Project. If any of these other two specified opportunities results in an acquisition by the Company (through Prospect UK), a performance fee shall be payable to the Introducing Parties, subject to negotiation; and
(c) In consideration, the Company has agreed to issue 60,000,000 of its fully paid ordinary shares to CML (or its nominees) at a deemed price of 1.2 cent ($0.012) per share ("CML Placement").

CML has advised the Company to issue all the shares that it receives under the CML Placement to the list of parties or nominees as noted below. The proposed split of the Company's Shares to be issued under the CML Placement is as follows:

ProposedRecipientsundertheCMLPlacement	Proposed percentage ofshares under the CMLPlacement	Proposed number of CompanyShares under the CMLPlacement
Harry Greaves	24%	14,400,000
Andrew Halsted	24%	14,400,000
Roger Tyler	7%	4,200,000
Zed Rusike	5%	3,000,000
Others	40%	24,000,000
Total	100%	60,000,000

The issue of the Company's shares to each of Harry Greaves and Zed Rusike are being dealt with under Resolutions 9 and 10 of the Notice as they are related parties to the Company.

As referred to in Part A of the Explanatory Statement and as announced by the Company on 15 July 2013, the Exclusivity Agreement is the part of a wider strategic venture entered into by the Company, whereby its UK-based 100% owned subsidiary Prospect UK has entered into a number of key agreements known as the Zimbabwe Transaction Documents that solidifies its position as a mining operator in Zimbabwe and surrounding lands. The Exclusivity Agreement places the Company in a position to take advantage of mining opportunities as they emerge, by engaging personnel (who form an integral part of the Zimbabwe Team) who have a deep understanding of the local mining industry. Paul West who played an instrumental role in procuring the Company's entry into the Zimbabwe Transaction Documents via the introduction of the Zimbabwean Team to the Company has agreed to be remunerated for his services in the form of securities issued by the Company. The issue of these securities are being dealt with in Resolution 6 of the Notice and its is proposed that he will receive 2,000,000 shares at a deemed 1.2 cents ("West Shares") and 2,000,000 share options exercisable at 1.5 cents each, on or before 30 June 2015 ("West Options").

The Company also proposes to issue 80,000,000 options in the Company (collectively "Management Options") to some Directors of the New Board, key management personnel and advisers of the Company. These Management Options are planned to align the long term goals of the Management Optionholders with that of shareholders and will incentivise the Management Optionholders to provide ongoing dedicated services to the Company. These Management Options are intended to link directors and management to the future performance of the Company. As part of the 80,000,000 Management Options, the Company proposes to issue Management Options to Roger Tyler, Chris Hilbrands, Chris Rees and Paul Strusic.

1.3 Under section 606 of TCA, a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that persons or someone else's voting power in the company increases:
- (a) from 20% or below to more than 20%; or
- (b) from a starting point that is above 20% and below 90%.

Under section 611 (Item 7) of TCA, section 606 does not apply in relation to any acquisition of shares in a company approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transaction pursuant to a section 611 (Item 7) meeting.

1.4 Following completion of the Subscription Agreements and the other proposals noted in paragraph 1.2 above and in the Notice, the Consortium who currently holds nil shares in Prospect would own a total of 325,000,000 shares in Prospect representing approximately 40.14% of the then shares on issue (assuming all other share issues as envisaged and described in the Notice and Explanatory Statement). There would be 809,593,287 Prospect shares on issue. As it is envisaged that Blumont would have 60% of the issued capital of the nominee company to be used by the Consortium, Blumont's indirect interest in Prospect would approximate 24.08% but as it will control the nominee company and has Board representation on the nominee company, Blumont has a relevant interest in all of the 325,000,000 Consortium Subscription Shares.
1.5 A notice prepared in relation to a meeting of shareholders convened for the purposes of section 611 (Item 7) of TCA should be accompanied by an independent expert's report stating whether it is fair and reasonable to approve the issue of 325,000,000 Consortium Subscription Shares to Consortium's nominee company at 1.2 cents each to raise a gross $3,900,000. To assist shareholders in making a decision on the proposal outlined in Resolution 2 of the Notice the directors have requested that Stantons International Securities prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the proposal under Resolution 2 is fair and reasonable to the non-associated shareholders of Prospect.

We are not reporting on the fairness and reasonableness of the other resolutions referred to in the Notice and Explanatory Statement. However, we note that the issue of the Consortium Subscription Shares is part of the overall Subscription Agreements with the Subscribers to raise a gross $4,500,000.

1.6 Apart from this introduction, this report considers the following:
- Summary of opinion
- Implications of the proposals with the Consortium
Corporate history and nature of business
Future direction of Prospect
Basis of valuation of Prospect shares
Premium for control
Consideration as to fairness and reasonableness
Conclusion as to fairness and reasonableness
Sources of information
Appendix A and Financial Services Guide
1.7 In determining the fairness and reasonableness of the transaction pursuant to Resolution 2 we have had regard to the definitions set out by the Australian Securities and Investments Commission ("ASIC") in its Regulatory Guide 111, "Content of Expert Reports". The Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of "fairness" is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the "target" and irrespective of whether the consideration is scrip or cash. An offer is "reasonable" if it is fair. An offer may also be reasonable, if despite not being "fair", there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. It also states that, where an acquisition of shares by way of an allotment is to be approved by shareholders pursuant to section 611 (Item 7) of TCA, it is desirable to commission a report by an independent expert stating whether or not the proposal is fair and reasonable, having regards to the proposed allottees and whether a premium for potential control is being paid by the allottees. Regulatory Guide 111 also provides that such an allotment should involve a comparison of the advantages and disadvantages likely to accrue to non associated shareholders if the transactions proceed compared with if they do not.

Accordingly, our report in relation to Resolution 2 comprising the approval to issue 325,000,000 Consortium Subscription Shares to the Consortium or their nominees is concerned with the fairness and reasonableness of the proposal with respect to the existing non-associated shareholders of Prospect and whether the Consortium is paying a premium for control.

Summary of Opinion

1.8 For the purposes of section 611 (item 7) of TCA, in relation to the approval to issue 325,000,000 Consortium Subscription Shares to the Consortium (or its nominee company), in our opinion taking into account the factors noted elsewhere in this report including the factors (positive, negative and other factors) noted in section 7 of this report, the proposal as outlined in paragraph 1.1 and Resolution 2 may on balance collectively be considered to be fair and reasonable at the date of this report.

Each shareholder needs to examine the share price of Prospect, market conditions and announcements made by Prospect, particularly pertaining to the Zimbabwean Projects (up to the date of the shareholders meeting) at the time of exercise of vote to ascertain the impact, if any, on Resolution 2. The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report.

2. Implications of the Proposals

2.1 As at 2 August 2013, there are 372,593,287 ordinary fully paid shares on issue in Prospect. The significant registered fully paid shareholders as at 24 July 2013, based on the top 20 shareholders list were believed to be:

	No. of fully paidshares	% of issued fullypaid shares
Hugh and Dianne Warner	32,300,000	8.67
Elliot Holdings Pty Ltd	27,000,000	7.25
Holloway Cove Pty Ltd	23,900,000	6.41
United Equity Partners Pty Ltd	21,000,000	5.64
Leilani Investment Pty Ltd	20,000,000	5.37
BO & EJ Stephens	15,000,000	4.03
	139,200,000	37.37

The top 50 shareholders at 24 July 2013 owned approximately 78.06% (290,859,411 shares) of the ordinary issued capital of the Company.

2.2 As at 2 August 2013 the following unlisted share options are outstanding:
- 875,000 options exercisable at 20 cents each by 5 November 2013
- 60,000,000 options exercisable at 15 cents each by 18 June 2015
2.3 Following completion of the Subscription Agreements and the other proposals noted in paragraph 1.2 above and in the Notice, the Consortium who currently holds nil shares in Prospect would own a total of 325,000,000 shares in Prospect representing approximately 40.14% of the then shares on issue (assuming all other share issues as envisaged and described in the Notice and Explanatory Statement). There would be 809,593,287 Prospect shares on issue. The Company will raise $4,500,000 from the Subscriptions of which $3,900,000 will come from the Consortium or their nominees.

The Company seeks approval for the issue and allotment of 325,000,000 fully paid ordinary shares in the capital of the Company to the Consortium (via a nominee company) under the Consortium Placement. The following is a table depicting the percentage of ordinary shares the Consortium may hold in the Company if certain resolutions are approved by shareholders under this Notice of Meeting:

Current and proposed Shareholders	Only if Resolution 2is approved	If certainResolutions areapproved
Current issued ordinary shares	372,593,287	372,593,287
The Consortium/Nominee Company (Resolution 2)	325,000,000	325,000,000
Sirius Trustees (Resolution 3)	-	8,333,333
Investec (Resolution 4)	-	41,666,667
CML (Resolution 5)	-	60,000,000
Paul West (Resolution 6)	-	2,000,000
Total	697,593,287	809,593,287
Possible approximate percentage of fully paid ordinaryshares owned by the Consortium	46.59%	40.14%

In the event that all 80,000,000 Management Options and the 2,000,000 share options to be issued under Resolution 6 are in fact issued and exercised at 1.5 cents each, the Consortium's shareholding would reduce to approximately 36.45%. The Company would receive a gross $1,230,000 if the 82,000,000 share options are exercised.

2.4 We understand that the Subscription monies raised will be used for working capital and exploration and evaluation activities on the Zimbabwean prospects.

2.5 The Board of Prospect currently consists of Hugh Warner (Executive Chairman), Harry Greaves (Non Executive Director) and Gerry Fahey (Non Executive Director). Jonathan Pager and Michael Pollak resigned as directors of the Company on 15 July 2013 following the appointment of Harry Greaves and Gerry Fahey on the same day. The Consortium Subscription Agreement agrees that the Board of the Company will comprise of no more than 6 directors and:
- (a) For every 16.7% of the Company's fully paid ordinary shares legally and beneficially owned by the Consortium (nominee company) ("the Appointment Interest") the Consortium will be granted the right to appoint 1 director to the Board of the Company; and
- (b) The right granted to the Consortium only perpetuates when the Consortium is the legal and beneficial owner of Prospect's fully paid ordinary shares that at least satisfies the Appointment Interest.

This right has also been granted to Investec, one of the Subscribers. Further new directors may be appointed in the future as the needs arise and subject to the Consortium nominating any new directors.

2.6 The Company via Prospect UK has subscribed for a 70% interest in Hawkmoth for US$50,000 and Hawkmoth acquiring a 100% interest in Coldawn for US$20,000. Hawkmoth and Coldawn have further commitments and further details are noted in paragraph 1.2 above and elsewhere in the Explanatory Statement attached to the Notice.

3. Corporate History and Nature of Business

3.1 Prospect is listed on the ASX and is a resource company primarily focused on the exploration and evaluation of mineral projects in Australia and more recently Zimbabwe (conditional). The Company's projects are as follows:
- The Northampton Project comprising of EL 66/56 (Mary Springs Project) and an 80% interest in EL 66/53 (along with 5 Mining Access Agreements)
- Refer paragraph 1.2 and the Explanatory Statement attached to the Notice on potential interests in Zimbabwe.
3.2 A summarised unaudited consolidated balance sheet (statement of financial position) of the Prospect Group as at 30 June 2013 is outlined in paragraph 5.4.1 of this report.

4. Future Directions of Prospect

4.1 We have been advised by the directors and management of Prospect that:
- The immediate short-term plan is to complete the Subscriptions to raise $4,500,000 and such funds will be used for working capital and exploration and evaluation of the existing Northampton Project and the to be acquired Zimbabwean Projects;
- Composition of the Board of directors of Prospect may change in the near future as outlined in paragraph 2.5;
- No dividend policy has been set and it is not proposed to be set until such time as the Company is profitable and has a positive cash flow; and
- The Company may seek to raise further capital if required but no further capital raisings are expected in 2013/14 (the $4,500,000 is expected to be completed in the third quarter of calendar 2013).

5. Basis of Valuation of Prospect

5.1 Shares

5.1.1 In considering the proposals as outlined in Resolution 2, we have sought to determine whether the issue price of the Consortium Subscription Shares to the Consortium (via a nominee company) is in excess of the current fair value of the shares in Prospect on issue and whether the proposed Consortium Subscription is at a price that Prospect could make to unrelated third parties and then conclude whether the proposal is fair and reasonable to the existing non associated shareholders of Prospect.

5.1.2 The valuation methodologies we have considered in determining a theoretical value of a Prospect share are:
- capitalised maintainable earnings/discounted cash flow;
- takeover bid the price at which an alternative acquirer might be willing to offer;
- adjusted net asset backing and windup value; and
- the recent market prices of Prospect shares.

5.2 Capitalised maintainable earnings and discounted cash flows

5.2.1 Prospect currently does not have a reliable cash flow or profit history from a business undertaking and therefore this methodology is not considered to be appropriate.

5.3 Takeover Bid

5.3.1 It is possible that a potential bidder for Prospect could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place however that is not to say a bid may not be made in the future. However, if all of the 325,000,000 Consortium Subscription Shares are issued, the Consortium (via a nominee company) would control approximately 46.59% of the expanded ordinary issued capital of Prospect before the exercise of any outstanding share options and other share issues and approximately 40.14% if all other share issues are undertaken as referred to in this report and the Notice and Explanatory Statement.

5.4 Adjusted Net Asset Backing

5.4.1 As there is no intention to wind up the Company, we have not considered wind up values for the purposes of this report. A summary of the un-audited consolidated statement of financial position as at 30 June 2013 of Prospect is summarised below along (after adjusting for estimated administration ($328,000) and exploration expenditure ($22,000) to 30 September 2013 of $350,000) with a proforma consolidated statement of financial position after allowing for the following:
- the issue of 375,000,000 Subscription Shares at 1.2 cents each to the Subscribers (including 325,000,000 Consortium Subscription Shares) to raise a gross $4,500,000 and the payment of capital raising fees of $25,000;
- the allowance of $50,000 for costs relating to the Notice which have been expensed;
- the issue of 62,000,000 shares to CML and others at a deemed issue price of 1.2 cents per share and the cost of $744,000 expensed;
- the issue of 80,000,000 Management Options to some Directors of the New Board, key management personnel and advisers to the Company and 2,000,000 share options to Mr West at a deemed cost of $256,000; and
- the payment of US$50,000 (say $55,000) to acquire a 70% shareholding interest in Hawkmoth and the payment by Hawkmoth of US$20,000 (say $22,000) to acquire 100% of the shares in Coldawn and Hawkmoth and Coldawn paying upfront fees relating to tenement rights of a total US$70,000 (say $77,000).

	Un-auditedAdjusted30 June 2013$000's	Pro-formaUn-audited30 June 2013$000's
Current assets
Cash and cash equivalents	399	4,670
Receivables	3	3
Other	9	9
	411	4,682

Non - current assets

Capitalised exploration and evaluation costs	1,006	1,160
Financial assets (investments)	-	-
	1,006	1,167
Total assets	1,417	5,842
Current liabilities
Trade and other payables	406	406
Provisions	-	-
	406	406
Total liabilities	406	406
Net Assets	1,011	5,436
Equity
Issued capital	14,831	20,050
Reserves	899	1,155
Accumulated losses	(14,719)	(15,769)
Net Equity	1,011	5,436

5.4.2 The unaudited book net tangible asset backing as at 30 June 2013 (as adjusted) equates to approximately 0.27 cents per share based on 372,593,287 ordinary shares on issue as at that date. After the issue of the 375,000,000 Subscription Shares to raise a gross $4,500,000 and other share and share option issues as noted above, the net book asset backing per share may approximate 0.67 cents (809,593,287 shares on issue).
5.4.3 We have accepted the book amounts of Prospect for all current assets and non-current assets. We have been assured by the management of Prospect that they believe the carrying value of all current assets and liabilities at 30 June 2013 are fair and not materially misstated. We note that included in the net assets of Prospect are capitalised exploration and evaluation costs relating to the Company's existing Northampton Project. An external technical valuation of the mineral assets of Prospect has not been undertaken. As noted above, the cash position of the Company is poor and without the influx of funds from the Subscription (or some other form of capital raising) in the near future, the Company may be forced into some sort of administration.

5.5 Market Price of Prospect Fully Paid Ordinary Shares

5.5.1 We set out below a summary of share prices of Prospect since 1 January 2013 to 10 July 2013 (the Company's shares were voluntarily suspended from trading on 11 July 2013 pending the announcement of the funding proposal and dealings with Hawkmoth and Coldawn).

			Volumes Trade
2013			(000's)

			1,614
			1,140
			1,504
			2,032
			532
			328
0.6	0.6	0.6	170
	High Cents0.90.91.11.21.00.6	Low Cents0.80.80.90.50.50.5	Last SaleCents0.80.91.00.50.60.5

The price of an Prospect share is dependent on a number of factors including the announcements on the Northampton Project, the cash position and demand for the Company's shares. It is our view, that the market and potential investors were awaiting new developments to take place at Prospect by way of a new project and a new capital raising before the shares (price) were re-rated by the market. On the last trading day immediately prior to the announcement of the proposed Subscription (8 July 2013 was the last day shares in Prospect were sold) to raise $4,500,000 and acquire Zimbabwean Projects, the shares were trading at 0.6 cents. Since the announcement on 15 July 2013 of the proposed Subscription and Zimbabwean acquisitions, the shares have traded between 0.5 cents and 1.1 cents (last sale on 26 July 2103 was 0.5 cents).

5.5.2 No independent valuations have been prepared on the mineral prospects of Prospect and we do not consider it necessary to obtain an independent valuation of the mineral prospects for the purposes of this report. We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between Prospect and other parties. We also note it is not the present intention of the Directors of Prospect to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value (as adjusted), is just that, theoretical. The shareholders, existing and future, must acquire shares in Prospect based on the market perceptions of what the market considers a Prospect share to be worth. It is noted that before the onset of the global financial crisis ("GFC") many mineral exploration and producer companies listed on the ASX were arguably trading at premiums to appraised technical values (this is a turnaround from the early 2000s when a discount may have applied and also when the GFC was at its worse from late 2008 to March 2009). The market capitalisation of Prospect as at 8 July 2013 was approximately $2.23 million that is materially greater than the un-audited net equity position as noted above of around $1.218 million as at 30 June 2013 (as adjusted). In the case of Prospect, the monthly volume of trades over the last six months on the ASX is quite low but not uncommon for a small cap mineral exploration company with only one project but is enough to argue that an orderly market exists for the Company's shares. The "market" arguably is fully informed of the Company's activities, notwithstanding that approximately 78% of the shares are under the control of fifty shareholders (and nine shareholders control 44.45% as at 24 July 2013). We are of the opinion that it is fair to use a range of market values over the past two months as one of the indicators of what an Prospect share is worth but this is not exclusive as we have also considered the net asset backing of the Company and the probability that the share price may continue to fall in the near future without positive announcements on the prospectivity of its Northampton Project, the ability of the Company to raise funds and the Company acquiring a new mineral project. Prospect is in our opinion a classic small cap company awaiting introduction of a new project (or more than one new project).

As at 30 June 2013, the cash position of the Company approximates $0.399 million and this would have been reduced by repayment of creditors, administration costs and on-going exploration costs post 30 June 2013. The Company's financial position is arguably insufficient to continue exploration and evaluation of its Northampton Project and pay new administration and corporate costs without a significant inflow of funds via a capital raising or loan funds.

5.5.3 Generally, the market is a fair indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher. Based on the adjusted audited 30 June 2013 book values of Prospect assets, Prospect has a value per share (0.30 cents) significantly lower than the proposed issue price of the 1.2 cents under the Subscription and the theoretical technical value may be higher. The true or recoverable values of the capitalised mineral assets may be higher than book values depending on whether they could be successfully exploited through their sale or through further exploration and development.

5.6 Preferred value of Prospect fully paid shares (range) to arrive at fairness conclusion

5.6.1 Notwithstanding the prospectivity of the Northampton Project without cash the Company cannot complete exploration and evaluation and the share price may continue to fall. As noted above, the market is kept fully informed of the operations of the Company and thus the pre announcement share price is a fair indicator of what the market considers the Company's shares to be worth. The Company cannot exploit its main asset (held in the books at approximately $1.011 million as at 30 June 2103 as adjusted) without further cash and thus we have not put a great weighting on to the asset backing approach. In conclusion, we consider that the fair value of a Prospect fully paid share falls in the range of 0.5 cents to 1.0 cents that is the range of share prices since January 2013 to 10 July 2013. As stated, the share prices do not necessarily reflect fair values in the current economic circumstances of the Company. If funds can be raised then arguably the fair value of a Prospect share would be in excess of the current share price (26 July 2013) of around 0.5 cents and the proposed issue price of the Subscription Shares of 1.2 cents as envisaged in Resolutions 2 to 4. It would be expected that in the absence of the Subscription and the proposed Zimbabwean acquisitions, the shares would drift downwards below 0.5 cents and may eventually in late 2013 or early 2014 run out of funds and fall into administration.

5.6.2 The future value of a Prospect share will depend upon, inter alia:
- The future commercialisation of the existing mineral interests and in particular the proposed Zimbabwean projects to be acquired;
- The state of the gold and other base metal markets (and prices) and foreign exchange rates;
- Cash position of Prospect;
- Political stability in Zimbabwe;
- The state of Australian and overseas stock markets;
- Membership and control of the Board and the composition and quality of management;
- General economic conditions; and
- Liquidity of shares in Prospect.

6. Premium for Control

6.1 Premium for control for the purposes of this report, has been defined as the difference between the price per share, which a buyer would be prepared to pay to obtain or improve a controlling interest in the Company and the price per share which the same person would be required to pay per share, which does not carry with it control or the ability to improve (increase) control of the Company.
6.2 Under TCA, control may be deemed to occur when a shareholder or group of associated shareholders control more than 20% of the issued capital. In this case, if the Consortium (via the nominee company) subscribed for 325,000,000 Subscription Shares at 1.2 cents each, the Consortium's shareholding in Prospect could increase from nil% to up to approximately 40.14% of the expanded issued capital of Prospect. Accordingly, we have addressed whether a premium for control will be paid.
- 6.3 The market value of a Prospect share pre announcement of the proposal lies in the range of approximately 0.5 cent to 1.0 cents with the net book asset backing disclosing a significantly lower value. The value of the 325,000,000 Consortium Subscription Shares that would be issued to the Consortium's nomine company at 1.2 cents per share would lie in the range of $1,625,000 to $3,250,000 compared with the Subscription value of 1.2 cents per share ($3,900,000). The issue price of the Subscription Shares (including the Consortium Subscription Shares) is 1.2 cents each which is at a premium of approximately 100% to the last sale price (0.6 cents) of a Prospect share traded on ASX on 8 July 2013 (last sale price prior to the announcement of the Subscription proposal with the Subscribers including the Consortium via its nominee company). Therefore, the Consortium may be considered to be paying a premium for potential control. It is noted that on an un-audited net asset backing basis, the value per share is approximately 0.27 cents compared with the Subscription price to be paid by the Consortium of 1.2 cents. On such a basis (net asset backing) the Consortium would also be paying a premium for control. However it is noted that Prospect does not have sufficient funds to continue full evaluation of its Northampton Project and without an inflow of funds by way of a capital raising there is the possibility that the shares in Prospect could fall below the late June 2013/early July 2013 share prices (of 0.5 cents to 0.6 cents).
6.4 We note that currently the Consortium does not have Board control of Prospect. The Board of Prospect currently consists of Hugh Warner (Executive Chairman), Harry Greaves (Non Executive Director) and Gerry Fahey (Non Executive Director). Jonathan Pager and Michael Pollak resigned as directors of the Company on 15 July 2013 following the appointment of Harry Greaves and Gerry Fahey on the same day. The Consortium Subscription Agreement agrees that the Board of the Company will comprise of no more than 6 directors and:
- (a) For every 16.7% of the Company's fully paid ordinary shares legally and beneficially owned by the Consortium (nominee company), the Consortium will be granted the right to appoint 1 director to the Board of the Company; and
- (b) The right granted to the Consortium only perpetuates when the Consortium is the legal and beneficial owner of Prospect's fully paid ordinary shares that at least satisfies the Appointment Interest.

Further new directors may be appointed in the future as the needs arise and subject to the Consortium nominating any new directors.

7. Fairness and Reasonableness of the Proposed Consortium Subscription

7.1 We set out below some of the advantages and disadvantages and other factors pertaining to the proposed issue of 325,000,000 Consortium Subscription Shares to the Consortium (via its nominee company) pursuant to Resolution 2 of the Notice.

Advantages

7.2 By entering into the proposals with the Consortium, Prospect increases its cash reserves (it will raise a gross $3,900,000 from the Consortium and a further gross $600,000 from Sirius and Investec as noted above). Obtaining access to a significant amount of cash funds in the current environment is difficult and thus the Company and its shareholders should benefit. This should alleviate cash flow concerns in the immediate future.
7.3 In the event that the full capital raising via the proposal with the Subscribers is not completed or the Company cannot raise adequate working capital from other sources, there is the likelihood that the expenditure on the Northampton Project may be curtailed until such time as new funds are raised and the Company may run out of cash funds in late 2013 or early 2014 (and possibly fall into administration). In the current market it is difficult for exploration companies such as Prospect to raise equity, particularly for a company that has only one mineral project that is not in the advanced stage. It is our understanding that discussions were held with other interested parties with a view to raising capital. We have been advised that management has considered that the best proposal put to them were the proposals as outlined in paragraph 1.2 above. It would be expected that if a capital raising proceeded, via a broker, the issue price may have been at a discount to the early July 2013 share price and that a commission of between 5% and 7% may be payable ($225,000 to $315,000 cash outlay to raise a gross $4,500,000 via the Subscription, including the Consortium Subscription). It is estimated that the cash costs to hold the Shareholders Meeting may approximate $50,000 and $25,000 will be paid to Investec.
7.4 There is an incentive for the Consortium to ensure Prospect becomes a viable mineral exploration and hopefully development company as the Consortium will have a significant shareholding interest in Prospect. The Consortium is taking a risk in investing funds into Prospect as to a large extent, Prospect's future share price may be determined by the exploitation and/or commercial success (or otherwise) of its mineral projects (including the proposed Zimbabwean Projects as noted above). There is a huge incentive for the Consortium to make Prospect a successful company and have the share price rise considerably. All shareholders would benefit from a rise in the share price.
7.5 The Consortium represents a major cornerstone investor for Prospect and Blumont that will have a 60% interest in the Consortium nominee company is a Singaporean based company with a market capitalisation in excess of S$2 billion. As stated above, the Consortium has a strong incentive to ensure the success of Prospect which can be assisted through Blumont's strong balance sheet.
7.6 The issue price of the Subscription Shares is 1.2 cents that is at a premium of approximately 100% to the last sale price of a Prospect share traded on ASX on 8 July 2013 (last sale price prior to the announcement of the Subscription proposal with the Consortium and the Subscribers, the Zimbabwean acquisition proposals and the announcement of a new management team).
7.7 The Subscription is being undertaken on the basis that the Zimbabwean acquisitions will proceed along with a change to the Board of Directors and management (some of which have already occurred). The new proposals effectively recapitalise the Company and offer the Company new mineral prospects.
7.8 Diversification into a number of further mineral areas outside Australia by acquiring the Zimbabwean prospects may reduce the risk to the Company who is currently dependent on one mineral project in Western Australia. Should the current project already owned by Prospect prove not to be commercially viable, diversification by acquiring potential gold and phosphate projects in Zimbabwe may reduce the risk (although these may not prove to be commercially viable and Prospect is to be dealing in an African company that has political and other risks in the high category). The chance of the Company raising sufficient funds in the near future is low without the proposed Zimbabwean acquisitions and changes in management.

Disadvantages

7.9 The number of fully paid ordinary shares on issue initially rises to 809,593,287 on completion of the Subscription and other proposals being put to the shareholders. This represents an approximate 117% increase in the ordinary shares of the Company from the shares on issue as at 15 July 2013.
7.10 An influential shareholding of the Company is being given to the Consortium in that they would ultimately have voting control of approximately 40.14% of the expanded ordinary issued capital after the successful ratification and implementation of all of the proposals noted in paragraph 2 above and elsewhere in this report and the Notice and ES. Existing shareholders would be diluted further so that in the absence of any further capital raisings, the existing non associated shareholders interest could reduce from 100% to approximately 46.02%.
7.11 There is always the possibility that the value of the shares may be in excess of the Subscription price of 1.2 cents per share. However, shareholders will benefit from an increased share price in the event that the market re-rates the Company due to successful exploration on the Northampton and Zimbabwean projects.

Other Factors

7.12 Having a cornerstone investor such as the Consortium (via the nominee company) has advantages but it may also limit the opportunity for other parties to bid for all or part of the shares in Prospect in the future. However, a takeover bid for the Company cannot be completely ruled out.
7.13 There should be additional market profile to the Company as a result of the increased involvement of the Consortium and the Zimbabwean Management Team with the Company.
7.14 In the event of commercial success of the Zimbabwean and/or Northampton projects, the chances of the proposed Management Options and West Options to be issued (refer paragraph 1.2 and elsewhere in this report) being exercised at 1.5 cents on or before 30 June 2015 may be enhanced. The Company would receive $1,230,000 from such share option holders if all Management Options and West Options were exercised.
7.15 It would be expected that the proposed new board members and the Zimbabwean Team will bring further technical and business experience to the Board and management of Prospect. In addition, via the Zimbabwean Teams share and share option interests (if approved by shareholders), it would be expected that they would seek to maximise the investment in Prospect. Ultimately, the value of Prospect is dependent on commercial success of its planned Zimbabwean (and Northampton) projects. There is always risk in investing in mineral companies.
7.16 The issue price of the Consortium Shares is to be the same issue price as the shares to be issued to non-related parties, Sirius and Investec as noted in Resolutions 3 and 4.
7.17 The Consortium whilst it has a shareholding of at least 20% in the issued capital of Prospect will have the right of first refusal ("ownership right") to participate in any and all subsequent capital raisings (if any) conducted by Prospect on equal terms and conditions to other prospective and invited investors of the subsequent capital raising, with the primary purpose of providing the Consortium an opportunity to maintain its ownership percentage of Prospect's fully paid ordinary shares following the completion of the subsequent capital raisings. Similar rights apply to Investec but no 20% threshold and the term granting the right to participate in subsequent capital raisings is limited to 5 years from July 2013.

8. Conclusion as to Fairness and Reasonableness

8.1 For the purposes of section 611 (item 7) of TCA, in relation to the approval to issue 325,000,000 Consortium Subscription Shares to the Consortium (or its nominee company), in our opinion taking into account the factors noted elsewhere in this report including the factors (positive, negative and other factors) noted in section 7 of this report, the proposal as outlined in paragraph 1.1 and Resolution 2 may on balance collectively be considered to be fair and reasonable at the date of this report.

Each shareholder needs to examine the share price of Prospect, market conditions and announcements made by Prospect, particularly pertaining to the Zimbabwean Projects (up to the date of the shareholders meeting) at the time of exercise of vote to ascertain the impact, if any, on Resolution 2.The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report.

9. Sources of Information

9.1 In making our assessment as to whether the proposal to issue 325,000,000 Consortium Subscription Shares to Consortium at 1.2 cents each as outlined in paragraph 1.1 is fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company and its mining assets that is relevant to the current circumstances. In addition, we have held discussions with the management of Prospect about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Prospect.
9.2 Information we have received includes, but is not limited to:
- draft Notices and Explanatory Statement to Shareholders of Prospect prepared to 5 August 2013;
- the Subscription Agreement between Prospect and the Consortium of 5 July 2013;
- discussions with management and a director of Prospect;
- details of historical market trading of Prospect ordinary fully paid shares recorded by ASX for the period 1 January 2013 to 26 July 2013 (last day that shares traded to 31 July 2013);
- shareholding details of Prospect as at 24 July 2013;
- announcements made by Prospect to the ASX from 1 January 2012 to 3 August 2103;
- preliminary cash flow forecasts of Prospect to June 2014;
- audited accounts of Prospect for the year ended 30 June 2012 and un-audited accounts of Prospect for the six months ended 31 December 2012 and the year ended 30 June 2013;
- details as disclosed on the Company's web site to 31 July 2013;
- proposed Prospect Deal (Share) Structure and proposed top 20 shareholders post the dealings with the Subscribers and acquisitions of Zimbabwean projects;
- Sirius Trustees Subscription Agreement and Investec Subscription Agreement of July 2013;
- Memorandum of Shareholder Agreement between Prospect, Farvic and Hawkmoth of 15 July 2013;
- Memorandum of an Agreement between Farvic, Prospect and Hawkmoth of 15 July 2013;
- Placement Exclusivity Agreement between Prospect and CML of 15 July 2013;
- Share Sale and Purchase Agreement between Prospect, Farvic, Hawkmoth and Coldawn of 15 July 2013; and
- Senior Prospecting & Mining Agreement between Hawkmoth, Martin Gunning Investments (Private) Limited, Falcon College Trust and Prospect (undated).

9.3 Our report includes Appendix A and our Financial Services Guide attached to this report.

Yours faithfully STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities)

J P Van Dieren - FCA Director

AUTHOR INDEPENDENCE

This annexure forms part of and should be read in conjunction with the report of Stantons International Audit and Consulting Pty Ltd trading as Stantons International Securities dated 3 August 2013, relating to Resolution 2 outlined in the Notice of Meeting of Shareholders of Prospect to be forwarded to shareholders of Prospect in August 2013.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with Prospect other than acting as an independent expert for the purposes of this report. There are no existing relationships between Stantons International Securities and the parties participating in the transactions detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated not to exceed $15,000 (excluding GST). The fee is payable regardless of the outcome. With the exception of that fee, neither Stantons International Securities nor John P Van Dieren have received nor will or may they receive any pecuniary or other benefits, whether directly or indirectly for or in connection with the making of this report. Stantons International Securities and Stantons International Audit and Consulting Pty Ltd or any directors of Stantons International Audit and Consulting Pty Ltd do not hold any securities in Prospect. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice. Stantons International Securities has prepared other independent expert reports for parties associated with the Proponent.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Investment Advisers Licence (No 418019) under the Corporations Act relating to advice and reporting on mergers, takeovers and acquisitions involving securities. A number of the directors of Stantons International Audit and Consulting Pty Ltd are the directors and authorised representatives of Stantons International Securities. Stantons International Securities and Stantons International Audit and Consulting Pty Ltd (also trading as Stantons International) have extensive experience in providing advice pertaining to mergers, acquisitions and strategic and financial planning for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuations and financial aspects thereof, including the fairness and reasonableness of the consideration offered. The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the tasks they have performed.

DECLARATION

This report has been prepared at the request of Prospect in order to assist the shareholders of Prospect to assess the merits of the proposals (Resolution 2 only) to which this report relates. This report has been prepared for the benefit of the Prospect shareholders and those persons only who are entitled to receive a copy for the purposes of Section 611 (Item 7) of the Corporations Act 2001 and does not provide a general expression of Stantons International Securities opinion as to the longer term value of Prospect or the Prospect Businesses and mineral assets (current and future interests). Stantons International Securities does not imply, and it should not be construed, that it has carried out any form of audit on the accounting or other records of Prospect or any of its subsidiaries. Neither the whole, nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

DUE CARE AND DILEGENCE

This report has been prepared by Stantons International Securities with due care and diligence. The report is to assist shareholders in determining the fairness and reasonableness of the proposal set out in Resolution 2 to the Notice and each individual shareholder may make up their own opinion as to whether to vote for or against Resolution 2.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by Prospect, its officers and other parties (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Prospect has agreed:

(a) to make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Prospect may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by Prospect and the other parties; and
(b) to indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Prospect or any of its officers providing Stantons International Securities any false or misleading information or in the failure of Prospect and its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.

A draft of this report was presented to the Directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

PO Box 1908 West Perth WA 6872 Australia

Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

FINANCIAL SERVICES GUIDE STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 5 August 2013

ABN: 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

1. Stantons International Securities (ABN 84 144 581 519 and AFSL Licence No 418019) ("SIS" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.
1. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 418019;
remuneration that we and/or our staff and any associated entities receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.
1. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Associations and relationships

SIS is ultimately a wholly owned division of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. From time to time, SIS and Stantons International Audit and Consulting Pty Ltd (also trading as Stantons International) and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

Complaints resolution

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

Telephone: 08 9481 3188 Facsimile: 09 9321 1204

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited ("FOSL"). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

AI assistant

PROSPECT RESOURCES LIMITED — Proxy Solicitation & Information Statement 2013

65617_rns_2013-08-21_8ac2222e-7608-41c9-95f9-1a0845493f88.pdf

PROSPECT RESOURCES LIMITED

ACN 124 354 329

NOTICE OF MEETING

EXPLANATORY STATEMENT

PROXY FORM

CONTENTS PAGE

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

YOUR VOTE IS IMPORTANT

VOTING IN PERSON

VOTING BY PROXY

Proxy Forms received later than this time will be invalid.

NOTICE OF EXTRAORDINARY GENERAL MEETING

ORDINARY RESOLUTIONS

1. RESOLUTION 1 – APPROVAL OF CHANGE TO SCALE OF ACTIVITIES

2. RESOLUTION 2 – APPROVAL OF FUTURE ISSUE OF SHARES TO A GROUP OF INVESTORS CALLED THE CONSORTIUM

3. RESOLUTION 3 – APPROVAL OF FUTURE ISSUE OF SHARES TO SIRIUS TRUSTEES

4. RESOLUTION 4 – APPROVAL OF FUTURE ISSUE OF SHARES TO INVESTEC ZIMBABWE RECAPITALISATION FUND LIMITED

Part B: Issue of securities pursuant to exclusivity agreement

5. RESOLUTION 5 – APPROVAL OF FUTURE ISSUE OF SHARES TO CONTINENTAL MINERALS LIMITED

6. RESOLUTION 6 – APPROVAL OF FUTURE ISSUE OF SHARES AND OPTIONS TO PAUL WEST

Part C: Issue of directors', managements' and advisors' incentives

7. RESOLUTION 7 – APPROVAL OF FUTURE ISSUE OF 42,500,000 MANAGEMENT OPTIONS

8. RESOLUTION 8 – RELATED PARTY APPROVAL – HUGH WARNER

9. RESOLUTION 9 – RELATED PARTY APPROVAL – HARRY GREAVES

10. RESOLUTION 10 – RELATED PARTY APPROVAL – ZED RUSIKE

11. RESOLUTION 11 – RELATED PARTY APPROVAL – GERRY FAHEY

EXPLANATORY STATEMENT

Part A: Change of scale in activities and issue of securities pursuant to subscription agreements

Background

Capital raising by the Company

Formation of strategic relationships into Zimbabwe

Capital raising to fund revised growth objectives of the Company

ORDINARY RESOLUTIONS

RESOLUTION 1 – APPROVAL OF CHANGE TO SCALE OF ACTIVITIES

Information Required by ASX Listing Rule 11.1.2

Bushtick Project

Penhalonga Project

Chisanya Project

Pro-forma balance sheet

Detailed use of funds

Advantages of the change to scale of Company's activities

Disadvantages and risks of the change to scale of Company's activities

Directors' recommendation

Forward looking statements

Competent person

RESOLUTION 2 – APPROVAL OF FUTURE ISSUE OF SHARES TO A GROUP OF INVESTORS CALLED THE CONSORTIUM

Complimentary Information Pursuant to ASX Listing Rule 7.3

Information Required pursuant to Chapter 6 of the Corporations Act

Why is approval under the exception in item 7 of 611 of the Corporations Act needed?

Relevant interests, voting power and proposed capital structure of the Company

Intentions of the Consortium/Newco

Independent Expert's Report

Shareholders are urged to carefully read the IER before deciding how to vote on Resolution 2.

Directors' Recommendation

Professional Advice

RESOLUTION 3 – APPROVAL OF FUTURE ISSUE OF SHARES TO SIRIUS TRUSTEES

Information Required by ASX Listing Rule 7.3

RESOLUTION 4 – APPROVAL OF FUTURE ISSUE OF SHARES TO INVESTEC ZIMBABWE RECAPITALISATION FUND LIMITED

Information Required by ASX Listing Rule 7.3

Part B: Issue of securities pursuant to exclusivity agreement

Background

(c) In consideration, the Company has agreed to issue 60,000,000 of its fully paid ordinary shares to CML (or its nominees) at a deemed price of 1.2 cent ($0.012) per share (CML Placement).

RESOLUTION 5 – APPROVAL OF FUTURE ISSUE OF SHARES TO CONTINENTAL MINERALS LIMITED

Information Required by ASX Listing Rule 7.3

RESOLUTION 6 – APPROVAL OF FUTURE ISSUE OF SHARES AND OPTIONS TO PAUL WEST

Information Required by ASX Listing Rule 7.3

Part C: Issue of directors', managements' and advisors' incentives

Background

New Board of the Company

Biographies of the proposed Directors of the New Board

RESOLUTION 7 – APPROVAL OF FUTURE ISSUE OF 42,500,000 MANAGEMENT OPTIONS

Information Required by ASX Listing Rule 7.3

RESOLUTION 8, 9, 10 and 11 – RELATED PARTY APPROVAL

(Collectively known as Relevant Directors)

Information Required by ASX Listing Rule 10.13

Information Required by Chapter 2E of the Corporations Act

PROSPECT RESOURCES LIMITED Proxy Solicitation & Information Statement 2013