PROSPECT RESOURCES LIMITED — Regulatory Filings 2016

Sep 26, 2016

New Lithium Bearing Pegmatite Discovery within the Greater Arcadia High Grade Lithium Project Claims Area

Prospect Resources Ltd (ASX: PSC) (Prospect, the Company) is pleased to report that an approximate 300m length outcrop of lithium bearing pegmatite has been discovered within the Arcadia High Grade Lithium Project area. This discovery is some 1.5km down dip from the known strike. Additional RC rigs are being mobilised to target this outcrop and the wider claims area.

Drilling to date has covered approx. 12% of the Company's exploration area. The drilled strike of the 14 stacked pegmatites extends more than 1km SW-NE and some 400m down dip to NW.

The Company's ground position now covers more than 600 hectares of mining licences.

Size of the Arcadia High Grade Lithium Project

An approximate 500m spaced scout drilling programme is being prepared to determine the overall size of this large scale lithium bearing pegmatite system - Arcadia High Grade Lithium Project. Prospect intends to fast track the drilling of this new discovery as part of the wide spaced scout programme. This drill programme is expected to cover some 500 hectares of the claims area. RC drill rigs are scheduled to return to site in early October to carry out further resources definition holes. This programme is expected to aid in the siting for the processing plant, camp accommodation and ancillary equipment.

Assay Results

Assay results received from the next two RC drill holes* returned a peak grade of 2.57% Li2O. Significant intersections are summarised as:

• ACR020 – peak grade 2.57% Li2O
  • o 2m @ 1.49% Li2O from 22m
  • o 5m @ 1.76% Li2O from 35m
  • o 19m @ 1.597% Li2O from 43m
• ACR021 – peak grade 2.43% Li2O
  • o 4m @ 1.21% Li2O from 33m
  • o 15m @ 1.42% Li2O from 66m

*The Company is awaiting results from holes ACR004-019, and holes ACR022-ACR032

Metallurgical Testing

Two diamond rigs are drilling metallurgical test holes. The first three diamond holes are complete with both holes intersecting thick pegmatites and the next two holes are underway. The first samples are en-route to FT Geolabs for test work.

For further information, please contact:

Hugh Warner Harry Greaves Prospect Resources Prospect Resources Executive Chairman Executive Director

Ph: +61 413 621 652 Ph: +263 772 144 669

Competent Person's Statement

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

JORC Code, 2012 Edition – Table 1 report template

Section 1 Sampling Techniques and Data

Criteria	JORC Code explanation	Commentary
Samplingtechniques	Nature and quality of sampling (eg cut channels, random chips, orspecific specialised industry standardmeasurement tools appropriateto the minerals under investigation, such as down hole gammasondes, or handheld XRF instruments, etc). These examples shouldnot be taken as limiting the broad meaning of sampling.Include reference to measures taken to ensure sample representivityand the appropriate calibration of any measurement tools or systemsused.Aspects of the determination of mineralisation that are Material to thePublic Report.In cases where 'industry standard' work has been done this would berelatively simple (eg 'reverse circulation drilling was used to obtain 1m samples from which 3 kg was pulverised to produce a 30 g chargefor fire assay'). In other cases more explanation may be required,such as where there is coarse gold that has inherentsamplingproblems. Unusual commodities or mineralisation types (egsubmarine nodules) may warrant disclosure of detailed information.	•At the ArcadiaProject,the samples were percussion chipsgenerated from a Smith Capitalrig, using a double tube reversecirculation technique.•3kg Samples were collected every metre in triplicate, in addition to asmaller sample retained for reference and logging.Standards, blanks and field duplicates will be inserted intothe sample shipment (5% of total sample number)Samples will be shipped to Zimlabs laboratory where theywill be pulverized to produce a 30g chargeand thendispatched by courier to ALS Johannesburg. All sampleswill beanalysed by multi-element ICP(ME-MS61).Overlimits on lithium analysed by LiOG63 method,
Drillingtechniques	Drill type (eg core, reverse circulation, open-hole hammer, rotary airblast, auger, Bangka, sonic, etc) and details (eg core diameter, tripleor standard tube, depth of diamond tails, face-sampling bit or othertype, whether core is oriented and if so, by what method, etc).	Double tube, 5" reverse circulation.A trailer mounted SmithCapitaldouble tube RC rig was used with a 25 bar (Inergsoll Rand)2013 compressor. 3m rods were used, and the holeair blasted toallow samplerecovery viaa cyclone every 1m.
Drill samplerecovery	Method of recording and assessing core and chip sample recoveriesand results assessed.Measures taken to maximise sample recovery and ensurerepresentative nature of the samples.Whether a relationship exists between sample recovery and gradeand whether sample bias may have occurred due to preferentialloss/gain of fine/coarse material.	•Chip samples were bagged directly from the cyclone, and immediatelyweighed, then riffle split.Material seems largelyhomogenous, and no relationship has beendetected between grain size and assayed grade.
Logging	Whether core and chip samples have been geologically andgeotechnically logged to a level of detail to support appropriate	•Chip samples have been geologically logged at 1m intervals, with data

Criteria	JORC Code explanation	Commentary
	Mineral Resource estimation, miningstudies and metallurgicalstudies.Whether logging is qualitative or quantitative in nature. Core (orcostean, channel, etc) photography.The total length and percentage of the relevant intersectionslogged.	recorded in spreadsheet format using standardized codes. Sampleweight, moisture content, lithologies, texture, structure, induration,alteration, oxidationand minerlisation were recorded.The work is undertaken according to Prospect Resources' standardprocedures and practices, overseen by the CP.Prospect Resourcesbelieves that the level of detail and quality of the work is appropriate tosupport the current and any future exploration.
Sub-samplingtechniquesand samplepreparation	If core, whether cut or sawn and whether quarter, half or all coretaken.If non-core, whether riffled, tube sampled, rotary split, etc andwhether sampled wet or dry.For all sample types, the nature, quality and appropriateness of thesample preparation technique.Quality control procedures adopted for all sub-sampling stages tomaximise representivity of samples.Measures taken to ensure that the sampling is representative of the insitu material collected, including for instance results for fieldduplicate/second-half sampling.Whether sample sizes are appropriate to the grain size of the materialbeing sampled.	•Samples were bagged straight from the cyclone.Typically 12 –18 kgof sample were produced per metre.•The dry samples were split using a 3-stage riffle splitter. With three, 3kgsamples being collected per 1m interval.Excess material was dumpedin a landfill,•Field duplicates were produced every 20th sample.•The 3kg samples were crushed and milled (90%, pass-75u) at theFarvic Laboratory. Labduplicates, blanks and standard material (produced and AMIS) were inserted in identical packets to thesamples, one per 20 normal samples. This was done under thesupervision of a qualified geologist.
Quality ofassay dataandlaboratorytests	The nature, quality and appropriateness of the assaying andlaboratory procedures used and whether the technique is consideredpartial or total.For geophysical tools, spectrometers, handheld XRF instruments, etc,the parameters used in determining the analysis including instrumentmake and model, reading times, calibrations factors applied and theirderivation, etc.Nature of quality control procedures adopted (eg standards, blanks,duplicates, external laboratory checks) and whether acceptable levelsof accuracy (ie lack of bias) and precision have been established.	All samples will be analysed by multi-element ICP (ME-MS61).Overlimits on lithium analysed by LiOG63 method, after four aciddisolution,and HCL leachat ALS
Verification ofsampling and	The verification of significant intersections by either independent oralternative company personnel.	•Prospect Resources' Chief geologist has almost 30 years experienceand was on site during most of the drilling and sample pre-

Criteria	JORC Code explanation	Commentary
assaying	The use of twinned holes.Documentation of primary data, data entry procedures, dataverification, data storage (physical and electronic) protocols.Discuss any adjustment to assay data.	preparation. Thesignificantintersectionswere also shownGeological Survey staff.•All hard copies of data are retained at the Prospect ResourceExploration offices, attached to the Farvic Mine. All electronic dataresides in Excel format on the office desktop, with back-ups retainedon hard-drives in a safe.No holes have been twinned to date.Though twinning is taking placeon historically drilled holes (from 1970s)Logging and assay data captured electronically on excel spreadsheet,and subsequently Access database.
Location ofdata points	Accuracy and quality of surveys used to locate drill holes (collar anddown-hole surveys), trenches, mine workings and other locationsused in Mineral Resource estimation.Specification of the grid system used.Quality and adequacy of topographic control.	No Mineral Resource estimate has been carried out.The first drill hole wascompleted withdown-hole surveyed using aAzimuth Point System (APS) Single Shot survey method down-holeinstrument at a minimum of every 50m and measured relative tomagnetic North. These measurements have been converted frommagnetic to UTM Zone 35 South values. No significant hole deviationis evident in plan or section
Data spacinganddistribution	Data spacing for reporting of Exploration Results.Whether the data spacing and distribution is sufficient to establish thedegree of geological and grade continuity appropriate for the MineralResource and Ore Reserve estimation procedure(s) andclassifications applied.Whether sample compositing has been applied.	Drill holes are planned to be drilled at an average of 50m intervalsalong strike. This is sufficient to establish geological and gradecontinuity, Further infill drilling is planned to take place as a secondcampaign to infill this to 25m
Orientation ofdata inrelation togeologicalstructure	Whether the orientation of sampling achieves unbiased sampling ofpossible structures and the extent to which this is known, consideringthe deposit type.If the relationship between the drilling orientation and the orientationof key mineralised structures is considered to have introducedasampling bias, this should be assessed and reported if material.	Mineralised structures are flat lying pegmatites and drilling wasplanned in a straightforward manner to intersect thesestructureswithout bias.
Samplesecurity	The measures taken to ensure sample security.	Samples will beplaced in sealed bags to prevent movement andmixing. Minimal preparation was done on site.
Audits or	The results of any audits or reviews of sampling techniques and data.	To be advised.

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Criteria	JORC Code explanation	Commentary
Mineraltenement andland tenurestatus	Type, reference name/number, location and ownership including		Arcadia V claim, held by JV partner Paul Chimbodza.
	agreements or material issues with third parties such as jointventures, partnerships, overriding royalties, native title interests,historical sites, wilderness or national park and environmentalsettings.	No environmental or land title issues.
		Rural farmland -fallow
	The security of the tenure held at the time of reporting along withanyknown impediments to obtaining a licence to operate in the area.
Explorationdone by otherparties	Acknowledgment and appraisal of exploration by other parties.	Two rounds of historical drilling were done. Three EXT holes weredrilled in 1969 at site of current pit. These logs are available, and thelithologies observed are consistent with that seen by ProspectResources' drilling. The sites of at least 10 NQ sized boreholes havealso been identified in the field. The detailed records of thisprogramme have been lost. But the work done in the 1970's wasrecorded by the Geological Survey in their 1989 bulletin, wherehistorical estimatesof 18mt at upto 5% Li were recorded.
Geology	Deposit type, geological setting and style of mineralisation.	Na-Li pegmatite, with spodumene, eucryptite, petaliteandamblygonite. In addition to disseminated tantalite and beryl.
Drill holeInformation	A summary of all information material to the understanding of theexploration results including a tabulation of the following informationfor all Material drill holes:	Bhs	Eastings	Northings	RL	Azimuth	Dip	Depth
		ACR021	331,314	8,034,287	1,381	132	-80	85
	oeasting and northing of the drill hole collar	ACR022	331,262	8,034,367	1,363	134	-80	83
	oelevation or RL (Reduced Level –elevation above sea level inmetres) of the drill hole collar
	odip and azimuth of the hole
	odown hole length and interception depth
	ohole length.

Section 2 Reporting of Exploration Results

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

Criteria JORC Code explanation Commentary

reviews

Criteria	JORC Code explanation	Commentary
	If the exclusion of this information is justified on the basis that theinformation is not Material and this exclusion does not detract fromthe understanding of the report, the Competent Person should clearlyexplain why this is the case.
Dataaggregationmethods	In reporting Exploration Results, weighting averaging techniques,maximum and/or minimum e truncations (eg cutting of high grades)and cut-off grades are usually Material and should be stated.	Borehole intersections were reported using downhole weightedaveraging methods. No maximum or minimum grade truncations wereused. The mineralisation is well constrained in pegmatites and quartz
	Where aggregate intercepts incorporate short lengths of high graderesults and longer lengths of low grade results, the procedure usedfor such aggregation should be stated and some typical examples ofsuch aggregations should be shown in detail.	veins.
	The assumptions used for any reporting of metal equivalent valuesshould be clearly stated.
Relationshipbetweenmineralisationwidths andinterceptlengths	These relationships are particularly important in the reporting ofExploration Results.	The firstdrilled to intersect the shallow dipping pegmatiteveins. Alldrill holes were drilled with an azimuth of 135°. The dip of all the holes
	If the geometry of the mineralisation with respect to the drill holeangle is known, its nature should be reported.	is-80°.The first hole intersected the main pegmatite as planned.
	If it is not known and only the down hole lengths are reported, thereshould be a clear statement to this effect (eg 'down hole length, truewidth not known').
Diagrams	Appropriate maps and sections (with scales) and tabulations ofintercepts should be included for any significant discovery beingreported These should include, but not be limited to a plan view ofdrill hole collar locations and appropriate sectional views.	Mapsare attached and cross sections are being created
Balancedreporting	Where comprehensive reporting of all Exploration Results is notpracticable,representative reporting of both low and high gradesand/or widths should be practiced to avoid misleading reporting ofExploration Results.	The Company believes that all resultshave been reported andcomplywith balanced reporting.
Othersubstantiveexplorationdata	Other exploration data, if meaningful and material, should be reportedincluding (but not limited to): geological observations; geophysicalsurvey results; geochemical survey results; bulk samples –size andmethod of treatment; metallurgical test results; bulk density,groundwater, geotechnical and rock characteristics; potential	Channel sampling also carried out at the adjacent dormant pit, thatwas mined in the '70s. Geological mapping and grab sampling wasundertaken on a surveyed grid, down-dip and along strike of the pit.

Criteria	JORC Code explanation	Commentary
	deleterious or contaminating substances.
Further work	The nature and scale of planned further work (eg tests for lateralextensions or depth extensions or large-scale step-out drilling).	Infill and extension drilling is being planned for Q3 2016
	Diagrams clearly highlighting the areas of possible extensions,including the main geological interpretations and future drilling areas,provided this information is not commercially sensitive.