Prospect Resources Ltd: Quarterly Activities Report

Perth - Prospect Resources Ltd. (ASX:PSC) (Prospect, the Company) is pleased to report on another busy quarter of activities.

Summary of Significant Announcements:

14 Feb - Arcadia Lithium Project Update

14 Mar - Significant Mineral Resource Upgrades - Arcadia Lithium

5 Apr - Pre-Feasibility Study timing and New Website

Much of the quarter was spent on preparing the Pre-Feasibility Study (PFS) for the Company's Arcadia Lithium Project. Step out drilling is ongoing and we continue to intersect lithium bearing pegmatites and grow the resource base at Arcadia.

Metallurgical Testwork:

The metallurgical testwork programs for the PFS are well advanced albeit at a slower pace than anticipated. This has resulted in a slight delay in the studies that are now targeted for completion in the June 2017 Quarter.

A total of 500kg of samples have been sourced from dedicated metallurgical diamond drill holes drilled from within the conceptual pit defined by the PFS. They have been submitted to independent laboratories in Johannesburg (FT Geolabs) and Perth (Nagrom) respectively to undertake testwork that includes comminution studies, heavy mineral separation, floatation as well as detailed mineralogy.

Discussions have been taking place and are ongoing with a number of potential off-take customers both in the downstream lithium chemical and glass/ceramics industries. An additional 580kg representative sample (diamond drill core) has been delivered to Nagrom in Perth in order to complete pilot scale processing based on the existing PFS flowsheet/process route. This will provide product samples for delivery and testing with potential off-take partners. Based on testwork completed to date, Prospect expects to produce spodumene and petalite concentrate within the below specifications:

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Product            Specification              Market 
Spodumene          +6% Li2O <0.8% Fe2O3       Chemical/Battery
Petalite           +4% Li2O < 0.05% Fe2O3     Glass/Ceramics/Battery
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This is an important next step for potential off-take customers to be able to receive finished products so that they can be tested and 'qualified' to be used within a customer's existing process facility.

Establishment of local laboratory:

The Company is in the process of establishing a dedicated laboratory fully equipped to handle all future Li, Ta and Fe assays as well as floatation testwork. The laboratory will be headed up by Jeremy Elliot, a renowned Zimbabwean chemist with more than 25 years' experience in minerals testing and processing. The laboratory is expected to be fully functional within 3 weeks and is being developed to achieve the following:

- Training of a team of competent technicians
- Access to rapid turn-around of all lithium assays for production forecasting and grade control
- Constant checks on the flotation process within the plant
- Production of laboratory scale lithium carbonate and lithium hydroxide samples

Regional Exploration:

Exploration has continued, with a single RC rig active in testing the strike extent of the Arcadia pegmatites to the south west. These pegmatites have now been delineated for 3.5km of southwest-northeast strike. The (>0.2% Li2O cut-off) resource extends for 2.2km of this strike length.

In addition, three teams are carrying out geochemical soil sampling across the eastern strike extents of the mineralised pegmatites on the adjacent Lawfield and Vuta farms. Orientation work has proved that soil geochemistry is a very effective and efficient tool in defining pegmatites mineralised in lithium. Several well defined anomalies have been defined that will be drill tested during the next quarter.

A ground magnetics survey was conducted over the area defined by the conceptual pit. The results confirmed the presence of the previously interpreted major southwest-northeast and northwest-southeast fault sets, plus numerous lessor parallel structures.

Arcadia Lithium Deposit updated Mineral Resource Estimate:

Highlights:

- 56% increase in high grade Mineral Resource estimate to:
o 34.9Mt grading 1.42% Li2O (1% Li2O cut-off)
- 60% increase in Global Mineral Resource estimate to:
o 57.3Mt grading 1.12% Li2O (0.2% Li2O cut-off)
- 136% increase in Measured Resources to:
o 5.7Mt grading 1.48% Li2O (1% Li2O cut-off)
- 27% increase in total Measure and Indicated Resources to:
o 20.8Mt grading 1.41% Li2O (1% Li2O cut-off)

Below (see the link below) is a summary of the update Mineral Resource estimate from the Company's 16 March 2017 announcement.

Other Activities

Farming - Arcadia Surface Rights

Prospect's first maize crop covering some 80 hectares has continued to grow and is nearing harvest time. This project forms part of Prospect's ongoing commitment to local stakeholders and communities. These farming operations are expected to provide an additional source of employment within the region and a source of income to Prospect. We plan to approach other landholders relevant to Arcadia and offer to farm their land on standard leasing terms for the 2018 season.

Gwanda East Gold Projects

During the quarter, the Sally Gold Mine shaft was dewatered, a headframe erected and rails installed.

The mine is being cleaned out and the gold bearing sands recovered will be processed shortly.

A 70 m horizontal cross cut into the hanging wall has been blasted from the 7 level elevation where the old workings terminated in preparation for underground exploration drilling. This cross cut has advanced past the dolerite (waste) dyke and is back into the Granite host rock. As investors may remember from previous announcements, it is these sills and dykes that historically sounded the death knell for many of the small scale Gwanda gold miners. Modern production within the region has proved that the gold bearing reef normally continues below these sills/dykes. The purpose of the drilling is to establish the location of the reef package on the northern side of the dyke.

Summary of Activities Planned for the Period to 30 June 2017

Arcadia High Grade Lithium Project

- Completion of Pre-Feasibility Study (PFS)
- Drilling to continue to expand the resource inventory at Arcadia
- Regulatory Approvals for development of the Arcadia Mine
- Provision of specification product samples to potential off-take partners

Gwanda East Gold Project

- Begin underground exploration drilling of the Sally Gold Mine
- Continue to sweep and vamp underground workings
- Process gold bearing sands removed from the underground workings

Other Acquisitions

- Continue to investigate additional lithium and cobalt acquisitions

To view tables and figures, please visit:
http://abnnewswire.net/lnk/LL4T8OIW


About Prospect Resources Ltd:

Prospect Resources Ltd. (ASX:PSC) is based in Australasia with operations in Zimbabwe and is a publicly listed company. We are committed to creating value for Prospect's shareholders and the communities in which our company operates. Our vision is to build a Southern African based mining company of international scale.



Contact:

Hugh Warner Executive Chairman
Prospect Resources Ltd.
T: +61-413-621-652

Harry Greaves Executive Director
Prospect Resources Ltd.
T: +263-772-144-669
www.prospectresources.com.au