Prospect Resources Limited (Prospect or the Company) provides the following additional commentary relating to the proposed distribution to shareholders, currently estimated by Prospect to be in the range of A$430-450 million, which is subject to completion of the transaction (Transaction) with Zhejiang Huayou Cobalt Co., Limited (Huayou), as further described in the Notice of Meeting published on 25 January 2022 (Notice of Meeting).

Whilst the structure of the Proposed Distribution has not been finally determined, broadly speaking it is anticipated that the Proposed Distribution may be undertaken by one of the following mechanisms: Return of capital (ROC); or equal access share buy-back, where an off-market buy-back offer will be made to all shareholders to buy back the same percentage of each shareholders' ordinary shares (Off-Market Share Buy-Back); or An on-market buy-back, which is a buy-back offer made on the ASX in the ordinary course of trading. Although it is also available to all shareholders, it is essentially a 'first come, first served' offer (OnMarket Share Buy-Back).

Each structure has different tax, legal and commercial considerations. The following commentary is limited to the potential tax consequences of each structure, which will be validated with the Australian Taxation Office (ATO) via a class ruling process.

Contact:

Sam Hosack

Email: shosack@prospectresources.com.au

About Prospect Resources Limited (ASX: PSC, FRA:5E8)

Prospect Resources Limited (ASX: PSC, FRA:5E8) is an ASX listed lithium company based in Perth with operations in Zimbabwe. Prospect's flagship asset is the Arcadia Lithium Project located on the outskirts of Harare. Arcadia possesses a world-class hard rock lithium resource and is one of the most advanced lithium projects globally.

About Lithium

Lithium is a soft silvery-white metal which is highly reactive and does not occur in nature in its elemental form. In nature it occurs as compounds within hard rock deposits (such as Arcadia) and salt brines. Lithium and its chemical compounds have a wide range of industrial applications resulting in numerous chemical and technical uses. Lithium has the highest electrochemical potential of all metals, a key property in its role in lithium-ion batteries.

Caution Regarding Forward-Looking Information

This announcement may contain some references to forecasts, estimates, assumptions and other forward-looking statements. Although the Company believes that its expectations, estimates and forecast outcomes are based on reasonable assumptions, it can give no assurance that they will be achieved. They may be affected by a variety of variables and changes in underlying assumptions that are subject to risk factors associated with the nature of the business, which could cause actual results to differ materially from those expressed herein. All references to dollars ($) and cents in this announcement are in United States currency, unless otherwise stated. Investors should make and rely upon their own enquiries before deciding to acquire or deal in the Company's securities.

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