Prospect Resources : Notice of Extraordinary General Meeting/Proxy Form

For personal use only

Letter to Shareholders and Proxy Form in relation to

Extraordinary General Meeting

Prospect Resources Limited (ASX: PSC, FRA:5E8) (Prospect or the Company) is pleased to enclose the following documents in relation to its upcoming Extraordinary General Meeting:

• Letter to Shareholders;
• Notice of Extraordinary General Meeting; and
• Proxy Form.

Authorise for release by the Board of Directors.

For further information, please contact:

For personal use only

17 June 2022

Dear Shareholder,

Extraordinary General Meeting - Letter to Shareholders

Prospect Resources Limited (ASX: PSC) ("Prospect Resources Limited" or the "Company")

advises that an Extraordinary General Meeting ("EGM") of Shareholders will be held at 10.30AM (Perth time) on Monday, 18 July 2022 at Level 2, 40 Kings Park Road, West Perth 6005.

In accordance with section 110D of the Corporations Act 2001, the Company will only be dispatching physical copies of the Notice of Meeting (Notice) to Shareholders who have elected to receive the Notice in physical form. The Notice is being made available to Shareholders electronically and can be viewed and downloaded online from the Company's website at: https://www.prospectresources.com.au/announcements.

Business of the EGM

Following the completion of the sale of the Company's 87% interest in the Arcadia Lithium Project to Zhejiang Huayou Cobalt Co., Ltd (Transaction) the Company has determined to distribute the Transaction proceeds to Shareholders via a A$0.96 per share distribution comprising an unfranked dividend component of A$0.77 per share (Special Dividend) and, subject to shareholder approval, a capital reduction component of A$0.19 per share (Capital Reduction).

The Company has called the EGM on 18th July 2022 for Shareholders to approve the Capital Reduction. The Special Dividend does not require Shareholders' approval. If the Capital Reduction is approved, the cash payment of $0.96 per share will be made shortly after the EGM on 29th July 2022 in accordance with the timetable set out in the Notice of Meeting.

If the Capital Reduction is approved by Shareholders, Eligible Shareholders at the Record Date of 5.00pm (Perth time) on Friday, 22nd July 2022 will receive the A$0.96 per Share Cash Distribution (comprising the Capital Reduction and the Special Dividend), which will be distributed on Friday, 29th July 2022. Should the Resolution not be passed, the Cash Distribution will only include the Special Dividend of A$0.77 per share and the total amount of the Capital Reduction will be retained by the Company.

For effective delivery of the $0.96 Cash Distribution (if the Capital Return is approved), it is important that Shareholders ensure that their banking details are up to date with Prospect's share registry, Automic. Instructions for Shareholders to access the Automic investor portal and update their details are contained in the Notice of Meeting. Alternatively, Shareholders can use the form enclosed with this letter.

For personal use only

Contents

Important notices and how to vote

Important dates

Letter from Chairman

Shareholder information updates

Notice of Extraordinary General Meeting

Explanatory Memorandum

1. Summary
2. Background
3. Cash Distribution
4. Directors' recommendation
5. Reasons to vote in favour of the Resolution
6. Reasons to vote against the Resolution
7. Tax implications of Cash Distribution for Shareholders
8. Prospect's plans post Distribution
9. Other information

Enquiries

Glossary

Proxy Form

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