NEOMETALS LTD — AGM Information 2008

Oct 23, 2008

Reed Resources Ltd

ABN 89 099 116 631

97 Outram Street West Perth WA 6005 Tel: + 61 8 9322 1182 Fax: + 61 8 9321 0556

Company Announcements Platform Australian Securities Exchange Limited via electronic lodgement

24 October 2008

Dear Sirs

NOTICE OF ANNUAL GENERAL MEETING

Please find enclosed, a copy of the notice of meeting for the 2008 Annual General Meeting of Reed Resources Ltd (RDR) which is being delivered to shareholders of RDR today.

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Christopher Reed MANAGING DIRECTOR COMPANY SECRETARY

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Reed Resources Ltd

ABN 89 099 116 631

97 Outram Street West Perth WA 6005 Tel: + 61 8 9322 1182 Fax: + 61 8 9321 0556

Dear Shareholder

ANNUAL GENERAL MEETING

On behalf of the Board of Reed Resources Ltd ( Company ), it gives me pleasure to invite you to our Annual General Meeting ( AGM ) of Shareholders to be held at 3pm on Tuesday, 25 November 2008 at first floor, 104 Marine Parade, Cottesloe, Western Australia.

The business of the AGM will be to receive the Annual Report of the Company for the year ended 30 June 2008 which includes the Directors’ Report, the Financial Report, the Remuneration Report and the Report of the Auditor.

Shareholders will also be asked to vote on:

• (a) ratification of the appointment of Steven Cole as a Director of the Company;

• (b) re-election of Christopher Reed and Ian Junk as Directors of the Company;

• (c) ratification of the issue of ordinary shares in the Company to clients of Transocean Pty Ltd who are professional and sophisticated investors in June 2008;

• (d) ratification of the grant of options to Transocean Pty Ltd to acquire fully paid ordinary shares in the Company (as part of its fees for the capital raising referred to in (c) above);

• (e) ratification of the issue of ordinary shares in the Company to Prime Minerals Ltd in August 2008 as part consideration for the acquisition of 100% of the ordinary shares of Australian Vanadium Corporation Pty Ltd;

• (f) approval for a proposed issue of in aggregate, 1,250,000 options to acquire fully paid ordinary shares in the Company to Directors of the Company;

• (g) approval for the proposed increase of the non-executive Directors' remuneration pool from $100,000 to $250,000; and

• (h) adoption of the 2008 Annual Remuneration Report of the Company.

• Please find enclosed the following documents in relation to the AGM:

• (a) Notice of AGM together with the Explanatory Statement;

• (b) Proxy Forms for the AGM together with instructions; and

• (c) Form for the Appointment of Corporate Representative for the AGM.

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If you are not able to attend the AGM in person, you are urged to complete and lodge the enclosed Proxy Form or Appointment of Corporate Representative (if a company).

Your Directors hope that you will be able to attend the AGM.

Yours sincerely

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Christopher John Reed MANAGING DIRECTOR

23 October 2008

NOTICE OF

ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of members of Reed Resources Ltd ABN 89 099 116 631 ( Company ) will be held at First floor, 104 Marine Parade, Cottesloe, Western Australia on Tuesday, 25 November 2008 at 3pm for the purpose of transacting the following business.

The Explanatory Statement and the Proxy Form accompanying this Notice are incorporated in and comprise part of this Notice. Information relevant to the proposed resolutions set out below, including information required by the ASX Listing Rules and the Corporations Act 2001 (Cth), can be found in the Explanatory Statement.

BUSINESS

Annual Report for year ended 30 June 2008.

To receive the Annual Report of the Company for the period ended 30 June 2008 which includes the Financial Report of the Company, the Directors’ Report, the Remuneration Report and the Report of the Auditor, Deloitte. During the consideration of these items, Shareholders are invited to ask questions or make comments on:

• the Financial Report of the Company for the period ended 30 June 2008;

• the Directors’ Report in relation to that period; and

• the Report of the Auditor on the Financial Report.

A representative of the Company's Auditor is anticipated to be in attendance to respond to any questions raised of the Auditor or on the Auditor's Report in accordance with the terms of s 250T of the Corporations Act.

1. Ratification of appointment of Steven Cole as Director

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

Resolution 1

"THAT, for the purposes of Article 11.11 of the Company's Constitution, and for all other purposes, this meeting approves and ratifies the appointment by the Company of Steven Cole as Director and Deputy Chairman of the Company on 24 July 2008 and announced to ASX on the same day."

2. Re-election of Christopher John Reed and Ian Courtney Junk as Directors

To consider and if thought fit to pass, respectively as separate and independent ordinary resolutions, with or without amendment, each of the following:

Resolution 2

"THAT Christopher John Reed who will retire as a Director by rotation in accordance with Articles 11.3 and 11.5 of the Company’s Constitution, and who is eligible for re-election as a Director in accordance with Article 11.4 of the Company’s Constitution and who offers himself for re election, be re elected as a Director."

Resolution 3:

"THAT Ian Courtney Junk who will retire as a Director by rotation in accordance with Articles 11.3 and 11.5 of the Company’s Constitution, and who is eligible for re-election as a Director in accordance with Article 11.4 of the Company’s Constitution and who offers himself for re election, be re elected as a Director."

3. Ratification of previous issues of securities

3.1 Issue of shares to clients of Transocean Securities Pty Ltd (ACN: 009 230 120)

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

Resolution 4

"THAT for the purpose of ASX Listing Rule 7.4, and for all other purposes, this meeting ratifies and approves the issue by the Company on 13 June 2008 of 13,333,333 fully paid ordinary shares of the Company at a price of $0.90 each to be privately placed with clients of Transocean Securities Pty Ltd (ACN: 009 230 120) (in every case, such client being a sophisticated or professional investor for the purposes of section 708 of the Corporations Act 2001 (Cth)) to raise gross funds of approximately $12,000,000 pursuant to the terms of the 'Equity Raising and Corporate Advisory Mandate' letter agreement dated 30 May 2008 (as amended by letter dated 5 June 2008) between the Company and Transocean Securities Pty Ltd (ACN: 009 230 120)."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 7.5.6, and for all other purposes, the Company will disregard any votes cast on the Resolution by Transocean Securities Pty Ltd (ACN: 009 230 120) or any person that participated in the placement and any associate of any of them. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

(b) it is cast by a person chairing the meeting 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.

3.2 Grant of options (as capital raising fee) to Transocean Securities Pty Ltd (ACN: 009 230 120)

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

Resolution 5

"THAT, for the purpose of ASX Listing Rule 7.4, and for all other purposes, this meeting approves and ratifies the grant and allotment by the Company of 1,333,333 options to Transocean Securities Pty Ltd (ACN: 009 230 120) to acquire fully paid ordinary shares in the Company, exercisable at any time on or before 30 June 2010 at an exercise price of $1.08 each, pursuant to the terms of the 'Equity Raising and Corporate Advisory' letter agreement dated 30 May 2008 between the Company and Transocean Securities Pty Ltd, as issued and allotted on 13 June 2008 and announced to the ASX on the same date."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 7.5.6, and for all other purposes, the Company will disregard any votes cast on the Resolution by Transocean Securities Pty Ltd (ACN: 009 230 120) and any associate of it. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

(b) it is cast by a person chairing the meeting 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.

3.3 Issue of shares to Prime Minerals Limited (ACN: 120 658 497)

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

Resolution 6

"THAT, for the purpose of ASX Listing Rule 7.4, and for all other purposes, this meeting approves and ratifies the issue and allotment by the Company of 2,000,000 fully paid ordinary shares in the Company to Prime Minerals Limited (ACN: 120 658 497), a sophisticated and professional investor for the purposes of section 708 of the Corporations Act 2001 (Cth), pursuant to the terms of the Agreement for Sale and Purchase of Shares in Australian Vanadium Corporation Pty Ltd (ACN 121 044 415) dated 29 August 2008, as issued and allotted on 1 September 2008 and announced to the ASX on the same date."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 7.5.6, and for all other purposes, the Company will disregard any votes cast on the Resolution by Prime Minerals Limited (ACN: 120 658 497) and any associate of it. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting 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. Approval of proposed issue of options to Christopher John Reed, Peter Lionel Fleury Collins, Ian Courtney Junk and Steven Cole

To consider and if thought fit to pass, respectively as separate and independent ordinary resolutions, with or without amendment, each of the following:

Resolution 7

"THAT for the purpose of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, this meeting approves and authorises the Company to grant 600,000 options to acquire fully paid ordinary shares of the Company to Christopher John Reed, a director of the Company, to be exercised at any time on or before 30 June 2013 at an exercise price of $1.20 each, and to be issued on the terms and conditions particularised in Appendix 1 of the Explanatory Statement forming part of this Notice of Meeting."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and for all other purposes, the Company will disregard any votes cast on the Resolution by Christopher John Reed and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

(b) it is cast by a person chairing the meeting 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.

Resolution 8

"THAT for the purpose of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, this meeting approves and authorises the Company to grant 200,000 options to acquire fully paid ordinary shares of the Company to Peter Lionel Fleury Collins, a director of the Company, to be exercised at any time on or before 30 June 2013 at an exercise price of $1.20 each, and to be issued on the terms and conditions particularised in Appendix 1 of the Explanatory Statement forming part of this Notice of Meeting."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and for all other purposes, the Company will disregard any votes cast on the Resolution by Peter Lionel Fleury Collins and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting 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.

Resolution 9

"THAT for the purpose of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, this meeting approves and authorises the Company to grant 200,000 options to acquire fully paid ordinary shares of the Company to Ian Courtney Junk, a director of the Company, to be exercised at any time on or before 30 June 2013 at an exercise price of $1.20 each, and to be issued on the terms and conditions particularised in Appendix 1 of the Explanatory Statement forming part of this Notice of Meeting."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and for all other purposes, the Company will disregard any votes cast on the Resolution by Steven Cole and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting 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.

Resolution 10

"THAT for the purpose of ASX Listing Rule 10.11 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, this meeting approves and authorises the Company to grant 250,000 options to acquire fully paid ordinary shares of the Company to Steven Cole, a director of the Company, to be exercised at any time on or before 30 June 2013 at an exercise price of $1.20 each, and to be issued on the terms and conditions particularised in Appendix 1 of the Explanatory Statement forming part of this Notice of Meeting."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.13.6 and Section 224 of the Corporations Act 2001 (Cth), and for all other purposes, the Company will disregard any votes cast on the Resolution by Steven Cole and any of his associates. However, the Company need not disregard a vote if:

• (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• (b) it is cast by a person chairing the meeting 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.

5. Approval of proposed increase to non-executive directors' remuneration cap

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

Resolution 11

"That for the purposes of ASX Listing Rule 10.17 and section 208 of the Corporations Act 2001 (Cth), and for all other purposes, this meeting approves and authorises an increase of $150,000 to the maximum remuneration payable to nonexecutive Directors as a whole, thereby making the maximum remuneration payable to non-executive Directors in aggregate, equal to $250,000."

Voting Exclusion Statement

For the purposes of ASX Listing Rule 10.17.1, and for all other purposes, the Company will disregard any votes cast on the Resolution by non-executive Directors of the Company or any of their associates. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

(b) it is cast by a person chairing the meeting 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. Adoption of Remuneration Report

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

Resolution 12

"THAT for the purposes of section 250R (2) of the Corporations Act 2001 (Cth) the Remuneration Report for the year ended 30 June 2008 be adopted."

The Remuneration Report is set out on pages 19 to 22 of the 2008 Annual Report. Please note that in accordance with section 250R (3) of the Corporations Act 2001 (Cth) the vote on this resolution is advisory only, and does not bind the Directors or the Company.

7. Other Business

In compliance with section 250S(1) of the Corporations Act 2001 (Cth) the members are invited to ask questions about or make comments on the management of the Company and to raise any other business which may lawfully be brought before the meeting.

BY ORDER OF THE BOARD

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Christopher John Reed Director Perth, Western Australia Date: 23 October 2008

EXPLANATORY STATEMENT

THIS EXPLANATORY STATEMENT accompanies and forms part of the Notice of Meeting convening the Annual General Meeting ( AGM ) of Shareholders of Reed Resources Ltd ABN 89 099 116 631 ( Company ) to be held at 104 Marine Parade, Cottesloe, Western Australia, Western Australia, on Tuesday 25 November 2008 at 3pm .

This Explanatory Statement is to provide Shareholders with explanatory notes and information relevant to the meeting and its business, it comprises of a Part A, a Part B and three Appendices. This Explanatory Statement should be read in conjunction with the accompanying Notice.

PART A: VOTING

1. Definitions

AASB means the Australian Accounting Standards Board.

Annual General Meeting means the annual general meeting notified to the Shareholders by the Notice.

ASIC means Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited.

Board means the board of Directors of the Company.

Business Day has the meaning ascribed to it in the Listing Rules.

Company means Reed Resources Ltd (ABN 89 099 116 631).

Corporations Act means Corporations Act 2001 (Cth).

Corporations Regulations means the Corporations Regulations 2001 (Cth).

Director means a Director of the Company.

Listing Rules means the Listing Rules from time to time of the ASX.

Notice means the notice of annual general meeting incorporating this Explanatory Statement.

Share means an ordinary share in the Company.

Shareholders means the shareholders of the Company.

2. Required Majority

• (a) In accordance with the Corporations Act for the resolutions to be effective:

• (i) the resolutions must be passed at a meeting of which not less than 28 days written notice specifying the intention to propose the resolutions has been given (satisfied by this Notice); and

• (ii) in the case of ordinary resolutions, must be passed by more than 50% of all the votes cast by Shareholders present and entitled to vote on the resolutions (whether in person or by proxy, attorney or representative); and

• (iii) in the case of special resolutions, must be passed by not less than 75% of all the votes cast by Shareholders present and entitled to vote on the resolutions (whether in person or by proxy, attorney or representative).

• (b) On a show of hands every Shareholder has one vote and, on a poll, every Shareholder has one vote for each Share.

3. Proxies

• (a) The Company has determined that, for the purposes of this Annual General Meeting, each Share in the Company shall be taken to be held by the person who held the Share as a registered Shareholder at Friday, 5pm, 21 November 2008 ( Effective Time ).

• (b) All holders of shares in the Company as at the Effective Time are entitled to attend and vote at this Annual General Meeting.

• (c) A proxy need not be a member of the Company.

• (d) The proxy form sent with this Notice should be used for this Annual General Meeting.

• (e) Each Shareholder who is entitled to cast 2 or more votes at this Annual General Meeting, may appoint 2 persons to act as proxies and may specify the proportion or number of votes that each proxy is entitled to exercise. If a Shareholder does not specify the proportion or number of that Shareholder’s votes each proxy may exercise, then each proxy will be entitled to exercise half of the votes. An additional proxy form will be supplied by the Company on request.

• (f) In the case of a member who is an individual, a proxy must be under the hand of the individual or his or her attorney duly authorised in writing and, in the case of a member that is a corporation, a proxy must be executed by the corporation under common seal, pursuant to Section 127 of the Corporations Act or under the hand of its duly authorised officer or attorney.

• (g) Any member may by power of attorney appoint an attorney to act on his or her behalf and such power of attorney or certified copy thereof must be received by the Company as specified in paragraph (i).

• (h) Any corporation which is a member of the Company may appoint a representative to attend and vote for that corporation at the Annual General Meeting. Appointments of representatives by corporations must be received by the Company as specified in paragraph (i) or handed in at the Annual General Meeting when registering as a company representative.

• (i) In accordance with Article 10.34 of the Company’s Constitution, proxies and powers of attorney granted by Shareholders must be received by the Company by 5pm, Friday 21 November 2008 at:

• (i) The registered office of the Company – 97 Outram Street, West Perth, Western Australia; or

• (ii) By facsimile at the registered office of the Company – facsimile number (08) 9321 0556.

PART B: EXPLANATORY NOTES

1. Ratification of appointment of Steven Cole as Director

Resolution 1: Ratification of appointment of Steven Cole as Director

Steven Cole was appointed to the position of Deputy Chairman on 24 July 2008. It is a requirement that a Director who has been appointed by the board of Directors must have his or her appointment confirmed at the next Annual General Meeting. If the appointment is not ratified, the person ceases to be a Director at the end of the Annual General Meeting. Accordingly, Steven Cole's appointment will be put before the Shareholders for ratification.

By way of background, the following information is set out in respect of Mr Cole.

Steven Cole, LLB (Hons) FAICD, Age 57

Position: Deputy Chairman

Term of Office: Appointed 24 July 2008

Independent: Yes

Company Board Committee Membership: Nomination and Remuneration Committee

Current External Directorships: Emerson Stewart Group Limited, Solco Limited (and Group subsidiaries), Sanmina-SCI Holdings Australia Pty Ltd and SanminaSCI Australia Pty Ltd, 2 Australian subsidiaries of Sanmina-SCI Systems Holdings Inc (USA), DGB Investment Funds Pty Ltd and Bilton Canning Pty Ltd

Skills, Experience and Expertise: Steven has 35 years of professional, corporate and business experience through senior legal consultancy, as well as a range of executive management and non executive appointments. His extensive boardroom and board sub-committee experience includes ASX listed, statutory, proprietary and NFP organisations covering the industrial, financial, educational, professional services, health and resources sectors.

Recommendation of Board

The Board after considering the recommendations of the Nomination and Remuneration Committee recommends that Shareholders vote in favour of the resolution ratifying the appointment of Steven Cole as Director.

2. Re-election of Chris Reed and Ian Junk as Directors

Resolution 2: Re-election of Christopher John Reed as a Director

It is a requirement under Article 11.3 of the Company’s Constitution that at the Annual General Meeting in every year one third of the Directors retire from office. The Directors to retire are those who have been longest in office since their last election. Accordingly, Chris Reed will retire at the end of the Annual General Meeting in accordance with this requirement and offers himself for re-election.

Information in respect of Chris Reed is set out below:

Christopher John Reed, Bcom, GradCertMinEcon, ASA, MAusIMM, Age 35

Position: Executive Director

Term of Office: Appointed 20 December 2001

Independent: No

Company Board Committee Membership: None

Current External Directorships: None

Skills, Experience and Expertise: Chris was born and raised in Kalgoorlie. He started working in the mining industry in 1990 as a field assistant at New Celebration Gold Mine. Chris holds a Bachelor of Commerce in Accounting from the University of Notre Dame and a Graduate Certificate in Mineral Economics from the Western Australian School of Mines. In 2002 Chris was admitted as an associate of the Certified Practicing Accountants. Chris spent 2 years as the Chief Financial Officer and Company Secretary of the University Building Society prior to joining his father in establishing Reed Resources. Chris has also held positions in the legal, stockbroking, investment banking and chartered accounting industries.

Recommendation of Board

The Board after considering the recommendations of the Nomination and Remuneration Committee recommends that Shareholders vote in favour of the resolution re-electing Chris Reed.

Resolution 3: Re-election of Ian Courtney Junk as a Director

It is a requirement under Article 11.3 of the Company’s Constitution that at the Annual General Meeting in every year one third of the Directors retire from office. The Directors to retire are those who have been longest in office since their last election. Accordingly, Ian Junk will retire at the end of the Annual General Meeting in accordance with this requirement and offers himself for re-election.

Information in respect of Ian Junk is set out below:

Ian Courtney Junk, BEng (Hons), MAusIMM, Age 40

Position: Non-executive director

Term of Office: Appointed 1 December 2003

Independent: No

Company Board Committee Membership: Nomination and Remuneration Committee

Current External Directorships: CBR-TSX, BMC-TSX, Committee Bay Resources, Brilliant Mining Corp

Skills, Experience and Expertise: Ian joined the board in December 2003. Ian is a highly respected mining engineer with considerable experience in narrow vein underground mining and project development. Ian holds an Honours degree in Mining Engineering from the Western Australian School of Mines and a First Class Mine Managers Certificate. Ian was instrumental in the purchase and management of the Miitel and Wannaway nickel mines from WMC for the Miitel Joint Venture, involving Clough Mining and Mincor Resources NL. Ian and his brother Leigh were

chosen as national finalists in the 2003 Ernst & Young - Young Entreprenuer of the Year for their successful implementation of innovative mining methods at the Miitel nickel mine. Ian is a member of the Australian Institute of Mining and Metallurgy.

Recommendation of Board

The Board after considering the recommendations of the Nomination and Remuneration Committee recommends that Shareholders vote in favour of the resolution re-electing Ian Junk.

3. Ratification of previous issues of securities

3.1 Background of relevant issues

Resolution 4: Ratification of issue of shares to clients of Transocean Securities Pty Ltd (ACN: 009 230 120)

On 30 May 2008 the Company entered into an 'Equity Raising and Corporate Advisory Mandate' letter agreement dated 30 May 2008 with Transocean Securities Pty Ltd (ACN: 009 230 120) ( Transocean ) whereby Transocean agreed to provide financial and corporate advisory services to the Company to assist the Company in restructuring its asset base. Part of the initial strategy developed by Transocean included the placement of fully paid ordinary shares in the Company by way of a private placement to sophisticated and professional investors to raise further capital for the Capital.

On 13 June 2008 the Company, facilitated by Transocean, issued and allotted in aggregate, 13,333,333 fully paid ordinary shares of the Company at an issue price of $0.90 per Share to clients of Transocean, all of whom are sophisticated and professional investors for the purpose of Part 6D.2 of the Corporations Act 2001 (Cth).

The placement raised gross funds of approximately $12,000,000, which have been or are intended to be used for the purpose of financing the Company's development of the Barrambie assets.

The Shares were issued within the discretionary capacity of the board under ASX Listing Rule 7.1.

Resolution 5: Issue of options to Transocean Securities Pty Ltd (ACN: 009 230 120)

On 13 June 2008 the Company granted and allotted 1,333,333 options to acquire ordinary fully paid shares of the Company to Transocean Securities Pty Ltd (ACN 009 230 120) ( Transocean ), to be exercised at any time on or before 30 June 2010 at an exercise price of $1.08 each. These options were issued as consideration for Transocean's role in the placement of shares issued on 13 June 2008 the subject of Resolution 4 above.

Resolution 6: Ratification of issue of shares to Prime Minerals Limited (ACN: 120 658 497)

On 29 August 2008, the Company entered an Agreement for Sale and Purchase of Shares in Australian Vanadium Corporation Pty Ltd (ACN 121 044 415) ( Agreement ) with Prime Minerals Limited (ACN 120 658 497) in which the Company agreed to pay $1,000,000 plus issue 2,000,000 ordinary fully paid shares as consideration for the purchase of 100% of the

ordinary shares of Australian Vanadium Corporation Pty Ltd. Prime Minerals Limited is a sophisticated and professional investor for the purposes of section 708 of the Corporations Act 2001 (Cth). On 1 September 2008 the Company issued 2,000,000 ordinary fully paid shares to Prime Minerals Limited pursuant to the Agreement.

The purpose of the acquisition of Australian Vanadium Corporation Pty Ltd is to expand the Company's landholdings around its Barrambie vanadium deposits. This expansion allows the Company to further expand its resource base and optimally place its plant infrastructure and waste deposits. The acquisition of Australian Vanadium Corporation Pty Ltd is part of the Company's strategic plan to fast-track the development of its Barrambie vanadium assets.

3.2 Approvals Required for Resolutions 4, 5 and 6

ASX Listing Rule 7.1 provides that, without approval of the Shareholders, the Company must not issue or agree to issue more equity securities if such issue, if aggregated with the securities issued by the Company without approval and which were not subject to an exemption, during the previous 12 months, would be such amount that would exceed 15% of the issued shares at the commencement of that 12 month period (subject to certain rules and exemptions).

ASX Listing Rule 7.4 however provides that an issue of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purposes of Listing Rule 7.1 if that issue did not breach Listing Rule 7.1 at the time of issue and the shareholders subsequently ratify that issue. The issues referred to in Resolutions 4,5 and 6 did not breach Listing Rule 7.1 when made.

Under Resolution 4, the Company seeks the ratification by the Shareholders of the issue and allotment of the 13,333,333 fully paid ordinary shares of the Company issued and allotted to clients of Transocean Securities Pty Ltd (ACN: 009 230 120).

Under Resolution 5, the Company seeks the ratification by the Shareholders of the issue and allotment of the 1,333,333 options to acquire fully paid ordinary shares of the Company issued and allotted to Transocean Securities Pty Ltd (ACN: 009 230 120).

Under Resolution 6, the Company seeks the ratification by the Shareholders of the issue and allotment of the 2,000,000 fully paid ordinary shares issued and allotted to Prime Minerals Limited (ACN 120 658 497).

The effect of the ratification by the Shareholders pursuant to Resolutions 4, 5 and 6 is to restore the Company's capacity for the purposes of Listing Rule 7.1 to issue or agree to issue further equity securities up to the 15% limit.

3.3 Details of the previous issues of securities in respect of Resolutions 4, 5 and 6 Resolutions 4 and 5: 13 June 2008 Placement to Transocean Securities Pty Ltd

In respect of Resolutions 4 and 5, for the purposes of Listing Rule 7.5.1, 7.5.2 and 7.5.4, the following information is given to Shareholders:

Issue Date	Allottee Basis	Issue Price	Number of fully paid ordinary shares
13 June 2008	Clients of Transocean Securities Pty Ltd (ACN: 009 230 120) pursuant to the terms of the 'Equity Raising and Corporate Advisory' letter agreement between the Company and Transocean Securities Pty Ltd each being a sophisticated and professional investor for the purpose of s708 of the Corporations Act.	$0.90	13,333,333
Issue Date	Allottee Basis	Exercise price	Number of options to acquire fully paid ordinary shares
13 June 2008	Transocean Securities Pty Ltd (ACN: 009 230 120) as part of the remuneration of the terms of the 'Equity Raising and Corporate Advisory' letter agreement between the Company and Transocean Securities Pty Ltd.	$1.08	1,333,333

Listing Rule 7.5 also requires the following further information to be provided to Shareholders:

• (a) ( Terms of the securities ) – the issued shares are fully paid ordinary shares and are on the same terms as existing fully paid ordinary shares of the Company. The terms of the options granted to Transocean the subject of Resolution 5, are set out in Appendix 2. Each option, when exercised entitles Transocean to be issued one fully paid ordinary share in the Company.

• (b) ( Use or Intended use of the funds raised ) – the additional capital made available to the Company in consequence of the issue has been and is intended to be used for financing the Company's development of its Barrambie assets. There were no funds raised in connection with the issue of the options to Transocean under Resolution 5 as the options were issued without payment of cash consideration. The proceeds from a future exercise of the options, however, are intended to be applied towards meeting working capital requirements of the Company relevant at, or about the time of, the exercise of the options at the discretion of the Board.

Resolution 6: 1 September 2008 issue to Prime Minerals Limited

In respect of Resolution 6, for the purposes of Listing Rule 7.5.1, 7.5.2 and 7.5.4, the following information is given to Shareholders:

Issue Date	Allottee Basis	Issue Price	Number of fully paid ordinary shares
1 September 2008	Prime Minerals Limited (ACN 120 658 497) as part of the agreement between the Company and the allottee.	Part consideration for purchase of Australian Vanadium Corporation Pty Ltd	2,000,000

Listing Rule 7.5 also requires the following further information to be provided to Shareholders:

• (a) ( Terms of the securities ) – the issued shares are fully paid ordinary shares and are on the same terms as existing fully paid ordinary shares of the Company.

• (b) ( Use or Intended use of the funds raised ) – No funds were raised because the share issue to Prime Minerals Limited (ACN 120 658 497) was part consideration for the purchase of the Australian Vanadium Corporation Pty Ltd (ACN 121 044 415) pursuant to the terms of the Agreement for Sale and Purchase of Shares in Australian Vanadium Corporation Pty Ltd. The purpose of the acquisition of Australian Vanadium Corporation Pty Ltd is to expand the Company's landholdings around its Barrambie vanadium deposits. This expansion allows the Company to further expand its resource base and optimally place its plant infrastructure and waste deposits. The acquisition of Australian Vanadium Corporation Pty Ltd is part of the Company's strategic plan to fast-track the development of its Barrambie vanadium project.

3.4 Recommendation of Board in respect of Resolutions 4, 5 and 6

The Directors unanimously recommend that Shareholders vote in favour of each of Resolutions 4, 5 and 6 to ratify those previous issues of securities of the Company.

4. Approval of issue of securities to Directors

4.1 Background

Resolutions 7, 8, 9 and 10: Grants of Options to Christopher John Reed, Peter Collins, Ian Junk and Steven Cole

The effect and purpose of Resolutions 7, 8, 9 and 10 is to authorise the grant to Christopher John Reed, Peter Lionel Fleury Collins, Ian Courtney Junk, and Steven Cole (collective the Grantees), each a director of the Company, a total of 1,250,000 options (as set out in the table below) to acquire fully paid ordinary shares of the Company on or prior to 30 June 2013 at an exercise price of $1.20.

Name	No of options
Christopher John Reed	600,000
Peter Lionel Fleury Collins	200,000
Ian Courtney Junk	200,000
Steven Cole	250,000
TOTAL	1,250,000

On 19 August 2008, the Board resolved to issue 1,250,000 options to the Grantees as recognition of their continued contribution to the Company’s progress to date and to further incentivise their ongoing performance and commitment to the Company.

4.2 Approvals Required

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. In particular, section 208 of the Corporations Act prohibits a public company giving a financial benefit to a related party of the company without shareholder approval, unless sanctioned by an exception to that section (which exceptions either do not apply or are not sought to be relied upon by the Company in the present circumstances). A director of a company is a related party for the purposes of the Corporations Act.

As the Grantees are directors of the Company, the grant of the options may be prohibited by Section 208 of the Corporations Act as providing a financial benefit to a related party.

Pursuant to section 208 of the Corporations Act, a public company is permitted to give a financial benefit to a related party of that company if:

• (a) it obtains the approval of its members in the way set out in sections 217 to 227 of the Corporations Act; and

• (b) it gives the benefit within 15 months after the approval.

Further, ASX Listing Rule 10.11 requires that a listed company obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party. If approval is given under ASX Listing Rule 10.11, approval is not required under ASX Listing Rule 7.1 (refer to ASX Listing Rule 7.2 Exception 14). ASX Listing Rule 10.13 sets out the relevant information requirements that are to be provided to Shareholders in this Explanatory Statement with respect to an approval being sought under ASX Listing Rule 10.11.

Accordingly, approval for the issue of the options to the Grantees is required pursuant to Listing Rule 10.11 and s 208 of the Corporations Act.

4.3 Corporations Act and ASX Listing Rules

Section 219 of the Corporations Act specifies matters which must be addressed in an explanatory statement for the purposes of a notice convening a meeting to obtain the approval of the Shareholders for the issuing of the options to the Grantees. ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11.

For the purposes of both section 219 of the Corporations Act 2001 (Cth) and ASX Listing Rule 10.13, the following further information is provided in relation to Resolutions 7, 8, 9 and 10:

Disclosure Requirements for ASX Listing Rules and Corporations Act	Disclosure Requirements for ASX Listing Rules and Corporations Act
Information Requirement	Detail
Parties to whom proposed resolution would permit financial benefits to be given	Christopher John Reed Peter Lionel Fleury Collins Ian Courtney Junk Steven Cole
Maximum number of options to be issued to each DirectorChristopher	Christopher John Reed – 600,000 Peter Lionel Fleury Collins – 200,000 Ian Courtney Junk – 200,000 Steven Cole – 250,000
Total number of options to be issued	1,250,000
Issue and allotment date	It is proposed that the options will be issued and allotted (if approved) as soon as practicable after this AGM (and in any case within 1 month of this AGM).
Nature of financial benefits	Appendix 1 of this Explanatory Statement sets out the key terms in respect of the options. The options will entitle the Grantees to acquire fully paid ordinary shares in the Company exerciseable on or before 30 June 2013 for an exercise price of $1.20 per share. The current dollar value of the options to be issued is calculated using the Black-Scholes pricing model and is set out below.
Use or intended use of funds raised	There will be no funds raised in connection with the issue of the options to Grantees under Resolutions 7, 8, 9 and 10 as the options are to be issued without payment of cash consideration. The proceeds from a future exercise of the options, however, are intended to be applied towards meeting working capital requirements of the Company relevant at, or about the time of, the exercise of the options at the discretion of the Board.
Directors' recommendations and reasons	This information is set out in paragraph 4.5 below.

Information Requirement	Detail
Directors' interest in outcome of resolutions	This information is set out in paragraph 4.6 below.
Other remuneration currently given to the Grantees.	This information is set out in paragraph 4.7 below.

4.4 Value of options to be issued

It is a requirement of ASIC that shareholders be informed of the current dollar value of the options to be issued.

In determining the fair value of the options, the Black-Scholes option pricing model was used taking into account, as at the grant date, the variables and assumptions set out below. The inputs used below against each assumption are those which applied on 19 August 2008:

• (a) ( exercise price ) the options to be exerciseable at $1.20;

• (b) ( expected life of the instrument ) the options will expire, should they not previously be exercised, on or prior to 30 June 2013;

• (c) ( current price of the underlying share ) the share price at the grant date is $0.64, based on the last sale of shares on ASX as at 18 August 2008;

• (d) ( expected volatility ) price volatility of the shares of the Company is approximately 196%;

• (e) ( expected dividends ) there are no dividends presently expected to be paid in respect of the underlying shares; and

• (f) ( the risk-free interest rate for the expected life of the instrument ) the average current risk free interest rate is 6.53%.

On this basis, an exercise price of $1.20 each results in an implied value of $0.54 per option. The aggregate implied value of the 1,250,000 options to be issued in favour of the Grantees is therefore $675,000.

By way of information, the highest and lowest market price of listed ordinary shares of the Company during the 12 months immediately preceding 19 August 2008 is set out below:

	12 month high	12 month low	last market sale price as at 19 August 2008
Ordinary Share Price	$1.20	$0.52	$0.68

4.5 Director's recommendations to members and reasons

The recommendation to members of each Director and the reasons for that recommendation in relation to Resolutions 7,8, 9 and 10 in respect of each Director are as follows:

• Each Director, other than the Grantees, recommends that Shareholders vote in favour of Resolutions 7, 8, 9 and 10. Each Grantee has a conflict of interest as the intended recipient of the options and, accordingly, makes no recommendation to Shareholders in relation to Resolutions 7, 8, 9 and 10.

• Each of the Directors making the recommendation to vote in favour of Resolutions 7, 8, 9 and 10 considers that Resolutions 7, 8, 9 and 10 are in the best interests of the Company as recognition of the Grantee's continued contribution to the Company’s progress to date and to further incentivise their ongoing performance and commitment to the Company.

Shareholders should be aware, however, that:

• the passing of Resolutions 7, 8, 9 and 10 will result in the Grantees becoming entitled to 1,250,000 new Shares in the Company; and

• the passing of Resolutions 7, 8, 9 and 10 will result in, on any exercise of the options in due course, a dilution in the percentage shareholding of the Company's Shareholders, but the benefit of an enhancement of the Company’s capital base by reason of the receipt by the Company of the consideration or exercise price payable.

The number of Shares on issue as at 9 October 2008 was 137,450,000. Subject to the issue of shares pursuant to the exercise of all the existing options and proposed new options under this Resolutions 7, 8, 9 and 10 and assuming no other securities have been issued in the meantime, the aggregate number of Shares in the Company would be approximately 153,933,333. The proposed new options, on exercise in full, represent 1,250,000 Shares or 0.81% of that fully diluted capital base. The proposed new options, when aggregated with all prior options granted to the Grantees, on exercise in full, together with their other shareholdings, represent 9,845,205 Shares or 6.4% of a fully diluted capital base.

Ultimately, approval of Resolutions 7, 8, 9 and 10 by Shareholders is entirely a decision for each Shareholder to be made by exercising his or her own judgment. Shareholders are encouraged to seek such expert advice on the matter as they consider appropriate.

4.6 Directors' interest in the outcome of Resolutions 7,8,9 and 10

If Resolutions 7, 8, 9 and 10 for the issue of options to Grantees is passed, Grantees will become entitled to the relevant options the subject of those resolutions together with the option rights and entitlements associated with being a proprietor of such options.

4.7 Other remuneration currently given to the Grantees

The only other remuneration currently given to Christopher John Reed by the Company, is by way of annual salary, as an executive director of the Company, of $235,690 (refer Directors Remuneration Report). He has previously been issued an aggregate 4,000,000 options (1,000,000 exercisable at $0.35 per option on or before 31 December 2008, which issue was approved by the Shareholders at the extraordinary general meeting of the Company held on 16 June 2004, and 1,000,000 exercisable at $0.50 per option on or before 1 July 2010, which issue was approved by the Shareholders at the extraordinary general meeting of the Company held on 6 July 2005, 1,000,000 exercisable at $0.75 per option on or before 30 June 2011, which issue was approved by Shareholders at the annual general meeting held on 23 November 2006, and 1,000,000 exercisable at $0.85

per option on or before 31 December 2012, which issue was approved at the annual general meeting held on 26 November 2007).

The only other remuneration currently given to Peter Lionel Fleury Collins by the Company, is by way of annual salary for directors fees totalling $43,600 and geological consultant fees totalling $24,987 (refer Directors Remuneration Report). He has previously been issued an aggregate of 1,000,000 options (500,000 exercisable at $0.35 per option on or before 31 December 2008, which issue was approved by the Shareholders at the extraordinary general meeting of the Company held on 16 June 2004, and 500,000 exercisable at $0.75 per option on or before 30 June 2011, which issue was approved by Shareholders at the annual general meeting held on 23 November 2006).

The only other remuneration currently given to Ian Courtney Junk by the Company, is by way of annual salary for directors fees totalling $43,600. He has previously been issued an aggregate of 1,000,000 options (500,000 exercisable at $0.35 per option on or before 31 December 2008, 250,000 of these options have since been exercised, which issue was approved by the Shareholders at the extraordinary general meeting of the Company held on 16 June 2004 and 500,000 exercisable at $0.75 per option on or before 30 June 2011, which issue was approved by Shareholders at the annual general meeting held on 23 November 2006).

The only other remuneration currently given to Steven Cole by the Company, is by way of annual salary for directors fees totalling $54,500. He has not previously been issued any options.

4.8 Other information known to the Company

Other than as provided for in this Explanatory Statement, there is no other information known to the Company or any of its Directors that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s best interests to pass Resolution 7.

Comparative information

By way of further information for the benefit of the Shareholders, the following comparative information is presented. Set out below is a table of the existing shares and options of the Company held by Grantees and, for comparison, the new options to be issued and allotted pursuant to the proposed Resolutions 7, 8, 9 and 10.

	Shares		Otions	Proposed otions	Total %
Director	Direct	Related Entity	p currently held	p under Resolutions 7-10	holding in fully diluted basis*
Christopher John Reed	1,341,287	482,513	4,000,000	600,000	4.1%*
Peter Lionel Fleury Collins	285,705	NIL	1,000,000	200,000	1.0%*
Ian Courtney Junk	261,900	473,800	750,000	200,000	1.1%*
Steven Cole	NIL	1,900	NIL	250,000	0.2%*

*Assumes the options granted in Resolution 5 and proposed to be granted in Resolutions 7, 8, 9 and 10 are granted, and all options (including previously issued options) are exercised and no further securities are issued by the Company (in particular, any future issue of securities pursuant to Resolutions 7, 8, 9 and 10 has not been assumed).

Number of Existing Options

Number of Existing Options
	Exercisable on or before
2,200,000	31 December 2008	$0.35
	Exercisable on or before
1,000,000	1 July 2010	$0.50
	Exercisable on or
2,000,000	before 31 May 2009	$0.60
	Exercisable on or before
2,700,000	30 June 2011	$0.75
	Exercisable on or before
2,500,000	31 December 2009	$0.78
	Exercisable on or
2,500,000	before 31 December 2012	$0.85
	Exercisable on or
1,000,000	before 30 June 2013	$1.20
Number of New Options
	Exercisable on or
1,333,333	before 30 June 2010	$1.08
	(if approved under Resolution 5)
	Exercisable on or
1,250,000	before 30 June 2013	$1.20
	(if approved under Resolutions 7, 8, 9 and 10)

5. Increase to non-executive Directors' fee remuneration pool

5.1 Background

Resolution 11

The effect and purpose of Resolution 12 is to increase the pool from which non-executive Directors' salaries are paid from $100,000 to $250,000. Currently Peter Lionel Fleury Collins, Ian Courtney Junk and Steven Cole are appointed to the position of non-executive Director with the Company. On 1 July 2008, the board resolved to increase the nonexecutive remuneration to $250,000 to accommodate the recent appointment of Steven Cole as a non-executive director and also to allow for the appointment of additional nonexecutive directors if necessary and in the best interests of the Company.

5.2 Approvals Required

ASX Listing Rule 10.17 requires that the Company must not increase the total amount of Director's fees payable by it without the approval of Shareholders. ASX Listing Rule 10.17.1 sets out the information requirements for the notice of meeting, and states that the notice of meeting must include the amount of the increase, the maximum amount that may be paid to the Directors as a whole and a voting exclusion statement.

For the purposes of ASX Listing Rule 10.17, the following information is provided:

• (a) ( Current remuneration cap ) – The total amount payable to the non-executive directors as a whole is currently $100,000

• (b) ( Amount of increase to remuneration cap ) – The proposed increase to the remuneration cap of non-executive Directors is $150,000.

• (c) ( Proposed remuneration cap ) – The maximum amount payable to the nonexecutive directors as a whole after the proposed increase is $250,000.

6. Adoption of Remuneration Report

Resolution 12: Adoption of Remuneration Report

The Remuneration Report for the financial year ended 30 June 2008 is set out on pages 19 to 22 of the 2008 Annual Report.

The Remuneration Report sets out the Company's remuneration arrangements for all Directors and certain other executives.

Section 250R(2) of the Corporations Act requires the Annual General Meeting to include a vote on the adoption of the Remuneration Report. Pursuant to section 250R(3) of the Corporations Act, the vote on the resolution is advisory only and does not bind the Directors or the Company.

Section 250SA of the Corporations Act requires that a reasonable opportunity be allowed to Shareholders at the meeting to ask questions about, or make comments on, the Remuneration Report.

Recommendation of Board

The Directors recommend that Shareholders vote in favour of the resolution to adopt the Remuneration Report. It is noted that each of the Directors has a conflict of interest in recommending that Shareholders vote in favour of Resolution 13, as each Director has received, and continues to receive, remuneration as described in the Remuneration Report.

APPENDIX 1 – TERMS OF OPTIONS TO THE DIRECTORS

Terms and Conditions of Offer

The following sets out the key terms of the options to be issued to [NAME OF DIRECTOR], subject to the proposed grant being approved by the resolution of the shareholders of the Company at its annual general meeting scheduled to be held on 25 November 2008 (the Options ):

• (a) There are no restrictions as to the time at which any or all the Options issued to [NAME OF DIRECTOR] may be exercised, and exercise of the Options is at the sole discretion of [NAME OF DIRECTOR].

• (b) For the avoidance of doubt, all Options may be exercised:

• (i) during any Bid Period (as defined in the Corporations Act); or

• (ii) at any time after an event in which a change of control of the Company has occurred; or

• (iii) on an application under section 411 of the Corporations Act 2001, if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.

• (c) Each Option, when exercised entitles the optionholder to be issued one fully paid ordinary share in the Company.

• (d) Options not exercised on or before 30 June 2013 will automatically lapse.

• (e) Options may only be exercised by notice in writing to the Board delivered to the registered office of the Company. The notice must specify the number of Options being exercised and must be accompanied by:

• (i) the exercise price for the number of Options specified in the notice; and

• (ii) the certificate for those Options, for cancellation by the Company.

• The notice is only effective (and only becomes effective) when the Company has received value for the full amount of the exercise price (for example, if the exercise price is paid by cheque, by clearance of that cheque).

• (f) All shares of the Company allotted upon exercise of Options rank pari passu in all respects with the fully paid ordinary shares of the Company previously issued and, in particular, shall have rights to participate fully in:

• (i) dividends declared by the Company after the date of allotment; and

• (ii) all issues of securities made or offered pro rata to holders of ordinary shares of the Company.

• (g) The shares issued pursuant to the Options only carry an entitlement to participate in new issues of securities to holders of ordinary shares if an Option has been exercised and those shares allotted in respect of the Option before the record date for determining entitlements to the issue.

• (h) If there is a bonus share issue (Bonus Issue) to the existing holders of ordinary shares, the number of ordinary shares over which an Option is exercisable will be increased by the number of ordinary shares which Christopher John Reed would have received if the Option had been exercised before the record date for the Bonus Issue (Bonus Shares). The

Bonus Shares will be paid up by the Company out of the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank pari passu in all respects with the other shares of that class on issue at the date of the Bonus Shares.

• (i) If there is a pro rata issue (other than a Bonus Issue) to the existing holders of ordinary shares during the currency of, and prior to the exercise of any Options, the exercise price of the Options will be adjusted in the manner provided for in the Listing Rules.

• (j) If, prior to the expiry of any Options, there is a reorganisation of the issued capital of the Company, Options will be reorganised in accordance with the Listing Rules.

APPENDIX 2 – TERMS OF OPTIONS TO TRANSOCEAN SECURITIES

Terms and Conditions of Offer

The following sets out the key terms of the options proposed to be issued in respect of which approvals are sought under Resolution 5:

1. Options are exercisable at an exercise price of $1.08 ( Exercise Price )

2. Options may be exercised at any time prior to 5:00pm WST 30 June 2010 ( Expiry Date ) at the sole discretion of the optionholder, including, for the avoidance of doubt:

3. (a) during a Bid Period;

4. (b) at any time after a Change of Control Event has occurred; or

5. (c) on an application under section 411 of the Corporations Act 2001, if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.

6. Options will not be quoted on the ASX.

7. Options not exercised on or before the Expiry Date will automatically lapse.

8. Options may only be exercised by the optionholder serving notice in writing to the Board delivered to the registered office of the Company. The notice must specify the number of Options being exercised and must be accompanied by:

9. (a) a cheque payable to the Company for an amount equal to the Exercise Price multiplied by the number of Options exercised (as specified in such notice); and

10. (b) the certificate for those Options, for amendment and/or cancellation by the Company.

11. Options may not be sold, transferred, mortgaged, charged or otherwise dealt with or encumbered other than with the prior approval of the Board.

12. All Shares allotted upon exercise of Options rank pari passu in all respects with Shares previously issued and, in particular, entitle the holder of the Shares to participate fully in:

13. (a) dividends declared by the Company after the date of allotment; and

14. (b) all issues of securities made or offered pro rata to holders of Shares.

15. Shares issued pursuant to the Options only carry an entitlement to participate in new issues of securities to holders of Shares if an Option has been exercised and resulting Shares allotted in respect of the Option before the record date for determining entitlements to the issue.

16. If there is a bonus share issue to the holders of Shares, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the optionholder would have received if the Option had been exercised before the record date for the Bonus Issue.

17. If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise of any Options, the Exercise Price of an Option will be adjusted in the manner provided for in the ASX Listing Rules.

18. If, prior to the Expiry Date, there is a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the ASX Listing Rules.

19. The following definitions apply in relation to these terms and conditions, unless the context requires otherwise:

20. Bid Period means, in relation to a takeover bid in respect of Shares, the period

21. referred to in the definition of 'bid period' in section 9 of the Corporations Act 2001

(Cth) provided that where a takeover bid is publicly announced prior to the service of a bidder's statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement.

Board means the board of directors of the Company.

Bonus Issue means a bonus issue of Shares referred to in condition 10.

Change of Control Event means such time at which a shareholder, or a group of associated shareholders, become entitled to sufficient shares in the Company to give it or them the ability, and that ability is successfully exercised, in general meeting, to replace all or a majority of the Board.

Company means Reed Resources Ltd (ACN 099 116 631).

Exercise Price has the meaning as defined in condition 1.

Expiry Date has the meaning as defined in condition 2.

Shares means fully paid ordinary shares in the capital of the Company.

Reed Resources Ltd ABN 89 099 116 631

APPOINTMENT OF PROXY ANNUAL GENERAL MEETING

To assist you in exercising your right to vote your shares at the forthcoming Annual General Meeting of the Company to be held at 3:00 pm, Tuesday 25 TO APPOINT A PROXY, FOLLOW THE STEPS November 2008, you may wish to appoint a person who is attending as your BELOW proxy. Name of Shareholder Insert here the name and address of shareholder. ............................................................................. Address ............................................................................. ............................................................................. APPOINTS Name of Proxy .................................................... Insert here the name and address of the person you wish to appoint as proxy. Shareholders cannot appoint Address .............................................................. themselves. ............................................................................. OR or failing that person the Chairperson of the meeting; Mark the box opposite if you wish to appoint only the Chairperson of the Meeting to act as your proxy. OR If you plan to attend the Meeting your proxy’s right to THE CHAIRPERSON OF THE MEETING speak and vote for you will be suspended while you are present. to vote in accordance with the directions on this form, at the Annual General Meeting of the Company and at any adjournment thereof. If the Chairperson holds the proxy and if no specific voting direction on the following page of this form is given: � assuming that the Company Chairman chairs the meeting, his intention is to exercise the proxy in favour of each Resolution; � it is acknowledged that the Chairperson may exercise the proxy even if he or she has an interest in the outcome of the Resolution and votes cast by him or her other than as proxy holder will be disregarded because of that interest.

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SIGNATURE OF SHAREHOLDER(S)
� ........................................................................
() Individual shareholder
() Director
() Sole Director and Sole Secretary
� ........................................................................
() Director/Secretary
IF A CORPORATION AFFIX COMMON SEAL
(OPTIONAL)
Dated this day of 2008
() Delete if not applicable
----- End of picture text -----*

SHAREHOLDER MUST SIGN HERE AND DATE HERE

This proxy must be signed by the shareholder or by the shareholder’s attorney, or if a corporation, either under its common seal or by its authorised officers, or attorney who has not received any notice of revocation.

If this proxy is signed by a person who is not the registered shareholder, then the relevant authority must either have been exhibited previously with the Company or be enclosed with this proxy.

FOR YOUR VOTE TO BE COUNTED, THIS FORM MUST BE RECEIVED NO LATER THAN THE YOUR VOTE TIME SHOWN ON IS THE REVERSE SIDE IMPORTANT

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COMPLETE THE REVERSE SIDE IF YOU WISH TO SPECIFICALLY DIRECT YOUR PROXY HOW TO VOTE ON EACH RESOLUTION OR IF YOU DO NOT WISH TO SO DIRECT

YOUR PROXY HOW TO VOTE, MARK THIS BOX AND BY SO DOING DIRECT YOUR PROXY TO VOTE AS YOUR PROXY THINKS FIT. BY MARKING THIS BOX YOU ACKNOWLEDGE THAT THE CHAIRMAN MAY EXERCISE YOUR PROXY EVEN IF HE HAS AN INTEREST IN THE OUTCOME OF THE RESOLUTION AND VOTES CAST BY HIM OTHER THAN AS PROXY HOLDER WILL BE DISREGARDED BECAUSE OF THAT INTEREST.

Reed Resources Ltd ABN 89 099 116 631

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Resolutions For Against Abstain
----- End of picture text -----

1.	Ratification of appointment of Steven Cole as a Director	�	�	�
2.	Re-election of Christopher John Reed as Director	�	�	�
3.	Re-election of Ian Courtney Junk as Director	�	�	�
4.	Ratification of issue of shares to
	clients of Transocean Securities	�	�	�
	Pty Ltd
5.	Ratification of the grant of options
	to Transocean Securities Pty Ltd	�	�	�
	(as capital raising fee)
6.	Ratification of issue of shares to Prime Minerals Ltd	�	�	�
7.	Approval of proposed grant of options to Christopher John Reed	�	�	�
8.	Approval of grant of options to Peter Lionel Fleury Collins	�	�	�
9.	Approval of proposed grant of options to Ian Courtney Junk	�	�	�
10.	Approval of proposed grant of options to Steven Cole	�	�	�
11.	Approval of proposed increase to
	non-executive Directors'	�	�	�
	remuneration cap
12.	Adoption of Remuneration Report	�	�	�

A Shareholder who is entitled to cast 2 or more votes may appoint 2 persons (whether Shareholders or not) to attend the Meeting and vote. If you appoint a second proxy, state here the proportion or number of votes given to the proxy appointed on this form:

(OPTIONAL)

APPOINTMENT OF A SECOND PROXY

______ An additional proxy form will be supplied on request

Reed Resources Ltd ABN 89 099 116 631

Proxy Notes:

1. A member entitled to attend and cast 2 or more votes at the meeting is entitled to appoint 2 proxies. If a member does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes.

2. A proxy need not be a member of the Company.

3. Unless a member specifically directs the proxy how to vote on each Resolution, the proxy may vote as he or she thinks fit or abstain from voting. If the Chairperson is appointed and if no specific direction as to how to vote on each Resolution is given, and assuming that the Company Chairman chairs the meeting, his intention is to exercise the proxy in favour of each Resolution. It is acknowledged that the Chairperson may exercise the proxy even if he or she has an interest in the outcome of the Resolution and votes cast by him or her other than as proxy holder will be disregarded because of that interest.

1. In the case of an individual, a proxy must be under the hand of the individual or his or her attorney duly authorised in writing and, in the case of a corporation, a proxy must be under the common seal of that corporation, pursuant to section 127 of the Corporations Act or under the hand of its duly authorised officer/s or attorney.

2. To be valid, the form appointing the proxy and the power of attorney granted by members or other authority (if any) must be lodged at the registered office of the Company as set out below.

Your completed proxy must be received by 5pm, Friday 21 November 2008:

• (a) The registered office of the Company – 97 Outram Street, West Perth, Western Australia; or

• (b) By facsimile at the registered office of the Company – fax number (08) 9321 0556.

Reed Resources Ltd ABN 89 099 116 631

APPOINTMENT OF CORPORATE REPRESENTATIVE Pursuant to Section 250D of the Corporations Act

_____ ( ACN/ARBN _____ )

(Insert name of Shareholder/Body Corporate & ACN/ARBN)

Hereby Authorises

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(Insert name of appointee)

• ()1. To act as the Company’s representative at all meetings of: Reed Resources Ltd ABN 89 099 116 631*

• (*)2. To act as the Company’s Representative at the Annual General Meeting to be held at 3:00 pm on Tuesday 25 November 2008 and any adjournment thereof.

Dated this ____ day of _______ 2008

Executed by the Shareholder in accordance with its Constitution in the presence of:

(*) Director

(*) Sole Director & Sole Secretary

Director/Secretary Affix Common Seal here (optional)

(*) Delete if not applicable

This authority must be sent to the registered office of the Company, 97 Outram Street, West Perth, Western Australia or sent by facsimile to the Company, facsimile number (08) 9321 0556, by 5:00 pm Friday 21 November 2008 as set out in the Notice of Meeting which this appointment accompanies or handed in at the Meeting when registering as a company representative. In any case, the authority will be retained by the Company.