NEOMETALS LTD — Capital/Financing Update 2004

Jan 7, 2004

ASX and Media Announcement 8 January 2004

COMET VALE INFILL DRILLING RESULTS RESUMPTION OF PRE FEASIBILITY STUDY

Emerging gold producer Reed Resources Limited (ASX:RDR) today announced that it has successfully completed an infill drilling program at its Sand George gold deposit (100% owned) located at Comet Vale, 100 km north of Kalgoorlie.

The successful drilling program confirms the continuity of gold lodes and paves the way for Reed's mining consultants, RSG Global, to resume the mining Pre-Feasibility Study. In October 2003, the study was suspended to allow additional drilling of the multiple-lode deposit to the recommended drill density, which has lifted the level of confidence in the Sand George resource estimates.

Reed expects to announce the results of the new gold inventory being calculated by RSG later this month. The study is expected to be completed by the end of February enabling the decision to mine to be considered by the Board this quarter.

The drilling program included 4 dedicated reverse circulation (RC) holes and 10 RC pre-collared diamond core holes.

Drilling was targeted on a zone between 320 and 170 metres RL (65 to 215 metres below surface) to infill parts of the resource where there was more than 35 m between drill hole intersections from previous drilling campaigns.

All diamond drill holes intersected mineralised lodes at the targeted depth and have confirmed internal continuity of the Sand George 1 (SG1) and Sand George 2 (SG2) lodes.

Some of the lode intersections contain narrow high-grade sections with several assays in excess of 20 g/t Au. The better results include:

• 1.15 m @ 19.3 g/t Au (including 0.50 m @ 25.7 g/t Au) $\bullet$ .
• 1.95 m @ 14.3 g/t Au (including 0.45 m @ 48.0 g/t Au)
• 2.10 m @ 14.5 g/t Au (including 0.50 m @ 30.2 g/t Au) $\bullet$
• 2.15 m @ 11.7 g/t Au (including 0.55 m @ 39.5 g/t Au)
• 1.50 m @ 10.6 g/t Au (including 0.50 m @ 26.5 g/t Au)
• 0.95 m @ 46.0 g/t Au (including 0.45 m @ 96.7 g/t Au)
• 1.35 m @ 17.3 g/t Au (including 0.35 m @ 26.4 and 0.50 m @ 21.0 g/t Au) $\bullet$ .
• 1.35 m @ 12.1 g/t Au (including 0.35 m @ 42.3 g/t Au)

Reed Resources Executive Chairman David Reed said that the latest Sand George drilling program had provided the Company with a significant level of confidence to progress the development of the high-grade deposit.

"The Sand George drilling program has reinforced Reed's existing geological modeling and we are confident that production can commence during the September quarter," Mr Reed said.

"To expedite production, Donegal Resources has commenced mine planning and scheduling and Reed has commissioned a geotechnical engineer to provide a geotechnical assessment for consideration in the design of an underground mine." Mr Reed added that the Company is appropriately positioned to fund the development of Sand George.

"Reed is well funded to commence mining at Sand George following the signing of a Memorandum of Understanding with Consolidated Minerals Limited in December 2003. Subject to shareholder approval, the MOU will provide Reed with an underwritten convertible note of \$4 million."

Although gold grades are variable, all intersections of the SG1 and SG2 lodes contain anomalous zinc and lead, which are key indicators of the Sand George lodes and of gold mineralisation at the old Sand Queen-Gladsome mine.

All geological, analytical and survey data have been included in the Comet Vale data base and diamond drill core from the latest drilling program has also been logged by a geotechnical engineer.

Hole $IDTT$	Collar	Collar	From	То	Intersection	Grade (3)
	Northing (2)	Easting (2)	m	m	m	g/t Au
RD021	13225	7714	141.30	142.45	1.15	19.38
		including	141.30	141.80	0.50	25.78
			144.20	146.15	1.95	14.34
		including	145.70	146.15	0.45	48.06
RD018	13215	7758	94.70	96.80	2.10	14.53
		including	96.30	96.80	0.50	30.23
			98.25	100.40	2.15	11.77
		including	99.35	99.90	0.55	39.51
			107.10	107.81	0.70	9.27
RD020	13198	7703	160.25	161.05	0.80	10.08
			171.95	173.45	1.50	10.62
		including	171.95	172.45	0.50	26.51
RD019	13195	7757	100.25	102.35	2.10	2.59
			106.50	107.85	1.35	2.10
RD022	13175	7740	118.35	119.30	0.95	46.03
		including	118.85	119.30	0.45	96.71
			125.10	128.00	2.90	1.63
RD023	13150	7708	165.50	166.45	0.95	2.33
RD024	13125	7739	124.10	125.20	1.10	8.66
			150.30	151.65	1.35	17.30
		including	150.30	150.65	0.35	26.47
		including	151.15	151.65	0.50	21.03
DRC178	13125	7779	87.00	87.50	0.50	7.96
RD025	13100	7740	160.70	161.20	0.50	10.14
			163.35	164.90	1.55	1.17
RD026	13100	7710	177.30	178.65	1.35	12.15
		including	177.30	177.65	0.35	42.31
			204.85	205.75	0.90	9.96
			208.85	209.80	0.95	1.67
RD027 Text.	13075 计二进制机 医二甲二	7735 2.31 148.65 148.95 0.30 smmt. $\sim$ in most $\sim$ . $\sim$ よわめ よねせい

Results (gold assays in excess of 1 g/t only) are listed below:

1. Diamond drill holes have an 'RD' prefix, and RC drill holes have a 'DRC' prefix

2. Collar coordinates are for a local grid. All holes collared at 60° to the east.

3. All samples analysed by Genalysis Laboratory Services using 50g Fire assay with an AAS finish (FA50/AAS) and calculated as a weighted average.

Some of the RC drill holes also tested the Sand Prince West lode position and results (gold assays in excess of 1 g/t only) are listed below:

Drill	Collar	Collar	From	То	Interval	Grade
Hole	Northing	Easting			depth
	(m)	(m)	$\mathsf{m}$	(m)	(m)	$(g/t \text{ Au})$
DRC170	13225	7714	24	25		1.62
DRC174	13175	7740	21.5	22	0.5	2.25
DRC176	13150	7677	25	28		3.40
DRC178	13125	7779	21	22		1.50

Note: Collar coordinates are for a local grid. All holes drilled with a dip of -60° towards 085 AMG. Samples are 1 m drill intervals and analysed by Fire Assay with an AAS finish.

A review of all drill hole intersections of the Sand Prince West lode is to be undertaken as part of a preliminary assessment of the potential for a shallow open pit mining operation.

Feasibility Study

All data from the latest drilling campaign is currently being validated prior to the resumption of the Pre-Feasibility Study by RSG Global.

A hydrogeological study, advanced metallurgical testwork and an environmental impact assessment will be undertaken concurrently with the Pre-Feasibility Study to enable the decision to mine to be made this quarter.

For further information, please contact:

David Reed Executive Chairman Reed Resources Ltd Tel: 08 9322 1182

Issued by Warrick Hazeldine, Porter Novelli Tel: 08 9386 1233 Mob: 0417 944 616

Visit: www.reedresources.com

Technical aspects of this report have been compiled by Dr P Collins (BSc (Hons), PhD, MAIG), an employee of Curtin Consultancy Services Ltd. Dr Collins has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity which is being reported on to qualify as a Competent Person as defined in the Code for Reporting of Mineral Resources and Ore Reserves. Dr Collins consents to the inclusion in the report of the matters in the form and context in which it appears.