NEOMETALS LTD — Capital/Financing Update 2009

Aug 31, 2009

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

Reed Resources Ltd

ABN 89 099 116 631

1 September 2009

Reed Resources exercises option to acquire 250,000 tpa Nimbus Processing Plant

Highlights

• Reed have exercised option to acquire Nimbus Silver Project and Processing Plant in Kalgoorlie for A$2.25M;

• Acquisition funded by recent successful A$6.4M Capital Raising to institutional and qualified investors and fully underwritten A$4.5M Shareholder Purchase Plan;

• The plant offers a long term milling solution for the Company’s highgrade Sand Queen Gold Mine operations.

• Potential site for a mobile plant to produce lithium (spodumene) concentrates from Mount Marion, utilizing existing water supply, tailings facilities and site infrastructure.

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed”) has significantly enhanced its production capabilities in the Goldfields region of Western Australia, confirming today it has excised its option to acquire the Nimbus Silver Project and Processing Plant, 15km southeast of Kalgoorlie (Figure 1).

Reed entered into an Option Agreement with Polymetals Group Pty Ltd (“PGPL”) in April 2008 and since that time has been conducting technical and environmental due diligence of the assets. At the time of entering into the option agreement Reed made a payment to PGPL of A$50,000. Reed has exercised its option and will make payment a further payment of A$2.25M with settlement to occur this Friday, 4 September 2009.

An independent valuation in 2008 valued the plant and associated equipment at a replacement value (not installed) of A$7M.

The plant, which is capable of processing 250,000 tpa precious metals, will enable Reed to further develop its strategy of increasing its level of profitable gold production from its share of the high-grade Sand Queen Production Joint Venture (“Sand Queen”). The company believes there are significant opportunities associated with production of shallow gold resources at Sand Queen, amenable to low-cost open pit mining and processing through a Merrill-Crowe gold recovery circuit installed at Nimbus.

Reed Resources, managing director, Chris Reed believes this acquisition represents significant value to the Company.

“Mills such as this one are extremely difficult to locate. This acquisition will assist in the removal of potential milling risk and production limits from current processing/ore-sale arrangements,” he said.

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The Comet Vale gold ores are highly amenable to gravity recovery followed by leaching, and the Nimbus plant, which includes a yet to be installed gravity circuit, will enable both open pit and underground ores to be processed at their optimal conditions.

The Nimbus Project comprises two granted mining leases (M26/490, M26/598). PGPL commenced mining in early 2004 and produced approximately 3M oz of silver from two open pits before ceasing mining operations in late 2006. The processing plant was placed on care and maintenance in late 2007. There is significant base metal exploration upside and in-situ high-grade silver mineralisation beneath the current pit floors.

The Company is currently evaluating its existing shallow open–pit gold resources so as to provide base-load feed and enable a decision to refurbish and re-commission the plant at an initial rate of 100,000 tonnes per annum.

ENDS

For more information please contact:

Reed Resources Media Chris Reed David Tasker/Jasmine Green Managing Director Professional Public Relations Tel: 08 9322 1182 Tel: 9388 0944

About Reed Resources

Reed Resources is a diversified mining and exploration Company based in Western Australia, with modest gold production the Company is expanding and diversifying its production base.

Reed Resources has four main projects all in Western Australia including;

• Comet Vale – High-grade underground gold mine in JV with Kingsrose Mining Limited. Nickel Laterite JV with Heron Resources NL.

• Barrambie – Completed a Definitive Feasibility Study on Ferrovanadium operation to produce 6300t of vanadium per annum. Currently in approvals process.

• Mount Finnerty – Iron Ore JV with Portman Ltd. Nickel JV with Western Areas NL.

• Mount Marion – Option Agreement over high-grade Lithium project located approximately 40km south of Kalgoorlie

Competent Person

Geological aspects of this report that relate to Exploration Results have been compiled by Dr Peter Collins (MAIG), a Director of Reed Resources Ltd. Dr Collins has sufficient experience relevant to the style of mineralisation 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.

Although Reed Resources remain optimistic about the potential of its exploration projects, any reference to the terms “ore”, “high-grade” and “low-grade” in this report is conceptual in nature. Use of the term “Ore” is not intended to represent an Ore Reserve except where expressly indicated. Use of the term “grade” is not intended to represent the grade of a resource except where expressly indicated.

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Figure 1 Location of the Nimbus Processing Plant.
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