NEOMETALS LTD — Capital/Financing Update 2010

Sep 14, 2010

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

ASX Announcement

15 September, 2010

GOLD STRATEGY AND PROJECT UPDATE

KEY POINTS:

• Expansion Strategy at Comet Vale approved by Board of Directors

• Resource Extension Drilling at Comet Vale in progress

• Sand Prince West Open Pit Reserve & Optimisation Finalised

• Detailed engineering commenced for Nimbus Mill refurbishment to 300ktpa

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed”), is pleased to provide an update on its Gold assets and its strategy to resume gold production.

The Company’s strategy is to expand the existing resource base at Comet Vale through a staged RC and diamond drilling program and delineate sufficient reserves to resume production at the Sand Queen Gold Mine as a mechanised decline operation. New resource estimates and reserve calculations are expected by Christmas 2010. These results will also determine the processing rate and scale of the Nimbus Mill refurbishment and recommissioning, for both internal and third‐party requirements.

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Figure 1 Location of the Comet Vale project (left) and plan of tenements surrounding the Sand Queen Mine.

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RESOURCE EXTENSION DRILLING

A staged drilling program targeting both the existing Sand Queen/Sand George Lodes and the new parallel Sand Prince/Princess Grace lode system has commenced and is expected to be completed in early November. Results will be released in due course. Phase 1 of the drilling will specifically target the Princess Grace structure that lies directly beneath the designed Sand Prince West Open Pit, which is also planned to host the portal for a potential decline (Figure 2).

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Figure 2 Surface view of planned drilling in relation to existing resources and infrastructure

A cross sectional illustration can be seen in Figure 3. This shows the planned and current mine openings, the resource and planned drilling. Results from this drilling will allow a sustainable mining plan to be generated.

Phase 2 of the drilling will specifically target any areas requiring further definition, including diamond tails of drill holes into the Sand Queen / Sand George Lodes. It is anticipated that this drilling will total 10,000m.

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Figure 3 Cross Section illustrating a planned drill hole in relation to existing operations and planned open pit

REGIONAL EXPLORATION

In addition to the resource extension drilling, a campaign of exploration drilling has been planned and will be drilled on completion of the Resource Expansion campaign. This is expected to total an initial 5,000m and is designed to test the main Comet Vale Shear both North and South of the Sand Queen mine.

SAND PRINCE RESERVE

The Sand Prince West Pit was optimised and redesigned by Minecomp Pty Ltd. Extensional drilling is designed to delineate the Princess Grace lode system and thus provide impetus for a decline access into both the Princess Grace and Sand Queen/Sand George Lodes. Tabe 1 shows a reserve summary for the Sand Prince West pit above an undiluted grade of 1.5g/t @ $1,250/oz gold price.

Table 1 Reserve estimates for the Sand Prince West Deposit, Comet Vale project.

Deposit	Classification	Tonnes	Grade (g/t Au)	Ounces (Au)
Sand Prince West	Probable	109,000	2.6	9,200

Details of reserve estimation methodology are provided at the end of this announcement.

NIMBUS PROCESSING PLANT

The Company is in receipt of operating and capital cost estimates for the conversion and refurbishment of the Nimbus processing plant for a number of throughput rates. A Works Approval is being prepared for refurbishment to an initial 300ktpa rate, which is considered the internal milling requirement for any mechanised development at Comet Vale. Discussions have been held with parties interested in development of Nimbus as a toll milling facility, to treat supplementary sources of feed should production resume from the existing shaft at Comet Vale. Connection to the high‐voltage Western Power grid is expected to be completed in the March Quarter 2011. GR Engineering has commenced detailed design work on parts of the processing plant for refurbishment. Removal of the ball mill for inspection was completed last week (picture below).

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C J Reed

MANAGING DIRECTOR

COMPETENT PERSONS STATEMENT

The information that relates to the Surface Ore Reserves was compiled by Gary McCrae, a full time employee of Minecomp Pty Ltd which is a corporate member of the Australian Institute of Mining and Metallurgy. Gary McCrae is a qualified mining engineer who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the 1999 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Gary McCrae consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears.

Notes to accompany Mineral Reserve estimate:

Minecomp Pty Ltd was commissioned by Reed Resources Ltd (Reed) to undertake an estimation of open pit gold reserves at the Sand Queen mine, in accordance with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).

The ore reserve is that part of the Mineral Resource which can be economically mined by open pit mining methods. Dilution of the Mineral Resource and an allowance for ore loss was included in the Ore Reserve estimate. All the Indicated Ore Resource was classified as Probable Reserves after consideration of all mining, metallurgical, social, environmental and financial aspects of the Comet Vale Project. Slope angles used in the Ore Reserve estimation were based on standard pit slope angles for that rock type and weathering profiles. The pit limits were determined by the surrounding infrastructure (road and rail line) that limits the extents to which the pit can be economically excavated. The following ore related parameters were used in the optimisation: (prices quoted are in A$)

• Processing costs $35/t

• Toll Haulage of $12/t

• Metallurgical recovery of 96%

• A gold price of AUS$1,250

• Government royalty of 2.5%

• Total cost of $969/oz

Metallurgical recovery was based on recoveries seen through processing the Sand Queen ore for the last 3 years. Processing costs are based on those expected at the refurbished Nimbus Mill, a wholly owned asset of The Company.

ENDS

For further information please contact:

Chris Reed	David Tasker
Managing Director
Reed Resources Limited	Professional Public Relations
T: +61 89322 1182	T: +61 89388 0944/ +61 433 112 936
E:chris@reedresources.com	E: david.tasker@ppr.com.au

About Reed Resources

Reed Resources Ltd (ASX:RDR, OTC:RDRUY) is a diversified mining and exploration Company based in Western Australia. We are diversifying and expanding its production base. Reed Resources has five main projects (all in Western Australia) including:

• Mount Marion – High‐grade Lithium project located about 40km south of Kalgoorlie in JV with Mineral Resources Limited. First production planned by March 2011.

• Barrambie – Definitive Feasibility Study completed on a Ferrovanadium operation to produce 6300t of vanadium per annum. Currently in approvals process. Exclusivity Agreement with China Nonferrous Metals for EPC & Financing.

• Comet Vale – High‐grade underground gold mine on care & maintenance.

• Mount Finnerty – Iron ore JV with Cliffs Natural Resources & Nickel Farm‐in with Barranco Resources NL.

• Bell Rock Range – Nickel‐Copper‐PGM Farm‐out to Anglo American Exploration.

Website: www.reedresources.com