NEOMETALS LTD — Capital/Financing Update 2010

Aug 11, 2010

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

ASX Announcement

12 August 2010

Mineral Resource Estimates at Mt Marion Lithium Project in WA increase by 18%

HIGHLIGHTS

• Total Resources increase a further 18% to 10.5Mt @ 1.4% Li2O.

• 2.1 Mt @ 1.5% Li20 now in Measured Resource

• All deposits remain open along‐strike and down‐dip.

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed”), together with joint venture partner Mineral Resources Limited ( ASX: MIN ) (“Mineral Resources”), continues to prove up the world class nature of its Mt Marion Lithium project near Kalgoorlie, Western Australia, with the total contained lithium oxide resource increase to 146,000 tonnes (Li2O). The planned production rate is 200,000 per annum of ~6.5% Li2O concentrate, which contains ~13,000 tonnes lithium oxide (Li2O).

The upgraded resource classification and increased confidence in the estimate was based upon additional geology, bulk density and quality control work undertaken on the drilling at the Mt Marion project, to further highlight and demonstrate the robustness of the project geology and grade.

“This upgrade in the resource further highlights that Mt Marion is a formidable world class Lithium deposit”, Mr Reed said.

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Figure 1 Mt Marion Lithium Project Location

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RESOURCES

The geological model was prepared by way of a collaborative effort by Hellman and Schofield Pty Ltd (“H&S”) and Reed, from data provided by Reed. Independent consultants H&S have completed data validation, analysis, domain coding and interpretation and subsequently undertaken a re‐run of the Mineral Resource Estimates. The new estimates give total contained mineral resources for the Mt Marion Deposit of 146,500 tonnes of lithium oxide (Li2O) above a cut off grade of 0.3% lithium oxide, reported below in accordance with the JORC Code and Guidelines. Details of the previous resource/reserve estimates are included in Tables 2 and 3 for comparison.

Table 1 – August 2010 Mt Marion Mineral Resource Estimate (above 0.3% Li2O block cut‐off)

		Tonnes	Li2O %	Li2O Tonnes	Fe2O5 %
Deposit 1	Measured Indicated Inferred TOTAL	1,298,000 1,415,000 1,286,000 3,999,000	1.5 1.4 1.2 1.4	18,984 19,287 16,066 54,336	0.9 1.1 2.5 1.5
Deposit 2	Measured Indicated Inferred TOTAL	154,000 438,000 749,000 1,341,000	1.4 1.4 1.4 1.4	2,132 5,953 10,129 18,214	1.5 1.4 1.2 1.3
Deposit 2W	Measured Indicated Inferred TOTAL	694,000 2,051,000 2,080,000 4,825,000	1.6 1.5 1.4 1.4	10,877 30,176 28,196 69,249	1.2 1.2 1.1 1.2
Deposit 5	Measured Indicated Inferred TOTAL	‐ 4,000 353,000 357,000	0.0 1.5 1.3 1.3	0 60 4,453 4,514	0.0 2.0 2.4 2.4
TOTAL		10,522,000 1.4 146,500 1.3

Figures may not sum due to rounding and notation of significant figures does not imply an added level of precision. A summary of resource modelling and estimation methodology are provided at the end of this announcement.

The resource estimate was based on 197 RC holes (9,959m) and 8 diamond holes (499m) drilled by the Joint Venturers. Collar positions of drill holes completed for the 2010 resource estimate are shown in Figure 3. Drillhole spacing ranges from 30 x 30m to 80m x 40m.

FORWARD WORK

Assessment of the Mining Proposal and Works Approval from the Departments of Minerals and Petroleum, and Environment and Conservation has commenced. Approval has been granted to clear 180 ha and will commence upon approval of the Mining Proposal.

C J Reed

MANAGING DIRECTOR

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Figure 2 Mount Marion pegmatite group within mining leases M15/999 and M15/1000.

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Figure 3 Mount Marion pegmatite group within the northern half of mining lease M15/1000.

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Figure 4 Cross section (A‐A’ in Figure 1) in the central part of the No.1 Deposit (interpretation by Bryan Smith Geosciences).

Table 2 – 1996 Mt Marion Reserve and Resource Estimates

(Reported in accordance with the JORC Code 1989)

Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)	Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)	Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)	Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)	Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)	Table 2 – 1996 Mt Marion Reserve and Resource Estimates (Reported in accordance with the JORC Code 1989)
Deposit	Reserve/ Resource	Classification	Tonnes	Grade (Li2O%)	Li2O (Tonnes)
No. 1 No. 2 No. 1 No. 2W No. 4	Reserve Reserve Reserve	Proven Probable Probable	540,000 950,000 300,000	1.9 1.5 1.2	10,260 14,250 3,600
	Reserve	Sub‐total	1,790,000	1.57%	28,110
	Resource Resource Resource	Inferred Inferred Inferred	1,000,000 800,000 300,000	1.5 1.17 1.3	15,000 9,360 3,900
	Resource	Sub‐total	2,100,000	1.35%	28,260
		Total	3,890,000	1.45%	56,370

All tonnage, grade and Li2O values have been rounded and slight errors may occur due to this rounding of values. A minimum cut‐off grade of 1.2% Li2O was applied to No 1 Deposit, and a zero cut‐off grade applied at the No.2, No.2 West and No.4 deposits. Strip ratios for the deposits ranged from 1:1 to 2:1.

Table 3 – April 2010 Mt Marion Mineral Resource Estimate

(above 0.3% Li2O block cut‐off)

Deposit	Resource classification	Tonnes	Grade (Li2O%)	Li2O (Tonnes)
No 1	Indicated	2,364,000	1.42	33,569
No 1	Inferred	1,219,000	1.3	15,847
	Subtotal	3,583,000	1.4	53,745
No 2	Indicated	391,000	1.37	5,357
No 2	Inferred	595,000	1.4	8,330
	Subtotal	985,000	1.4	13,790
No 2W	Indicated	1,606,000	1.4	22,484
No 2W	Inferred	2,513,000	1.4	35,182
	Subtotal	4,119,000	1.4	57,666
No 5	Inferred	237,000	1.2	2,844
	Total	8,924,000	1.4	128,045

Figures may not sum due to rounding and notation of significant figures does not imply an added level of precision. A summary of resource modelling and estimation methodology are provided at the end of this announcement.

Competent Persons Statement

The information in this report that relates to Mineral Resources and Ore Reserves is based on information compiled by Mr. Robert Spiers who is a full time employee of Hellman & Schofield Pty Ltd and who is a Member of the Australian Institute of Geoscientists. Mr. Spiers has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Spiers consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Geological aspects of this report that relate to Exploration Results have been compiled by Dr Bryan Smith (MAIG),(MAIMM), a consultant to Reed Resources Ltd. Dr Smith 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 Smith consents to the inclusion in the report of the matters in the form and context in which it appears.

Notes to accompany Mineral Resource estimates:

Hellman and Schofield Pty Ltd (H&S) was commissioned by Reed Resources Ltd (Reed) to undertake an estimation of Lithium resources at the Mt Marion project, in accordance with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code) and guidelines.

Drill testing over the area has been variably in‐filled to approximately 40m by 40m pattern densities over four main target areas, deposit 1, 2, 2W and 5.

H&S were supplied with a historical WMC database in imperial coordinates and recent RC drilling, some geophysical and geological information and interpretation. Within the collar file datasets for Mt Marion are 224 holes for a total of 10490.9 metres drilling. Drill holes were primarily reverse circulation drilled with 8 diamond holes completed of the 224 drill holes.

The resource estimate, as supplied by H&S, was based on a primary domain defined by the extent of localised pegmatite lithologies within each of the project areas and assay data provided by Reed as of March 2010. The mineralised domains were constructed by H&S in consultation with Reed Resources representative providing the structural, lithological context and geometry.

Down hole intercept were composited to 1 meter intervals and coded with the primary domain solid and exported to GS3 for geometry modelling. No top cuts were applied during the statistical analysis or subsequent modelling.

The estimation of block grade was undertaken within H&S's proprietary GS3 software in a single pass utilising a three dimensional ordinary kriging approach. Geometry modelling employed variography analysis to identify direction of mineralisation continuity.

Taking into account the following items inclusive of but not limited to the drill spacing, reproducibility of historical data, geological complexity, sampling and assaying appropriateness, recovery and density data and assumed information on local geological continuity, the classification of the Mt Marion Mineral Resources is in accordance with JORC (2004) code and guidelines.

All data was provided to H&S by Reed representatives, the collation of this data was a collaborative effort on the part of both parties (H&S and Reed). No independent checks were made by H&S with regard to assaying or sampling at a third party laboratory.

ENDS

For more information please contact:

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

About Reed Resources

Reed Resources Ltd is a diversified mining and exploration Company based in Western Australia. It has modest gold production and is 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 EPCM & Financing.

• Comet Vale – High‐grade underground gold mine.

• 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