NEOMETALS LTD — Capital/Financing Update 2010

Jun 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 June 2010

Positive Results from Lithium Carbonate Pre‐feasibility Study, New Exploration Target and Project Update

HIGHLIGHTS

• Independent consultants, Hatch, complete Pre‐feasibility Study into processing of lithium concentrates to battery‐grade lithium carbonate.

• Preferred case Net Present Value of around US$400 million based on various key commercial and operating assumptions, and using 12% discount rate, delivering an Internal Rate of Return of around 68%.

• Identifies China and Malaysia as the preferred options for location of lithium carbonate plant, based on operating and capital costs, and taxation regimes.

• Strong interest from domestic and Asian parties seeking toll‐conversion and standalone lithium carbonate joint venture arrangements.

• Exploration target of an additional 10 – 15 Mt of 1.1 – 1.4% Li2O.

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed”) is pleased to announce the results of a Pre‐feasibility Study (“PFS”) into the processing of lithium concentrates (spodumene) into battery‐grade lithium carbonate. The PFS undertaken by Hatch investigated the production of 17,000 tonnes per annum of lithium carbonate from 120,000 tonnes of chemical‐grade spodumene concentrate, of a quality equivalent to Reed’s planned share of output from its proposed Mt Marion Lithium project operation.

The Mt Marion Lithium project is a joint venture with Mineral Resources Limited (ASX:MIN), “Mineral Resources”), refer ASX announcement 27 October 2009.

“The study shows the significant benefits of producing lithium carbonate from lithium concentrates and highlights the potential to become a major supplier of high‐purity lithium chemicals to Asian lithium battery makers,” said Reed Resources Ltd Managing Director, Mr Chris Reed.

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PRE‐FEASIBILITY STUDY – LITHIUM CARBONATE PRODUCTION

Reed commissioned Hatch to complete a pre‐feasibility study to investigate the economic viability of 17,000 tonne per annum battery‐grade lithium carbonate (99.5% Li2CO3) processing plant at potential plant sites in Kwinana, Malaysia and China. The study assumes the availability of requisite approvals, purchase and supply of spodumene to plant site and capital.

The process involves conventional sulphate roast‐water leaching of spodumene concentrate then precipitation and purification of lithium carbonate. Sodium sulphate is produced as a by product. Process test work was conducted on concentrates produced from the Company’s Mt Marion Lithium Project, located 40km south of Kalgoorlie in the Eastern Goldfields of Western Australia.

For the purpose of the study, a kiln feed rate of 120,000 tonnes per annum @ 6.5% Li2O was assumed and the following key process steps applied:

• Decrepitation in a rotary kiln

• Sulphating roast and leaching

• Precipitation and ion exchange

• Lithium carbonate crystallisation

• Sodium sulphate crystallisation

• 17,000 tonnes per annum lithium carbonate production

• 20 year effective plant life

Operating Parameters	Quantity
Spodumene Concentrate Feed	120,000 tpa
Spodumene Concentrate Grade	6.5 % Li2O
Lithium Carbonate Production	17,000 tpa

PROJECT ECONOMICS

Operating cost estimates will be not be released due to their sensitive commercial nature. The project, if located in China, has a Net Present Value (NPV) (un‐geared, pre‐tax, nominal discount rate of 12%) is estimated at US$404 million and payback around 2 years.

Capital costs, as at March 2010 with an indicative accuracy range of ±30% and a 20% contingency are summarised below (in US dollars):

Site Location Option	China	Malaysia	Kwinana
Direct Construction Costs	44,758,000	50,374,000	88,669,000
EPCM(*) Costs	7,920,000	8,712,000	15,498,000
Contingency	10,881,000	11,820,000	20,834,000
Total Capital Cost (USD)	63,559,000	70,906,000	125,001,000

(*) EPCM – Engineering, procurement, construction management

The Company’s preferred option in the medium to long term is to develop a wholly‐owned plant in China or Malaysia, based on lower operating and capital costs, supply of essential reagents and proximity to the fastest growing battery markets in the world. China is already the largest converter of lithium minerals to chemicals, and its acceptance of this proven processing method to meet the significant increase in demand expected from the growth of the hybrid and electric vehicle markets, supports management’s confidence in the demand for and pricing of lithium chemicals in the future.

EXPLORATION TARGET

In addition to the current resource estimate if 8.9 million tonnes at a grade of 1.4% Li2O (ASX announcement 14 April 2010) at Mt Marion, the Company has identified potential for additional spodumene‐bearing pegmatite within Mining Leases M15/999 and M15/1000 (Figure 2).

A further program of exploration is being considered to test for strike and depth extensions to current resources and testing of additional pegmatites with an exploration target of 10 – 15 million tonnes at a grade of 1.1‐1.4% Li2O. This is based on a combination of wide‐spaced drilling, geophysical interpretation, surface sampling and mapping of outcrops, as outlined in Appendix A.

It should be noted that the exploration target is conceptual in nature and there is insufficient data to confirm the presence of a resource and it is possible that further exploration may downgrade the area in both tonnage and grade of the area being considered for resource potential.

PROJECT UPDATE

Reed together with joint venture partner Mineral Resources Limited, remains on track for a Q1 2011 first shipment from the Mount Marion Lithium Project, located in the Goldfields region of Western Australia, at a production rate of 17,000 tonnes per month of +6.5% Li2O concentrate, with a ‘decision to mine’ projected to be made around the commencement of the new financial year.

IMPRECISE NATURE OF ARRANGEMENTS

The Company is currently in discussions with local and international companies to enhance its anticipated entitlements from its projected Mt Marion development, by participation in arrangements to toll‐convert spodumene concentrates and engage in downstream ventures to produce high purity lithium products (≥99.99% Li2CO3). Although Reed believes that matters to this end can progress in a constructive and commercial manner, no party is under any obligation to proceed with any downstream processing proposal, regulatory requirements still need to be considered and addressed, and there is no certainty that a transaction will eventuate.

Reed will keep the market informed should anything of a more formal and or complete nature develop.

C J Reed MANAGING DIRECTOR

Competent Persons Statement

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.

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Figure 1 Isometric view of proposed lithium carbonate plant

APPENDIX A: NOTES TO ACCOMPANY EXPLORATION TARGETS

The total mineral resource estimate for Mt. Marion is 8.9 million tonnes at a grade of 1.4% Li2O, using a block cut‐off grade of 0.3% Li2O (as reported to the ASX on 14 April, 2010). This resource is entirely within Mining Lease M15/1000 (Figure 2), which is held under option by Reed Resources Ltd.

Reed Resources have reviewed the technical data available for the property and consider there is a total Exploration Target of an additional 15 million tonnes of mineralization that could be reasonably expected on Mining Leases M15/1000 and M15/999, which is also held under option by Reed Resources Ltd.

The Exploration Target is comprised of: ‐

Depth extensions to existing resources

Geological interpretations of the current resources indicate a reasonable expectation for continuity of grade and thickness with depth at the three main Deposits, 1, 2 and 2W. The additional Exploration Target will be limited by the stripping ratio and has been estimated to be about 6 million tonnes .

Number 4 Deposit

This deposit is located on tenement M15/999 approximately 3 km southeast of the 1, 2 and 2W deposits within M15/1000 (Figure 2). Outcropping pegmatite at this location has been drill‐tested with four widely spaced vertical percussion holes drilled by WMC in 1971. Based on the geology, grade and thicknesses of the mineralization revealed by this drilling, it is reasonable to nominate an Exploration Target of 2 million tonnes for this deposit.

Number 1W Deposit

This pegmatite is immediately to the northwest of the No.1 Deposit and may even be an extension of the No.1 Deposit (Figure 2). There are a number of outcrops of pegmatite that have been mapped and sampled and they reveal similar grades to the 1, 2 and 2W deposits. Based on the areal extent of the outcrop ping pegmatites and the thicknesses of mineralization revealed in the drilling of the NW section of the No.1 Deposit, it is reasonable to put an Exploration Target of 1 million tonnes on this Deposit.

Number 2 Deposit SW extension

The mineralized pegmatite in the Number 2 Deposit appears to extend around the flanks of a hill to the SW. A number of pegmatite outcrops around the flank of the hill have been mapped and sampled and show similar grades of Li2O mineralization as seen in the Number 2 Deposit where it has been drilled to date. From the areal extent of the outcrops and similarity of geology, grades and thickness of the Number 2 Deposit, it is reasonable to apply an Exploration Target of 2 million tonnes for this extension.

Southern section of M15/1000

So far only outcropping pegmatites defined by drilling by WMC in 1961 and 1971‐1974 have been drilled out to JORC‐Code compliant Resource Estimate standards. The southern part of M15/1000 is covered by residual soils and colluvium with only sporadic outcrops. It is known that the mineralized pegmatites occur in an annulus at a distance of about 4 to 7km around the Depot Granite which is to the west and southwest of the Project. In the areas in the northern part of M15/1000 the pegmatite occurrences are consistent within this annulus around the Depot Granite. It is therefore reasonable to expect that other spodumene‐ bearing pegmatites will occur within the nominated annulus in the areas of cover in the southern section of M15/1000. Sporadic outcrops of pegmatite have already been mapped and sampled in the areas under cover and these show similar grades of mineralization to the deposits already drilled. An Exploration Target of 4 million tonnes has been nominated for this area .

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Figure 2 Mineral Resources within the 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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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 January 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