NEOMETALS LTD — Capital/Financing Update 2010

May 16, 2010

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ASX Announcement 17 May 2010

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

Reed Resources grants NFC exclusivity for Barrambie Vanadium Project in WA

Key points:

• Reed Resources has entered into discussions with China Non-ferrous Metal Industry’s Foreign Engineering and Construction Co. Ltd (“NFC”) which, if successfully concluded, would allow for the development of Reed’s Barrambie Vanadium Project,

• The discussions to date specifically covers an engineering procurement & construction contract and project financing,

• The approach to Reed Resources has been facilitated by Western Australian engineering and construction company Arccon (WA) Pty Ltd (Arccon), and

• Reed has agreed to deal exclusively with NFC and Arccon until 31 August 2010.

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) ( “Reed” or “the Company” ) is pleased to announce that it has entered into discussions with China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. Ltd (“ NFC” ) which, if successfully concluded, would allow development of Reed’s Barrambie Vanadium Project in Western Australia.

The proposal received specifically relates to the provision of an engineering procurement and construction contract and project financing assistance by NFC for Barrambie, which is recognised as one of the world’s highest grade vanadium deposits.

Reed completed a two year AUD$20M definitive feasibility study for Barrambie in 2009 which forecast average earnings per annum in excess of AUD$100m at the current vanadium price. Importantly it is highly geared to any increases above the current price of US$34/kg (see ASX announcement dated 5 May 2009).

Reed has agreed to deal exclusively with NFC and Arccon regarding a development and financing proposal for Barrambie until 31 August 2010.

The approach by NFC has been facilitated by Arccon (WA) Pty Ltd ( “Arccon” ), a leading engineering and construction company servicing the mining and commercial building sectors of Western Australian.

The discussions are at a preliminary stage. No party is under any obligation to proceed 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 be received.

Ends

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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 Ltd

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

• Comet Vale – High‐grade underground gold mine.

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

• 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

About NFC

NFC is a state controlled company mandated by the Chinese central government to develop overseas mineral resources to meet China’s growing demand for metals. Listed on the Shenzen Stock Exchange, NFC is the largest Chinese contractor for foreign industrial projects in the nonferrous metals sector, and had built and financed mining plants and smelters across Asia and Africa. NFC’s overseas projects include:

• Kazakhstan Aluminum Smelter Project

• Chambishi Copper Mine of Zambia

• Vietnam Sin Quyen Copper Mine

• Iran Yazd Zinc Smelter

• Faryab Ferroalloy Plant of Iran

• Arak Aluminum Smelter of Iran

• Upgrading Project of Iran Jajarm Alumina Plant

• Iran Khatoon Abad Copper Plant

Website: www.nfc.com.cn