NEOMETALS LTD — Capital/Financing Update 2011

Aug 28, 2011

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ABN 89 099 116 631
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Level 1, 672 Murray St West Perth WA 6005 Locked Bag 8 West Perth WA 6872 Tel: +61 8 9322 1182 Fax: +61 8 9321 0556

ASX RELEASE

29 August 2011

MEEKATHARRA GOLD PROJECT UPDATE AND INITIAL DRILLING RESULTS

HIGHLIGHTS

• Key Bankable Feasibility Study work packages for recommencement of production ahead of schedule

• Mine plan to produce ~120,000 ounces pa from 1.5Mtpa of open pit/underground ore nearing completion

• Work commences on optimisation of a ’ Paddys Flat Super-Pit ‘

• Successful maiden drilling campaign including,

• 3m @ 2.15g/t Au, 5.0 g/t Ag and 1.1% Cu intersected at Chunderloo

• 3m @ 5.84 g/t Au and 2m @ 4.4 g/t Au intersections outside Batavia reserve

• 10m @ 2.45 g/t Au intersection extends strike length at Whangamata by 300m

• 1m @ 142 g/t Au intersected at new prospect, Sirdar.

Emerging Western Australian gold producer Reed Resources Ltd ( ASX: RDR ) (“Reed”) is pleased to provide an update on recommencement of gold production from its Meekatharra Gold Project by the December Quarter 2012 and results from the initial drilling campaign at various prospects within the Meekatharra Gold Project in the Murchison region of Western Australia.

PROJECT UPDATE

Mining Plan & Underground Schedule

The open pit mining plan is complete but will be modified as new ore resources convert to mineable reserves. The underground mining plan and mining schedule is in the final stages of design and will be announced in the coming weeks.

It is anticipated that ore will be sourced from both open pit and underground mining and that the operation will initially treat in excess of 1.5 million tonnes per annum for an annualised production target exceeding 120,000oz of gold.

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Processing Plant

A detailed report has been completed by GR Engineering Services for refurbishment of the 3 Mtpa processing plant and resumption of operations at an initial rate of 1.5 Mtpa. Subject to finance and Board approval, the refurbishment will commence before the end of the calendar year. The refurbishment will largely comprise replacement and repair of pumps, gearboxes, electrical and plumbing reticulation. The replacement value of the plant and associated infrastructure has been independently assessed at being in excess of $100M.

Accommodation Village

A detailed report has been completed on the requirements of the accommodation village to house a combined open pit and underground workforce. Work required at the village comprises a new state of the art messing facility, new ensuite rooms and repairs on the existing infrastructure. Expressions of interest have been received and the tender document is being finalised for issue. It is anticipated that refurbishment will commence in October along with the placement order for long lead items.

Power

Negotiations are advanced with power providers on a build-own-operate basis (BOO), the Company’s power strategy is to buy power over-the-fence from providers using gas powered generating units. The final mill design which is due to be completed in October will provide an accurate estimate of power consumption to allow these negotiations to be concluded.

Financing

The Company is in discussions with a number of potential financiers regarding the provision of a bridge financing facility to commence the mill and accommodation refurbishments ahead of the completion of the Bankable Feasibility Study in February 2012.

Managing Director, Mr Christopher Reed said, “ The timeline to production recommencement is ahead of schedule and the company plans to pursue all avenues available to expedite recommencement of operations.”

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Figure 1: Current state of the feasibility study timeline

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PADDY’S FLAT ’ SUPER PIT ‘ OPTIMISATION

A study has commenced on the potential to combine all the resources along the porphyry and BIF lines at the Paddys Flat area, Meekatharra into a single ‘super pit’ mining operation embracing an area almost 5km in length and 1km in width (Figure 2). The concept of a ‘super pit’ was initiated by Dominion Mining in 1993 but was uneconomic at mid-1990’s gold prices.

The investigation will require remodelling resources at some of the Northern orebodies (eg, Democrat, Commodore, Ready Mix) and combining these with the latest resource models for the Southern deposits (eg, Prohibition, Mickey Doolan, Phar Lap). The implications of having an optimised open pit shell embracing over 20 deposits in close proximity has the potential to significantly expand an open pit mining operation, provide feed to fully utilise the 3Mtpa milling capacity at Bluebird and extend the mine life for Reed Resources at Meekatharra.

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Figure 2: Map showing the area under evaluation for a potential “Super Pit”

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EXPLORATION RESULTS

Results from the Company’s initial drilling program are summarised below, with further details and images provided at Appendix A. The drilling campaign targeted resource extensions, brownfields exploration and ore recovery for metallurgical test work at various prospects within the Meekatharra gold project.

Table 1 Status of drilling at each of the projects tested in the initial drilling campaign .

Project	Purpose	Drilling Status	Assay Result Status	Assay Result Status
Chunderloo	Brownfields exploration	Complete	Complete
Batavia	Resource Extension	Complete	Complete
Rhens	Resource Extension	Complete	Partial	results
			available
Whangamata	Brownfields exploration	Complete	Complete
Rocklea	Brownfields exploration	Complete	Complete
Sirdar	Brownfields exploration	Complete	Partial	results
			available
Mill Area	Brownfields exploration	Complete	Complete
Fenian West	Brownfields exploration	Complete	Complete
Prohibition	Metallurgical Study	Complete	Partial	results
			available
Mickey Doolan	Metallurgical Study	In Progress	Awaitingresults

Table 2. Summary of results from maiden drilling campaign

Project	Key Intersections	Key Intersections	Drilling Status	Drilling Status
Chunderloo	•	3m @ 2.15g/t Au, 5.0 g/t Ag and		Down-plunge continuity of mineralisation and
		1.1% Cu		continuation along strike confirmed
	•	2m @ 4.07 g/t Au, 4.95 g/t Ag		Geological setting confirmed as conducive	to
		and 0.6% Cu		hosting copper-gold mineralisation
	•	2m @ 1.96 g/t Au, 3.8 g/t Ag and		Opportunity to expand mineralised footprint
		0.6% Cu		for additional exploration and potential
				resource expansion
Batavia	•	3m @ 5.84 g/t Au		Drilling confirms a parallel zone	of
	•	2m @ 4.44 g/t Au		mineralisation immediately to the north	of
	•	1m @ 5.53 g/t Au		the deposit which remains open to the north Area to be re-modeled and optimised with a
				view to expanding the current planned open
				pit
Rhens	•	7m @ 3.38 g/t Au		7 holes drilled as resource infill
	•	2m @ 6.42 g/t Au		Current resource of 2.8MT @ 1.6g/t Au
	•	Assays awaited for 5 holes	 	500m from processing plant New Optimisation planned
Whangamata	•	10m @ 2.45g/t Au		Mineralisation extensions over 300m strike
	•	5m @ 4.08g/t Au		Resource modelling in progress
				6km from processing plant, soft oxide ore.
Rocklea	•	2m @ 4.7g/t Au		Area to be assessed for further potential.
Sirdar	•	1m @ 142.25g/t Au		Narrow high grade structure around current
	•	Assays awaited for 2 holes		workings

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Project	Purpose	Purpose	Drilling Status	Drilling Status
Mill Area	•	6 sterilisation holes		Area sterilised to be used for mining
				infrastructure
Fenian West	•	4m @ 2.0g/t Au		Southern extensions to Prohibition open pit
	•	3m @ 2.97g/t Au		Near surface mineralisation
	•	10m @ 1.46g/t Au		Optimisation to be re-run
Prohibition	•	Metallurgical Drilling		Test work commencing for BFS
Mickey Doolan	•	Metallurgical Drilling		Test work commencing for BFS

Managing Director, Mr Christopher Reed said, “This is a great result from the first drilling campaign at our Meekatharra Gold Operation. Almost every area drilled represented some material increase to value of the ore in the ground by way of grade increase, tonnage increase, contained metal increase and the ability to now convert the inferred resources to indicated resources, and ultimately into mineable reserves.”

ENDS

For further information please contact:

Chris Reed Tony Dawe Reed Resources Limited Professional Public Relations T: +61 89322 1182 T: +61 89388 0944/ +61 405 989 743 E: chris@reedresources.com E: tony.dawe@ppr.com.au

COMPETENT PERSONS STATEMENT

Geological aspects of this report have been compiled by Mr Craig Fawcett (MAIMM), a full time employee of Reed Resources Ltd. Mr Fawcett 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 (2004). Mr Fawcett consents to the inclusion in this report of the matters in the form and context in which it appears.

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APPENDIX A

Chunderloo

The drilling undertaken at Chunderloo was designed to test the down-plunge continuity of the mineralisation (figure 3) and it’s continuation along strike. Reed Resources are now able to confirm the success of both of these targets.

The down plunge continuity has been proved to a depth of 60 vertical metres (11CHRC001 {3m @ 2.15g/t Au, 5.0 g/t Ag and 1.1% Cu}, 11CHRC002 {2m @ 4.07 g/t Au, 4.95 g/t Ag and 0.6% Cu} and 11CHRC020 {2m @ 1.96 g/t Au, 3.8 g/t Ag and 0.6% Cu}).

Mineralisation has been identified along strike (11CHRC006 1m @ 0.5% Cu and 11CHRC011 1m @ 2.99 g/t Au). This regional drilling has provided further evidence that the geological setting is conducive to hosting copper-gold mineralisation, and expands the mineralised footprint for additional exploration and potential expansion. Further work at Chunderloo will comprise DHEM and HTEM to assist with delineation of the near surface massive sulphides.

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Figure 3: A long section projection of mineralization at Chunderloo

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au **	*Ag **	Cu* (%)
11CHRC001	636087	7045474	-60 / 313	56	59	3	2.15	4.97	1.1
11CHRC002	636099	7045462	-60 / 313	27	28	1	3.09	1.10	0.0
				65	67	2	4.07	4.95	0.6
11CHRC006	635517	7044846	-60 / 313	34	35	1	0.10	1.00	0.6
11CHRC011	635590	7044777	-60 / 313	20	21	1	2.99	0.30	0.0
11CHRC020	636139	7045493	-60 / 313	88	90	2	1.96	3.80	0.6

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Batavia

Drilling of resource extension targets at the Batavia deposit (0.3Mt @ 2.4 g/t Au for 24Koz) is now complete. A total of 8 holes were drilled for 714m, and assays have been received for all holes in the program. RC drilling at the Batavia deposit was designed to target a parallel zone of mineralisation immediately to the north of the deposit. The secondary zone of mineralisation was interpreted from grade control drilling (2008) and exploration drilling (2002). Initial results of 3m @ 5.84 g/t Au (11BVRC006 – 90m VD) and 2m @ 4.44 g/t Au (11BVRC001 – 41m VD) indicate that the secondary mineralized shoot exists, and indicates that mineralization remains open to the north (figure 4).

On receipt of all results, the area will be re-modeled and optimised with a view to expanding the current planned open pit.

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11BVRC001	641429	7050452	-60 / 300	46	48	2	4.45
11BVRC003	641489	7050474	-60 / 300	109	110	1	5.53
11BVRC005	641449	7050464	-60 / 300	59	60	1	2.53
11BVRC006	641466	7050453	-60 / 300	94	95	1	1.23
				101	104	3	5.85

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Figure 4: A long section projection of the Batavia area showing the northern mineralized shoots and current pit design

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Rhens

RC in-fill drilling of the Rhens resource comprised 7 holes for 348m being drilled to in-fill the southern part of the resource area to 20m spaced sections. The Rhens resource currently stands at 2.8Mt @ 1.6 g/t Au for 143Koz, and is in close proximity to the mill. Reed views the Rhens area as a potential low cost oxide ore source that can be partially exploited during the initial three years of operation. Results from this drilling will be modeled and re-optimised as this forms a part of the mining plan.

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11RHRC007	642658	7047623	-60 / 288	36	40	4	2.31
				44	51	7	3.38
				54	56	2	6.42

Whangamata

The drilling of 12 RC holes for 949m at Whangamata, targeting extensions and validation of mineralisation, is now complete. The quartz vein system hosting mineralisation (figure 5) was intersected in all holes, with best results of 10m @ 2.45 g/t Au (11WHRC011 52-62m) and 5m @ 4.08 g/t Au (11WHRC009 72-77m). Infill and extension drilling has now delineated mineralisation over a strike length of 300m that remains open to the northwest. The mineralisation at Whangamata is being remodelled with a view to optimising the resource to a reserve and adding to the open pit mine life.

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Figure 5: A cross-section of the Whangamata mineralisation

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11WHRC001	643533	7050518	-60 / 290	49	51	2	2.16
				57	59	2	2.43
				67	69	2	2.67

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Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11WHRC002	643558	7050508	-60 / 290	77	78	1	1.04
				80	82	2	2.79
				89	90	1	1.44
				97	99	2	1.82
				103	104	1	1.15
				106	107	1	1.55
11WHRC003	643524	7050497	-60 / 290	22	23	1	2.20
				25	26	1	2.41
				31	32	1	2.54
				36	38	2	2.09
				39	41	2	1.68
				44	48	4	2.33
				49	50	1	1.05
11WHRC005	643533	7050472	-60 / 290	28	29	1	3.75
				42	45	3	2.70
				47	48	1	1.23
11WHRC006	643569	7050459	-60 / 290	71	72	1	1.96
				75	78	3	1.30
				80	81	1	1.29
11WHRC007	643589	7050451	-60 / 290	86	90	4	2.57
11WHRC008	643555	7050413	-60 / 290	19	20	1	2.45
				23	24	1	2.51
				25	27	2	2.20
				30	31	1	3.05
				40	45	5	2.25
				70	71	1	1.19
11WHRC009	643583	7050402	-60 / 290	56	58	2	1.33
				64	65	1	1.63
				72	77	5	4.08
				78	79	1	1.14
				83	86	3	2.73
11WHRC010	643544	7050395	-60 / 290	13	14	1	1.24
				19	20	1	1.03
				28	30	2	3.49
11WHRC011	643567	7050387	-60 / 290	42	47	5	2.93
				48	50	2	1.32
				52	62	10	2.46
				63	64	1	1.46
11WHRC012	643579	7050340	-60 / 290	24	25	1	1.17
				28	29	1	1.98
				38	40	2	1.98
				44	48	4	3.36
11WHRC013	643600	7050332	-60 / 290	55	57	2	2.67
				75	77	2	2.08
				81	85	4	2.19

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Rocklea

RC drilling, consisting of 21 holes for 981m, targeting strike extensions to the narrow quartz-hosted Rocklea mineralisation is now complete. Assay results indicate that narrow mineralized quartz veins extend along strike to the north. Results include 2m @ 4.7 g/t Au (11RLRC015 – 15m VD) and 2m @ 1.25 g/t Au (11RLRC016 – 27m VD). Other low-grade intersections (e.g. 11RLRC005 1m @ 1.43 g/t Au at 54m down hole) indicate that further review of the results is warranted due to the historic “spotty” nugget nature of mineralisation in the area when mined historically. A full interpretation of the Rocklea area will be used to determine if further drilling in the region is warranted, along with a resource model and pit optimisation.

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11RLRC005	642137	7049866	-60 / 284	40	41	1	1.08
				54	55	1	1.43
11RLRC015	642081	7050209	-60 / 284	17	19	2	4.70
11RLRC016	642091	7050206	-60 /284	31	33	2	1.25
11RLRC021	642243	7049923	-60 /284	20	21	1	1.10

Sirdar

RC drilling at the Sirdar prospect, consisting of 5 holes for 418m, was designed to test for mineralization beneath historic shallow stopes (>30m) and shafts that were mined in the early 1900’s. A previous program of RC drilling undertaken in the 1990’s returned intersections of up to 14 g/t Au from a narrow vein system. Results for the Sirdar program are incomplete, with assays from two holes yet to be received from the laboratory. Reed is pleased to announce a high grade intersection of 1m @ 142.25 g/t Au (11SIRC002 – 52m VD) in the vicinity of other historic high grade intersections (figure 6).

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Figure 6: A long section projection of drilling and old workings at Sirdar

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Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11SIRC002	642785	7051909	-60 /288	60	61	1	142.25

Paddys Flat “Old Mill” Site

The drilling of 6 RC holes for 386m at the historic Mill Area of Paddys Flat has failed to identify any significant mineralisation. The program was designed to test for mineralisation on both limbs of the structure as well as testing the hinge region of the fold. The lack of mineralisation allows Reed Resources to consider the site sterilised and may be utilised for infrastructure associated with the planned underground and open pit operations in the area.

Fenian West

Drilling at the Fenian West prospect, consisting of 17 holes for 982m, was designed to target supergene mineralization adjacent to the mineralized Prohibition Banded Iron Formation (BIF). Drilling has now been completed and results have been received for all holes. Results indicate that mineralization is present within, and adjacent to, oxidized fault zones (figure 7), with best intersections of 4m @ 2.0 g/t Au (11FWRC016 – 28m Vertical Depth (VD)) and 3m @ 2.97 g/t Au (11FWRC012 – 56m VD). Much of the drilling undertaken was into areas previously interpreted as un-mineralized. The implications of the intersected mineralisation will be reported following a new geological interpretation.

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Figure 7: A cross-section of Fenian West showing the Prohibition BIF and location of supergene mineralization along faults adjacent to the BIF

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Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11FWRC002	649553	7055765	-60 / 107	24	25	1	2.43
				30	31	1	1.90
				39	41	2	1.10
				42	43	1	1.98
11FWRC003	649534	7055771	-60 / 107	56	59	3	1.69
				65	67	2	1.24
				68	69	1	1.50
11FWRC004	649515	7055777	-60 / 107	42	44	2	1.73
11FWRC006	649522	7055733	-60 / 107	33	34	1	1.11
				38	39	1	1.19
11FWRC007	649502	7055739	-60 / 107	65	66	1	1.99
				67	68	1	1.07
11FWRC009	649528	7055689	-60 / 107	7	8	1	1.04
11FWRC010	649509	7055695	-60 / 107	15	16	1	1.57
				17	18	1	1.35
				20	21	1	1.47
11FWRC011	649490	7055701	-60 / 107	39	41	2	1.99
				46	47	1	4.10
				53	54	1	1.12
11FWRC012	649471	7055707	-60 / 107	64	67	3	2.98
11FWRC013	649503	7055676	-60 / 107	16	19	3	2.21
11FWRC014	649484	7055682	-60 / 107	19	20	1	1.24
				25	26	1	1.71
				32	33	1	1.30
				43	44	1	1.64
11FWRC015	649465	7055688	-60 / 107	5	6	1	1.09
				47	50	3	1.69
11FWRC016	649571	7055823	-60 / 107	31	35	4	2.00
				37	38	1	3.12
				40	41	1	2.39
				54	55	1	2.26
11FWRC017	649553	7055828	-60 / 107	44	46	2	2.33
				57	58	1	1.27

Prohibition

Diamond and RC drilling was undertaken as metallurgical confirmation testing for the feasibility study as it represents a large resource (5.4Mt @ 2.6 g/t Au for 454Koz). Results of the test work will supply critical information about the nature of the ore to allow appropriate design modifications (if required) to the existing Bluebird Treatment Plant during refurbishment. Structure and mineralisation evident in the drill core is consistent with the existing geological model for the Prohibition ore system. Assay results have been received for one pre-collar and three oxide metallurgical holes targeting known mineralisation, with intersections of 3m @ 11.18 g/t Au from 103m down-hole.

Prohibition (Awaiting further results)

Hole	MGA East	**MGA North **	Inc/Azi	**From **	To	Width*	*Au (g/t) **
11PRRD001	649743	7056460	-55 / 107	18	19	1	1.50
				37	39	2	2.70
				103	106	3	11.18
				157	158	1	1.15
				160	161	1	1.50

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Mickey Doolan

Diamond core drilling for metallurgical samples is now complete. The metallurgical test work will investigate the potential gold recovery from ore from the Mickey Doolan deposit via fine grinding and floatation.

Initial results from an optimisation study on the Mickey Doolan deposit has indicated that an open pit mine containing in the order of 180,000oz of Au at a gold price of A$1300/oz could provide the project with an additional 3 years of open pit mine life, subject to current metallurgical study results. The resource at Mickey Doolan contains 19.5MT @ 1g/t for 609,000oz.

• All intersections calculated using 1g/t lower cutoff and maximum 2m internal waste Assays performed by Genalysis Laboratory Services using 50g Fire Assay for gold and 25g Aqua Regia for silver and copper Widths quoted are downhole widths

PROJECT MINERAL RESOURCE STATEMENT (inclusive of Reserves)

Meekatharra	Category	Tonnes (Mt)	Grade (g/t)	Gold (koz)
Meek. North	Indicated	0.7	1.3	29.0
	Inferred	0.2	1.2	6.0
Paddys Flat	Indicated	19.1	1.7	1,047.9
	Inferred	9.5	1.	437.3
Yaloginda	Indicated	9.7	1.7	536.3
	Inferred	3.9	1.7	240.4
Reedys	Indicated	1.8	2.7	153.4
	Inferred	3.1	2.4	241.2
Total		48.6	1.7	2,754.8

PROJECT ORE RESERVE STATEMENT

Meekatharra	Category	Tonnes (Mt)	Grade (g/t)	Gold (koz)
Bluebird	Probable	1.4	1.9	87.0
South Junct.	Probable	0.1	1.5	4.5
Prohibition	Probable	1.1	2.7	96.0
Surprise	Probable	0.1	3.0	13.0
Batavia	Probable	0.2	2.4	14.0
Jack Ryan	Probable	0.2	3.1	21.8
Callisto	Probable	0.1	3.1	7.2
Rand	Probable	0.1	2.4	7.6
Total (o/p)	Probable	3.3	2.3	251.1
Prohibition	Probable	1.4	4.1	179.0
Vivian/Cons.	Probable	0.3	10.4	83.0
Fatts/Mud.	Probable	0.4	4.0	46.0
Total (u/g)	Probable	2.0	4.8	308.0
Total	Probable	5.3	3.3	559.1

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About Reed Resources

Reed Resources Ltd (ASX: RDR, OTC: RDRUY) is an emerging Western Australian gold producer focused on bringing its flagship Meekatharra Gold Project into production in the second half of 2012.

Reed’s wholly owned Meekatharra Gold Project is located in the prolific Murchison region of Western Australia and has a current JORC resource of 2.7 Moz and existing infrastructure including a 3 Mtpa processing plant.

Reed’s other projects include:

• Mount Marion Lithium – High-grade lithium project located 40km south of Kalgoorlie in JV with Mineral Resources Limited (ASX: MIN) and set to be the World’s second biggest lithium concentrate operation. Currently under construction with commissioning planned for first half 2012.

• Barrambie Vanadium – Definitive Feasibility Study completed on the production 6300t of vanadium per annum. Currently in approvals process and MOU for fixed price EPC and financing assistance with China Nonferrous Metals.

• Comet Vale Gold – Evaluating recommencement of high-grade underground gold production, currently on care & maintenance. JORC resource of 186,000 oz at 10.8 g/t.

• Mount Finnerty Iron Ore – Iron ore JV with Cliffs Natural Resources and nickel farm-in with Barranco Resources NL.

Reed’s American Depositary Receipts (ADR’s) trade under the code RDRUY (CUSIP Number: 758254106). Each Reed Resources ADR is equivalent to 10 ordinary shares of Reed Resources as traded on the ASX. The Bank of New York Mellon is the depository bank.

Website: www.reedresources.com

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