NEOMETALS LTD — Capital/Financing Update 2011

Jun 21, 2011

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

==> picture [285 x 63] intentionally omitted <==

ASX RELEASE

22 June 2011

REED RESOURCES INCREASES UNDERGROUND RESOURCES AT PADDYS FLAT TO 373,000oz.

HIGHLIGHTS

• Re-interpretation of the Vivian-Consols-Mudlode-Fatts ore system completed.

• Resource estimate by Snowden increases the global resource from 1.78Mt for 318,000oz to 1.77Mt for 373,000oz, due to a 17% increase in grade.

• Underground reserve and mine design in progress on new model.

• Recommencement strategy to include underground operations.

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed Resources”), is pleased to announce a new resource estimate in its evaluation to resume operations at the recently acquired Meekatharra Gold Project, Western Australia.

A new resource model has been constructed and completed for the Vivian-Consols-Mudlode-Fatts ore system at Paddys Flat (Table 1). The previous combined resource of 1.78Mt for 318,000oz has been increased to 1.77Mt for 373,000oz representing a material increase in global grade from 5.4g/t to 6.6g/t. This comes shortly after a new model for the Prohibition ore body has been completed, allowing an allencompassing underground reserve mining plan to commence.

During the technical review of the historical resource, the team identified a number of key structures controlling mineralisation that were not incorporated into the original overly simplistic model. In particular, the Vivian-Consols model resulted in (what Reed Resources considers) an overestimation of both confidence and tonnage. A comparison of the historical estimate and new estimate can be found in Table 1. The new interpretations more accurately reflect the confidence in the geology and the probability of the resources actually being there than the previous “bulked” approach. As a result, the gold grade for the Indicated Resource has increased from 9.3g/t to 10.4g/t. The more rigorous classification has resulted in less of the resource being classified as an Indicated Resource. This is a reflection of the technical team’s confidence in the previous estimate, and as such it will allow a more accurate mine plan to be created into the higher confidence part of the ore body. Drilling will now be planned to convert the Inferred Resource into an Indicated Resource.

==> picture [60 x 58] intentionally omitted <==

This is a significant development for Reed Resources and the Company’s de-risking strategy. The technical team have extensive mining experience and the confidence in the resource is paramount to an effective mine plan delivering ore at the correct tonnage and grade. The new estimate is based on geological continuity, interpretation and grade confidence. The classification of the resource reflects this understanding and has been applied by Reed Resources’ geology team.

==> picture [396 x 532] intentionally omitted <==

Figure 1. Location plan view of Paddys Flat illustrating position of Vivian-Consols-Mudlode-Fatts

-2-

Table 1 .* Snowden Resource Estimate As at June 2011

Historical Estimates – Various origins

==> picture [522 x 144] intentionally omitted <==

*Resources reported at the same cut-off grades and are inclusive of any reserves

The most significant increase in this update is the grade , which results in a greater number of ounces for less tonnage.

The Fatts ore body has had a similar result to the Vivian-Consols system, whereby the lower confidence ore at the perimeter of the ore body has been classified as Inferred Resource (there were none previously, cf. Table 1) creating a more robust resource that can now be used for more effective mine planning. Mudlode has seen a material increase in tonnage, grade and contained metal.

A mine planning exercise is underway to generate a new underground reserve that will also incorporate the Prohibition Resource.

Managing Director, Mr Christopher Reed said , “Once again this mineral field continues to deliver results in line with our expectations from the due diligence we conducted on the project.

“Vivian-Consols are narrow quartz-veins with spectacular “Spur Lodes” that contain a significant amount of metal but are difficult to predict and estimate. Whilst we have increased the grade and global contained metal in this ore body we have identified areas of lower confidence that would need infill drilling from underground. The Mudlode and Fatts are wider quartz-vein and quartz-stock-work style deposits and today’s results have increases in both grade and contained metal, further enhancing their attractiveness as mining propositions.

“The Prohibition ore body will provide the bulk of the underground ore, but the additional resources in the Vivian-Consols-Mudlode-Fatts ore systems will provide us with higher grade material. We eagerly await the results of the new mine design and reserve.” He added.

-3-

Project Update

The Management team for the project are progressing many facets of the BFS and operational aspects for recommencement. All key work packages have been identified and assigned where necessary, and the time-line for recommencement is within the expectations. Key items being progressed include:

• Completing the optimisation for the underground is underway and progressing well;

• The pit designs are being finalised and scheduling of the material will commence shortly to deliver an ore schedule;

• The refurbishment and engineering optimisation of the milling circuit is in progress with GR Engineering;

• The camp refurbishment and expansion options are in progress and being assessed by SCOPE Australia;

• Power generation and fuel options are being negotiated and costed;

• Contracts for the main site services are being negotiated with interested parties where relevant.

==> picture [507 x 205] intentionally omitted <==

----- Start of picture text -----

In Progress
Advanced
Advanced
----- End of picture text -----

Reed continues to refocus its broader business to three distinct commodity streams being gold, lithium and vanadium.

-ENDS-

For further information please contact:

Chris Reed Tony Dawe Reed Resources Ltd 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

-4-

About Reed Resources

Reed Resources Ltd (ASX: RDR, OTC: RDRUY) is a diversified mining and exploration Company based in Western Australia. Reed Resources’ 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.

Reed Resources has five main projects (all in Western Australia):

• Mount Marion – High-grade Lithium project located about 40km south of Kalgoorlie in JV with Mineral Resources Limited. World’s second biggest lithium concentrate operation under construction. Commissioning to occur in December 2011.

• Meekatharra – Recently acquired 2.7M oz Gold project with 3Mtpa processing plant and associated infrastructure, conducting resource re-optimisation and feasibility study to recommence gold production in second half of 2012.

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

• Comet Vale – Evaluating recommencement of high-grade underground gold production, currently on care & maintenance.

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

Website: www.reedresources.com

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.

Notes to accompany Mineral Resource Estimate

Information in this report that relates to Indicated and Inferred Mineral Resources for 2011 at Vivian, Consols, Mudlode and Fatts is based upon geological domains constructed by Reed Resources internal geological team (under Craig Fawcett BSc MAusIMM – General Manager Gold) and estimates prepared by Michael Andrew BSc MAusIMM of Snowden Mining Industry Consultants Pty Ltd. Both Mr Fawcett and Mr Andrew have 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). Both Mr Fawcett and Mr Andrew consent to the inclusion in this report of the matters in the form and context in which it appears.

-5-

APPENDIX A: Supporting Information to the Announcement

Vivian-Consols-Mudlode-Fatts Resource Estimate

A resource estimate incorporating the Vivian-Consols and Mudlode and Fatts ore system was completed by Snowden Mining Industry Consultants. Gold grades were estimated by ordinary block kriging using appropriate top-cuts. The Mineral Resource for Vivian-Consols-Mudlode-Fatts has been reported and classified using the guidelines of the 2004 JORC Code and has been depleted for all historic mining. A summary and comparison of the resource estimate compared with the historical estimate can be seen in Table 1. This resource represents material that can conceptually be sourced from underground mining. Reporting at appropriate cut-offs in line with historical cut-offs has been employed. These cut off values are still deemed appropriate

The entire ore system now incorporates five discrete ore bodies (Figure 2). Underground mine planning is underway to create a design that can effectively mine all these ore bodies from a combination of new and existing infrastructure.

==> picture [418 x 266] intentionally omitted <==

Figure 2. The Paddys Flat ore system illustrating the new ore model with the historical mine designs.

The “Spur Lodes” in the Vivian-Consols ore body are cross linking faults that are narrow (2m wide), have a short range (up to 20m long) but are high grade (Figure 3). Poor definition of these areas results in local overestimation of grade. The previous estimate failed to constrain these areas, and as a consequence the tonnage and total metal in the Indicated category for Vivian-Consols was artificially

-6-

elevated. The new model has built these geological constraints into the model resulting in grade uplift. The nature of this ore body is such that until closer spaced drilling from an underground position can be undertaken, there will be a high amount of inferred material (Figure 4). This will be targeted in due course as the mine progresses towards recommissioning.

The Mudlode and Fatts system were also remodelled to more accurately reflect the mineralised component of the ore body. These ore bodies still represent a formidable component of the resource and have the potential to increase in size as new information and drilling is accumulated (Figure 4). Increases in both grade and ounces in each of these ore bodies is an excellent result for Reed Resources.

Underground mining is anticipated to form an integral part of the operational recommencement strategy to best optimise the balance between selective high grade underground ore and lower grade open pit ore.

-7-

==> picture [417 x 602] intentionally omitted <==

Figure 3. Plan view of the Vivian-Consols-Mudlode-Fatts system at approx. 370mRL showing the spur lodes, the proximity of the ore bodies and some associated grades within the ore bodies.

-8-

==> picture [418 x 277] intentionally omitted <==

Figure 4. Long section schematic of the Vivian-Consols system and the drilling density.

==> picture [414 x 273] intentionally omitted <==

Figure 5. Long section schematic of the Mudlode-Fatts system and the drilling density

-9-

Project Mineral Resource Statement (inclusive of Reserves)

~~Project~~ Meekatharra North	~~Classification~~ Indicated Inferred Sub-Total	~~Tonnes~~ 706,000	~~(g/t)~~ 1.3	~~Ounces~~ 29,000
		174,000	1.2	6,000
		880,000	1.3	35,000
Paddy's Flat	Indicated Inferred Sub-Total	19,116,000	1.7	1,047,900
		9,456,800	1.6	500,600
		28,572,800	1.7	1,548,500
Yaloginda	Indicated Inferred Sub-Total	9,961,000	1.7	536,300
		4,328,000	1.7	240,400
		14,289,000	1.7	776,700
Reedys TOTAL	Indicated Inferred Sub-Total ~~Indicated~~ ~~Ifd~~	1,794,000	2.7	153,400
		3,095,000	2.4	241,200
		4,889,000 ~~31,577,000~~ ~~17053800~~	2.5 ~~1.7~~ ~~17~~	394,600 ~~1,766,600~~ ~~988200~~

• Resources are compiled from current and historical reports and remain current estimates of the Mineral Resource and have been reported at various cut-off grades.

Project Ore Reserve Statement.

~~Type~~ Open Pit	~~Project~~ Bluebird	~~Classification~~ Probable	~~Tonnes~~ 1,410,000	~~(g/t)~~ 1.9	~~Ounces~~ 87,000
	Prohibition	Probable	1,110,000	2.7	96,000
	South Junction	Probable	97,000	1.45	4,500
	Surprise	Probable	136,000	3.0	13,000
	Batavia	Probable	200,000	2.4	14,000
	Jack Ryan	Probable	222,500	3.1	21,800
	Callisto	Probable	72,500	3.1	7,200
	Rand	Probable	100,000	2.4	7,600
	Sub-Total	Probable	2,238,000	2.2	251,100
Underground	Prohbition	Probable	1,372,000	4.1	179,000
	Vivian/Consols	Probable	256,000	10.4	83,000
	Fatts/Mudlode	Probable	362,000	4.0	46,000
Sub-Total		Probable	1,990,000	4.8	308,000

• Reserves are compiled from current and historical reports and remain current estimates of the Ore Reserves

-10-