NEOMETALS LTD — Capital/Financing Update 2011

May 19, 2011

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

ASX Announcement 20 May 2011

$4.5M Sale of Nimbus Plant and Assets

• $4.5 million conditional sale of Nimbus plant and assets to MacPhersons Reward Gold Limited

• Pre agreed toll treatment option retained for Reed’s Sand Queen Gold Mine

• New mine plan for recommencement of mining at Sand Queen in progress

Australian diversified resources company Reed Resources Ltd (ASX Code: RDR) (“Reed”) is pleased to announce the conditional sale of its subsidiary Kalgoorlie Ore Treatment Company Pty Ltd (“KOTC”) to MacPhersons Reward Gold Limited (ASX Code: MRP) (“MacPhersons”) pursuant to a binding memorandum of understanding (“MOU”). KOTC holds Reed’s Nimbus processing plant and associated assets near Kalgoorlie.

The sale which remains subject to due diligence will see MacPhersons pay cash and scrip consideration of $4.5 million (A$3M cash and A$1.5M in MRP ordinary shares) plus reimburse Reed for up to $500,000 of costs associated with power line installation and ball mill upgrade prior to the contract becoming unconditional. MacPhersons will pay a deposit of $100,000 to secure the contract which includes a 3 month due diligence period, during which time certain permitting approvals are to be obtained. The deposit is non-refundable except if those approvals are not obtained. The parties are to enter into a formal sale agreement to reflect the terms of the binding MOU. Settlement will occur within 5 business days of the completion of successful due diligence and receipt of permitting approvals. Reed will retain a 1% Net Smelter Royalty on zinc production from KOTC’s two mining leases.

KOTC was acquired in April 2009 for A$2.5M, with approximately A$1M spent on refurbishment and rehabilitation activities. On this basis Reed will book a circa A$1M profit on the sale of this asset.

On the sale of the Nimbus assets, Reed Managing Director, Mr Chris Reed said:

“In short, ownership by Reed of this asset has become non-core, provided treatment access for Reed’s Sand Queen ore can be preserved. This disposal has the dual benefit of retaining a treatment option for Sand Queen whilst relieving the group of the capital cost and management time of the Nimbus refurbishment process.

“We are updating the mine plan for the resumption of operations at Sand Queen to coincide with the recommissioning of Nimbus. The recent history of high-grade production (80,000t @ 10 g/t Au) and the existing underground and surface infrastructure should ensure the restart is low-risk with a low-capital cost. Our current high-grade resource inventory at Sand

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Queen (186,000 oz @ 10.8 g/t Au, see Appendix A) in the current gold price environment with a milling solution is a great asset.

“We are reviewing options to maximise the value of the Sand Queen assets in the context of the gold business unit and the wider group structure, to allow the executive team to focus on its three core assets, Meekatharra, Mt Marion and Barrambie. We expect the period to the end of 2012 to be one of great progress.”

ENDS

For further information contact:

Reed Resources Chris Reed Managing Director Tel: +61 8 9322 1182

Professional Public Relations David Tasker Tel: +61 8 9388 0944 Mobile: +61 433 112 936

Bedford Capital Partners

Corporate Advisors to Reed Resources Ltd Greg Evans Tel:+61 8 6313 9000

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About Reed Resources

Reed Resources Ltd (ASX: RDR, OTC: RDRUY) is a diversified mining and exploration Company based in Western Australia. Reed’s American Depositary Receipts (ADR’s) trade under the code RDRUY (CUSIP Number: 758254106). Each Reed ADR is equivalent to 10 ordinary shares of Reed 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):

• Meekatharra (Gold) – Recently acquired 2.7M oz Gold project with 3Mtpa processing plant and associated infrastructure, conducting feasibility study to recommence gold production in 2012.

• Mount Marion ( Lithium ) – High-grade Lithium project located 40km south of Kalgoorlie in JV with Mineral Resources Limited – commissioning December 2011.

• Barrambie ( Vanadium ) – Definitive Feasibility Study completed on a Ferrovanadium operation to produce 6300t of Vanadium per annum. Currently in approvals process. MOU with China Nonferrous Metals for EPC & Financing assistance.

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

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

Website: www.reedresources.com

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APPENDIX A

Table 1 . Mineral Resource estimates for the Sand Queen mine, Comet Vale project (at a cut-off grade of 5 g/t Au) previously released to ASX 8 April 2010.

Resource Category	Tonnes	Grade g/t Au	Contained gold ounces
Indicated	238,000	10.8	82,500
Inferred	296,000	10.9	103,500
Total	534,000	10.8	186,000

Table 2. Mineral Resource estimates for potential open pit mining of gold deposits at Sand Prince West, Princess Grace and Coonega prospects (previously released to ASX 23 November 2006 and 24 July 2007).

Resource Category	Tonnes	Grade g/t Au	Contained gold ounces
Princess Grace(1 g/t Au lower cut, no upper cut required)
Indicated	93,000	2.8	8,400
Inferred	13,000	1.6	600
Total	106,000	2.7	9,000
Coonega(1 g/t Au lower cut, 12 g/t Au upper cut)
Inferred	106,000	2.2	7,500
Total	106,000	2.2	7,500
Sand Prince West(1 g/t Au lower cut, no upper cut required)
Measured	53,000	2.7	4,600
Indicated	46,000	2.2	3,200
Inferred	21,900	2.1	1,500
Total	121,000	2.4	9,300
Combined Resources(1 g/t Au lower cut)
Measured	53,000	2.7	4,600
Indicated	139,000	2.6	11,600
Inferred	141,000	2.1	9,600
Total	333,000	2.4	25,800

All tonnage, grade and ounce values have been rounded down to three significant figures; slight errors may occur due to rounding of values.

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