NEOMETALS LTD — Capital/Financing Update 2011

Mar 30, 2011

Reed Resources Ltd

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ABN 89 099 116 631
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97 Outram Street West Perth WA 6005 Tel: + 61 8 9322 1182 Fax: + 61 8 9321 0556

ASX Announcement

31 March 2011

UPDATED GOLD RESOURCE AND RESERVE ESTIMATES AT

MEEKATHARRA PROJECT

HIGHLIGHTS

• New Bluebird Reserve of 1,410,000t @ 1.92g/t for 87,000oz represents base load feed for first year’s planned gold production;

• Resource/Reserve extension drilling planned for landbridge between Bluebird and South Junction Pits and infill drilling of Inferred Resources within the current pit shell;

• New Rand Resource completed by Snowden has 10% higher grade and increases contained ounces 23% to 233,000oz;

• Re‐modelling of Prohibition, Surprise, South Emu and Whangamata are well advanced.

• Resource definition drilling planned for Yaloginda and Paddy’s Flat as part of a near‐mine expansion project;

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

A new Probable Ore Reserve at Bluebird, adjacent to the processing plant at Yaloginda, and new Mineral Resource estimate at the Rand deposit in the Reedy area, continue the success of the Company’s systematic re‐estimation and optimisation of resources at the historical mining centres using current economic and operational parameters. The focus, driven by economics, is to build a lower tonnage but higher grade resource and reserve base by applying better defined geological constraints to the mineralisation and delineate a more selective resource.

Managing Director, Mr Christopher Reed said , “As expected the remodelling of these orebodies continue to deliver either additional ore or higher grade ore, be it in resources or reserves. Bluebird has now reached a point where we have an optimised sole‐source ore body to span a 12 month production profile in the mill which is a quantum step toward de‐risking the Project.”

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Bluebird Ore Reserve

The Bluebird Ore Reserve was estimated using current economic parameters to more accurately reflect increases in operating costs and gold prices. Although the Probable Ore Reserve is almost identical to the previous estimate (Tables 1,2) there are still potential gains to be made. Resource extension/definition drilling of the landbridge between the South Junction pit and the southern end of the Bluebird pit will test for mineralisation that could potentially see the two pits combined. The optimisation process has identified areas of inferred resources within the current pit shell, these will be infill drilled with the aim of upgrading the resource classification to Indicated and potentially converted into reserves.

A definitive pit design will be created from which an underground feasibility can commence. There is currently no underground mining plan into the Bluebird ore body (Figure 2). It is expected to commence this work in the next 3 months. Tables 1 and 2 compare the historical and new Mining Reserve.

Table 1. Bluebird Reserve Estimate (Snowden 2007) Table 2. Bluebird Reserve Estimate (Snowden 2011)

~~Type~~ Open Pit	~~Classification~~ Probable	~~Tonnes~~ 1,500,000	~~(g/t)~~ 1.9	~~Total Ounces~~ 87,000		~~Type~~ Open Pit	~~Classification~~ Probable	~~Tonnes~~ 1,410,000	~~(g/t)~~ 1.9	~~Total Ounces~~ 87,000

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Figure 1. Cross section through the Bluebird ore body, illustrating the planned extension to

the pit and underground potential on completion of the open pit.

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Rand Mineral Resource Estimate

The previous Resource estimate for the Rand deposit (undertaken by Cube in 2005) has been re‐calculated and reclassified. The geological interpretation and modelling was completed internally, with the grade estimation and Mineral Resource classification completed by Snowden Mining Industry Consultants. The interpretation is based upon the known geology that was encountered in the pits and on reports written on the structural nature of the ore body, using a nominal cut‐off of 0.5 g/t Au. This has resulted in a 10% increase in grade and 17% increase in tonnes, and added some 53,000 additional ounces of gold (see Tables 3,4).

Previous drilling at Rand focussed on 50m beneath the existing workings and there is a lack of drilling beneath this depth, ie beneath the Indicated Resource outline (Figure 2). An area at the north end of the Rand pit has not been assigned to an Indicated Resource category as the primary source of data is from Rotary Air Blast (RAB) drilling. This, area is targeted for infill drilling to raise the Resource category. The March 2011 Rand Mineral Resource has been depleted for previous open‐pit mining. Approximately 15% of the Inferred Resource is considered to be extrapolated due to the sparse data at depth in the northern portion of the Rand mineralisation (Figure 2).

Table 3. Rand Resource Estimate (Cube 2005)

Table 4. Rand Resource Estimate (Snowden 2011)

~~Project~~ Rand	~~Classification~~ Indicated	~~Tonnes~~ 891,000	~~(g/t)~~ 1.9	~~Total Ounces~~ 55,000	~~Project~~ Rand	~~Classification~~ Indicated	~~Tonnes~~ 642,000	~~(g/t)~~ 2.4	~~Total Ounces~~ 49,400
	Inferred	1,458,000	2.7	125,000		Inferred	2,149,000	2.7	184,200
	Sub‐Total	2,349,000	2.4	180,000		Sub‐Total	2,791,000	2.6	233,600

*A lower cut‐off of 0.5g/t was used for both interpretations and both are Ordinary Kriged estimates.

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Figure 2. Longitudinal Projection of the Rand pit showing outlines of the Indicated and Inferred Resources.

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Figure 3. Cross section through the Rand ore body at 11510mN illustrating intercept grades of mineralisation at depth.

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Forward work – Resource Evaluation

The geological and engineering team are continuing to progress the other resource areas ahead of the planned timeframe. Resource modelling of the larger deposits (Prohibition at Paddys Flat, and Surprise at Bluebird) are well advanced.

Drilling to compliment the resources is being systematically planned and it is the intention to commence drilling as soon as a project ranking framework has been completed to ensure prioritisation of the highest yield targets. This will include a mix of targets from initial greenfields exploration through to resource expansion.

Resource Evaluation Work Program

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Project Timeline and Progress

Metallurgical, geotechnical and hydrological reviews are ongoing as the various ore sources and potential mining areas are evaluated. An electrical engineering review of the diesel power facility is under way and with various options being evaluated for either a refurbishment or replacement with diesel/gas powered facility. The accommodation village has been audited and options are being reviewed to upgrade the facility to modern standards.

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Project Timeline

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In Progress
Advanced
Advanced
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Project Mineral Resource Statement (inclusive of Reserves)

~~Project~~ Meekatharra North	~~Classification~~ Indicated	~~Tonnes~~ 706,000	~~(g/t)~~ 1.3	~~Ounces~~ 29,000
	Inferred	174,000	1.2	6,000
	Sub‐Total	880,000	1.3	35,000
Paddy's Flat	Indicated	17,879,000	1.7	986,000
	Inferred	7,925,000	1.4	349,000
	Sub‐Total	25,804,000	1.6	1,335,000
Yaloginda	Indicated	9,693,000	1.7	528,000
	Inferred	3,856,000	1.8	227,000
	Sub‐Total	13,549,000	1.7	755,000
Reedys	Indicated	1,794,000	2.7	153,400
	Inferred	3,095,000	2.4	241,200
	Sub‐Total	4,889,000	2.5	394,600
TOTAL	Indicated	30,072,000	1.7	1,696,400
	Inferred	15,050,000	1.7	823,200
	TOTAL	45,122,000	1.7	2,519,600

• Resources are compiled from historical reports and remain current estimates of the Mineral Resource.

Project Ore Reserve Statement.

~~Type~~ Open Pit	~~Project~~ Bluebird	~~Classification~~ Probable	~~Tonnes~~ 1,410,000	~~(g/t)~~ 1.9	~~Ounces~~ 87,000
	Surprise	Probable	136,000	3.0	13,000
	Batavia	Probable	200,000	2.4	14,000
	Sub‐Total	Probable	1,746,000	2.0	114,000
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
Meekatharra Package‐ TOTAL			3,736,000	3.51	422,000

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

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Location Plan of Reedy Project (Rand deposit) and Yaloginda (Bluebird deposit).

ENDS

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For further information please contact:

Chris Reed David Tasker Managing Director Reed Resources Ltd 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

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.

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

Information in this report that relates to the Ore Reserves at Bluebird was compiled by Gary McCrae, a full time employee of Minecomp Pty Ltd which is a corporate member of the Australian Institute of Mining and Metallurgy. Gary McCrae is a qualified mining engineer who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the Code for Reporting of Mineral Resources and Ore Reserves (2004). Gary McCrae consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears.

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Notes to accompany Mineral Reserve estimate:

The ore reserve is that part of the Mineral Resource which can be economically mined by open pit mining methods. Dilution of the Mineral Resource and an allowance for ore loss was included in the Ore Reserve estimate. All the Indicated Ore Resource was classified as Probable Reserves after consideration of all mining, metallurgical, social, environmental and financial aspects of the Bluebird Project.

Slope angles used in the Ore Reserve estimation were based on standard pit slope angles for that rock type and weathering profiles. The pit limits were determined by the surrounding infrastructure (road and rail line) that limits the extents to which the pit can be economically excavated. The following ore related parameters were used in the optimisation: (prices quoted are in AUS$)

• Processing costs $21.01/t (oxide) and $23.80/t (fresh);

• Metallurgical recovery of 94%;

• A gold price of AUS$1,300;

• Government royalty of 2.5% plus 1% prospectors royalty;

• Mining costs are variable depending on material and mining depth;

• Total cost of A$885/oz.

Metallurgical recovery was based on recoveries encountered from previous processing of the Bluebird or and metallurgical recoveries of the ore body in the primary ore.

Mining costs were based on estimates from a mining contractor.

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):

• 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 2.5M oz Gold project with 3Mtpa processing plant and associated infrastructure, conducting resource re‐optimisation and feasibility study to recommence gold production in 2012.

• Barrambie – 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 – Evaluating recommencement of high‐grade underground gold production and refurbishment of processing plant, both currently on care & maintenance.

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

Website: www.reedresources.com

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