NEOMETALS LTD — Capital/Financing Update 2012

Jan 19, 2012

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

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ABN 89 099 116 631
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ASX RELEASE

20 January 2012

Reed Resources upgrades Meekatharra Gold Reserves to more than 750,000oz

HIGHLIGHTS

• Total Reserves (including underground) increased 40% to 750,800oz of gold

• Open pit Reserves increased 59% from 308,000oz to 491,700oz

• Bankable Feasibility Study on schedule to be delivered in February

• Finalisation of Paddys Flat ‘Super Pit’ optimisation imminent

Australian diversified resources company Reed Resources Ltd ( ASX: RDR ) (the “Company” or “Reed”), is pleased to announce it has increased its Gold Reserve inventory at its flagship Meekatharra Gold Project by 40 per cent.

A headline increase in total Reserves to 750,800oz from 533,700oz (Table 1) has been achieved through Reed Resources’ continuing geological evaluation of its assets and conversion of the recently announced large increase in resource at Paddys Flat and Reedy deposits. Reed Resources’ strategic evaluation of its assets will ensure sustainable operations and a long-term production outlook.

Table 1. Summary of total Mineral Ore Reserves at A$1,300/oz

ble 1.	Summary of tot	al Mineral Ore R	eserves at A$1,3	00/oz
Type	Reserve Classification	Tonnes	Gold Grade (g/t Au)	Total Ounces
Open Pit	Probable	8,971,000	1.7	491,700
Underground	Probable	2,211,000	3.6	259,100
TOTAL	Probable	11,183,000	2.1	750,800

Reed Resources Managing Director, Mr Christopher Reed said; “The continued expansion of open pit Reserves confirm the potential of the Meekatharra Gold Project to be a significant long-life producer of gold. This fundamental step forward for the company not only expands our future production sources but places the company within sight of defining a million ounce reserve. The Bankable Feasibility Study is almost complete and we are advanced in our assessment for future expansions.”

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The optimisation of Resources at Paddys Flat (Open Pit) and Reedy (Underground) identified 185,300 of Probable Reserve ounces at a grade of 1.42 g/t Au. Mineralisation has also been identified beneath the Aladdin pit at Nannine, and at the Maid Marion prospect 20km north of Meekatharra. These resources have been optimised classifying an additional 30,100 ounces of Probable Reserves at 1.63 g/t Au (Table 6). A full list of the Mineral Resources and Reserves can be found in Table 11 and Table 12.

Appendix A details the technical aspects of the Reserve upgrade.

All Mineral Resources except Maid Marion were estimated by Snowden Mining Consultants Pty Ltd (SMC) using Ordinary Kriging and the Mineral Reserve estimates were undertaken by Minecomp Pty Ltd at A$1,300/oz gold price using indicative mining prices.

PROJECT UPDATE

The Project Schedule is progressing as per the released project time line.

• Bankable Feasibility Study on schedule for February 2012 completion;

• Village construction and refurbishment contract is ready for award;

• Mill refurbishment and upgrade contract is ready for award;

• Key personnel have been appointed to undertake on-site operational activities;

• Paddys Flat ’Super Pit’ Whittle 3-D pit optimization is nearing completion. This will evaluate the magnitude of the pit at various gold prices;

• Mill refurbishment personnel mobilizing to site in February to commence the detailed refurbishment planning and scheduling; and,

• Working with Noah’s Rule and Bligh Capital on project financing.

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Figure 1. Project timeline and progress.

ENDS

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For further information please contact :

Chris Reed John Gardner Reed Resources Ltd MAGNUS Investor Relations + Corp. Comms. T: +61 89322 1182 T: +61 8 9212 0101/ +61 413 355 997 E: chris@reedresources.com E: jgardner@magnus.net.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.

The Underground mining aspects of this report have been compiled by Mrs Elizabeth Jones (MAIMM), a full time employee of Reed Resources Ltd. Mrs Jones 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). Mrs Jones consents to the inclusion in this report of the matters in the form and context in which it appears.

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 Resources’ wholly owned Meekatharra Gold Project is located in the prolific Murchison region of Western Australia and has a current JORC resource of 3.27 Moz and existing infrastructure including the 3 Mtpa Bluebird processing plant.

Reed Resources’ other projects include:

• Mount Marion: 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 2012.

• Barrambie: Definitive Feasibility Study completed on the production 6300t of vanadium per annum. Currently in approvals process and evaluating recovery of titanium and iron as co-products.

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

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

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.

Website: www.reedresources.com

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Notes to accompany Open Pit Ore Reserve Estimates:

Minecomp Pty Ltd was engaged by Reed Resources Ltd (Reed) to undertake an estimation of open pit gold Reserves at the Mickey Doolan, Turn of the Tide (TOTT), Aladdin and Maid Marion resources, in accordance with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).

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 of the Indicated Mineral Resource has been classified as Probable Reserves after consideration of mining, metallurgical, social, environmental and financial aspects of the Meekatharra Project.

Slope angles used in the Ore Reserve estimation were based on historical pit slope angles for that rock type and weathering profiles that have remained largely in-tact for the last 15 years and were a base recommendation by Coffey Mining. Ore related parameters were used in the optimisation are tabulated in Table 2 (prices quoted are in AUS$).

Notes to accompany Underground Mineral Reserve Estimate:

The Reserve estimate has been compiled internally by Reed Resources, in accordance with The 2004 Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).

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

An internal review of geotechnical stability and ground support requirements was undertaken and recommendations for support regimes and dilution were incorporated into the generation of the Reserve statement. Ore-related parameters used in the Reserve estimate are listed in Table 2 (prices quoted are in A$).

Table 2. Summary of Ore Reserve Estimate parameters

Orebody	Processing Costs	Processing Costs	Met	3rd Party Royalty	Total Mining & Milling
			Recovery		Cost A$/oz
	Oxide	Fresh
Mickey Doolan	$21.01	$29.80	87%	2.15%	$1048
TOTT	$21.01	$23.80	94%	1.0%	$1007
Aladdin	$21.01	$23.80	94%	1.0%	$850
Maid Marion	$21.01		95%	1.0%	$996
South Emu UG		$27.00	96%	3.0%	$1050
South Emu OC		$23.80	96%	3.0%	$839

A state royalty of 2.5% was applied to the Reserves, and mining costs were derived from contractor estimates and/or peer equivalents. A gold price of A$1,300 is used to calculated the Reserves. A cost of $0.12tkm was applied to haulage where required.

Metallurgical recovery was based on recoveries encountered from previous processing of the ore, or from metallurgical work undertaken on the ore bodies.

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Appendix A – Technical Information

Paddy’s Flat Project:

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Figure 2. Plan view of Paddys Flat deposit locations.

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In September 2011 Reed appointed Ammtec to undertake metallurgical test work on fresh drill core from the Mickey Doolan deposit to determine the amenability of the ore to treatment by floatation and fine grinding. Results indicate that a recovery of 88% is possible via fine grinding a float concentrate followed by conventional CIL. Work is continuing on the Paddys Flat Super Pit evaluation, with the model currently undergoing optimisation.

Mickey Doolan Probable Reserve

The new open pit Probable Reserve for the Mickey Doolan (Figure 3, Table 4) deposit is based on applying economic mining parameters that reflect current operating costs, gold price and recovery parameters to the 2005 resource estimate of the deposit. Operational costs are derived from contractor costs, calculated operational costs and peer equivalent costs.

The optimisation exploits the extensive low grade carbonate-fuchsite hosted mineralisation in the southern part of the Paddys Flat mineralised system, and takes in the historic Phar Lap and Mickey Doolan open pits. Current work indicates that ore can be economically extracted from beneath and adjacent to the existing pits over a strike length of more than 800m with a stripping ratio of 3.0:1.

Table 4.	Summary of Mickey Doolan Ore Reserve Estimate	Summary of Mickey Doolan Ore Reserve Estimate	Summary of Mickey Doolan Ore Reserve Estimate	Summary of Mickey Doolan Ore Reserve Estimate
Type	Project	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Open Pit	Mickey Doolan	Probable	3,3124,000	1.1	121,700

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Figure 3. Section view (looking North) of the Mickey Doolan deposit showing the mineralisation and the current AUD$1,300 Probable Reserve shell.

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Reedy Project:

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Figure 4.

Plan view of Reedy deposit locations.

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Turn of the Tide

The Turn of the Tide (TOTT) line of mineralisation is located approximately 6km east of Reedy (Figure 5.). There are four existing open pits that were worked during the 1980’s and 1990’s. Three of these are within the current resource area; Culculli North, Culculli, and TOTT Main (Figure 5). Mineralisation has been remodelled by Reed’s internal geological team and a resource of 76,450 ounces at 1.6 g/t was released by Reed in November 2011.

Optimisation of a Reserve for the TOTT area has just been completed (Table 5), and defines an open pit Probable Reserve of 505,000t at 1.8g/t for 29,400oz at a cash cost of $1,007/oz. Results indicate that three areas are economically minable, the northern extension of the TOTT Main pit (12500 oz), the East Lode adjacent to the Culculli pit (14,200 oz), and the East Lode adjacent to the Culculli North pit (2700 oz).

Table 5. Turn of the Tide Ore Reserve Estimate . (Culculli North, Culculli and TOTT Main)

Table 5.	Turn of the Tide Ore Res	erve Estimate.(Culc	ulli North, Culcull	i and TOTT Main)
Type	Area	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Open Pit	Turn of the Tide	Probable	505,000	1.8	29,400

Mineralisation is associated with moderate to strongly weathered sericite-quartz schist. The host structure is predominantly steeply dipping to the east, except the West Zone which dips steeply towards the west. Drilling leaves the mineralisation open at depth, with only two holes extending below 80m.

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Figure 5.

Plan view of the TOTT Deposits showing the location of optimised pit shells.

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South Emu

South Emu is the southernmost pit on the Reedy line (Figure 4.).The bulk of mineralisation occurs on the margins of a felsic porphyry dyke on the contact between mafic volcanics and ultramafic rock.

The deposit was remodelled and re-optimised resulting in a resource increase from 78,000oz to 94,300oz and open pit Reserve of 91,000t at 4.7g/t for 13,900oz at a cash cost of $839/oz. An underground Reserve, mine design and mining schedule has just been completed and shows an underground Reserve of 249,700t at 4.26g/t for 34,200 oz beneath the proposed open pit cutback. The cash cost for this is calculated at $1,050/oz. Figure 6 illustrates the planned opened pit cut back and underground design.

Directly to the north along strike is the historic Triton shaft which produced 230,000oz from 1935 to 1948 at a grade of 9.7g/t and is currently undergoing re-evaluation.

Table 6.	South Emu Underground Ore Reserve Estimate at A$1,300/oz.	South Emu Underground Ore Reserve Estimate at A$1,300/oz.	South Emu Underground Ore Reserve Estimate at A$1,300/oz.	South Emu Underground Ore Reserve Estimate at A$1,300/oz.	South Emu Underground Ore Reserve Estimate at A$1,300/oz.
Type	Project	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Underground	South Emu	Probable	249,700	4.3g/t	34,200

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Figure 6. Long section schematic of South Emu proposed open pit cut back and underground design.

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Nannine Project:

Reed has recently begun re-modelling and assessment of the Nannine Project, located 20km south of the Bluebird mill along the Great Northern Highway. Reed currently holds an option to purchase the Nannine project (ASX release 6[th] July, 2011) which includes four areas of historic mining; Aladdin, Caledonian and Baileys Island open pits, and Nannine Reef Underground. Upon evaluation of the geological data, Reed took the position to undertake detailed validation and re-model the existing interpretations with the updated data set. This evaluation represents the first in an ongoing series of evaluations of the Nannine pits and exploration targets.

Aladdin

The Aladdin deposit has recently been re-modelled and Reed is pleased to announce a Mineral Resource Estimate of 854,000t at 1.6g/t for 43,600oz, and an open pit Reserve of 383,700t at 1.7g/t for 21,450oz at an estimated cash cost of $850/oz. Mineralisation at Aladdin is controlled by the intersection of a banded iron-formation with the Caledonian – Aladdin Fault, and is present over a strike length of 480m. The intersection plunges steeply toward the northwest and mineralisation reaches a thickness of more than 35m beneath the floor of the existing pit (Figure 7).

Table 7. Aladdin Mineral Resource Estimate.

Resource Classification	Tonnes	Gold Grade (g/t)*	Total Ounces
Indicated	611,000	1.6g/t	30,900
Inferred	243,000	1.6g/t	12,700
Total	854,000	**1.6g/t **	43,600

*Reported at >0.5g/t Au cut off

Table 8. Aladdin Open Pit Ore Reserve Estimate at A$1,300/oz.

Table 8.	Aladd	in Open Pit Ore Reserv	e Estimate at A$	1,300/oz.
Type	Project	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Open Pit	Aladdin	Probable	383,700	1.7g/t	21,450

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Figure 7.

Long section schematic of Aladdin proposed open pit cut back.

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Meekatharra North Project:

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Figure 8. Plan view of Meekatharra North deposit locations.

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The Meekatharra North Project encompasses a group of tenements extending 18km NE along strike from Paddys Flat and the historic Haveluck mine. Two deposits currently exist within the Meekatharra North project; Five Mile Well and Maid Marion (Figure 8). Five Mile Well is an historic open pit that was mined in the late 1980’s along a quartz-filled shear zone. Maid Marion is an unmined deposit located on a cherty gossan in the northern part of the tenement group.

Maid Marion

The Maid Marion deposit is situated approximately 32km northeast of the Bluebird mill and 1.5km east of the Great Northern Highway. It was discovered in 1987 during a regional RAB drilling program and was later drilled extensively by Dominion Mining. Originally believed to be a mineralised banded ironformation, diamond core drilling in 2005/6 indicated that the cherty iron-rich outcrop is derived from a highly deformed quartz veined sulphide-chlorite rock. The rocks are oxidised to a depth of approximately 90m and remain weathered in places down to 200m from surface.

Reed recently completed an internal Mineral Resource Estimate on the Maid Marion deposit using an extensive database of historic drilling from 1992 – 1998 and 2004 – 2008. A total resource of 768,800t at 1.4 g/t for 35,100 ounces of gold was defined (Figure 9 and Table 9). These results compare favourably with an Multiple Indicator Kriging (MIK) recoverable resource of 880,000t at 1.31g/t for 37,000 ounces generated by Snowden in 2007. Minecomp recently completed a Reserve estimation and pit design for Maid marion. A Reserve of 192,100t of oxide ore at 1.4 g/t for 8,650 ounces has been defined for the Maid Marion deposit at a cash cost of AUD$996/oz (Tables 2 and 10).

Table 9.

Maid Marion Mineral Resource Estimate.

Resource Classification	Tonnes	Gold Grade (g/t)*	Total Ounces
Indicated	749,200	1.4g/t	34,200
Inferred	19,600	1.4g/t	900
Total	768,800	**1.4g/t **	35,100

*Reported at >0.5g/t Au cut off

Table 10. Maid Marion Open Pit Ore Reserve Estimate at A$1,300/oz.

Type	Project	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Open Pit	Maid Marion	Probable	192,100	1.4g/t	8,650

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Figure 9. Long section schematic of Maid Marion proposed open pit.

SUMMARY OF RESOURCES AND RESERVES

Table 11. Summary of Current Mineral Resources

Project	Resource Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Meekatharra North	Indicated	749,200	1.4	34,200
	Inferred	19,600	1.4	900
	Sub-Total	768,800	1.4	35,100
Paddy's Flat	Indicated	23,096,700	1.6	1,175,276
	Inferred	11,610,000	1.6	580,853
	Sub-Total	34,706,700	1.6	1,756,128
Yaloginda	Indicated	10,049,000	1.7	563,603
	Inferred	6,291,000	1.7	346,877
	Sub-Total	16,340,000	1.7	910,480
Nannine	Indicated	611,000	1.6	30,900
	Inferred	243,000	1.6	12,700
	Sub-Total	854,000	1.6	43,600
Reedys	Indicated	2,740,000	3.1	276,410
	Inferred	3,688,000	2.4	289,359
	Sub-Total	6,428,000	2.7	565,760
TOTAL	Indicated	37,245,900	1.7	2,080,380
	Inferred	21,851,600	1.8	1,230,689
	TOTAL	59,097,500	1.7	3,311,068

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Table 12. Summary of Current Ore Reserves

Table 12.	Summar	y of Current Ore R	eserves
Type	Project	Reserve Classification	Tonnes	Gold Grade (g/t)	Total Ounces
Open Pit	Bluebird	Probable	1,410,000	1.9	87,000
	Prohibition	Probable	1,110,000	2.7	96,000
	MickeyDoolan	Probable	3,312,000	1.1	121,700
	Maid Marion	Probable	192,100	1.4	8,650
	South Junction	Probable	97,000	1.5	4,500
	Surprise	Probable	136,000	3.0	13,000
	Batavia	Probable	200,000	2.4	14,000
	Whangamata	Probable	258,962	1.43	11,900
	GNH	Probable	880,342	1.26	33,600
	Aladdin	Probable	383,700	1.7	21,450
	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
	South Emu	Probable	91,100	4.7	13,900
	TOTT	Probable	505,000	1.8	29,400
	Sub-Total	Probable	8,971,204	1.7	491,700
Underground	Prohibition	Probable	1,325,260	2.4	104,100
	Vivian/Consols	Probable	256,500	7.7	63,600
	Fatts/Mudlode	Probable	380,000	4.7	57,200
	South Emu	Probable	249,700	4.3	34,200
	Sub-Total	Probable	2,211,460	3.6	259,100
Meekatharra Package – TOTAL			11,182,664	2.1	750,800

ENDS

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