NEOMETALS LTD — Interim / Quarterly Report 2003

Oct 29, 2003

QUARTERLY REPORT FOR THE PERIOD ENDING 30 SEPTEMBER 2003

COMET VALE PROJECT

During the quarter, the Company's activities continued to focus on the Sand George deposit with completion of the geological consultant's final report on the Sand George resource drilling. Additional reports on the mineralogy of concentrate samples and on metallurgical testing indicate that the SG1 and SG2 lodes contain significant free gold which can be liberated through conventional gravity methods.

RSG Global was commissioned to commence a Pre-feasibility Study on the SG1 and SG2 lodes and Barminco, an underground mining contractor, commenced an evaluation of a possible joint venture arrangement. Subsequent to the end of the Quarter, both RSG and Barminco advised that further drilling of the Sand George resource was needed to increase confidence in the resource estimate. The Prefeasibility Study has consequently been temporarily suspended and an infill drilling program is scheduled to commence early November 2003.

The Company also commenced an assessment of the nickel sulphide potential of the komatiitic sequence on the eastern side of the Comet Vale project.

MT FINNERTY PROJECT

The company's geophysical consultants have completed an interpretation of the airborne geophysical survey that was undertaken in the First Quarter 2003. This work has identified numerous targets for follow-up exploration. These targets are currently being assessed to establish a priority for ground-based exploration in 2004.

Significantly, the geophysical interpretation has indicated a package of ultramafic rocks along the western side of the Watt Hills greenstone belt, and a similar package along the eastern side of the belt, which are considered to have potential for nickel mineralization. Anomalous nickel has previously been recorded in the western ultramafic sequence (refer map), and an initial ground reconnaissance is scheduled for the December Quarter 2003.

BARRAMBIE PROJECT

During the quarter the company received initial reports from consultants engaged to compile and validate over 30 years of exploration and resource data.

This work was centred on the Bay-Cove area where nearly 12,000 metres of drilling was completed within a 2 km long section of the 11 km strike length within Mining Lease M57/173. Little exploration has been completed outside of this area, although geological and geophysical data indicates that titanomagnetite mineralization extends through the full length of the mining lease.

Reed Resources' primary target is a thick band of high-grade titanium mineralization in the 'Eastern Band' which has only been tested in parts of the Bay-Cove area. Given the relative magnitude of previous non-JORC resource estimates and the potential continuity of the high-grade titanium mineralization in the Eastern Band, the company has engaged Mineral Engineering Technical Services Pty Ltd (METS) to supervise an initial program of metallurgical testing on about one tonne of available core before commencing resource definition drilling.

CORPORATE

The company encourages shareholders and interested parties to visit our website (www.reedresources.com) to register to receive announcements electronically.

GReed

C J Reed DIRECTOR

Technical aspects of this report have been compiled by Dr P Collins (BSc (Hons), PhD, MAIG), an employee of Curtin Consultancy Services Ltd. Dr Collins consents to the inclusion in the report of the matters in the form and context in which it appears.

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

REED RESOURCES LTD

ABN Quarter ended ("current quarter") 89 099 116 631 30 SEPTEMBER 2003 Consolidated statement of cash flows Year to date Current quarter Cash flows related to operating activities ŜΑ $(3 \t{.}$ months) \$Α $\overline{1.1}$ Receipts from product sales and related debtors $1.2$ (a) exploration and evaluation $(240, 290)$ Payments for $(240, 290)$ (b) development (c) production $(24,346)$ $(24, 346)$ (d) administration $(184, 331)$ $(184, 331)$ $1.3$ Dividends received $1.4$ Interest and other items of a similar nature 8,509 8,509 received $1.5$ Interest and other costs of finance paid 209) 209) t 1.6 Income taxes paid 1.7 Other-Net Operating Cash Flows $(440, 667)$ $(440, 667)$ Cash flows related to investing activities $1.8\,$ Payment for purchases of: (a)prospects $1,103)$ $(1,103)$ ł (b)equity investments other fixed $(c)$ 438) 438) ſ assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets $1.10$ Loans to other entities $[1]$ Loans repaid by other entities $1.12$ Other (Prospect payment recouped) 40,000 40,000 38,387 38,387 Net investing cash flows $1.13$ Total operating and investing cash flows $(402, 208)$ $(402, 208)$ (carried forward)

1.13	Total operating and investing cash flows (brought forward)	(402,208)	(402, 208)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings
1.17	Repayment of borrowings	(4, 724)	(4, 724)
1.18	Dividends paid
1.19	Other - Prospectus Costs
	- Deposits
	Net financing cash flows	(4, 724)	(4, 724)
	Net increase (decrease) in cash held	(406, 932)	(406, 932)
1.20	Cash at beginning of quarter/year to date	1,294,969	1,291,969
1.21	Exchange rate adjustments to item $1.20$
1.22	Cash at end of quarter	888,037	888,037

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

	A\$
1.23 Aggregate amount of payments to the parties included in item 1.2	(98, 516)
Aggregate amount of loans to the parties included in item 1.10 1.24

$1.25$ Explanation necessary for an understanding of the transactions

Office rent and service fees paid to a company related to a director	\$13.075
(Salary, superannuation payable to directors	\$69,850
Geological consulting fees payable to a director	\$15,591

Non-cash financing and investing activities

• $2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
• $2.2\,$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available
Add notes as necessary for an understanding of the position.

		Amount available \$Α	Amount used \$Α
-3.I	Loan facilities	Abs	MA
3.2	Credit standby arrangements		144

Estimated cash outflows for next quarter

4.1	Exploration and evaluation	SΑ 250,000
$-4.2$	Development
	Total	250,000

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter SΑ	Previous quarter SΑ
5.1	Cash on hand and at bank	51,222	113,679
5.2	Deposits at call	808,315	1,262,742
5.3	Bank overdraft		(110, 834)
5.4	Other (bonds)	28,500	29,382
	Total: cash at end of quarter (item 1.22)	888,037	1,294,969

Changes in interests in mining tenements

		Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter
-6.1	Interests in mining tenements relinquished, reduced or lapsed	E16/262 E30/266 P30/969 P30/970	Relinquished Relinquished Relinquished Relinquished	100% 100% 100% 100%	$0\%$ $0\%$ $0\%$ $0\%$
6.2	Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price per	Amount paid up per
				security (see note $3)$ (cents)	security (see note 3) (cents)
$7.1\,$	Preference
	*securities
	(description)
7.2	Changes during
	quarter
	(a) Increases through issues
	(b) Decreases
	through returns
	of capital, buy-
	backs, redemptions
7.3	+ Ordinary	49,750,000	32,750,000
	securities
7.4	Changes during quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns
	of capital, buy- backs
$7.5\,$	+Convertible
	debt securities
	(description)
7.6	Changes during quarter
	(a) Increases
	through issues
	(b) Decreases
	through securities
	matured,
	converted
7.7	Options			Exercise price	Expiry date
	(description and conversion
	factor)
7.8	Issued during
	quarter
7.9	Exercised during
7.10	quarter Expired during
	quarter
7.11	Debentures
	(totals only)
7.12	Unsecured notes (totals
	only)

Compliance statement

This statement has been prepared under accounting policies which comply with 1 accounting standards as defined in the Corporations Act or other standards acceptable to $\text{ASX}$ (see note 4).

$\overline{2}$ This statement does / does not^*/delete one) give a true and fair view of the matters disclosed.

GReed

Sign here:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Director/Company secretary) Date: 30 OCTOBER 2003

.. CHRISTOPHER JOHN REED................................... Print name:

Notes

$\mathbf{1}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

$\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

1. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

$\mathsf{S}$ Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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