NEOMETALS LTD — Interim / Quarterly Report 2003

Mar 12, 2003

Rules 4.1, 4.3

Appendix 4B

Half yearly/preliminary final report

Introduced 30/6/2002.

Name of entity
REED RESOURCES LTD
Half yearly ABN or equivalent company Preliminary reference final (tick) (iick) 89 099 116 631 $\mathbf X$	31 December 2002	Half year/financial year ended ('current period')
For announcement to the market Extracts from this report for announcement to the market (see note 1).		\$A
Revenues from ordinary activities (item $I.1$ )	up/down $0\%$	63,362 to
Profit (loss) from ordinary activities after tax attributable to members ( item 1.22 )	up/down $0\%$	(387, 604) to
Profit (loss) from extraordinary items after tax attributable gain (loss) to members ( item 2.5( d )) οf΄
Net profit (loss) for the period attributable to members (item 1.11)	$\%$ up/down	(387, 604) to
Dividends (distributions)	Amount per security	Franked amount per security
Final dividend (Preliminary final report only - item 15.4) Interim dividend (Half yearly report only - item 15.6)	0 cents	0 cents
Previous corresponding period (Preliminary final report - item 15.5; half yearly report - item 15.7)	0 cents	$0$ cents
$+$ Record date for determining entitlements to the dividend, (in the case of a trust, distribution) (see item $15.2$ ) Brief explanation of any of the figures reported above (see Note 1) and short details of any bonus or cash issue or other item(s) of importance not previously released to the market: There are no comparative figures as the company was formed 20 December 2001.

If this is a half yearly report it is to be read in conjunction with the most recent annual financial report.

Condensed consolidated statement of financial performance

		Current period - \$A	Previous corresponding period - \$A
1.1	Revenues from ordinary activities (see items 1.23 $-1.25$ )	63,362
1.2	Expenses from ordinary activities (see items 1.26 & 1.27)	(448, 917)
1.3	Borrowing costs	(2,049)
1.4	Share of net profits (losses) of associates and joint venture entities (see item 16.7)
1.5	Profit (loss) from ordinary activities before tax	(387, 604)
1.6	Income tax on ordinary activities (see note 4)
1.7	Profit (loss) from ordinary activities after tax	(387, 604)
1.8	Profit (loss) from extraordinary items after tax (see item $2.5$ )
1.9	Net profit (loss)	(387, 604)
1.10	Net profit (loss) attributable to outside $+$ equity interests
1.11	Net profit (loss) for the period attributable to members	(387, 604)
	Non-owner transaction changes in equity
1.12	Increase (decrease) in revaluation reserves
1.13	Net exchange differences recognised in equity
1.14	Other revenue, expense and initial adjustments
	recognised directly in equity (attach details) transitional Initial adjustments from UIG provisions
1.15 1.16	Total transactions and adjustments recognised
	directly in equity (items 1.12 to 1.15)
1.17	Total changes in equity not resulting from transactions with owners as owners
		(387,604)

Earnings per security (EPS)	Current period	Previous corresponding period
Basic EPS 1.18	$-0.79$ cents
Diluted EPS 1.19	$-0.79$ cents

Notes to the condensed consolidated statement of financial performance

Profit (loss) from ordinary activities attributable to members

		Current period - \$A	Previous corresponding period - ŚΑ
1.20	Profit (loss) from ordinary activities after tax (item I.7)	(387,604)
1.21	Less (plus) outside $+$ equity interests
1.22	Profit (loss) from ordinary activities after tax, attributable to members	(387,604)

Revenue and expenses from ordinary activities

(see note $15$ )

		Current period - \$A	Previous
			corresponding period - \$Α
1.23	Revenue from sales or services	1,131
1.24	Interest revenue	62,231
1.25	Other relevant revenue	63,362
1.26	Details of relevant expenses
	Employee benefits	(114,370)
	Legal & professional	(83,038)
	Service fees	(56, 583)
	Travel	(37, 892)
	Insurance	(26, 666)
	Communications $\&$ advertising	(26,080)
	Native title	(21, 031)
	Office supplies $&$ equipment hire	(19, 161)
	Rental costs	(11,956)
	Other exps from ordinary activities	(29, 439)
	Total	(426,216)
1.27	Depreciation and amortisation excluding amortisation of intangibles (see item 2.3)	(22,701)
		(448, 917)

Consolidated retained profits

		Current period - \$A	Previous corresponding period - \$A
1.30	Retained profits (accumulated losses) at the beginning of the financial period	(240, 560)
1.31	Net profit (loss) attributable to members ( item 1.1T)	(387, 604)
1.32	Net transfers from (to) reserves (details if material )
1.33	Net effect of changes in accounting policies
1.34	Dividends and other equity distributions paid or payable
1.35	Retained profits (accumulated losses) at end of financial period	(628,164)

Intangible and extraordinary items

		Consolidated - current period
		Before tax SA. (a)	Related tax \$A (b)	Related outside $+$ equity interests \$Α (c)	Amount (after $\max$ attributable to members \$Α (d)
2.1	Amortisation of goodwill
2.2	Amortisation of other intangibles
2.3	Total amortisation of intangibles
2.4	Extraordinary items (details)
2.5	Total extraordinary items

Comparison of half year profits (Preliminary final report only)

• $3.1$ Consolidated profit (loss) from ordinary
  activities after tax attributable to members reported for the 1st half year (item 1.22 in the half yearly report)
• Consolidated profit (loss) from ordinary
  activities after tax attributable to members for $3.2$ the 2nd half year

Current year - \$A	Previous year - \$A

	Condensed consolidated statement of financial position	end At οf current period \$Α	As shown in last annual report \$A	As in last half yearly report \$A
	Current assets
4.1	Cash	3,325,143	3,002
4.2	Receivables	101,651	38,287
4.3	Investments
4.4	Inventories
4.5	Tax assets
4.6	Other (provide details if material)
	Prepayments		607,323
4.7	Total current assets	3,426,794	648,612
	Non-current assets
4.8	Receivables
4.9	Investments (equity accounted)
4.10	Other investments
4.11	Inventories
4.12	Exploration and evaluation expenditure capitalised (see para .71 of AASB 1022)	4,001,748	3,283,479
4.13	$(^+$ mining Development properties entities)	638,353	22,071
4.14	Other property, plant and equipment (net)	219,243	92,161
4.15	Intangibles (net)
4.16	Tax assets
4.17	Other (provide details if material)
4.18	Total non-current assets	4,859,344	3,397,711
4.19	Total assets	8,286,138	4,046,323
	Current liabilities
4.20	Payables
		(13,762)	(592, 234)
4.21	Interest bearing liabilities	(74, 745)	(261, 531)
4.22	Tax liabilities
4.23	Provisions exc. tax liabilities
4.25	Total current liabilities	(88,507)	(853,765)
	Non-current liabilities
4.26	Payables
4.27	Interest bearing liabilities	(33,116)	(33,116)
4.28	Tax liabilities
4.29	Provisions exc. tax liabilities
4.31	Total non-current liabilities	(33, 116)	(33, 116)

4.32	Total liabilities	(121, 623)	(886, 881)
4.33	Net assets	8,164,515	3,159,442
	Equity	8,792,679	3,400,002
4.34	Capital/contributed equity
4.35	Reserves
4.36	Retained profits (accumulated losses)	(628, 164)	(240, 560)
4.37	Equity attributable to members of the parent entity	8,164,515	3,159,442
4.38	Outside + equity interests in controlled entities
4.39	Total equity	8,164,515	3,159,442
4.40	Preference capital included as part of 4.37

Condensed consolidated statement of financial position continued

Notes to the condensed consolidated statement of financial position

Exploration and evaluation expenditure capitalised
(To be completed only by entities with mining interests if amounts are material. Include all expenditure incurred.)

		Current period \$A	Previous corresponding period - ŜΑ
5.1	Opening balance	3,283,479
5.2	Expenditure incurred during current period	620,597
5.3	Expenditure written off during current period
5.4	Acquisitions, disposals, revaluation increments, etc.	97,672
5.5	Expenditure transferred to Development Properties
5.6	Closing balance as shown in the consolidated balance sheet (item 4.12)	4,001,748

Development properties
(To be completed only by entities with mining interests if amounts are material)

		Current period \$A	Previous
			corresponding
			period - \$A
6.1	Opening balance	22,071
6.2	Expenditure incurred during current period	616,282

f

• 6.3 Expenditure transferred from exploration and evaluation
• Expenditure written off during current period 6.4
• 6.5 Acquisitions, disposals, revaluation increments, etc.
• Expenditure transferred to mine properties 6.6
• $6.7$ Closing balance as shown in the consolidated balance sheet (item 4.13)

638,353

Condensed consolidated statement of cash flows

		Current period \$A	Previous corresponding period - \$A
	Cash flows related to operating activities
7.1	Receipts from customers	1,131
7.2	Payments to suppliers and employees	(454,750)
7.3	Dividends received from associates
7.4	Other dividends received
7.5	Interest and other items of similar nature
	received	62,231
7.6	Interest and other costs of finance paid	(1,512)
7.7	Income taxes paid
7.8	Other (provide details if material)
7.9	Net operating cash flows	(392,900)
	Cash flows related to investing activities
7.10	Payment for purchases of property, plant and
	equipment	(149, 783)
7.11	Proceeds from sale of property, plant and equipment
7.12	Payment for purchases of equity investments
7.13	Proceeds from sale of equity investments
7.14	Loans to other entities
7.15	Loans repaid by other entities
7.16	Payments for exploration, evaluation and	(1,581,345)
	development expenditure
7.17	Net investing cash flows	(1,731,128)
	Cash flows related to financing activities
7.18	Proceeds from issues of + securities (shares,
	options, etc.)	6,000,000
7.19	Proceeds from borrowings
7.20	Repayment of borrowings	(9,046)
7.21	Dividends paid
7.22	Other (provide details if material)
	Prospectus costs	(336,747)
	Other	(30, 298)

7.23	Net financing cash flows	5,623,909
7.24	Net increase (decrease) in cash held	3,499,881
7.25 7.26	Cash at beginning of period (see Reconciliation of cash) Exchange rate adjustments to item 7.25.	(240, 438)
7.27	Cash at end of period (see Reconciliation of cash)	3,259,443

Non-cash financing and investing activities

Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. (If an amount is quantified, show comparative amount.)

Reconciliation of cash

	Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current period \$A	Previous corresponding period - \$A
8.1	Cash on hand and at bank	325,143
8.2	Deposits at call	3,000,000
8.3	Bank overdraft	(65,700)
8.4	Other (provide details)
8.5	Total cash at end of period (item 7.27)	3,259,443

Other notes to the condensed financial statements

Ratios		Current period	Previous corresponding Period
9.1	Profit before tax / revenue Consolidated profit (loss) from ordinary activities before tax ( item 1.5 ) as a percentage of revenue (item 1.1)	$-616%$
9.2	Profit after tax $\wedge^+$ equity interests Consolidated net profit (loss) from ordinary activities after tax attributable to members ( item 1.11 ) as a percentage of equity (similarly attributable) at the end of the period (item 4.37)	$-4.75%$

Earnings per security (EPS)

Details of basic and diluted EPS reported separately in accordance with paragraph 9 and $10.$ 18 of AASB 1027: Earnings Per Share are as follows.

Loss 387,604 over 49,000,000 shares = -0.79 cents per share

Basic & diluted

NTA backing (see note 7)	Current period	Previous corresponding Period
11.1 Net tangible asset backing per $+$ ordinary security	$N/A$ as mining Enterprise

Discontinuing Operations

(Entities must report a description of any significant activities or events relating to discontinuing operations in accordance with paragraph 7.5 (g) of AASB 1029: Interim Financial Reporting, or, the details of discontinuing operations they have disclosed in their accounts in accordance with AASB 1042: Discontinuing Operations (see note $17)$ .)

Discontinuing Operations $12.1$

${\rm N/A}$

Control gained over entities having material effect

$N/A$

Name of entity (or group of $13.1$ entities)

13.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control was ⁺acquired

• 13.3 Date from which such profit has been calculated
• 13.4 Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period

\$ \$

Loss of control of entities having material effect

14.1 Name of entity (or group of entities) $\begin{bmatrix} \end{bmatrix}$

×
---

• 14.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the current period to the date of loss of control
• $14.3$ Date to which the profit (loss) in item 14.2 has been calculated
• Consolidated profit (loss) from ordinary activities and $14.4$ extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period
• $14.5$ Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control

Dividends (in the case of a trust, distributions)

• Date the dividend (distribution) is payable $15.1 -$
• $15.2$ ⁺Record date to determine entitlements to the dividend (distribution) (ie, on the basis of proper instruments of transfer received by 5.00 pm if $+$ securities are not $+$ CHESS approved, or security holding balances established by 5.00 pm or such later time permitted by SCH Business Rules if ⁺securities are ⁺CHESS approved)
• $15.3 -$ If it is a final dividend, has it been declared? (Preliminary final report only)

	\$
ł
	\$
	\$

$N/A$

Amount per security

		Amount per security	Franked amount per security at % tax (see note 41	Amount per security of foreign source dividend
15.4	(Preliminary final report only) Final dividend: Current year	¢	Ć	¢
15.5	Previous year	¢
15.6	(Half yearly and preliminary final reports) Interim dividend: Current year	¢	¢	¢
15.7	Previous year	¢	Ć	¢

Total dividend (distribution) per security (interim plus final)

(Preliminary final report only)

	Current year	Previous year
+ Ordinary securities	e
Preference + securities	e

15.9 Preference ⁺securi

15.8

Half yearly report - interim dividend (distribution) on all securities or Preliminary final report - final dividend (distribution) on all securities

• 15.10 ⁺Ordinary securities (each class separately)
• 15.11 Preference *securities (each class separately)
• 15.12 Other equity instruments (each class separately)
• 15.13 Total

The ⁺dividend or distribution plans shown below are in operation.

The last date(s) for receipt of election notices for the ⁺dividend or distribution plans

Any other disclosures in relation to dividends (distributions). (For half yearly reports, provide details in accordance with paragraph 7.5(d) of AASB 1029 Interim Financial Reporting)

Current period \$A	Previous corresponding period - \$A
N/A

Details of aggregate share of profits (losses) of associates and joint venture entities

entities':	Group's share of associates' and joint venture	Current period \$A	Previous corresponding period - SA
16.1	Profit (loss) from ordinary activities before tax
16.2	Income tax on ordinary activities
16.3	Profit (loss) from ordinary activities after tax
16.4	Extraordinary items net of tax
16.5	Net profit (loss)
16.6	Adjustments
16.7	Share of net profit (loss) of associates and joint venture entities

Material interests in entities which are not controlled entities

The economic entity has an interest (that is material to it) in the following entities. (If the interest was acquired
or disposed of during either the current or previous corresponding period, indicate date of acquisition

Name of entity	Percentage of ownership interest held at end of period or date of disposal		Contribution to net profit (loss) (item 1.9)
Equity accounted 17.1 associates and joint venture entities	Current period	Previous corresponding period	Current period SA.	Previous corresponding period - \$A

	N/A
17.2 Total
17.3 Other material interests
17.4 Total

Issued and quoted securities at end of current period
(Description must include rate of interest and any redemption or conversion rights together with prices and dates)

	Category of + securities	Total number	Number quoted	Issue price per security (see note (4) (cents)	Amount paid up per security (see note $14)$ (cents)
18.1	Preference + securities (description)
18.2	Changes during current period (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions
18.3	+ Ordinary securities	49,000,000	32,000,000
18.4	Changes during current period (a) Increases through issues (b) Decreases through returns of capital, buybacks	30,000,000	30,000,000
18.5	+ Convertible debt securities (description and conversion factor)
18.6	Changes during current period (a) Increases through issues (b) Decreases through securities matured, converted
18.7	Options (description and conversion factor)			Exercise price	Expiry date $(f\,$ any)
18.8	Issued during current period
18.9	Exercised during current
	period
18.10	Expired during current period
18.11	Debentures (description)
18.12	Changes during current period (a) Increases through issues
	(b) Decreases through securities matured, converted

18.13	Unsecured notes (description)
18.14	Changes during current period (a) Increases through issues
	(b) Decreases through securities matured, converted

Segment reporting

The economic entity is engaged in mineral resource exploration and development, carried out in the Kalgoorlie region of Western Australia.

Comments by directors

(Comments on the following matters are required by ASX or, in relation to the half yearly report, by AASB 1029: Interim Financial Reporting. The comments do not take the place of the directors' report and statement (as required by the Corporations Act) and may be incorporated into the directors' report and statement. For both half yearly and preliminary final reports, if there are no comments in a section, state NIL. If there is insufficient space to comment, attach notes to this report.)

Basis of financial report preparation

• 19.1 If this report is a half yearly report, it is a general purpose financial report prepared in accordance with the listing rules and AASB 1029: Interim Financial Reporting. It should be read in conjunction with the last ⁺annual report and any announcements to the market made by the entity during the period. The financial statements in this report are "condensed financial statements" as defined in AASB 1029: Interim Financial Reporting. This report does not include all the notes of the type normally included in an annual financial report. [Delete if preliminary final report.]
• 19.2 Material factors affecting the revenues and expenses of the economic entity for the current period. In a half yearly report, provide explanatory comments about any seasonal or irregular factors affecting operations.

The income tax expense of Nil differs by more than 15% from the amount of income tax prima facie payable on the profit before tax due to the fact that the company has timing differences and tax losses that have not been brought to account as future income tax benefits.

$19.3$ A description of each event since the end of the current period which has had a material effect and which is not already reported elsewhere in this Appendix or in attachments, with financial effect quantified (if possible).

19.4 Franking credits available and prospects for paying fully or partly franked dividends for at least the next year.

NIL

$19.5$ Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report. Any changes in accounting policies, estimation methods and measurement bases since the last annual report are disclosed as follows. (Disclose changes and differences in the half yearly report in accordance with AASB 1029: Interim Financial Reporting. Disclose changes in accounting policies in the preliminary final report in accordance with AASB 1001: Accounting Policies-Disclosure).

NIL

Revisions in estimates of amounts reported in previous interim periods. For half yearly reports $19.6$ the nature and amount of revisions in estimates of amounts reported in previous +annual reports if those revisions have a material effect in this half year.

NIL

19.7 Changes in contingent liabilities or assets. For half yearly reports, changes in contingent liabilities and contingent assets since the last * annual report.

NIL

Additional disclosure for trusts

• 20.1 Number of units held by the management company or responsible entity or their related parties.
• 20.2 A statement of the fees and commissions payable to the management company or responsible entity.

Identify:

• initial service charges ٠
• management fees $\bullet$
• other fees

Annual meeting

(Preliminary final report only)

The annual meeting will be held as follows:

Place

Date

Time

$\overline{2}$

Approximate date the ^"annual report will be available

Compliance statement

$\mathbf{l}$ This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX (see note 12).

Identify other standards used

						This report, and the + accounts upon which the report is based (if separate), use the

• same accounting policies.
• 3 This report does/does not* (delete one) give a true and fair view of the matters disclosed (see note 2).
• This report is based on "accounts to which one of the following applies. $\overline{4}$

The ⁺accounts have been audited.

$\overline{\phantom{a}}^*$ accounts have The been subject to review.

The "accounts are in the process of being audited or subject to review.

The ⁺accounts have not yet been audited or reviewed.

• 5 If the audit report or review by the auditor is not attached, details of any qualifications are attached/will follow immediately they are available* (delete one). (Half yearly report only - the audit report or review by the auditor must be attached to this report if this report is to satisfy the requirements of the Corporations $Act.$ )
• 6 The entity has/does not have* (delete one) a formally constituted audit committee.

Sign here: Date: ............................ ....................................... (Director/Company Secretary)

CHRISTOPHER REED Print name: ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Notes

• $1.$ For announcement to the market The percentage changes referred to in this section are the percentage changes calculated by comparing the current period's figures with those for the previous corresponding period. Do not show percentage changes if the change is from profit to loss or loss to profit, but still show whether the change was up or down. If changes in accounting policies or procedures have had a material effect on reported figures, do not show either directional or percentage changes in Explain the reason for the omissions in the note at the end of the profits. announcement section. Entities are encouraged to attach notes or fuller explanations of any significant changes to any of the items in page 1. The area at the end of the announcement section can be used to provide a cross reference to any such attachment.
• $2.$ True and fair view If this report does not give a true and fair view of a matter (for example, because compliance with an Accounting Standard is required) the entity must attach a note providing additional information and explanations to give a true and fair view.

3. Condensed consolidated statement of financial performance

Item 1.1 The definition of "revenue" and an explanation of "ordinary activities" are set out in AASB 1004: Revenue, and AASB 1018: Statement of Financial Performance. Item $1.6$ This item refers to the total tax attributable to the amount shown in item 1.5. Tax includes income tax and capital gains tax (if any) but

excludes taxes treated as expenses from ordinary activities (eg. fringe benefits tax).

$\overline{4}$ . Income tax If the amount provided for income tax in this report differs (or would differ but for compensatory items) by more than $15%$ from the amount of income tax prima facie payable on the profit before tax, the entity must explain in a note the major items responsible for the difference and their amounts. The rate of tax applicable to the franking amount per dividend should be inserted in the heading for the column "Franked amount per security at % tax" for items 15.4 to 15.7.

$5₁$ Condensed consolidated statement of financial position

Format The format of the consolidated statement of financial position should be followed as closely as possible. However, additional items may be added if greater clarity of exposition will be achieved, provided the disclosure still meets the requirements of AASB 1029: Interim Financial Reporting, and AASB 1040: Statement of Financial Position. Also, banking institutions, trusts and financial institutions may substitute a clear liquidity ranking for the Current/Non-Current classification.

Basis of revaluation If there has been a material revaluation of non-current assets (including investments) since the last ⁺annual report, the entity must describe the basis of revaluation adopted. The description must meet the requirements of $AASB$ 1010: Accounting for the Revaluation of Non-Current Assets. If the entity has adopted a procedure of regular revaluation, the basis for which has been disclosed and has not changed, no additional disclosure is required.

• 1. Condensed consolidated statement of cash flows For definitions of "cash" and other terms used in this report see AASB 1026: Statement of Cash Flows. Entities should follow the form as closely as possible, but variations are permitted if the directors (in the case of a trust, the management company) believe that this presentation is inappropriate. However, the presentation adopted must meet the requirements of $AASB$ 1026. ⁺Mining exploration entities may use the form of cash flow statement in Appendix 5B.
• $7.$ Net tangible asset backing Net tangible assets are determined by deducting from total tangible assets all claims on those assets ranking ahead of the $+$ ordinary securities (ie, all liabilities, preference shares, outside $+$ equity interests etc). $+$ Mining entities are not required to state a net tangible asset backing per $+$ ordinary security.
• 1. Gain and loss of control over entities The gain or loss must be disclosed if it has a material effect on the "accounts. Details must include the contribution for each gain or loss that increased or decreased the entity's consolidated profit (loss) from ordinary activities and extraordinary items after tax by more than 5% compared to the previous corresponding period.
• 1. Rounding of figures This report anticipates that the information required is given to the nearest \$1,000. If an entity reports exact figures, the \$A'000 headings must be amended. If an entity qualifies under ASIC Class Order 98/0100 dated 10 July 1998, it may report to the nearest million dollars, or to the nearest \$100,000, and the \$A'000 headings must be amended.
• $10.$ Comparative figures Comparative figures are to be presented in accordance with AASB 1018 or AASB 1029 Interim Financial Reporting as appropriate and are the unadjusted figures from the latest annual or half year report as appropriate. However,

if an adjustment has been made in accordance with an accounting standard or other reason or if there is a lack of comparability, a note explaining the position should be attached. For the statement of financial performance, AASB 1029 Interim Financial Reporting requires information on a year to date basis in addition to the current interim period. Normally an Appendix 4B to which AASB 1029 Interim Financial Reporting applies would be for the half year and consequently the information in the current period is also the year to date. If an Appendix 4B Half yearly version is produced for an additional interim period (eg because of a change of reporting period), the entity must provide the year to date information and comparatives required by AASB 1029 Interim Financial Reporting. This should be in the form of a multi-column version of the consolidated statement of financial performance as an attachment to the additional Appendix 4B.

• $11.$ Additional information An entity may disclose additional information about any matter, and must do so if the information is material to an understanding of the reports. The information may be an expansion of the material contained in this report, or contained in a note attached to the report. The requirement under the listing rules for an entity to complete this report does not prevent the entity issuing reports more frequently. Additional material lodged with the ⁺ASIC under the Corporations Act must also be given to ASX. For example, a director's report and declaration, if lodged with the $\pm$ ASIC, must be given to ASX.
• $12.$ 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 one exists) must be complied with.
• $13.$ Corporations Act financial statements This report may be able to be used by an entity required to comply with the Corporations Act as part of its half-year financial statements if prepared in accordance with Australian Accounting Standards.
• $14.$ Issued and quoted securities The issue price and amount paid up is not required in items 18.1 and 18.3 for fully paid securities.
• 15 AASB 1018 requires disclosure of expenses from ordinary Details of expenses activities according to either their nature or function. For foreign entities, there are similar requirements in other accounting standards accepted by ASX. AASB ED 105 clarifies that the disclosures required by $AASB$ 1018 must be either all according to nature or all according to function. Entities must disclose details of expenses using the layout (by nature or function) employed in their $\pm$ accounts.

The information in lines $1.23$ to $1.27$ may be provided in an attachment to Appendix 4_B

Relevant Items AASB 1018 requires the separate disclosure of specific revenues and expenses which are not extraordinary but which are of a size, nature or incidence that disclosure is relevant in explaining the financial performance of the reporting entity. The term "relevance" is defined in AASB 1018. There is an equivalent requirement in AASB 1029: Interim Financial Reporting. For foreign entities, there are similar requirements in other accounting standards accepted by ASX.

Dollars If reporting is not in A\$, all references to \$A must be changed to the 16 reporting currency. If reporting is not in thousands of dollars, all references to "000" must be changed to the reporting value.

$17.$ Discontinuing operations

Half yearly report

All entities must provide the information required in paragraph 12 for half years beginning on or after 1 July 2001.

Preliminary final report

Entities must either provide a description of any significant activities or events relating to discontinuing operations equivalent to that required by paragraph 7.5 (g) of AASB 1029: Interim Financial Reporting, or, the details of discontinuing operations they are required to disclose in their "accounts in accordance with AASB 1042 Discontinuing Operations.

In any case the information may be provided as an attachment to this Appendix 4B.

Format $18.$

This form is a Word document but an entity can re-format the document into Excel or similar applications for submission to the Companies Announcements Office in ASX.

REED RESOURCES LTD ABN 89 099 116 631

Interim financial report for the half year ended 31^st December 2002

APPENDIX 4B HALF YEARLY REPORT

DIRECTORS REPORT

Your directors present their report on the consolidated entity consisting of Reed Resources Limited and the entities it controlled during the half year ended 31 December 2002.

DIRECTORS

The following persons were directors of Reed Resources Limited holding office during the whole of the half year and up to the date of this report;

Mr David John Reed Mr Christopher John Reed Mr Peter Collins

REVIEW OF OPERATIONS

A summary of consolidated revenues and results for the half year are set out below. There is no comparative period as the company was formed in December 2001.

	Current Period \$Α
Revenue from sales	1,131
Interest Revenue	62,231 63,362
Details of relevant expenses
Employee benefits	(114, 370)
Legal & professional	(83,038)
Service fees	(56, 583)
Travel	(37, 892)
Insurance	(26, 666)
Communications & advertising	(26,080)
Depreciation	(22, 701)
Native title	(21, 031)
Office supplies & equipment hire	(19, 161)

Rental costs	(11, 956)
Borrowing costs	(2,049)
Other exps from ordinary activities	(29, 439)
Total	(450, 966)

Net (Loss) from ordinary activities before Tax	(387, 604)
	---------------------------------------

The consolidated loss after income tax for the half year attributable to members of Reed Resources Ltd was \$387,604.

Reed Resources Limited raised \$6,000,000 by the issue of shares in July 2002.

The company has spent \$1,236,879 in capitalised exploration and development costs in the half year to 31 December 2002.

COMMENTS ON THE OPERATIONS AND THE RESULT OF THOSE OPERATIONS ARE SET OUT BELOW:

Land Development

Comet Vale Project (Reed Resources 100%)

The Company's principal operations during the December half-year continued to be at the Comet Vale Project with the focus on dewatering and rehabilitation of the Sand Queen main shaft and further exploration at the Sand George prospect.

Sand Queen Main Shaft - Dewatering and Rehabilitation

Dewatering of the Sand Queen Main Shaft commenced on 17 October 2002 and the water level in the old mine workings is now below the No.3 Level. Rehabilitation of the shaft has been undertaken as the water level was lowered. The shaft is fully operational between the Surface and No.3 level. The old workings are not accessible for underground geological mapping or for exploration drilling of the Sand Queen South Extension. Dewatering will continue to No.4 Level as this may be used for underground access to the Sand George lodes.

Sand George Prospect Exploration

During the Quarter, the Company successfully completed a four-hole diamond core drilling (DDH) program at the Sand George prospect (drill holes RD001 -RD004). Each of the drill holes intersected a mineralised lode(s) with significant gold grades in a structural position that is consistent with the continuation of the main Sand George lode at depth.

Drill holes RD001, RD002 and RD004 each intersected two lodes at a vertical depth of 140-160 m below surface which is equivalent to the position of the No.4 Level in the Sand Queen mine. The spacing of these intersections indicates that the Comet Vale lode has a strike length of at least 100 m at this level. Drill hole RD003 intersected a single major lode at a vertical depth of about 190 m below surface which is below the equivalent position of No.5 Level in the Sand Queen mine. An interpretation of the results of the RC and DDH drilling programs indicates that the main Sand George lode is open at depth and may have a steep south plunge.

The Company's consultants completed a revision of the Mineral Resource at the Sand George prospect. The additional infill RC drilling completed during 2002 has also allowed redefinition and upgrading of the previous resource estimate that was reported in the Company's Prospectus.

Lode	Category	Tonnes	Grade	Contained
	(No. samples)		g/t Au	gold
				ounces
C 1	INDICATED (59)	84,585	11.7	31,821
C 2	INFERRED (12)	32,791	6.2	6,537
	INFERRED (22)	33,274	3.6	3,852
D1	INFERRED (11)	15,400		843

The updated Mineral Resource estimate for the Sand George deposit is:

Sand Queen South Extension

Previous RC drilling indicated potential remnant high grade ore in the Sand Queen South Extension, along strike from the southern end of the Sand Queen mine. As the southern mine workings have been found to be inaccessible, the exploration drilling will be done from the surface. A sevenhole infill RC drilling program will test the Sand Queen South Extension between the Surface and No.3 Level. This exploration is expected to confirm a mineral resource at the Sand Queen South Extension.

Comet Vale South

An initial program of RC drilling of the projected position of the Comet Vale lode structure to the south of the Sand George prospect was completed toward the end of the quarter.

Mt Finnerty Project (Reed Resources 100%)

A consultant has been compiling previous exploration data on the Mt Finnerty tenements, particularly previous RAB and soil sampling data to identify potential gold exploration targets. An aeromagnetic survey covering the Mt Finnerty project is scheduled for February 2003.

The Company also successfully applied to have the Mount Finnerty tenements endorsed for iron ore (under section 111 of the Mining Act). All of these tenements lie outside the proposed extensions to the Mt. Manning Nature Reserve.

Exploration initially will focus on the northern part of the tenements, north of Mt Finnerty (previously Iron Knob), as this area has been considered prospective for iron ore at least since the 1960s. However, there has been no previous systematic iron ore exploration within this 15 kilometre long section of the Watt Hills greenstone belt that is held by Reed Resources Ltd. Portman Mining Ltd's Mt. Walton prospect is only about 1km along strike to the north of Reed Resources' tenements.

FURTHER INFORMATION

Further, more detailed information on the Company's activities during the half year is available in the Company's September 2002 and December 2002 quarterly reports to the Australian Stock Exchange.

EVENTS SUBSEQUENT TO BALANCE DATE

There has not arisen in the interval between the end of the half year and the date of this report any item, transaction or event of a material or unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in subsequent financial periods.

This report is made in accordance with a resolution of the directors

D.J.Reed Director

C.J.Reed Director

Perth, 13 March 2003

REED RESOURCES LTD

DIRECTORS DECLARATION

31 DECEMBER 2002

The directors declare that:

• the attached financial statements and notes thereto comply with $(a)$ Accounting Standards:
• The attached financial statements and notes thereto give a true and $(b)$ fair view of the financial position and the performance of the consolidated entity:
• In the directors opinion, the attached financial statements and notes $(c)$ thereto are in accordance with the Corporations Act 2001; and
• $(d)$ In the directors opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

C.J.Reed Director Perth, 13 March 2003 Delaithe Touche Tobiqaton A.R.R. 74-490 (2) 660 Central Park Level 16 152-158 St Georges Terrace Permi 9/A 6000 GPO Box A46 Porth VAN 6837 Augustia

DX 206 Telephone (08) 9365-2000 Carsionals (000-9365-7901) reservateliskte centrale

Deloitte Touche Tohmatsu

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF REED RESOURCES LIMITED

Scope

We have reviewed the attached financial report of Reed Resources Limited in the form of Appendix 4B of the Australian Stock Exchange (ASX) Listing Rules, including the directors' declaration, for the half-year ended 31 December 2002, but excluding the following sections:

• material factors affecting the revenues and expenses of the consolidated entity for the current period (item19.2); and a)
• b) compliance statement.

The financial report includes the consolidated financial statements of the consolidated entity comprising the disclosing entity and the entities it controlled at the end of the half-year or from time to time during the half-year. The disclosing entity's directors are responsible for the financial report. We have performed an independent review of the financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia, statutory requirements and ASX Listing Rules as they relate to Appendix 4B, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and performance as represented by the results of its operations and its cash flows, and in order for the disclosing entity to meet its obligations to lodge the financial report with the Australian Securities and Investments Commission and the ASX.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the entity's personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Reed Resources Limited is not in accordance with:

• $(a)$ the Corporations Act 2001, including:
• giving a true and fair view of the consolidated entity's financial position as at 31 December 2002 and of its $(i)$ performance for the half-year ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations $(ii)$ Regulations 2001; and
• $(b)$ other mandatory professional reporting requirements in Australia and ASX Listing Rules as they relate to Appendix 4B.

Dallacht Touch's Topmoton!

DELOITTE TOUCHE TOHMATSU

ÆVS-den al

P J Messer Partner Chartered Accountants Perth, 13 February 2003