NEOMETALS LTD — Interim / Quarterly Report 2005

Oct 19, 2005

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

QUARTERLY REPORT FOR THE PERIOD ENDING 30 SEPTEMBER 2005

COMET VALE PROJECT

Production Joint Venture Sand Queen-Sand George Gold Deposits (Kingsrose Pty Ltd earning 50%)

During the quarter, Joint Venture Operator Kingsrose Pty Ltd completed the reconstruction of the shaft collar and construction of a base for installation of the headframe and winders, which were erected 25 July. The Joint Venturer's received approval to recommence underground development following receipt of approvals from the Department of Industry and Resources for the Notice of Intent and the Project Management Plan and a land clearing permit from the Department of Environment.

Although there was some delay in certification of one of the winders, the service winder has been commissioned, dewatering and preparation of the Sand Queen shaft for production has commenced. Less than 50 metres of level development on 2 Level is required to access the Sand Queen South Deposit (4,000 oz @ 19.7) g/t) with stoping to commence in December. Development drives from the shaft at the 4 and 6 Levels are planned to access the Sand George deposit (65,000 oz $@$ 12.2 g/t) in the June Quarter 2006.

Sand Prince West Deposit (100% RDR)

During the quarter, a second phase of drilling was carried out after preliminary resource calculations and optimisation studies indicated that a large proportion of the resource could be economically mined (as illustrated below).

The Phase 2 drilling was undertaken to extend the resource and confirm the influence of a high grade intercept of 7m @ 39.63g/t (hole SPWGC048, on 13100N). The drilling program consisted of 1,906 metres of drilling in 51 RC drill holes designed to:

• Close-off to the south and extend the current resource to the north around previous intercepts; and
• Test other potential "flat" lodes nearby.

Drill results were highly variable with holes around SPWGC048 returning up to 5m wide quartz veins but little gold grade with the central resource now closed off to the north and south. Drilling further to the north on $25m \times 15m$ spacing between 13150 and 13250 confirmed the presence of a 'northern flat vein'. Whilst 50 to 100m to the south, exploration holes intersected encouraging results of up to 2m @ 3.87 from 27m suggesting the potential for further shallow economical mineralisation. Details of the drilling results are summarised in Appendix One.

Further drilling of the Sand Prince West lodes will depend on the results of resource calculations and optimisation studies which are currently being undertaken.

Nickel laterite exploration

During the September quarter, first pass AC/RC drilling was conducted over 1km of the prospective Walter Williams Formation, which is the same stratigraphic unit that hosts the Goongarrie, Cawse, and Siberia deposits.

Nine wide-spaced drill holes (602 metres drilled), intersected two separate horizons of lateritic nickel mineralisation. There is a near surface 'A horizon' and a lower 'B horizon'. Grades and widths indicate the potential for a resource similar in style to Heron's Goongarrie and Highway deposits.

Further wide-spaced drilling on an 800m x 160m grid over 4km of strike will start in November to define an initial resource. Details of the drilling results are summarised in Appendix One.

Regional exploration

During the quarter, the Company received processed images from an airborne geophysical survey, and regolith mapping and an auger soil sampling progam were completed over the Comet Vale tenements. The regional-scale auger soil sampling was designed to test below the widespread sand and colluvial cover that obscures much of the area. Soil samples were analysed or Au, Ni and several pathfinder elements and a number of anomalies have been identified for follow-up exploration, in conjunction with an interpretation of the airborne geophysical data.

MT FINNERTY PROJECT

Iron Ore Joint Venture (Portman earning 80% Fe rights)

A comprehensive Joint Venture agreement with Portman was finalised and Following a comprehensive data review Portman have executed on 2 August. commenced an extensive fieldwork programme with drilling expected early in the new year.

Previous geological mapping and surface sampling by Reed of banded iron formations (BIF) south of Mt. Finnerty identified two zones of iron-enriched BIF approximately 10 km apart. The northern zone was sampled over a strike length of at least 4 km with assays of 58.5 to 65 % Fe in surface rock chip samples. Further surface sampling of iron-enriched BIF by Portman confirmed the high iron grades and and low levels of phosphorous, aluminium, silicon and manganese over the 4 km of strike previously sampled by Reed. Geophysical interpretation indicates the prospective BIF is continuous over a strike length of at least 15km.

Regional Exploration (RDR 100% all other minerals)

During the quarter, soil sampling (1500 samples) was carried out over three areas of the favourable ultramafic host units on the western side of the greenstone belt and one favourable ultramafic unit that had been identified on the eastern side of the greenstone belt. Combined nickel and copper anomalies were outlined over strike lengths of up to 3 km with values up to 5,000 ppm nickel and 125 ppm copper.

A short programme of RAB drilling (92 holes for 3,000 metres) was completed within the four areas covered by the soil sampling. This drilling traversed some of the anomalous zones and has also provided bedrock information on the ultramatics to help refine the stratigraphy and identify the most prospective basal contacts for nickel sulphide mineralization. The drilling returned some anomalous values up to 1.0% nickel and 400 ppm copper in strongly weathered ultramafics.

A reconnaissance ground in loop TEM geophysical programme was also completed during the quarter over nine areas underlain by the prospective ultramafics. A number of conductors have been identified at a favourable stratigraphic position (see overleaf).

The geophysical and geochemical data generated is currently being assessed and significant anomalies will be followed up by a percussion drilling programme commencing in mid November

BARRAMBIE PROJECT (100%)

PRE-FEASIBILITY STUDY

During the quarter the results of metallurgical test-work, completed as part of the Pre-feasibility Study, confirmed the deposit's excellent metallurgical characteristics.

Beneficiation

The Company reported the following results of concentrates produced from a combined gravity and magnetic separation using separate oxide and primary feeds:

Feed $(125 \text{ µm})$	Recovery $%$ mass	V 2 O 5 %	SiO 2 $\%$	AI 2 O 3 $\%$
Oxide	36.1	1.37	2.74	2.39
Primary	69.2	0.82	2.68	1.92

Although the recovery of vanadium into concentrate of the oxide ore is lower than the primary ore, the mining costs will be significantly lower for the oxide ore as it is extremely weathered, soft and will require little if any blasting.

The ore will be crushed and ground using a conventional SAG mill to 125 um, the values for ore competency, grindability and abrasiveness indicate the energy input will be low and therefore the grinding costs. The ore will then be subjected to low intensity magnetic separation and rare-earth drum to produce a concentrate.

Roast/Leach

Samples of the concentrate produced from the magnetic separation test work have been successfully roasted and leached with excellent recoveries from the oxide concentrate, some exceeding 95%. The silica levels of around 3% in the concentrate had no bearing on the recoveries, with 6 of the 20 roast-leach test recoveries greater than 90% using a variety of sodium fluxes.

Future Work Programme

Open pit optimisation, design and scheduling on the oxide resource will be completed once processing cost estimates become available. Ecological and Ethnographic studies have been completed. Process flow sheet's and accompanying mass and energy balances have been forwarded to Sinclair Knight Merz who are designing and costing the construction and operation of the processing plant. The PFS is scheduled to be completed in December.

Mill throughput	2.0 Mt p.a.
Concentrate	720,000 t p.a.
$V2O5$ Flake production	18,000,000 lbs $p.a.$

Market Price

The mean price of vanadium pentoxide flake, as quoted by Ryans Notes, is US\$13.00/lb (as at 18 October 2005).

CORPORATE

Titan Resources Limited

The Company announced on 15 September 2005 that it had been granted a call option by Consolidated Nickel Pty Ltd (a subsidiary of Consolidated Minerals Limited) to acquire 60 million shares in ASX listed Titan Resources Limited (Titan) and that it intended to approach the Board of Titan to discuss any opportunities and to conduct due diligence.

A Confidentiality Agreement has been entered into between Reed Resources and Titan which, in addition to the usual obligations of confidentiality, imposes a 6 months standstill on acquisitions by Reed Resources and Titan of the other's securities. The standstill ceases to apply in certain circumstances, including if a bid is made for the other's securities.

The Board of Reed Resources has not determined whether or not it will make a bid for Titan and remains in the early stages of evaluating its position.

Annual General Meeting

The Company's Annual General Meeting of Shareholders to be held at 3pm on Thursday 10 November 2005 at The Western Australia Club, 101 St George's Terrace, Perth, Western Australia.

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

D J Reed CHAIRMAN

Geological aspects of this report have been compiled by Peter Collins (BSc(Hons), PhD, MAIG), an employee of Reed Resources Ltd. Peter Collins has sufficient experience relevant to the style of mineralisation and types of deposit under consideration and to the activity which is being reported on to qualify as a Competent Person as defined in the JORC Code (2005). Dr Collins consents to the inclusion in the report of the matters in the form and context in which it appears.

APPENDIX A

$Hole$ ID	Northing	Easting	From	To	Width	. . Grade	Lode
SPWGC049	7645	13087.5	21.5	23	1.5	3.79	CF
SPWGC051	7660	13100	35	36.5	1.5	3.27	CF
SPWGC052	7645	13100	23	32.5	9.5	0.98	CF
SPWGC056	7645	13112.5	20	21	1	4.21	СF
SPWGC057	7637.5	13112.5	29.5	36.5		1.24	CF
SPWGC060	7637.5	13125	35	40.5	5.5	1.58	NF
SPWGC063	7675	13000		7	6	5.43	СF
SPWGC064	7667.5	13000	7.5	10	2.5	3.34	CF
SPWGC066	7678.5	13012.5	0	3	3	1.56	CF
SPWGC067	7671.75	13025	4	7	3	7.39	CF
SPWGC068	7660	13025	8	13.5	5.5	1.23	СF
SPWGC069	7645	13050	18	20	2	3.18	CF
SPWGC074	7660	13175	32	34.5	2.5	3.2	NF
SPWGC076	7667.5	13200	29.5	32	2.5	4.7	NF
SPWGC078	7645	13225	33	36	3	2.81	NF
SPWGC091	7635	12887.5	27	29	$\overline{2}$	1.23	South
SPWGC092	7635	12937.5	27	29	$\overline{2}$	3.87	South
SPWGC096	7675	12987.5	З	5	2	1.16	south

Table 2. Sand Prince West Significant Intersections (>1m thick, 1g/t lower cut, 20g/t

$CF = central flat$

NF =northern flat

Table 3. Comet Vale Laterite Significant Intersections > 0.4% Ni

Hole ID	Northing	Easting	Depth from	Depth to	Width	Nickel	Cobalt	Zone
	GDA	GDA	(m)	(m)	(m)	(%)	(%)
NLA0001	6684950	319620	0	12	12	0.65%	0.05%	A
			29	43	14	0.39%	0.02%	Β
NLA0002	6684750	319905	5	34	29	0.59%	0.03%	Α
inc			5	17	12	0.74%	0.04%	Α
			44	55	11	0.42%	$0.03\%$	В
NLA0003	6684725	319800	8	46	36	0.60%	0.03%	Α
inc			21	36	15	0.82%	0.04%	Α
			56	60	4	0.56%	0.03%	Β
NLA0004	6684835	319710	17	29	12	0.83%	0.07%	Α
			52	55	3	0.53%	0.02%	B
NLA0005	6684960	319715	3	23	20	0.38%	0.02%	Α
			33	59	26	0.59%	0.05%	В
NLA0006	6684065	320094	11	28	17	0.44%	0.02%	Α
			42	45	3	0.40%	0.02%	В
NLA0007	6684060	320035		6	5	0.49%	0.02%	Α
NLA0008	6684080	319895	35	64	29	0.55%	0.03%	B

NB: Assay by Kalassay Group using a 4 acid digest with XRF analysis. No screen upgrade.