NEOMETALS LTD — Interim / Quarterly Report 2005

Jul 25, 2005

Appendix 5B

$Rule 5.3$

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

89 099 116 631

Quarter ended ("current quarter")

30 JUNE 2005

Year to date

Current quarter

Consolidated statement of cash flows

Cash flows related to operating activities

	Cash flows related to operating activities	\$Α	$(12 \text{ months})$ ŜΑ
1.1	Receipts from product sales and related debtors	0	1,000
1.2	Payments for (a) exploration and evaluation	(61, 338)	(348, 267)
	(b) development (c) production	(133, 991)	(329, 590)
	(d) administration	(221, 809)	(949, 400)
1.3	Dividends received
1.4	Interest and other items of a similar nature received	35,627	99,730
1.5	Interest and other costs of finance paid	$\bf{0}$	(1, 292)
1.6	Income taxes paid
1.7	Other-
	Net Operating Cash Flows	(381, 511)	(1,527,819)
1.8	Cash flows related to investing activities Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets	(21, 831)	(84, 548)
1.9	Proceeds from sale of: (a)prospects (b) equity investments (c)other fixed assets
1.10 1.11	Loans to other entities
1.12	Loans repaid by other entities Other
		(21, 831)	(84, 548)
	Net investing cash flows
1.13	Total operating and investing cash flows (carried forward)	(403, 342)	(1,612,367)

⁺ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought forward)	(403, 342)	(1,612,367)
1.14 1.15	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares	0	2,080,000
1.16 1.17	Proceeds from borrowings Repayment of borrowings	0	(13, 713)
1.18 1.19	Dividends paid Other - Capital raising costs	0	(104,000)
	Net financing cash flows	(403, 342)	1,962,287
	Net increase (decrease) in cash held	(403, 342)	349,920
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	2,756,948	2,003,686
1.22	Cash at end of quarter	2,353,606	2,353,606

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

		Current quarter A\$
1.23	Aggregate amount of payments to the parties included in item 1.2	101,471
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions Office rent and service fees paid to a company related to a director \$21,429 Salary and superannuation payable to directors \$80,042

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

⁺ See chapter 19 for defined terms.

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

		Amount available -SA	Amount used
3.1	Loan facilities		SALE
3.2	Credit standby arrangements		w.

Estimated cash outflows for next quarter

4.2	Development
4.1	Exploration and evaluation	400,000
		SΑ

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 SА
5.1	Cash on hand and at bank	267,174	2,217,178
5.2	Deposits at call	2,021,932	508,572
5.3	Bank overdraft
5.4	Other (bonds)	64,500	31,198
	Total: cash at end of quarter (item 1.22)	2,353,606	2,756,948

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
6.2	Interests in mining tenements acquired or increased

⁺ See chapter 19 for defined terms.

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 security (see note $3)$ (cents)	Amount paid up per 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 securities	70,000,000	70,000,000
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)	2,650,000	Nil	\$0.35	31/12/2008
7.8	Issued during
7.9	quarter Exercised during
	quarter
7.10	Expired during
	quarter
7.11	Debentures (totals only)

⁺ See chapter 19 for defined terms.

Date: 26 July 2005

-7.12	Unsecured
	notes (totals
	only)

Compliance statement

• $\mathbf{I}$ This statement has been prepared under accounting policies which comply with 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)

Print name: CHRISTOPHER JOHN REED

Notes

• $\mathbf{I}$ 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.
• $\overline{3}$ 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 4 Industries and AASB 1026: Statement of Cash Flows apply to this report.
• 5 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.

$\begin{tabular}{ll} \hline \begin{tabular}{ll} \textbf{m} & \textbf{m} & \textbf{m} & \textbf{m} & \textbf{m} \ \hline \end{tabular} \end{tabular}$

⁺ See chapter 19 for defined terms.