NEOMETALS LTD — Interim / Quarterly Report 2005

Jan 30, 2005

TO ASX ANNOUNCE

97 Outram Street West Perth WA 6005 Tel: $+61893221182$ $Fax: + 61893210556$

QUARTERLY REPORT FOR THE PERIOD ENDING 31 DECEMBER 2004

COMET VALE PROJECT (100%)

During the quarter, the Company focused on development of the Sand George prospect and re-evaluation and infill drilling of the Sand Prince West lode.

Sand George mining start-up

In November 2004, the Board committed to mining the deposit based on the results of a mining study conducted by Australian Contract Mining Pty Ltd, which indicated recovery of more than 65,000 ounces of gold from an existing indicated resource of 249,000 tonnes at 8.6 g/t Au. The Company entered into discussions with mining contractors to negotiate a mining contract, including Kingrose Pty Ltd (Kingrose) with whom a Memorandum of Understanding (MOU) was signed at the beginning of January 2005.

The MOU provides for Kingrose to earn a 50% interest in Mining Leases M29/52 (Sand George) and M29/321 (Sand Queen) and Miscellaneous Licence L29/67 by incurring all mining and development costs to earn 50% of the gold recovered to a depth of 243 m below the collar of the Sand Queen Main Shaft and 60% of gold recovered below that level, excluding royalties. Mining operations, initially using the Sand Queen Main Shaft, are planned to commence on 1 March 2005 and the first gold production is planned for the December Quarter, 2005.

An application for land clearing for mining purposes has been lodged with the Department of Environment and an NOI is ready to be lodged with the Department of Industry and Resources once the Project Management Plan is finalised.

Sand Prince West

A number of RC pre-collars for diamond drill holes that were drilled to test the deeper sections of the Sand George deposit also intersected a shallowly northwest dipping lode structure, referred to as the Sand Prince West lode. Previous resource evaluation of this lode structure identified an Inferred Resource of some 77,600 tonnes at 3.9 g/t Au to a depth of 35m below surface.

Re-evaluation of this resource indicated its suitability for a small open pit mine, subject to further close-spaced drilling. An in-fill drilling program targeted on a zone between 13000 and 13100 mN and from surface to a maximum depth of 25 metres has been completed with 46 RC drill holes drilled to a maximum depth of 36 m (down-hole). Most of the holes returned intersections with at least 1 g/t Au over at least 1 metre drilled depth and up the 10.5 metres thick, as listed in Table 1. The best intersection is 7 metres at 31.42 g/t Au (drill hole SPWGC048). The thicker and high grade portion of this lode is open to the north.

Results of the latest drilling will be combined with previous drilling data for a reevaluation and upgrading of the Sand Prince West resource and an assessment of the viability for a shallow open pit mine.

The Company will also undertake a re-assessment of previous drilling and resource estimate at the nearby Coonega prospect (M29/35) to determine its potential for a small open pit mine.

MT FINNERTY PROJECT (100%)

During the quarter, exploration continued on advancing the iron ore, nickel and gold potential of the Mt Finnerty tenements. A report on a biological assessment of the Mt Finnerty project has been completed and will facilitate early approvals for ground clearance applications for drilling and other exploration activities.

Iron Ore

Geological mapping and surface sampling of banded iron formations (BIF) south of Mt Finnerty has located another zone of iron-enriched BIF with assays of 58.5 to 65 % Fe in surface samples. The latest discovery has been sampled over a strike length of at least 4 km and is approximately 10 km along strike from the initial discovery alongside the Trans-Australia Railway. Repeat sampling of iron-enriched BIF adjacent to the railway has confirmed the high assays at this location with 60-61 % Fe.

The latest sampling indicates that the iron-enriched BIF between Mt Finnerty and the railway line has low levels of aluminium, silicon and manganese and very low phosphorous levels (most samples less than 0.08 % P).

Following advice from Consolidated Minerals Limited that it does not wish to participate in a joint venture for iron ore at Mt Finnerty, the Board has initiated discussions with another company to enter into a joint venture agreement to assess the iron ore potential of the Mt Finnerty project. Drilling that had been planned for the end of the quarter was postponed until negotiations are finalised.

Nickel

Geological mapping (1:10,000) has been completed along the western flank of the Watt Hills Greenstone Belt. This work has confirmed the presence of a thick sequence of ultramafic rocks, which had previously been interpreted from an aeromagnetic survey flown in 2003.

Results of this mapping are being integrated with other data sets, including an ortho-rectified image acquired during the quarter, and previous landform-regolith mapping and soil and rock-chip geochemical data to define targets for further ground-based exploration, including RAB and RC drilling and EM surveys.

BARRAMBIE PROJECT (100%)

The first two stages of metallurgical test-work on the high-grade Eastern Zone of the deposit, under supervision of Mineral Engineering Technical Services Pty Ltd (METS), indicated that a high grade ilmenite concentrate containing about 55% Ti0₂ can be produced via conventional technology and acid leaching.

A third stage of laboratory metallurgical test-work will focus on recovering vanadium from the leach solution to produce high-grade $V_2O_5$ as a co-product of the titanium. Following completion of the test-work, the Company will then be able to proceed to a scoping study to evaluate the economic viability of mining the deposit.

CORPORATE

Consolidated Minerals Limited ("Consolidated") advised that it does not wish to participate in a joint venture for iron ore at Mt Finnerty or for titanium at Barrambie but retains a right to enter into a joint venture for nickel at the Mt Finnerty Project.

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 Dr P Collins (BSc(Hons), PhD, MAIG), an employee of Curtin Consultancy Services Ltd. Dr Collins has sufficient experience relevant to the styles of mineralization 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 Code for Reporting of Mineral Resources and Ore Reserves. Dr Collins consents to the inclusion in the report of the matters in the form and context in which it appears.

Hole ID	Collar	Collar	From	To	Intersection	Grade (3)
	Northing (2)	Easting (2)	m	m	m	g/t Au
SPWGC01	13012.5	7682.5	0.0	$\overline{2.0}$	$\overline{2.0}$	4.03
SPWGC02	13012.5	7675	0.0	3.0	$\overline{3.0}$	3.24
SPWGC03	13012.5	7667.5	$\overline{2.0}$	0.0	6.0	4.83
SPWGC04	13012.5	7660	9.5	12.0	2.5	4.42
SPWGC10	13000	7677.5	6.5	8.5	2,0	10.86
SPWGC13	13025	7690	0.5	$\overline{2.0}$	1,5	2.57
SPWGC14	13025	7675	20.0	26.0	6.0	3.64
SPWGC15	13025	7667.5	6.0	16.0	10.0	4.71
SPWGC16	13025	7652.5	14.5	16.0	1.5	3.42
SPWGC18	13037.5	7682.5	1.0	3.0	$\overline{2.0}$	1.20
SPWGC 19	13037.5	7675	8.5	10.0	$\overline{1.5}$	3.63
SPWGC20	13037.5	7667.5	6.5	16.5	0.8	3.85
SPWGC21	13037.5	7660	9.0	14.0	5.0	2.06
SPWGC22	13037.5	7652.5	15.0	16.0	1.0	7.19
SPWGC25	13050	7690	7.0	8.0	1.0	1.67
SPWGC26	13050	7682.5	8.0	11.5	3.5	3.12
SPWGC27	13050	7675	10.0	13.0	3.0	2.65
SPWGC28	13050	7667.5	14.0	15.0	1.0	1.61
			23.5	25.0	1.5	2.26
SPWGC29	13050	7660	9.0	11.5	2.5	1.69
			23.5	28.0	4.5	1.58
SPWGC30	13050	7652.5	14.5	20.0	5.5	5.75
SPWGC33	13062.5	7682.5	9.5	12.5	3.0	2.96
SPWGC34	13062.5	7675	15.5	17.0	1,5	1.26
SPWGC35	13062.5	7667.5	16.5	18	1.5	2.35
SPWGC36	13062.5	7660	16.5	24.5	8.0	4.56
SPWGC37	13062.5	7652.5	19.0	20.5	1.5	2.88
SPWGC40	13075	7667.5	19.0	22.0	3,0	6.08
SPWGC41	13075	7652.5	19.5	20.5	1.0	1.35
SPWGC45			23.5	34.0	10.5	2.21
SPWGC46	13087.5	7660	$\overline{26.0}$	27.5	1.5	1.21
	13087.5	7652.5	24.5	30.0	5.5	3.55
SPWGC48 DA ALL	13100	7652.5	26.0	33.0	7.0	31.42

Table 1 Results of in-fill RC drilling of the Sand Prince West lode, for intersections of at least 1 metre and with gold assays in excess of 1 g/t (see Note 1, below).

1. RC chip samples were analysed by Genalysis Laboratory Services using a cyanide leach LEACHWELL (400g) solvent extraction then Flame Atomic Absorption Spectrometry (LW400/SAAS).

2. Collar coordinates are for a local grid. All holes collared at 60° toward 090° on the local grid.
   3. Intersection grades are calculated as a weighted average of individual sample widths, which are taken at 0.5 or 1.0 m intervals.

Appendix 5B Mining exploration entity quarterly report

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

89 099 116 631

Quarter ended ("current quarter") 31 DECEMBER 2004

Year to date

$(6$ months)

Current quarter

SΑ

Consolidated statement of cash flows

Cash flows related to operating activities

					\$A
1.1	Receipts from product sales and related debtors			$\mathbf 0$	0
1.2	Payments for (a) evaluation	exploration	and	(75, 197)	(205, 757)
		(b) development (c) production		(145, 845)	(145, 845)
		(d) administration		(217, 321)	(429, 712)
1.3	Dividends received
1.4	Interest and other items of a similar nature received			62,847	64,103
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other $-$
	Net Operating Cash Flows			(375,516)	(717, 211)
	Cash flows related to investing activities
1.8	Payment for purchases of:	(a)prospects
		(b)equity
	investments
	assets	other $\left( c\right)$	fixed	(21, 831)	(21, 831)
1.9	Proceeds from sale of:	(a)prospects
		(b)equity
	investments
		(c)other	fixed
	assets
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other
	Net investing cash flows			(21, 831)	(21, 831)
1.13	Total operating (carried forward)	and investing cash flows		(397, 347)	(739, 042)

$+$ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought forward)	(397, 347)	(739, 042)
	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, 945)	(10, 225)
1.18	Dividends paid
1.19	Other - Prospectus Costs
	- Deposits
	Net financing cash flows	(4, 945)	(10, 225)
	Net increase (decrease) in cash held	(402, 292)	(749, 267)
1.20	Cash at beginning of quarter/year to date	1,656,711	2,003,686
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter	1,254,419	1,254,419

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 AS
1.23	Aggregate amount of payments to the parties included in item 1.2	103,783
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions

$\mid$ Office rent and service fees pald to a company related to a director Salary and superannuation payable to directors	\$26,616 \$77.167

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.

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

	\$Α	SΑ
- 3. I Loan facilities		-
3.2 Credit standby arrangements

Estimated cash outflows for next quarter

	Total	200,000
4.2	Development
4.1	Exploration and evaluation	200,000
		ŜΑ

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 SА	Previous quarter ŝΑ.
5.1	Cash on hand and at hank	198,428	27,168
5.2	Deposits at call	1,026,448	1,600,000
5.3	Bank overdraft
5.4	Other (bonds)	29,543	29,543
	Total: cash at end of quarter (item $1.22$ )	1,254,419	1,656,711

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	E15/746	SURRENDER	100%	$0\%$
6.2	Interests in mining tenements acquired or increased	MLA15/1720 MLA15/1721	APPLICATION APPLICATION	0% 0%	100% 100%

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.

$+$ See chapter 19 for defined terms.

		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
7.2	(description) Changes during quarter (a) Increases through issues
	(b) Decreases through returns of capital, buy- backs, redemptions
7.3	+ Ordinary securities	62,000,000	62,000,000
7.4	Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs
7.5	+Convertible debt securities
7.6	(description) Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7	Options (description and			Exercise price	Expiry date
7.8	conversion factor) Issued during	2,400,000	Nil	\$0.35	31/12/2008
7.9	quarter Exercised during quarter
7.10	Expired during quarter
7.11	Debentures (totals only)
7.12	Unsecured notes (totals only)

Compliance statement

⁺ Sce chapter 19 for defined terms.

• $\mathbf{1}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement does /does not* /delete one) give a true and fair view of the matters disclosed.

GReed

(Director/Company secretary)

Date: 31 January 2005

Print name: CHRISTOPHER JOHN REED

Notes

Sign here:

• $\mathbf{1}$ 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.
• 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.
• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive 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.

⁺ See chapter 19 for defined terms.