NEOMETALS LTD — Interim / Quarterly Report 2007

Jul 25, 2007

Reed Resources Ltd

ABN 89 099 116 631

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

QUARTERLY ACTIVITIES REPORT

26 JULY 2007

Highlights

• Barrambie (vanadium) - Infill drilling results confirm exceptional grades , with an average assay grade of 0.91 % V2O5 and 15.5% TiO2 for intercepts of targeted high-grade mineralisation. Resource Estimate by Snowdens due early August.

• Mt Finnerty (iron) – Re-interpretation of geophysical data and satellite imagery by Portman reveals potential palaeochannels with detrital iron deposits along with (structural) target mineralisation , concealed under cover. New outcropping surface-enriched iron targets (FIN10 & 11)

• Mt Finnerty (nickel) - Highly anomalous soil geochemical anomalies coincident with the basal ultramafic/basalt contact , over 10 km of strike , targeted for follow-up ground EM/IP surveys.

• Comet Vale (gold) – Underground development and ore production ramp up continuing, including completion of 3 Level access to Sand George lodes. Open pit study progressing well.

Reed Resources exploration and development activities during the quarter have focussed on the Barrambie vanadium project and the Comet Vale gold operations. Portman Iron Ore Ltd (Portman) and Western Areas N.L. (Western Areas), are exploring the Mt Finnerty project for iron ore and nickel, respectively. Work is also progressing on a large exploration licence at Bell Rock Range in the Musgrave Province of central Australia (Figure 1).

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Figure 1 Location of Reed Resources’ main projects in Western Australia.

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BARRAMBIE VANADIUM PROJECT (Reed 100%)

Feasibility Study

During the quarter, the Feasibility Study (FS) proceeded as scheduled a staged with the Phase 1 program comprising resource definition drilling, assessment of ore types and feed options, metallurgical test work focusing on optimising the beneficiation process, preliminary environmental assessment, infrastructure studies and process water appraisal. In this way the up-front expenditure is minimised during the early stages of the Feasibility Study (FS) until the process flowsheet is fixed to warrant progressing to the more engineering intensive and costly Phase 2 program.

Resource definition drilling results

A total of 120 RC drill holes (8,290 metres of drilling) were completed in the quarter for infilling of previous drill lines in the Bay, Cove and Gulf segments of the Barrambie deposit (Figure 2) in preparation for estimation of mineral resources and ore reserves.

The assay results (5,378) continue to confirm the exceptional tenor of the vanadiferous magnetite-ilmenite mineralisation. The average grade of all highgrade intercepts (i.e., 1,168 assays greater than 0.6% V2O5 continuous within each intercept) is 0.90 % V2O5 and 16.2 % TiO2 , including 373 assays in excess of 1.00 % V2O5 and a maximum assay of 1.80 % V2O5 over two metres.

Drilling has confirmed continuity of the thick massive Eastern Band and numerous narrow massive bands within the Central Bands (Figure 3).

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Figure 3 Drill section 11970N in the Bay segment of the Barrambie deposit showing interpreted distribution of high-grade bands (>0.55 % V2O5) including the massive Eastern Band and high-grade bands among disseminated mineralisation making up the Central Bands to the west.

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Figure 2 Drilling during the quarter has been within the Bay, Cove and Gulf segments of the Barrambie deposit.

Test work results

A large diameter (0.9m diameter) Calweld drilling rig completed 7 holes for approximately 172 metres of drilling across the deposit to provide bulk samples for metallurgical test work. Holes were drilled to the base of complete oxidation (~30 metres) to provide representative bulk samples from a range of depths within both the Central and Eastern Bands. A total of approximately 500 tonnes of material was collected.

Separate bulk samples from the Eastern Band and Central Bands have been milled to less than 150 µm and passed through magnetic separation and table (gravity) tests. Material from the magnetic separation and gravity test work will undergo further grinding and high intensity magnetic separation to identify a preferred beneficiation route for production of a final concentrate.

Assay results for the Eastern and Central Bands concentrates are expected to be available in early August. The suitability of each concentrate as feed for salt roasting test work will then be determined for further beneficiation test work.

Energy, water and transport strategic studies have commenced. These impact on each other and will progress through the next quarter to establish basic design criteria.

Project management

Mr Lyall Beaney has been seconded from Sinclair Knight Merz (SKM) to replace Mr Ken Hellsten as project manager. The study team comprises SKM (study management and controls, engineering and infrastructure), Snowden Group (resource and mining studies), METS (process design and review), Aquaterra (water, environmental studies and approvals) with geological and field support by Reed Resources.

Forward work plan

Drilling data is currently being compiled and validated for inclusion in a comprehensive data base from which a geological model of the Barrambie deposit will be constructed in preparation for resource modelling by Snowden. A Mineral Resource estimate is expected to be available early August.

A second stage of infill PQ core drilling is scheduled to commence in early August. The programme includes six holes for process samples and eight geotechnical holes for mine development planning.

MT FINNERTY PROJECT

Nickel Sulphide Joint Venture (Western Areas NL earning 65% Ni rights)

Western Areas NL (Western Areas) has focussed their initial exploration efforts on selected areas of the Western Ultramafic sequence in order to gain early success.

This work has identified four highly anomalous soil geochemical anomalies that are coincident with the basal ultramafic/basalt contact, spread over 10 km of strike (Figure 4). There is no evidence of any previous exploration drilling of the Western Ultramafic, apart from limited gold-focused RAB holes.

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Figure 4 Completed and planned exploration of the Western Ultramafic sequence by Western Areas.

Exploration Forecast

Soil geochemical anomalies are currently being refined and field inspected for follow-up ground EM/IP surveys, and subsequent RC drilling. Nickel sulphide exploration further north along the footwall contact of the Western Ultramafic will consist of a mixture of soil sampling and short RAB drill testing of the basal ultramafic unit. A sub-parallel line of ultramafic lithologies further east will also be explored by lag sampling and RAB drilling.

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

During the quarter the Company received notification from Portman Iron Ore Limited, a subsidiary of Portman Limited (“Portman”) (ASX:PMM), that it has completed its earn-in requirement and is proceeding to form the Mount Finnerty Iron Ore Joint Venture. Under the agreement, Portman was required to solefund exploration expenditure of at least $300,000 within three years to earn 80% of the iron ore rights, at which point Reed can and has elected to retain its 20%. Reed retains a 100% interest in the non-iron rights in respect of the joint venture tenements.

Portman is targeting deposits of 5-10 Mt of iron ore within trucking distance of its 8 Mtpa Koolyanobbing Mine (Figure 5).

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Figure 5 Location of initial iron ore exploration targets at the Mount Finnerty Project within trucking distance of Portman’s Koolyanobbing Iron Ore Project.

Exploration results

During the quarter, a review of airborne geophysical survey data by Portman resulted in the identification of a number of possible palaeochannels. These palaeochannels appear to drain toward the west, away from the central spine of BIF ridges. In some cases the palaeochannels appear to traverse areas of subcropping, iron-enriched BIF and where prospective BIF units are under a widespread cover of transported regolith.

These newly recognised palaeochannels may contain detrital iron ore mineralisation that has been derived from erosion of iron-enriched BIF units within the project area. This style of mineralisation has not previously been considered in the Mt Finnerty area but it is seen as a significant iron ore target. Interpreted palaeochannels are widespread throughout the Mt Finnerty project and have been identified in most exploration licences (Figure 6).

The review of aeromagnetic survey data has also indicated possible concealed enrichment of iron formations as discrete magnetic lows that may be attributed to demagnetised BIF in structurally complex areas (Figure 6); under the extensive regolith cover.

Ongoing surface exploration by Portman has identified additional surface enrichments of the targeted BIF units, referred to as FIN10 and FIN11 prospects (Figure 6). Portman’s rock chip sampling from FIN11 range between 56 and 61 % Fe.

Exploration Forecast

A two-stage shallow RAB drilling program (264 drill holes for about 5,000 metres of drilling) has been planned to test the concept of widespread detrital iron ore in palaeochannels (Figure 6). This drilling is scheduled to commence in August.

An intensive ground magnetic survey (70 line kilometres) is planned to guide RC drilling to test surface enriched iron ore targets at FIN10 and FIN11 and assist in evaluation of discrete magnetic lows coinciding with structurally complex zones. A gravity survey is planned to test under-cover extensions to the FIN9 deposit and guide additional RC drilling.

Modelling of the Flinders and Tasman gold prospects on the eastern side of the Mt Finnerty Project will enable calculation of preliminary resources; and a detailed evaluation of data on the Little Nipper mine (historically very high grade) will contribute to further gold exploration with the Project.

Impact of EPA Advice

On 14 May 2007, Western Australia’s Environmental Protection Agency (EPA) released EPA Bulletin 1256 advising of proposed extensions to the Mount Manning Nature Reserve.

Importantly, the entire Mount Finnerty Project is outside the priority area recommended by the EPA to become an A Class Nature Reserve, and therefore the company expects to be able to continue its exploration of the Project in accordance with its normal practice of environmental compliance.

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Figure 6 Planned exploration of the Mount Finnerty Project for BIF-hosted iron ore and newly recognised palaeochannels for detrital (channel) iron deposits.

COMET VALE PROJECT

Sand Queen Gold Mine Production Joint Venture (Kingsrose Mining Pty Ltd earning 50%)

Underground mining of the Sand George lodes (Figure 7) continued throughout the quarter with mining of the SG2A, SG2B and SG2C stopes above the 2 Level with 2,608 tonnes of ore stockpiled on surface and removal of 807 tonnes of waste. The 2 Level drive was advanced a further 25.9 metres but stopped to allow access to the SG2C stope.

On the 3 Level, the south development drive was advanced 146 metres to establish access to the northern end of the Sand George lodes with approximately 2,000 tonnes of waste mined from this drive. Development on the 3 Level was slowed by exceptionally high water in-flow associated with the ‘Earth Fault’, which is the same structure that marks the southern end of the Sand King lodes on the 2 Level. Two old drives in the old Sand Queen mine workings were cleared of tailings for construction of a holding dam to facilitate better management of excess mine waters.

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Figure 7 Long section looking west showing stope outlines (as at end of June 2007) in the Sand George lodes and remnant mining within the Sand Queen mine.

Mining Forecast

The extent of the underground development and mining is steadily increasing as more headings are opened up on the 2 and 3 Levels. Extraction of ore from stopes on the Sand George lodes on the 2 Level is continuing. Development will continue south on the 3 Level to provide full access to the Sand George lodes between the 2 and 3 Levels. A staged pumping system is scheduled to be installed to improve mine water management.

The next milling campaign is scheduled for late August 2007.

Open Pit Study

The Company commenced an evaluation of open-pit mining of the shallow (<40m depth) resources at Sand Prince West and Princess Grace (Figure 8, 9), which have combined Measured and Indicated Mineral Resources estimated to be 192,000 tonnes at a grade of 2.62 g/t Au, for 16,200 ounces of gold, at 1 g/t Au cut-off (Table 1).

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Figure 8 Tenement Plan of Comet Vale Project and plan gold resources and infrastructure on Mining Lease 29/52.

As part of the evaluation, 30 RC drill holes (JVC024–49, JVC059-062; 1,442 metres) were completed at Princess Grace to infill previous shallow RC drill intercepts and to test for strike extensions of the controlling Princess Grace structure.

An independent resource estimate, including the additional drilling data, was undertaken by Cube Consulting Pty Ltd (Cube) resulted in an Indicated and Inferred Mineral Resource for the Princess Grace deposit of 106,000 tonnes @ 2.7 g/t Au for 9,000 ounces of gold (using a 1g/t lower cut).

Cube also completed an initial assessment of resources at the Coonega mine, to the northwest of the Sand Queen mine, which resulted in an Inferred Resource of 106,700 tonnes @ 2.2 g/t Au for 7,500 ounces (Table 1).

These shallow gold resources could be exploited by conventional open pit mining and low-cost treatment by vat-leaching. Preliminary metallurgical test work on combined Sand Prince/Princess Grace ore is exceptional, with excellent recoveries and low to moderate reagent use.

Pit-optimisation studies are being undertaken this quarter on the Sand Prince West and Princess Grace resources this month to enable completion of a reserve calculation.

Table 1 Mineral Resource estimates for shallow low-grade gold deposits at Sand Prince West, Princess Grace and Coonega.

Category	Deposit	Tonnes	Grade g/t Au	Contained gold ounces
Measured Resource	Sand Prince West	53,000	2.7	4,600
Indicated Resource	Sand Prince West	46,000	2.2	3,200
	Princess Grace	93,000	2.8	8,400
Combined		192,000	2.6	16,200
Inferred Resource	Sand Prince West	21,900	2.1	1,500
	Princess Grace	13,000	1.6	600
	Coonega	106,700	2.2	7,500
Total Resource		333,600	2.4	25,800

Mineral Resources calculated using Ordinary Kriging constrained by wireframe models. All tonnage, grade and ounce values have been rounded down to three significant figures. Slight errors may occur due to this rounding of values

Regional Exploration

Four RC drill holes (JVC050-053) tested the strike continuation of the Sand George lodes, south along the Comet Vale Shear, infilling previous wide spaced drilling south of JV boundary (Figure 9). These holes intersected multiple quartz lodes consistent with Sand George mineralisation. Several holes will be extended by diamond drilling in August.

Three RC drill holes (JVC056–058; 310 metres) were drilled to test the Comet Vale Shear Zone north of the Gladsome workings (Figure 9). All three holes targeted the ultramafic contact. Although the intersected wide porphyries and minor quartz veins (up to 600mm) there were no significant gold intercepts.

A vertical RC drill hole (ETC003; 47m) that was drilled as water bore between the Long Tunnel and Lake View prospects (Figure 8) intercepted minor quartz veining with gold mineralisation in an actinolite schist with 2 metres at 4.19 g/t Au from 37 metres, including 1 metre at 7.24 g/t Au from 37 metres (400g Leachwell assay by Amdel).

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Figure 9 Plan of RC drilling of the Princess Grace thrust zone and Comet Vale shear zone as apart fo the near-mine exploration programme.

Exploration Forecast

Several RC holes from the latest regional exploration will be extended by diamond drilling in August, to target depth.

Completion of detailed mapping and interpretation of the Lake View-Long Tunnel and Lady Margaret areas will enable 3D modelling of these areas to design further RC drilling of key targets.

Pit optimisation studies for Sand Prince West and Princess Grace are scheduled for completion during the September quarter.

OTHER PROJECTS

During the quarter, the Company continued discussions with the Ngaanyatjarra Land Council for an access agreement over an area along the northern contact (~35 km) of the Bell Rock Range intrusion within the highly prospective Musgrave Province (Figure 10). This tenement is in the expedited procedure for grant in the September quarter.

Southern Geoscience Consultants have been engaged to process and interpret available airborne geophysical data (magnetic, radiometric) and create a basic Mapinfo data set, which will form the basis for the initial exploration programme.

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Figure 10 Location of Bell rock Range Project within the Musgrave Province in central Australia.

CORPORATE

Placement and Shareholder Purchase Plan

During the quarter the Company completed a Share Purchase Plan ( SPP ) raising $5,000,000 (before costs), being 11,904,762 shares at $0.42 (42 cents) per share.

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

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Chris Reed

EXECUTIVE DIRECTOR

Geological aspects of this report that relate to Exploration Results have been compiled by Dr Peter Collins (MAIG), a Director of Reed Resources Ltd. Dr Collins has sufficient experience relevant to the style of mineralisation and type 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.

Although Reed Resources remain optimistic about the potential of its exploration projects, any reference to the terms “ore, “high-grade” and “low-grade” in this report is conceptual in nature. Use of the term “grade(s)” is not intended to represent the grade of a resource.