NEOMETALS LTD — Interim / Quarterly Report 2010

Apr 29, 2010

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

QUARTERLY ACTIVITIES REPORT 31 MARCH 2010

Highlights

Mount Marion

• Mount Marion Lithium Content Increased by 220%

• Development Timetable issued, plant commissioning Dec Q 2010

• Resource Drill Program completed and confirms multiple, stacked, high‐grade pegmatites at the Nos 1, 2, 2W and 5 Deposits

Sand Queen Gold Mine

• Sand Queen Gold Mine Resource and Grade Increased to 186,000oz @ 10.8g/t

• Mined 7,092t at a grade of 17.8g/t Au

• Sold 16,493t at a grade of 13.8g/t (RDR share estimated at 2,468 ounces)

Barrambie

• Barrambie Public Environmental Review document lodged

MT MARION LITHIUM PROJECT (Reed option to acquire 100%)

(Production JV with Mineral Resources Limited)

In October 2009, Reed Resources Ltd ( ASX: RDR ) (“Reed” or “the Company”) announced it had entered into an agreement with Mineral Resources Limited ( ASX: MIN ) (“Mineral Resources”) to develop the Mt Marion Lithium Project (“Mount Marion Project”) located between Kalgoorlie and Kambalda in the Goldfields region of Western Australia.

Mineral Resources and its consultants are in the process of preparing a mining proposal and the necessary documents for works approval, which are required before either construction or mining may commence.

Resource Definition Drilling Program

During the quarter, the Company and Mineral Resources concluded the resource definition drilling program and commissioned an independent Mineral Resource Estimate. Mineral resource estimation was undertaken on four of the pegmatite deposits (No. 1, No. 2, No. 2W and No. 5 pegmatite; Figure 1) and completed in early April with results announced on 14 April 2010 (Table 1). This has confirmed the Mt Marion Lithium Project as a world class high grade deposit with a total Resource of 8.9 Mt at 1.4 % Li2O, containing 128,000 tonnes of lithium oxide (Li2O). The planned production rate, subject to a decision to mine, is 200,000 tonnes per annum of +6.5 % Li2O concentrate which contains an estimated 13,000 tonnes lithium oxide (Li2O).

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Table 1. Mt Marion Mineral Resource estimate for the No. 1, No. 2, No. 2W and No. 5 pegmatite deposits, as at April 2010 using 0.3 % Li2O block cut off grade (ASX announcement 14 April 2010).

Deposit	Resource Classification	Tonnes	Grade (Li2O%)	Li2O (tonnes)
No 1	Indicated	2,364,000	1.42	33,569
No 1	Inferred	1,219,000	1.3	15,847
	Sub Total	3,583,000	1.4	53,745
No 2	Indicated	391,000	1.37	5,357
No 2	Inferred	595,000	1.4	8,330
	Sub Total	985,000	1.4	13,790
No 2W	Indicated	1,606,000	1.4	22,484
No 2W	Inferred	2,513,000	1.4	35,182
	Sub Total	4,119,000	1.4	57,666
No 5	Inferred	237,000	1.2	2,844
	Sub Total	237,000	1.2	2,844
	TOTAL	8,924,000	1.4	128,045

Figures may not sum due to rounding & notation of significant figures does not imply an added level of precision.

The geological model was prepared as a collaborative effort between independent consultants Hellman and Schofield Pty Ltd (“H&S”) and Reed, from data provided by Reed. H&S have completed data validation, analysis, domain coding and interpretation and subsequently undertaken a re‐run of the Mineral Resource estimates. The new estimates have been calculated and reported in accordance with the JORC Code (2004) and Guidelines.

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Figure 1. Mount Marion pegmatite group within mining lease M15/1000.

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Reed has commenced test work to confirm historical recoveries of lithium in the production of lithium carbonate from Mt Marion spodumene concentrate. Spodumene concentrates from heavy liquid separation are currently undergoing further laboratory scale tests designed to produce lithium carbonate.

FORWARD WORK

The Joint Venturers expect to mobilise a processing plant and related equipment with a production rate of 17,000 tonnes per month of +6.5 % Li2O concentrate in 2010 subject to a decision to mine and obtaining all necessary approvals; the development timetable is below.

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COMET VALE

(Reed 100%, Production JV with Kingsrose Mining Limited)

Kingsrose Mining Limited ( ASX: KRM ) (“Kingsrose”) has continued to mine from and above the 4 Level under the existing production joint venture arrangement. Reed will become entitled to 100% of production from 1 June 2010 with preparation being made during the quarter for the change over in management.

A new Mineral Resource Estimate for the project was calculated by Cube Consulting during the quarter utilising data from both drill holes and mine excavations. The resulting new Resource estimate has a total 534,000 tonnes at an average grade of 10.8 g/t Au for 186,000 ounces of contained gold (ASX announcement 8 April 2010). An outline of the Indicated and Inferred Resources is illustrated in the long sections in Figure 2.

This latest Resource estimate has formed the basis for a new mine plan encompassing the development and mining of ore from both the 5 and 6 Levels. Pumping and electrical infrastructure has been upgraded to facilitate access for mining of these resources. The shaft has been dewatered to below the 5 Level with preparations underway for the commencement of 5 Level development.

A series of geotechnical holes were drilled during the quarter to assess the positioning of pit walls for the Sand Prince West and Princess Grace open pit. In addition, three exploration diamond holes (PGDR001‐3) were drilled into the western down‐dip position of the Princess Grace lode returning some encouraging results. All three holes intersected 3‐5 metres of steeply dipping shear zone with significant quartz veining and variable mineralisation, including:

PGDR002 4.50 m @ 12.9 g/t Au between 42.0 and 46.5 m down hole depth Including 2.00 m @ 28.64 g/t Au at 42.0 ‐ 44.0 m Including 0.8 m @ 55.88 g/t Au at 42.0 – 42.8 m

All three intercepts of the shear zone at the Princess Grace lode have anomalously high tungsten (W), bismuth (Bi) and molybdenum (Mo) with maximum assays of 3069 ppm W, 680 ppm Bi and 132 ppm Mo. The upper levels of the Sand Queen lode are known to have contained the tungsten mineral scheelite.

Sand Queen Mine Production (Kingsrose JV partner)

During the quarter, Kingsrose hauled 9,942 tonnes of ore to the surface.

The Level 4 Block 1 Stope was completed producing 7,092 tonnes at a grade of 17.8 g/t Au for the period. This stope has now produced 13,060 tonnes grading 16.8 g/t Au over the last two quarters.

At the close of the March Quarter a parcel of 16,493 tonnes grading 13.8 g/t Au, estimated from grade control sampling, was sold to a third party mill and processing of this ore parcel is underway. The final financial results from the sale are dependent on the average gold price for the month of April and grade confirmation. Reed expects a cash margin of A$550‐ 600/oz for its share of production, which is 40% of recovered metal (about 2,468 ounces).

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Figure 2. Vertical longitudinal projections of the Sand Queen Gold Mine, showing the resource outline in relation to current and planned development with selected drill hole intersections for Domain 1 (top) and Footwall and Hanging wall Domains (bottom).

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NIMBUS PROJECT (Reed 100%)

The Company purchased the Nimbus precious metals processing plant and mining leases M26/490 and M26/598 in September 2009. The plant is capable of treating 250,000 tpa of oxide ore and is situated approx 15 km south‐southeast of Kalgoorlie (Figure 3). The plant was acquired to enable the Company to further develop its strategy of increasing the level of profitable gold production.

During the March quarter the Company has continued to systematically upgrade the plant site and infrastructure. The Company has commenced evaluating refurbishment of the plant to an annual operating capacity ranging between 200,000 and 900,000 tonnes per annum.

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Figure 3. Location of the Nimbus Project Mining Leases (M26/490, M26/598) and processing plant.

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BARRAMBIE VANADIUM PROJECT (Reed 100%)

The Barrambie Vanadium Project continues to be a high priority and the Company is conducting test work for the detailed design stage whilst awaiting its environmental approvals before formally evaluating various project development strategies.

Barrambie remains one of the world’s highest grade vanadium deposits with a Probable Ore Reserve of 39.7 Mt at 0.82% V2O5 (Table 2). This Ore Reserve is based on an Indicated Mineral Resource of 49.2 Mt which represents a Resource to Reserve conversion rate of 81 %.

 Table 2. Probable Ore Reserve* estimate for the Barrambie vanadium deposit (ASX announcement 5 May 2009)

Diluted Ore Tonnes (Mt)	Diluted V2O5 (%)	Diluted TiO2 (%)	Diluted Fe2O3 (%)	Diluted Al2O3 (%)	Diluted SiO2 (%)
39.7	0.82	15.69	48.77	11.59	16.12

• Probable Ore Reserve by Snowden Mining Industry Consultants Pty Ltd for a diluted cut‐off grade of 0.6 % V2O5. All tonnes are estimated as dry tonnes.

The Public Environmental Review Document (PER) was lodged with the EPA in March 2010. Prior to lodging the PER a number of major milestones were achieved as follows:

• Acid leach test results on the beneficiated tailings samples show that very low levels of mobilised major metals and metalloids were liberated by the leaching process. This indicates that the beneficiated tailings do not represent an environmental risk when compared to national and international benchmark standards.

• A further round of stygo fauna identification was carried out bringing the total rounds of stygo fauna observations to four, the minimum recommended by the EPA.

• Further water modelling on the bore field was completed during the quarter and a management plan has been put in place for additional water to be provided from the nearby Gidgee mine open cuts, if required.

Laboratory roasting tests continued throughout the quarter with the work focusing on reducing the quantity of salt (sodium carbonate plus recycled sodium sulphate) required by the roasting process. Results were highly successful with a reduction in the amount of salt required in the roasting process dropping from 10.5 % of the roast feed to 8.5 % a saving of 2 % in actual percentage of salt in the roast feed (or 20 % in the amount of salt required), which will result in a significant positive benefit to the economics of the project.

The Definitive Feasibility Study (DFS) completed in April 2009 indicated that, based on the existing mineralisation, the Barrambie vanadium processing plant and associated infrastructure will target a through‐put of 3.2 million tonnes per annum of vanadium bearing magnetite mineralisation at a grade of 0.82 % V2O5 to produce 7,700 tonnes of Ferro‐ Vanadium (FeV80) per annum for a minimum 12 year period. The DFS estimated that the capital cost for mine development and construction of a processing plant is $628.9M and indicative operating costs would be less than US $20/kg V. The price is currently US $35/kg (Ryan’s Notes, 28 April 2010).

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MT FINNERTY PROJECT

The Mt Finnerty Project, located about 65 km east of Koolyanobbing, has a mix of iron exploration in Joint Venture with Cliffs Natural Resources Pty Ltd (“Cliffs”), nickel exploration (which was previously in conjunction with Western Areas NL), and gold exploration.

Iron Ore Joint Venture (Reed 20%, Cliffs 80%)

During the quarter iron exploration at Mt Finnerty focused on three prospects that had been identified during a geological and geophysical review by Cliffs in late 2009. These prospects, at FIN9 North, Mt Watt and Maitland, were tested by ground magnetic and gravity surveys.

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Figure 4 . Location of major iron mineralisation prospects, including FIN9, and iron exploration targets within the Mt Finerty project.

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Geological Mapping

The results of detailed mapping of iron ore targets undertaken in late 2009 were received and used to aid in the planning and interpretation of geophysical surveys. Several new prospects were outlined and mapped to reveal minor outcropping iron mineralisation.

Geophysical surveys

Interpretation of the FIN9 North prospect indicates that there are two separate BIF beds, referred to as the ‘Watt Bed’, which form the prominent topographic feature through the Watt Hills, and the ‘Fin Bed’, which is the host BIF unit for the FIN9, FIN10 and FIN11 mineralisation (Figure 4).

The northern extension of the FIN 9 mineralisation is interpreted to have been displaced to the south by a fault offset. The interpreted position of the continuation of the ‘Fin Bed’ is the primary target for further exploration.

At Mt Watt, two BIF horizons have also been interpreted from the geophysical surveys. The ‘Watt Bed’ has a fairly continuous geophysical response but the geophysical signature of the ‘Fin Bed’ is patchy.

The highest priority target at the Mt Watt prospect is a coincident gravity and magnetic anomaly, which represents the last positive identification of the ‘Fin Bed’. Minor iron mineralisation was intersected in previous drilling at the southern end of this target area (about 6 metres @ 54 % Fe in MFRC050).

At the Maitland prospect there are two readily interpretable units: BIF to the east and ultramafics to the west. Most of a large gravity response through the centre of the survey area is interpreted to be mafic volcanics. The priority target here is the second interpreted BIF unit, which does not appear to outcrop. The area is weakly magnetised but has a moderate confined gravity anomaly.

Nickel Exploration (Barranco 100%, Reed earning 60%)

During the quarter exploration continued on the western flank of the Mt. Finnerty Greenstone Belt (in Exploration Licences E16/305, E16/330) following up the IP target reported last quarter. A fixed loop TEM survey reported last quarter only revealed a diffuse anomaly attributed to a weakly conductive anomaly that, from modelling, was considered to be due to a stratigraphic contrast.

A diamond drill hole to test the IP anomaly was drilled to a depth of 320 metres down hole. The hole also targeted the interpreted basal contact of an ultramafic unit. This hole intersected a sheared talc carbonate unit with disseminated pyrite, pyrrhotite and chalcopyrite at a depth 81.6 metres (down Hole). No nickel sulphides were intersected but copper grades are up to 0.67 % Cu.

The disseminated sulphides coincided with the IP target depth. A down‐hole TEM (DHTEM) survey on this hole did not indicate massive sulphides adjacent to the drill hole. DHTEM anomalies generated in the upper part of the drill hole are considered to be spurious; being due to super paramagnetic (SPM) soils.

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Six lines of a moving loop TEM survey (MLTEM) was completed to fill in a gap of 1000 metres of strike length between MLTEM surveys in 2007 and 2008 to the south‐southeast of a WMC nickel ‘gossan’. The survey also covered the IP anomaly which was the target for the diamond drilling. Survey results did not display any features likely to be caused by massive sulphides but the results were compromised by equipment failures and the survey is yet to be completed using more appropriate equipment.

Three old drill holes were cleaned out for DHTEM surveys. Two holes were in the area of the work reported above while one was approximately 22 km to the south‐southeast of the area. Weak anomalies generated near surface are attributed to SPM soils. No basement conductors were detected.

This part of the Mt Finnerty project remains prospective for massive nickel sulphide mineralisation. There are favourable high MgO ultramafic host rocks with intact basal contacts and highly anomalous geochemical results (high Cu and Ni) that have yet to be satisfactorily explained. The effectiveness of TEM as a search tool for massive sulphides in this area is compromised by the presence of conductive overburden. The search for nickel sulphides is still at an early stage and will now focus on shallow RAB drilling along favourable basal contacts to locate indicative geochemical anomalies.

Nickel Exploration

(Reed 100%, WSA earning 65% Ni Rights)

Pursuant to a Heads of Agreement with Western Areas NL ( ASX: WSA ) made 26 February 2007, WSA has been exploring for nickel at Mt Finnerty and was entitled to earn a 51% interest by expending $1.5M before 26 February 2010 (ASX announcement 28 February 2007).

WSA had expended approximately $1.32M by the due date. Accordingly WSA’s right to earn an interest expired on 26 February 2010 and the Heads of Agreement subsequently lapsed (ASX announcement 8 March 2010).

Reed completed a diamond drill tail on a previous RC drill hole (MFRC010) to test the geological/geophysical target at Richies Reward; no nickel sulphides were intersected.

BELL ROCK RANGE PROJECT (Reed 100%, AAE earning 75%)

The Bell Rock Range Project (E69/2293) covers some 471 km[2] within the western part of the Proterozoic Musgrave Block in central Australia (Figure 5). It is highly prospective for several commodities, particularly Ni‐Cu sulphide and PGE mineralisation. Exploration is being conducted by Anglo American Exploration (Australia) Pty Ltd (“AAE”).

A regional airborne SPECTREM survey of the West Musgraves region was completed by AAE in mid‐March 2010, including approximately 2,610 line km flown in the Bell Rock Range tenement (E69/2293). Processing and interpretation of the Bell Rock Range data has included production of Conductivity Depth Images (CDI’s) for selected depth slices and more processing of the data is planned for Q2 2010 in order to identify potential targets.

A preliminary anthropological clearance survey was carried out over E69/2293 by an anthropologist to the Ngaanyatjarra Land Council (NgLC) to identify likely exclusion zones prior to making a decision to engage in Land Access negotiations.

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Figure 5 Location of the Bell Rock Range tenement (E69/2293) in the western Musgrave Province, Western Australia.

CORPORATE

At the end of the quarter the Company had $10.7 million in cash and term deposits, including $9 million in restricted‐use term deposits supporting performance bonds, in addition there was $0.7 million in trade debtors and 135.107 ounces of gold on hand at 31 March 2010.

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CJ Reed

MANAGING 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 styles of mineralisation and types of deposit under consideration and to the activity 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.

About Reed Resources

Reed Resources Ltd is a diversified mining and exploration Company based in Western Australia. It has modest gold production and is expanding and diversifying its production base. Reed Resources has five main projects (all in Western Australia) including;

• Mount Marion – High‐grade Lithium project located about 40km south of Kalgoorlie in JV with Mineral Resources Ltd. First production planned by January 2011.

• Comet Vale – High‐grade underground gold mine in Production JV with Kingsrose Mining Limited (resuming 100% equity on 1 June 2010).

• Barrambie – Definitive Feasibility Study completed on a Ferrovanadium operation to produce 6300t of vanadium per annum. Currently in approvals process.

• Mount Finnerty – Iron ore JV with Cliffs Natural Resources & Nickel Farm‐in with Barranco Resources NL.

• Bell Rock Range – Nickel‐Copper‐PGM Farm‐out to Anglo American Exploration.

website: www.reedresources.com

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