NEOMETALS LTD — Interim / Quarterly Report 2012

Apr 29, 2012

Level 1, 672 Murray St West Perth WA 6005

ABN 89 099 116 631

==> picture [110 x 47] intentionally omitted <==

ASX Release 30 April 2012

Locked Bag 8 West Perth WA 6872 Tel: +61 8 9322 1182 Fax: +61 8 9321 0556

REED RESOURCES QUARTERLY ACTIVITIES REPORT For the three months ended 31 March 2012

Highlights:

Meekatharra Gold Project

• Mineral Resources Increase 11% to 3.59 Moz, Ore Reserves Increase by 40% to 752 Koz Au,

• Stage 1 Bankable Feasibility Study completed, A$66m Net Cashflow over 19 months,

• Board makes Decision to Mine, subject to equity and debt financing arrangements,

• Project execution commenced, on track for first gold production in December Q 2012.

• Mt Marion Lithium Project

• Reviewing timing/production profile pending evaluation of mica production.

• Barrambie Fe-Ti-V Project

• Expanded Concept Study to recover titanium and vanadium units from concentrates.

Corporate Update

• As of 31 March 2012, the Company had $9.9 million in cash and term deposits, including $9 million in restricted use term deposits supporting performance bonds,

• Subsequent to the end of the quarter, on 2 April 2012, Reed Resources launched an underwritten, non-renounceable A$40 million entitlement offer to primarily fund the development of its 100%-owned Meekatharra Gold Project in Western Australia.

==> picture [229 x 208] intentionally omitted <==

==> picture [57 x 50] intentionally omitted <==

MEEKATHARRA GOLD PROJECT

(Reed 100%)

The Meekatharra Gold Project, centred on the Bluebird processing plant, is located 640km northeast of Perth and 10 km south of Meekatharra, in the Murchison Region of Western Australia.

==> picture [439 x 563] intentionally omitted <==

Figure 1. Location of tenement holdings overlain on bedrock geology of the Meekatharra – Mt Magnet region of the Murchison Province showing gold production from key Reed Resources mining districts and the location of other mining camps in the area.

2

Figure 2. Bluebird Processing Plant

==> picture [427 x 286] intentionally omitted <==

Project Strategy

Reed Resources approach to successfully recommencing mining and mitigate technical risk is through a staged development. During the quarter the Company completed the Bankable Feasibility Study (BFS) for Stage 1 at the Meekatharra Gold Project. The study was completed on-time and under-budget. Subject to finalisation of debt and equity financing arrangements, the Board has resolved to commence Project execution which would see gold production scheduled in the December quarter of this year.

The Meekatharra Gold Project has a number of key advantages, including:

• Existing 3 Mtpa (oxide) processing facilities and infrastructure

• Low capital expenditure

• A large reserve and resource base with significant exploration potential

The completion of the BFS and the decision to mine together represent a significant milestone for the Company, as Reed Resources continues its focus on bringing the Meekatharra Gold Project into production. Later decisions to commence Stages 2 and 3 respectively will be based on Bankable Feasibility Studies using prevailing live tendered prices and achievable gold prices.

Since Reed Resources acquired this landholding in January 2011 the Mineral Resource Inventory has been increased by 1.1Moz or 46% to a total of 3.59 million ounces of gold and the Reserves have increased by 78% from 0.42Moz to 752,000 oz (as at March 31[st] , 2012).

3

Bankable Feasibility Study – Stage 1 – Recommencement

Stage 1 is a low-risk start-up which the Company anticipates will become a considerably larger project in future years. Stage 1 will focus on production of 2.2 Mt @ 2.0 g/t Au for 134,000 oz over 19 months from the Bluebird, Whangamata, Batavia and Surprise open pits, all within a six kilometre radius of the mill at Yaloginda.

A number of resources and reserves in the Yaloginda area are being investigated as possible ore sources for an extension of the Stage 1 operations.

The Company projects that aggregate funding required until positive net cash flow is achieved to be around A$45million.

Net cashflow generated during the 19 months of Stage 1 milling is projected to be around A$66 million (using a A$1520 price floor). The Company proposes to use a Participating Forward structure for price protection, essentially selling some production as forward delivery contracts over this period and purchasing put options for the balance. In this manner the Company will shelter its risk against any unexpected gold price downturn whilst retaining significant upside participation. It should be noted that as at 30 June 2011 the Company has carried forward losses of A$51m.

Table 1. Stage 1 Summary target operational statistics

Table 1.Stage 1 Summary target operational stati	stics
Annual production rate	95,000 oz per annum 1.65 Mtpa@1.77g/t(recovered)
Totalplanned recovered ounces in Stage 1	134,200 oz(after mill recoveryof 94%)
Direct construction cost	A$24.1 million
Pre-commissioningminingand owners costs	A$11.4 million
Average cash cost(C1)	A$1,076/oz
Stage 1 duration	21 months(mining)/19 months(milling)
Stage 1 inventory (@A$1300/oz)	2.2 Mt @ 2.0g/t (Mining Stocks) 0.17 Mt@0.8g/t(Low Grade Stocks)
Average stripratio	7.8:1

Project Finance

During the quarter the Company continued the project financing process along with its advisors, Noah’s Rule Pty Ltd and Bligh Capital Partners Pty Ltd. A debt information memorandum and financial model was finalised and distributed to the list of interested financiers during the quarter. Following this extensive tender process in which competitive proposals were received from a number of domestic and international banks, a mandate was entered into with Barclays Bank Plc subsequent to the end of the quarter (see ASX announcement dated 30 April 2012).

4

Project Execution and Progress

The Project Execution methodology for the re-commencement of gold production at Meekatharra is in place. Key operational staff have been appointed and further operational staff will commence in the coming months. In line with the Project execution strategy, the Company is now ready to award key contracts to enable plant refurbishment, accommodation upgrade and associated infrastructure works to commence once the equity funding package is in place.

Processing Plant

The refurbishment works have commenced on the plant and are being carried out in-house. The contract for upgrade works on the crushing circuit is pending award. The new primary crusher unit has been purchased and is due for delivery in early August.

Village

A contract document for the accommodation village upgrade and new mess is ready for award. This will be awarded following completion of financing arrangements. Refurbishment of the existing accommodation units is being conducted by in-house personnel.

Power Station

A contract document for the provision of power “over-the-fence” under a Build-Own-Operate (BOO) arrangement is ready for award. The existing generators have been removed from the power house as part of the refurbishment work (below).

==> picture [372 x 190] intentionally omitted <==

Mining Tender

The open pit mining tender was distributed to ten (10) interested parties. Responses were received in January from 9 parties, which validate the open pit mining cost estimates for the BFS. The tender is due for award in June to allow time for a complete bid evaluation process to be undertaken.

Facilities Management

Expressions of interest have been requested for long-term village facilities management. A large number of providers have registered their interest, and the tender process will commence shortly.

Aviation Contract

The aviation charter contract is in the advanced stages of negotiation and is expected to be awarded in May/June.

5

The Project is within the projected delivery dates for the key items on the project and it is anticipated that the milestones to recommence will be achieved.

Figure 3. Project Timeline

==> picture [510 x 280] intentionally omitted <==

Forward Work Program

Ongoing Evaluations

The ongoing evaluation of the various ore bodies throughout the tenement holding continues to deliver additional sources for future expansion. The technical team will continue to interpret the mineral inventory for both open pit and underground potential, and persist with metallurgical evaluation.

Stage 2 – presently projected to commence in early 2014 and to include production from eight existing and identified reserves at Yaloginda and Paddy’s Flat (6 Mt @ 1.7 g/t Au for 328,000 oz).

Geotechnical, hydrological, metallurgical, and environmental studies are in progress and a BFS-level evaluation is anticipated to be completed before the end of the first quarter of CY2013.

Stage 3 - currently under continuing evaluation and is anticipated to supplement the Stage 2 open pits with ore from the Paddy’s Flat Underground reserve (2 Mt @ 3.6 g/t Au for 225,000 oz). A BFSlevel evaluation is anticipated to be completed by second quarter of CY 2013.

6

MT MARION LITHIUM PROJECT (Reed 70%, Mineral Resources Limited 30%)

During the quarter the Company, together with our partner Mineral Resources Limited (“Mineral Resources”), continued to advance the Mount Marion Lithium Project.

The Mount Marion Project has a designed capacity of 200,000 tpa of 6% Li2O chemical grade spodumene concentrate, 60,000 tpa of muscovite mica, and 30 tpa tantalite concentrate.

Mine Development Update

The Company is working with Mineral Resources to establish the most effective production profile and optimal timing for the commencement of operations in light of the prevailing industry, economic and financial market conditions. The world’s largest spodumene producer has announced that effective from 1 January 2012 it was raising prices 15%, however they are also in the process of expanding production from 400,000 to 780,000t by year’s end. The partners believe this has the potential to elicit a response from the large South American brine producers as both are targeting the largest market in the world, China.

During the quarter, the partners met with selected distributors and end users of mica products as part of a study to evaluate the economic contribution from producing high-grade mica products as a by-product of the spodumene recovery plant. An update on the preferred production profile and timing for the commencement of operations is expected in the June Quarter 2012.

Project development is fully funded by Mineral Resources.

Lithium Carbonate Development Strategy

The Company is awaiting approval of its application for Pioneer Status/Investment Tax Allowance from the Malaysian Industrial Development Authority for the construction of a 17,000 tpa Lithium Carbonate Facility. The financial incentives include a tax exemption on statutory income for a certain number of years.

The Company is also continuing strategic discussions with third parties in relation to a partial sale of the spodumene concentrate operations and/or joint ventures for lithium carbonate production. It should be stressed that discussions remain preliminary and there can be no assurance that a binding proposal will emerge.

The Company is also working with Mineral Resources on a review of the most appropriate methods for the Project’s special purpose vehicle to become an independently financed, industrial minerals company. Reed and Mineral Resources will keep the market informed as matters develop further.

7

BARRAMBIE FE-TI-V PROJECT

(Reed 100%)

In the December quarter of 2011 the Company commenced a concept study level evaluation of the production of a titanium rich concentrate from the Eastern Band of the Barrambie Fe-Ti-V deposit. Initially the study evaluated the recovery of titanium and iron units via the production and export of a titanomagnetite concentrate, the study has now been expanded to evaluate recovery of Fe-Ti-V units via a proprietary hydrometallurgical route.

Initial laboratory scale testwork is being conducted on Eastern Band magnetic concentrates generated in the 2007-09 Definitive Feasibility Study. A mini-plant (150kg) testwork program is planned pending the receipt of formal results. A number of companies around the world are trialling variants of this technology on hard rock titanium deposits and reporting very high recoveries (+90%) of each metal (Fe-Ti-V ) into very pure products.

A new forward work program and resource estimate will be released in the current quarter pending determination of an appropriate cut-off grade for titanium, previous estimates were cut using vanadium grades.

Barrambie’s Eastern Band is currently the second highest grade hard rock titanium deposit globally (behind Rio Tinto’s Lac Tio mine in Canada) (Mineral Resource (2005) of 48Mt @ 22% TiO2). Following the discovery of Barrambie in the late 1960s, a feasibility study was conducted in the early 1970s on a smelting operation to produce a titanium slag, with vanadium slag and pig iron as byproducts.

Figure 4. An indication of the size of the Eastern Band at Barrambie and its grade in comparison with two of the world’s highest grade titanium deposits.

==> picture [469 x 274] intentionally omitted <==

8

Figure 5. Plan of the Barrambie project showing position vanadiferous magnetite-ilmenite mineralisation

(top) and typical cross section.

==> picture [452 x 600] intentionally omitted <==

9

COMET VALE GOLD PROJECT (Reed 100%)

The Sand Queen mine remains on care and maintenance and there was no production during the March quarter. The plan for resumption of operations at Sand Queen to coincide with the recommissioning of the Nimbus plant by Macphersons Reward Gold Limited (MRP) has been updated. During the quarter, Reed has engaged PCF Capital to seek expressions of interest for the possible sale of Comet Vale project, indicative offers were received, detailed due diligence including site visits has been undertaken, binding offers are due May 8. The project has combined underground and open-pitable resources of 792Kt @ 8.2g/t Au for 208,000 oz.

MT FINNERTY PROJECT

The Mt Finnerty Project, located about 65 km east of Koolyanobbing, is currently being explored for iron ore in joint venture with Cliffs Natural Resources (“Cliffs”) and nickel mineralization in its own right.

Iron Ore (Cliffs 80%, Reed 20%)

During the reporting period, no work was undertaken at the Mt Finnerty prospects. A budget has been approved for the 2012 exploration season with the major activities comprising a focussed diamond drilling campaign in order to capture samples of favourable material types to facilitate magnetite characterisation studies.

Nickel (Barranco 100%, Reed option to acquire 100%)

During the quarter the previous geochemical data from auger sampling and RCP drilling was reassessed. Of particular interest are the very high values for PGE elements considered to be vectors to nickel sulphide mineralization.

Samples from the previous RCP drilling were carefully re-logged to identify potential ultramafic host rocks for nickel sulphides and additional analyses of PGEs including ruthenium were completed. A total of 807 metres of RCP drilling was completed during the quarter deepening some pre-existing holes as well as drilling new holes to test the basement ultramafic unit in fresh rock.

Planning for additional drilling to extend the testing of the basal ultramafic unit has been completed and re-logging of core from three earlier diamond holes testing an ultramafic unit at a different stratigraphic level is in progress.

10

Corporate Update

At the end of the quarter the Company had $9.9 million in cash and term deposits, including $9 million in restricted-use term deposits.

Subsequent to the end of the quarter, the Company launched an underwritten, non-renounceable entitlement offer to raise approximately A$40 million. The Company intends to use the proceeds of the Entitlement Offer primarily to fund the development of the Companies 100% owned Meekatharra Gold Project, including accommodation facilities upgrade, plant refurbishment, infrastructure, pre-commissioning costs and capital raising costs, and for general working capital purposes.

This equity raising follows the Company’s announcement on 27 February 2012 regarding the completion of the Bankable Feasibility Study (BFS) and the decision to mine at the Meekatharra Gold Project, with a view to achieving gold production in the December quarter 2012.

Eligible shareholders were invited to subscribe for 3 new shares for every 4 ordinary shares held at 5:00pm (Perth time) on the record date of Friday, 13 April 2012. The Entitlement Offer is fully underwritten by Bligh Capital Partners Pty Ltd.

The key dates of the Entitlement Offer are as follows:

Prospectus lodged with ASX and ASIC 2 April 2012	Prospectus lodged with ASX and ASIC 2 April 2012
‘Ex’ date 5 April 2012
Record Date 5:00pm (Perth time), 13 April 2012
Opening Date 17 April 2012
Prospectus and Entitlement and Acceptance Forms dispatched to Eligible Shareholders By 17 April 2012
Closing Date for acceptance and payment 5:00pm (Perth time), 2 May 2012
Deferred settlement trading commences 3 May 2012
Issue and allotment of New Shares 10 May 2012
Commencement of trading of New Shares 11 May 2012

ENDS

COMPETENT PERSONS STATEMENT

Geological aspects of this report have been compiled by Mr Craig Fawcett (MAIMM), a full time employee of Reed Resources Ltd. Mr Fawcett 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 (2004). Mr Fawcett consents to the inclusion in this report of the matters in the form and context in which it appears.

11

APPENDIX A: MEEKATHARRA GOLD PROJECT RESOURCES & RESERVES AS AT 31 MARCH 2012

MINERAL RESOURCE INVENTORY

Project	Category	Tonnes(Mt)	Au(g/t)	Au(koz)
Meekatharra North	Indicated	1.2	1.8	66
	Inferred	0.2	1.6	9
Nannine	Indicated	0.6	1.6	31
	Inferred	0.2	1.6	13
Paddy's Flat	Indicated	25.2	1.6	1,281
	Inferred	13.4	1.6	670
Yaloginda	Indicated	10.1	1.7	564
	Inferred	6.2	1.7	347
Reedys	Indicated	2.7	3.1	276
	Inferred	4.0	2.7	338
	Indicated	39.8	1.7	2,217
TOTAL	Inferred	24.1	1.8	1,377
	TOTAL	63.9	1.8	3,594

ORE RESERVE INVENTORY (31[ST] Mar, 2012)

Project	Category	Tonnes (Mt)	Au (g/t)	Au (koz)
Bluebird	Probable	1.39	1.9	86.2
Prohibition	Probable	1.11	2.7	96.0
MickeyDoolan	Probable	3.31	1.1	121.7
Maid Marion	Probable	0.2	1.4	8.6
South Junction	Probable	0.1	1.5	4.5
Surprise	Probable	0.1	3.0	13.0
Batavia	Probable	0.2	2.4	14.0
Whangamata	Probable	0.3	1.4	11.9
GNH	Probable	0.9	1.3	35.6
Aladdin	Probable	0.4	1.7	21.4
Jack Ryan	Probable	0.2	3.1	21.8
Callisto	Probable	0.1	3.1	7.2
Rand	Probable	0.1	2.4	7.6
South Emu	Probable	0.1	4.7	13.9
TOTT	Probable	0.5	1.8	29.4
Total(Open Pit)	Probable	9.0	21.7	492.9
Prohibition	Probable	1.3	2.4	104.1
Vivian/Consols	Probable	0.3	7.7	63.6
Fatts/Mudlode	Probable	0.4	4.7	57.2
South Emu	Probable	0.2	4.3	34.2
Sub-Total	Probable	2.2	3.6	259.1
Total	Probable	11.2	2.1	752

Notes:

1. Resources and Reserves comply with the Australian JORC Code (2004) reporting guidelines. 2. Resources are inclusive of Reserves.

12