NEOMETALS LTD — Interim / Quarterly Report 2013

Apr 23, 2013

Level 1, 672 Murray St West Perth WA 6005

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ABN 89 099 116 631
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Locked Bag 8 West Perth WA 6872 Tel: +61 8 9322 1182 Fax: +61 8 9321 0556

ASX Release 24 April 2013

REED RESOURCES LTD QUARTERLY ACTIVITIES REPORT For the quarter ended 31 March 2013

Highlights:

Meekatharra Gold Operation

• Bluebird Gold Processing Plant fully commissioned and meeting throughput and recovery targets

• 53% of Bluebird open pit total material movement mined whilst 88% of Reserve ounces remain to be mined

• 9,030 ounces mined and 9,123 ounces produced

• Target unit mining, processing and administration costs being achieved or bettered

• Mt Marion Lithium Project

• “Proof of Technology” test work program commenced

Barrambie Fe-Ti-V Project

• Continued the evaluation of a proprietary hydrometallurgical technology to produce high-purity titanium, iron & vanadium

Corporate

• $27 million cash realised on closure of hedge book

• Credit Suisse debt facility is fully repaid and group security is to be released

• Company cash balance increased by $7.7 million

• Executed a binding MOU for the sale of the Comet Vale Project for $6 million cash

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CORPORATE

Gold Hedge

Subsequent to the end of the quarter, Western Australian gold producer, Reed Resources Ltd ( ASX: RDR ) ( “Reed” or “the Company” ), announced that it has closed its hedge book to realise its inherent financial value and strengthen the Company’s balance sheet during this period of gold price weakness.

Reed’s participating forward hedging structure enabled Reed to achieve a floor price of approximately A$1,626 per ounce over 110,000 hedged ounces, mitigating risk should an unexpected gold price downturn occur. In light of the recent and significant fall in the Australian dollar gold price to its lowest price in two years, the Company took advantage of the gold price weakness by realising the value of the hedge book immediately at approximately $A1,330 per ounce, yielding the Company $27.135 million.

The Company has repaid Credit Suisse all amounts owing under the $19 million debt facility established in November 2012. Credit Suisse is in the process of finalising the documentation for the release of its security over the Reed group. The closure of the hedge book increased Reed’s working capital by approximately $7.7 million. The release of Credit Suisse security will also enable the Company to explore other opportunities to generate working capital through the release of restricted use term deposits securing performance bond facilities.

The Company has completed a review of its Stage 1 Life of Mine Plan, which shows that at a gold price of approximately A$1,300 the current Bluebird, Batavia and Surprise pits continue to be economically viable. The Whangamata pit is uneconomic at prevailing gold prices. With respect to the Bluebird open pit, which is currently being mined, 53% of the planned total material movement has already been mined to the end of March whilst only 12% of the Ore Reserve has been extracted, with the bulk of the pre-stripping and waste movement having been completed.

The Company is revising the production plan based largely around re-sequencing of ore sources at the Meekatharra Gold Operation to manage capital development expenditures, whilst preserving the potential or optionality to return to higher mining and processing rates subject to an improvement in the gold price.

Finances (unaudited)

Cash and term deposits on hand as of 31 March 2012 totalled $18.93 million, including $11.90 million in restricted use term deposits supporting performance bonds and other contractual obligations.

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MEEKATHARRA GOLD OPERATION

(Reed 100%)

The Meekatharra Gold Operation, 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.

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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.

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Meekatharra Gold Operation Strategy

Within the Meekatharra Gold Operation (“ MGO ”) tenements Reed has a Resource inventory of 3.6Moz and a Reserve inventory of 752koz ounces (refer to Annexure A). Reed has a 3 staged strategy to exploit the Reserve, Resource and inventory base of the extensive Meekatharra Gold assets which includes producing 134,000 ounces from its Stage 1 open pit ore sources that are within 6.5km of Reed’s Bluebird processing facility. Stage 2 will exploit the remaining 618,000 ounces of Reserves predominantly from Paddys Flat, Yaloginda and Reedy project areas with production sourced from open pits and underground. Stage 3 of Reed’s strategy at Meekatharra will be executed concurrently with Stage’s 1 and 2 and utilise the latest targeting and exploration techniques to convert as many of the 2.8M Resource ounces to Reserves as possible whilst defining further Resources and Reserves with the ultimate aim of delivering a sustainable 10 year mine life from the Meekatharra Project area generating between 100,000 to 150,000 ounces per annum at a total cost below $1000/ounce.

Safety

4 low severity lost time injuries occurred at MGO during the quarter.

Operations

Mining

Total material movement from the Bluebird open pit was 1.83 million BCM for the quarter. Full year total material movement of 3.18 million BCM is 6% above target and represents 53% of the total material to be mined from Bluebird. Although over half of the total material has been removed from Bluebird, 88% of Bluebirds Reserve ounces remain to be mined.

Ore mined from the Bluebird open pit was 314,184 tonnes at 0.89g/t for 9,030oz. Total material movement for the quarter was consistent with the Stage 1 Feasibility schedule which forms the basis for Reed’s production targets at Meekatharra.

The Bluebird open pit has been mined from the +460mRL to the 420mRL since commencement of operations. Approximately 88% of the Reserve ounces from the Bluebird open pit are generated from below the 420mRL with a significant increase in ounces per vertical metre from the 415mRL. The pit base is planned for the 325mRL.

Meekatharra	Units	Dec Qtr 2012	Mar Qtr 2013	Full Year 12/13
Total Material Movement	BCM	1,347,045	1,833,410	3,180,455
Total ore tonnes mined	tonnes	38,787	314,184	352,971
Minedgrade	g/t	1.32	0.89	0.94
Total containedgold in ore	oz	1,642	9,030	10,673

Table 1: Meekatharra Gold Operation mine production statistics.

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Figure 2: Pit floor of the Bluebird open pit looking North, mining from the 420mRL showing the previously mined North Bluebird fully excavated with the cut back of the remnant Bluebird pit (foreground) progressing to plan.

Processing

Ore processed through the Bluebird mill for the quarter was 342,233 tonnes containing 9,914 ounces and recovering 9,123 ounces at 92% recovery.

Metallurgical recovery was adversely impacted by the failure of dart valve seals located within the adsorption tank bank and the introduction of legacy scats stockpiles containing historic Triton tailings.

The legacy scats stockpile underperformed in grade by 64% equating to 986oz whilst the lower recovery of the scats and the failure of the dart valve seals contributed a further 423oz of foregone gold production.

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To offset both lower than expected recovery and underperforming legacy scat stockpile grade, a further 74,000 tonnes of ore mined from the Bluebird open pit was processed.

Mill throughput to the end of the quarter exceed target by 24% whilst recovery was 4% below target. Targeted metallurgical recovery of 94% was achieved from mid-February whilst recovery in March was 95.6%.

Bluebird Mill	Units	DecQtr 2012	MarQtr 2013	Full Year 2013
Ore tonnes milled	tonnes	39,033	342,233	381,266
Headgrade	g/t	0.74	0.90	0.88
Containedgold in ore	oz	929	9,914	10,843
Recovery	%	72.2	92	90.1
Goldproduced	oz	668	9,123	9,791
Finegold refined & sold	oz	-	7,336	7,336

Table 2: Meekatharra Gold Operation Bluebird mill production statistics.

Gold produced YTD is consistent with the Stage 1 Feasibility schedule which forms the basis for Reed’s production targets at Meekatharra.

Cash Costs

Reed has released separately a detailed quarterly cashflow report Appendix 5B.

Meekatharra Operation	Units	DecQtr 2012	MarchQtr 2013	Full Year 2013
Cash Costs	$	-	16,849,204	16,849,204
Royalties	$	-	305,283	305,283
Goldproduced	oz	-	9,791	9,791
Revenue	$	-	11,769,003	11,769,003
Gold refined & sold	oz	-	7,336	7,336
Cash Costs	$/oz	-	1,721	1,721
Royalties	$/oz	-	31	31
Average salesprice	$/oz	-	1,604	1,604

Table 3 : MGO gold sales, revenue and cost statistics.

Unaudited MGO C1 cash operating costs for the quarter were $1,721/oz reflecting the site’s commissioning period in which low grade feed was fed to the processing facility and much of Bluebird open pit’s mining was waste development.

For the purpose of reporting operating cash costs, both the operating expenditure and gold production from the December quarter have been combined with the operating expenditure and gold production from the March quarter.

Total expenditure at MGO is consistent with the Stage 1 Feasibility study which forms the basis for Reed’s expenditure targets at Meekatharra. Unit mining costs of $7.63/BCM full year to date is within 1.5% of targeted unit mining cost, unit milling costs were 12% below targeted unit milling costs full year to date whilst total site administration cost of $2.3 million full year to date equals targeted expenditure.

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Exploration and Development

During the quarter Reed completed an RC program of Reserve conversion and extension drilling within the Fenian West area of the Prohibition deposit.

Prohibition

The prohibition deposit is composed of two parts, the deep sulphide zone that will be targeted from underground, and the oxide-shallow sulphide zone mineralisation to be targeted from an open pit. The open pit is scheduled to be mined as part of the MGO’s Stage 2 operations. The deposit is located 17km north of the Bluebird Processing Plant and contains a Probable Reserve of 1.1Mt at 2.7g/t for 96,000oz of gold. Mineralisation at Prohibition is localised at the intersection of a suite of westerly dipping reverse faults and an easterly dipping banded iron-formation (“ BIF ”). Minor mineralisation also occurs along the westerly dipping faults adjacent to the BIF in the near surface related to re-mobilisation of gold during weathering.

To the south of the pit design there are areas of mineralisation that remained in the inferred resource category following the 2011 RC drilling program. Recent RC drilling was designed to test an area beneath the existing haul road, in an area known as Fenian West. Mineralisation was interpreted to have been offset by a late un-mineralised fault, which also offsets the BIF (Figure 3 and Figure 4). Results have confirmed the location of the late fault and identified the host BIF in the vicinity of the fault. Drilling has also identified two lode structures adjacent to the late fault. Results from the re-mobilised zone adjacent to the BIF include true width (“ TW ”) intersections of 8m @ 2.4g/t from 29m depth (13FWRC004) and 4m @ 6.9 g/t from 28m depth (13FWRC002 – Includes 1m @ 24.6g/t). Results from the BIF zone include intersections of 9m @ 3.0g/t from 35m (4.8m TW; 13FWRC012), 16m @ 1.6g/t from 56m depth (8.9m TW; 13FWRC010). A full list of intersections is presented in Table 4.

Hole ID	From	To	Depth	Width	TW	Au~~#~~	East	North	RL~~*~~
13FWRC002	32	36	28	4	4	6.9	690	2190	492
				Inc.	1	24.6
13FWRC003	86	94	81	8	5.6	2.0	671	2190	437
13FWRC004	30	38	29	8	8	2.4	686	2180	492
13FWRC005	85	100	72	15	10	1.1	667	2176	439
13FWRC007	51	54	47	3	1	2.7	659	2170	475
13FWRC010	67	83	60	16	8.9	1.6	680	2147	455
13FWRC012	40	49	36	9	4.8	3.0	681	2139	482
13FWRC013	22	24	21	2	1.5	1.3	705	2129	501
	48	53	42	5	3	2.0	691	2128	477

Table 4 : Fenian West significant drill intersections .

Determined by 50g fire assay with AAS analysis by Genalysis Laboratory Services. Composite grades generated using 0.5g/t lower cut, minimum composite grade of 1.0g/t and minimum width of 2m.

• Surface at 520mRL

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Figure 3 : Plan of the Fenian West area of the Prohibition deposit showing the geology at the 460mRL and the location of holes drilled (Red – Mineralisation, Bold lines – Faults, Brown – BIF).

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Figure 4: Cross-section 2180mN

Project Generation

Reed is currently undertaking a review of the large open pit resources within MGO’s inventory with a view to targeting higher grade zones within existing resources. The largest of these is the Mickey Doolan resource located at Paddys Flat.

Mickey Doolan is scheduled to be mined as part of MGO’s stage 2 operations and is the first large scale resource to be reviewed. Geological modelling will place an emphasis on identifying the extent of known zones of higher grade and modelling variation in metallurgical recovery within the ore body.

A review of historic drilling data for the Mickey Doolan and Phar Lap project areas has been completed and a number of reverse circulation grade control and exploration holes that had been excluded from previous estimates were identified. Validation of this drilling has been completed and an updated model is proceeding to incorporate the new data.

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An area of mineralisation has been identified in historic drilling at Reedy North within the Reedy Project. Reedy North was originally modelled in 1990 and a Reserve defined for the area. No further work has been performed on the project, and Reed will re-model the data and estimate a Resource using modern techniques. New drilling and QA/QC checks will be completed, where required, to validate the historic results.

MT MARION LITHIUM PROJECT

(Reed 70%, Mineral Resources Limited 30%)

During the quarter Reed Industrial Minerals Pty Ltd ( RIM ) continued to advance the Mt Marion Lithium Project (“ Mt Marion ”) with the commencement of a metallurgical test work program at SGS Perth. RIM is owned 70:30 by Reed Resources Ltd and leading mining services provider Mineral Resources Limited ( MRL ). MRL fund and operate the project through their subsidiary, Process Minerals International Pty Ltd.

As part of RIM’s integrated down-streaming strategy, and following on from the 2012 Pre-feasibility Study, the “proof of technology” test work program involves the production of high-purity lithium battery feed-stocks, Lithium Hydroxide and Lithium Carbonate, on a continuous scale from RIM’s proprietary process flow sheet using spodumene concentrates from Mt Marion. The test work program is planned to be complete in September at which time a decision to complete the Engineering Cost Study will be made.

Roskill are forecasting extraordinary increases in the consumption of high-purity or battery-grade lithium hydroxide and carbonate, underpinned by growth in rechargeable batteries. The current median prices for lithium hydroxide and lithium carbonate are US$7,500 and US$7,100 per tonne delivered (source: Industrial Minerals 9 April 2013).

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Reed and MRL are continuing to assess the most effective production profile and optimal timing for the commencement of spodumene concentrate operations at Mt Marion. All project approvals for Mt Marion have been received.

Reed is working with MRL in preparing RIM to become an independently financed, advanced minerals company. An Initial Public Offering of RIM is currently Reed and MRL’s preferred financing strategy, with the anticipated timing to be determined post-completion of a Definitive Feasibility Study. Strategic discussions continue with third parties in relation to alternate transaction structures. Discussions remain preliminary and there can be no assurance that a binding proposal will emerge. Reed and Mineral Resources will keep the market informed as matters develop further.

BARRAMBIE FE-TI-V PROJECT

(Reed 100%)

During the quarter Reed continued its evaluation of a proprietary hydrometallurgical technology to produce high-purity titanium from the Eastern Band of the Barrambie Fe-Ti-V deposit.

Barrambie’s Eastern Band is one of the highest grade hard rock titanium deposits globally and contains a 2005 Mineral Resource of 48Mt @ 22% TiO2.

Formal laboratory scale test work in Canada has confirmed high-purity titanium dioxide can be precipitated selectively from a leach solution at recoveries greater than 90%.

A continuous scale mini plant processing trial is planned once appropriate resources and funding become available. An updated Resource estimate for Barrambie will be prepared once cut-off grades are supported by results generated from mini plant trials of this prospective technology.

The company is currently negotiating a technology transfer agreement for the process.

COMET VALE GOLD PROJECT

(Reed 100%)

During the quarter the Company executed a binding memorandum of understanding for the conditional sale of its subsidiary Sand Queen Gold Mines Pty Ltd (“ SQGM ”) to Crest Minerals Ltd (“ Crest ”) (ASX: CTT). SQGM holds Reed’s Comet Vale Gold Project near Kalgoorlie.

Under the transaction Crest will pay Reed $6 million cash, including a non-refundable deposit of $100,000. The sale includes Reed’s 1% zinc net smelter royalty over the Nimbus Project, which Reed divested to MacPhersons Resources Ltd ( MRP ) in 2011, subject to MRP not exercising its preemptive right to purchase the royalty.

The sale is subject to Crest completing its due diligence enquiries by 19 May 2013, Crest completing a capital raising of at least $13,000,000 and receiving any necessary regulatory and shareholder approvals prior to the end of June 2013. The transaction is also conditional on Reed obtaining any necessary third party consents, approvals and waivers, together with any necessary governmental authorisations or approvals.

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MT FINNERTY PROJECT

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

Iron Ore (Cliffs 80%, Reed 20%)

During the previous quarter Cliffs tested a magnetite banded-iron target (FIN5) with a single diamond drill hole. Assays are yet to be received.

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

In pursuance of a new geological model proposed by Western Mining Services, Reed reinterpreted the geochemical signatures derived from the 2011-2012 RC drill testing of the footwall contact and geophysical surveys from 2009, refining the possible position of remobilised nickel sulphide mineralisation. The new model proposes the position to be centralised within the high magnesian ultramafic (Green Dam Ultramafic Complex) not on the footwall contact and to have involved hydrothermal fluids that were channelled along tectonically emplaced shear zones. Geological model similarities with the Mt. Keith nickel sulphide mineralisation have been identified. The geological model was central to an application for drilling co-funding application to the DMP, which was granted late in 2012.

Subsequent field work as part of the final positioning of the drill collars and pads/sumps resulted in the rediscovery of the surface material that was identical to the original WMC-era gossan samples of 1968 that returned 2-5% Ni. Averaged pXRF (Niton) determinations confirmed the strongly anomalous Ni values hosted within an apple-green mineralised talc-carbonate. Further analytical work is in progress.

In late March 2013, Westralian Diamond Drillers mobilised to site and commenced drill testing of a strong IP anomaly, the position of which had been relocated by recent geophysical reinterpretation of the 2010 target position. The second hole tested 200m down-dip of the highly anomalous PGE response evident in a 2012 RC drill hole. The third hole tested underneath the gossan sub-crop. The geology and sampling requirements of these holes will be assessed from mid-April 2013.

ROYALTY INTERESTS

Reed holds a 1% Net Smelter Royalty on all zinc extracted and recovered from M26/0490 and M26/0598, containing MRP’s Nimbus Silver-Gold-Zinc mine. MRP has reported to ASX that the mine has combined Resources of 4.4Mt @ 82g/t Ag, 0.23 g/t Au and 1.1% Zn, containing 48,800 tonnes of zinc, and that processing is planned to commence in first half of 2014.

ENDS

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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 they appear.

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APPENDIX A: MEEKATHARRA GOLD PROJECT RESOURCES & RESERVES AS AT 30 JUNE 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

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.

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