NEOMETALS LTD — Management Reports 2010

Nov 24, 2010

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

25 November 2010

Dear Shareholders,

The past financial year has marked an important growth phrase for Reed Resources with the Company achieving its previous objectives and rapidly developing and expanding its projects in Western Australia and I believe is in the strongest position it has been since listing on the Australian Securities Exchange in 2002.

Pleasingly, in just over 15 months since securing the rights to the lithium deposit at Mt Marion, our joint venture partners and operators, Mineral Resources Ltd, are committed to development of what will be, the world’s second largest spodumene (lithium) operation. The final approval to commence mining and site preparation is imminent. The processing plant is being built in a modular form at the Kwinana workshops of Mineral Resources. We believe we will be in production in the June quarter of 2011 and expect regular cashflows from the start of the 2011/12 financial year.

We have completed this year a pre‐feasibility study of constructing a lithium carbonate plant in Australia, Malaysia or China to quantify the additional value from the downstream processing of our lithium concentrates. We have received strong interest from Asian investors, producers, financiers and governments, for joint participation in expansion of existing plants and new plants. We are evaluating the various proposals and will provide guidance on our preferred options early in the new year.

Our vanadium deposit at Barrambie is the highest grade in Australia and we recently entered into an MOU with China Non‐ferrous Metal Industry’s Foreign Engineering and Construction Co Ltd (“NFC”) that formalises our discussions that took place during the year. The MOU covers an engineering procurement and construction contract (EPC) and project financing, and represents the next step towards the successful development of the Barrambie Vanadium Project.

During the year the Company resumed 100% ownership of the Sand Queen Gold Mine at Comet Vale but disappointingly had to suspend operations on the 1st of June 2010 due to economic milling facilities were no longer available. We are currently evaluating resuming production on a larger scale via the current fully equipped shaft. A commitment to develop will coincide with a decision to refurbish the Nimbus treatment plant, where preparatory works and engineering are well advanced, connection to the high‐voltage grid should occur in the March Quarter 2011 and some long lead times for plant refurbishment have been completed.

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Pleasingly, our iron ore joint venture with Cliffs will shortly be under the most intensive exploration activities since the joint venture commenced in 2006 and we are hopeful of outlining a development path by early 2011.

Our nickel project is still being reviewed following recent drilling.

With the outlook for lithium and vanadium prices set to increase substantially in the next few years we believe this will be a major contributor to profits in the coming years, supplemented by gold income and nickel and iron ore should these operations become feasible.

I believe the underlying value and future earning potential of our assets should support a much higher share price than we are currently experiencing.

The outlook for the next financial year is strong for Reed Resources with our cash position standing at approximately A$14.5 million at the time of this letter.

We will continue to build upon the successes achieved in 2010 in line with our long‐ term growth strategy.

In closing I must thank my fellow directors, executives, staff and contractors for an outstanding effort this year, in particular our Managing Director who has travelled extensively helping to build a solid foundation for the lithium and vanadium businesses. I would also like to thank you, our shareholders, for your ongoing loyalty and support and we look forward to sharing another successful year with you.

Yours faithfully

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David Reed Executive Chairman