Investor Update - Meekatharra Gold Project

INVESTOR UPDATE – MEEKATHARRA GOLD PROJECT

OCTOBER 2011

Chris Reed – Managing DirectorCraig Fawcett – GM Gold

ASX: RDR

www.reedresources.com

Important Notice

DisclaimerThis document has been prepared by Reed Resources Ltd (“Reed” or “the Company”) to provide an update of the Company to investors and potential new shareholders.

Any statements, opinions, projections, forecasts or other material contained in this document do not constitute any commitments, representations or warranties by Reed and its associated entities, directors, agents and employees. Except as required by law, and only to the extent so required, directors, agents and employees of Reed shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in this document.

This document includes certain statements, opinions, projections, forecasts and other material, which reflect various assumptions. The assumptions may or may not prove to be correct. Recipients of this document must make their own independent investigations, consideration and evaluation of the opportunity to invest in the Company. By accepting this document the recipient agrees that if it proceeds further with its investigations, consideration or evaluation of the opportunity to invest in the Company it shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon this document.

All figures in this document are in Australian dollars (AUD) unless stated otherwise.

Competent Persons StatementGeological aspects of this document have been compiled by Mr Craig Fawcett (MAIMM), a full time employee of Reed. 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 document of the matters in the form and context in which it appears.

Market CapitalisationLast price (30‐Sep‐11) $ 0.39

Shares on issue $ 262.2

Market capitalisation $m 102.3

Cash (est. end Sep) $m 15.9

Debt $m 0.0

Enterprise value $m 86.4

Reed Resources Ltd (ASX: RDR) is a WA‐based resource developer and emerging gold producer

Focused on its flagship 2.8Moz Meekatharra Gold Project

Targeting first production by December 2012 with a 100‐120Koz per annum sustainable production profile

Continues to achieve all milestones of turnaround strategy 12 Month Share Price

Background

Reed Corporate Snapshot

Substantial ShareholdersDavid Reed 8%

M & G/Vanguard 8%

TOTAL 16%

$0.00

$0.20

$0.40

$0.60

$0.80Reed’s strategy has been to acquire and develop undervalued assets across varying commodities

Now has 3 company making projects across gold, lithium and vanadium

Reed is significantly undervalued compared to peers across all projects

Reed Project Summary

GOLD LITHIUM VANADIUM Other Assets

100% 70% 100%100%

Production by Dec‐12

Stand‐aloneSPV

Stand‐aloneSPV

Incubate & Develop

Resource

Partners

Target Production

Total Funding

14.9Mt @ 1.3% Li2O2.84Moz (contained) 65.2Mt @ 0.82% V2O5

Mineral Resources (ASX: MIN)

China Nonferrous Metal Industry (NFC)

Iron ore (Reed 20%)

JV with Cliffs Natural Resources for DSO at Mt Finnerty

Nickel (Reed option to acquire 100%)

Mt Finnerty ‐prospective for nickel sulphides

Other (Au)

Comet Vale –186Koz @ 10.8 g/t

n/a

$40 million (inc. BOO)

Fully Funded by MIN

$33 million (to DTM)

$4 million remainingTBA

June Qtr, 2012December Qtr, 2012 2014/15

Strategy

Meekatharra Gold Project Regional Location

Meekatharra Gold Project ‐ Update

3 Mtpa processing plant

180 man camp

Low capex re‐start

InventoryFeb2011

Sep 2011

Increase

Resource 2.5Moz 2.8Moz ↑12%

Reserve 420koz 476koz ↑13%

Reserve (open pits)

114koz 250koz ↑119%

(Reed 100%)

Reed Development Strategy

Results to Date

Results Feb 2011 Sep 2011 IncreaseResource 2.5Moz 2.8Moz ↑12%

Reserve 420koz 476koz ↑13%

Reserve (Open Pits)

114koz 250koz ↑119%

Advanced

Reed Production Strategy

Sustainable Open‐pit Production Profile 100 – 120Kozpa

Stage 1

Optimal Production Profile

160 – 180Kozpa

Stage 2

Low risk start‐up

Open Pit and Underground Expansion

Meekatharra Fly Through

Stage 1 Bluebird Pit Extension and Cutback

Probable Reserve 1.4 Mt @ 1.9 g/t Au for 87,000 ozs

Stage 1 Bluebird Pit Extension and Cutback

Stage 1 Prohibition Pit Extension and Cutback


Probable Reserve 2 Mt @ 3.6 g/t Au for 225,000 ozs

Stage 2 Option Paddys Flat Underground

Total Resource 19.5 Mt @ 1.0 g/t Au for 609,000 ozs

Stage 2 Option Mickey Doolan Pit Extension and Cutback

Super Pit Tonnes(Mt)

Grade(g/t)

Gold(koz)

Total Resources 28.6 1.6 1,486.7

Stage 2 Option Meekatharra Super Pit

Reedys Tonnes(Mt)

Grade(g/t)

Gold(koz)

Resource 4.9 2.5 395

Reserve (o/p) 0.4 2.9 37

Southern Group Long Section

Stage 2 Option Reedys Underground

Meekatharra Summary

Reed is re‐establishing the integrity,credibility and value of the Meekatharra Gold Project

Careful planning and compliance

Detailed evaluation and feasibility studies

Reliable development schedules

Sustainable operations

Value Proposition: Size and Scope

Source: IRESS, ASX, company reports

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SBM NGF RRL FML SAR RDR IGR AXM

Resource (Moz)

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1.0

1.5

2.0

2.5

3.0

SBM RRL NGF SAR FML RDR IGR AXM

Reserve (Moz)

PRU ‐ 280 kozpa

BDR ‐ 150 kozpa

NMG ‐ 160 kozpa

GRY ‐ 200 kozpa

GGB/AZX ‐ 130 kozpa

AMX ‐ 200 kozpa

KGD ‐ 120 kozpa

CHN ‐ 100 kozpa

IDC ‐ 150 kozpa

RDR ‐ 100 kozpa

$0m

$50m

$100m

$150m

$200m

$250m

$300m

Feb‐11 Sep‐11 Apr‐12 Oct‐12 May‐13 Nov‐13 Jun‐14

Production vs. CAPEX vs. Time to Commissioning

Value Proposition: Time to Production

Value Proposition: Comparative Upside

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RRL IGR SAR SBM FML NGF AXM RDR ‐MGP

$EV / Resource Oz

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IGR RRL SAR FML SBM AXM NGF RDR ‐MGP

$EV / Reserve Oz

$ 11/oz

$ 90/ozPeer Average

Peer Average

$ 66/oz

$ 375/oz

Mt Marion Fly Through

Mt Marion Lithium Project ‐ Update

Special Purpose Vehicle ‐Reed Industrial Minerals P/L owned 70% RDR/30% MIN

MIN fund evaluation and construction ‘sunk’ costs

MIN construct and commission processing plant on BOO basis

1.2 Mtpa throughput to produce:

200Ktpa spodumene

60Ktpa muscovite mica

30tpa tantalite

(Reed 70%)

Mt Marion Lithium Resources

Mt Marion (100% basis)

Tonnes(Mt)

Li Grade(% Li2O)

Fe Grade(% Fe2O3)

Measured 2.0 1.45 0.9

Indicated 4.8 1.39 1.2

Inferred 8.1 1.3 1.3

Total 14.9 1.3 1.2

Comparison – Australian Lithium Mineral Producers

Source: Reed Resources Ltd

Talison ‐ Greenbushes

Incline vein pegmatite

Head grade 3% Li2O

Glass, ceramic, chemical grade

Strip ratio 5.6:1

Deposit Comparisons

Reed/MIN – Mt Marion

Flat lying vein pegmatite

Head grade 1.3% Li2O

Chemical grade

Strip ratio 3.3:1

Galaxy – Mt Cattlin

Flat lying pegmatite

Head grade 1% Li2O

Chemical grade

Strip ratio 2.4:1

Source: Reed Resources Ltd

Australian Lithium Market Cap Net Cash EV (1) Prodn (2) EV/Prod Implied

Mineral Producers $m $m $m kt pa LCE $/t LCE EV (1x2)

Talison Lithium (TSX: TLH)

Greenbushes 264 73 191 51.0 3,744 $111m

Concentrate producer

Reed Resources (ASX: RDR)

Mt Marion ? 29.7

LiC developer

Galaxy Resources (ASX: GXY)

Mt Cattlin 197 ‐2 199 20.3 9,783 $291m

Integrated LiC developer

Barrambie Fly Through

Vanadium Market – Strong Long Term Fundamentals

+ = ? Vanadium Redox (Liquid) Batteries

Renewable energy storage, peak shaving, load leveling, backup

High efficiency, long life >20yrs

Variable input/fixed output

Power (cell) and capacity (concentration and volume) varied to suit application

1MWh storage = 9t of V2O5

+Lithium Vanadium EV Batteries

Highest voltage → POWER

Highest energy density → RANGE

Contains 4kg Li, 20kg of V

Titanium‐Vanadium Alloys

Increasing intensity of use in aerospace

$75Roskillestimate

$0

$100

$200

$300

$400

$500

$600

$700

$800

Largo American Vanadium

Atlantic Apella TNG Energizer Sino Vanadium

Yellow Rock

EV / Resource Multiple ($/t V2O5)

Potential valuation range of $100 ‐ 400/t V2O5

Mean $251/t V2O5

Vanadium Peer Comparisons

Based on EV/resource benchmarking of listed vanadium peers, Barrambie has an implied

valuation of $53 ‐ $214mSource: Bloomberg, ASX, company reports

Board and Senior Management

David ReedFCPA, OAM Executive Chairman

Steven ColeLlb(Hons), FAICDNon-Executive Director

Dr Peter Collins BSc(Hons), PhD, MAIGNon-Executive Director

Chris ReedBCom, GradCertMinEcon, MAusIMMManaging Director and CEO

Craig Fawcett BSc(Hons), GDipMiningGeneral Manager - Gold

Ian Junk BEng(Hons), MAusIMMNon-Executive Director

Jason Carone BCom, CAFinancial Controller and Company Secretary

Dr Vanessa GuthrieBSc (Hons), PhD, GDBMNon-Executive Director

Darren WatesLegal Counsel and Company Secretary

Reed Technical Staff

David HollingsworthSenior Exploration Geologist

Elizabeth JonesSnr Planning Engineer

Matt SchembriResource GeologistOpen Pit

James LawrenceResource Geologist Underground

Jeremy WatkinsProject Manager – Gold

Dudley KingsnorthConsultant Lithium

Tony SimpsonConsultant Vanadium

Dr Bryan SmithConsultant GeologistLithium/Vanadium/Nickel

Bill Crossley Project Manager –Lithium/Vanadium

Summary

Why Reed?

Emerging gold producer targeting +100koz per annum

Advanced projects across 3 strategic commodities with strong price outlook

Well funded with experienced management team

Trades at a significant discount to peers across all projects (current share price $0.39)

Gold

Existing plant and camp

Large resource base

Low risk start‐up phase

Staged expansion upside

Exploration upside

LithiumOperated and funded by Mineral Resources Ltd (ASX: MIN)

In construction phase

Vanadium

High grade resource

Strong price fundamentals

In finance/approvals phase

Notes:

1. Resources and Reserves comply with the Australian JORC Codereporting guidelines

2. Resources are inclusive of Reserves

Meekatharra Category Tonnes (Mt) Au (g/t) Au (koz)

Meek. North Indicated 0.7 1.3 29.0

Inferred 0.2 1.2 6.0

Paddys Flat Indicated 18.7 1.6 987.2

Inferred 9.4 1.6 499.5

Yaloginda Indicated 8.8 1.8 509

Inferred 6.4 1.7 346

Reedys Indicated 2.0 3.4 219

Inferred 3.0 2.6 246

Total 49.2 1.8 2,841.7

Comet Vale Category Tonnes (Mt) Au (g/t) Gold (koz)

Comet Vale Indicated 0.2 10.8 82.5

Inferred 0.3 10.9 103.5

Total 0.5 10.8 186.0

Mt Marion Category Tonnes (Mt) Li2O (%) Li2O (kt)

1, 2, 2W, 4,5,6 Measured 2.0 1.45 29.2

Indicated 4.8 1.39 66.3

Inferred 8.1 1.30 105.1

Total 14.9 1.35 200.7

Barrambie Category Tonnes (Mt) V2O5 (%) TiO2 (%)

Barrambie Indicated 49.2 0.82 17.3

Inferred 16.0 0.81 17.2

Total 65.2 0.82 17.3

Meekatharra Category Tonnes (Mt) Au (g/t) Au (koz)

Bluebird Probable 1.4 1.9 87.0

South Junct. Probable 0.1 1.5 4.5

Prohibition Probable 1.1 2.7 96.0

Surprise Probable 0.1 3.0 13.0

Batavia Probable 0.2 2.4 14.0

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

Total (o/p) Probable 3.3 2.3 251.1

Prohibition Probable 1.3 2.4 104.1

Vivian/Cons. Probable 0.3 7.7 63.6

Fatts/Mud. Probable 0.4 4.7 57.2

Total (u/g) Probable 2.0 3.6 224.9

Total Probable 5.3 2.8 476

Barrambie Category Tonnes (Mt) V2O5 (%) TiO2 (%)

Barrambie Probable 39.7 0.82 15.7

Total 39.7 0.82 15.7

Summary

APPENDIX 1 Resource and Reserve Inventory

Investor Update - Meekatharra Gold Project

Documents

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