Encouraging results point to 2010 startup at Mt Marion

November 19, 2009

Australian diversified resources company Reed Resources Ltd (ASX: RDR) (the “Company” or “Reed”), together with joint venture partner Mineral Resources Limited (ASX: MIN) (“Mineral Resources”), continue to advance the Mount Marion Lithium Project in Western Australia towards a 2010 production start-up, with metallurgical test work yielding positive results and a resource definition drill program to extend the current resource underway.

METALLURGICAL TEST WORK

Como Engineers have supervised test work to confirm the recovery of spodumene from conventional heavy liquid separation on crushed ore. The current test work program was performed by Mineral Processors (WA) Pty Ltd on bulk samples from exploration winzes sunk into the No.1 and No.2 Deposits at Mount Marion and were crushed to P100 8mm before single-pass testing.

Figure 1: Graph of Mass Recovery and corresponding Grade of Spodumene (Lithia) Concentrates produced by Heavy Liquid Separation of ore at certain Specific Gravity cut-offs.

Previous beneficiation test work conducted as part of the Pre-Feasibility Study (“PFS”) undertaken by previous owners, Associated Minerals Pty Ltd, in 1996 recovered 24% of the original mass of ore from the No.1 Deposit into a concentrate grading 6.5% Li₂O. The current planned production rate assumes a mass recovery of approximately 20% into a concentrate grading +6.5% Li₂O.

Concentrates produced from the No.1 Deposit gave the following results:

Resource Definition Drilling Program

The Company has commenced Phase 1 of its Resource Definition drill program, targeting a Mineral Resource of 7-8 Mt of spodumene pegmatite at a grade of 1.3-2.0% Li₂O. The drilling is expected to be complete by the end of November. The potential quantity and grade of the exploration target is conceptual in nature and there has been insufficient exploration to define it as a mineral resource and that it is uncertain if further exploration will result in the determination of a mineral resource.

Figure 2: Mount Marion pegmatite group within mining leases M15/999 and M15/1000.

The Company has based its exploration target on estimates of reserves from a prefeasibility study in 1996 and reported in accordance with the JORC Code (1989). Identified reserves included 1.49 Mt at an average grade of 1.67 % Li20 in the No.1 deposit, including ‘proved reserves’ of 0.54 Mt at 1.9 % Li₂O and ‘probable reserves’ of 0.95 Mt at 1.5 % Li₂O. In addition, the review also confirmed an inferred resource of 1.0 Mt at 1.5 % Li₂O at depth in the No.1 deposit; ‘probable reserves’ of 0.3 Mt at 1.2 % Li₂O in the No.2 deposit; and inferred resources of 0.8 Mt at 1.17 % Li₂O in the No.2 West deposit and 0.3 Mt at 1.3 % Li₂O in the No.4 deposit.

Figure 3 Cross section (A-A’ in Figure 2) in the central part of the No.1 deposit showing the interpreted distribution of high-grade (>1.9% Li2O5) zone, within the pegmatite bands (interpretation by Bryan Smith Geosciences).

Forward work

Permitting has been lodged for a second phase of reverse circulation/ diamond drilling to commence in December. This will include some infill and extension drilling, and representative sample collection for geotechnical/metallurgical purposes.

A mineral resource estimate is planned to be completed by the end of Q1 2010. The Joint Venturers expect to mobilise a processing plant and related equipment in Q2 2010. First shipments of product, at a production rate of 17,000 tonnes per month of +6.5% Li₂O concentrate, is expected to commence from Q3 2010, subject to a decision to mine and obtaining all necessary approvals.