Robust Geophysical Target beneath historic Nickel Gossan

December 17, 2009

Australian diversified resources company Reed Resources Ltd (ASX: RDR) (the “Company” or “Reed”) together with Joint Venture partner Barranco Resources NL (“Barranco”) will commence a Reverse Circulation (RC)/ diamond drilling program at the Mt Finnerty project in January 2010, following confirmation of a robust IP/EM anomaly below a high grade historic gossan at the project (Figure 2).

Recent exploration at the project has focussed on the western flank of the Mt Finnerty greenstone belt, in an area where historic exploration resulted in the discovery of a nickelrich ‘gossan’ by Western Mining Corporation (WMC) in 1968 and surrounded by an extensive PGE soil geochemical anomaly detected by previous explorers in 2006. This area is underlain by a thick sequence of ultramafic-mafic volcanic rocks that is continuous along the western flank of the greenstone belt; a distance of over 50 km (Figure 2).

The Company’s exploration program included an induced polarisation (IP) survey and ground electromagnetic (EM) survey, supervised by Southern Geoscience Consultants. This work resulted in the discovery of a robust geophysical anomaly coincident with the ‘gossan’ and soil geochemical anomaly.

The IP survey (21 lines, 16.8 line km, 200 m line spacing) covered 4.2 km of strike length of the prospective ultramafic sequence. The survey was centred on the position of the WMC ‘gossan’ and detected a robust anomaly at a depth of 150-400 m below surface (Figure 3). The IP anomaly is along strike to the south and below the WMC ‘gossan’ which assayed at 5.1 % Ni, 310 ppm Cu.

The IP anomaly is close to a geological contact that was also interpreted from resistivity measurements during the IP survey. This geological contact is at the interpreted base of an ultramafic unit within the ultramafic-mafic volcanic sequence. Following the success of the IP survey, a fixed loop electromagnetic (FLTEM) survey (5 lines,4 line km, 100 m line spacing) was undertaken over the IP anomaly. The FLTEM survey revealed a diffuse EM anomaly that is attributed to a weakly conductive feature approximately coincident with the IP anomaly (Figure 3). Modelling of the EM anomaly indicates a steeply east-dipping planar feature, possibly a stratigraphic source that extends along strike to the north beyond the IP anomaly.

The geophysical anomalies also coincide with an extensive PGE soil geochemical anomaly that has maximum values in excess of 100 ppb Pt+Pd (2006). This anomaly is at least 500m in length along the strike of the ultramafic unit.

Historic RC drilling along strike to the north of the IP anomaly included two intersections of 1.5m @ 0.55% Ni, 375ppm Cu and 1.5m @ 0.52% Ni, 390ppm Cu in a vertical drill hole BFRP21 (WMC 1970). Another drill to the south of the IP anomaly intersected 15m @ 0.35% Ni, 237ppm Cu and 3m @ 0.33% Ni, 425ppm Cu in an inclined drill hole MF103 (Arimco 1995). Drill hole MF103 is also reported to have disseminated pentlandite, a primary nickel sulphide, in peridotite below the weathered profile. These drill holes are in the same ultramafic unit as the IP-EM anomalies but are at least 1 km from the geophysical anomaly.

The coincidence of IP and EM geophysical anomalies below a nickel-bearing ‘gossan’ and an extensive PGE soil geochemical anomaly that parallels an interpreted basal ultramafic unit confirms the potential of this target and the remainder of the Mt Finnerty greenstone belt for nickel sulphide mineralisation.

On the identification of robust IP/EM anomaly below the historic gossan Reed Resources Managing Director, Mr Christopher Reed said, “The successful ground IP-EM surveys in the Barranco ground and the exciting PGE soil geochemistry confirm our belief that this is the most underexplored fertile ultramafic belt in the Eastern Goldfields”.

Forward work program

An RC/diamond drilling program to test the geophysical anomaly, confirm the ultramaficmafic volcanic stratigraphy, and increase the geological understanding of the prospect is scheduled to commence in January 2010. A Program of Work (POW) application has been submitted to the Department of Mines and Petroleum and drilling will commence immediately once approval is received.

Competent Person Statement

Geological aspects of this report that relate to exploration results have been compiled by Dr Peter Collins (MAIG), a Director of Reed Resources Ltd. Dr Collins has sufficient experience relevant to the style of mineralization 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 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004). Dr Collins consents to the inclusion in this report to matters in the form and context in which it appears.