Resource definition drill results

January 18, 2010

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 Projec t, located in the goldfields region of Western Australia (refer Fig 1), towards a 2010 production start-up, with completion of the Phase 1 resource definition drilling program to extend the current resource at the No.1, No.2 and No.2W Deposits.

The first phase of resource definition Reverse Circulation (RC) drilling was completed at Mt. Marion during November-December 2009. A total of 139 vertical holes were drilled for an aggregate of 7,002 metres at three of the six known deposits on the Mt. Marion tenement (Figure 1). Spacing of the drill holes ranged from 30m x 30m to 80m x 40m. At the No.1 and No.2 Deposits the average depth of the holes was 40 metres (Figure 2). The depths of the holes drilled at the No.2W Deposit (Figure 3) averaged 75 metres with the deepest hole being 152 metres.

At a cut-off grade (“COG”) of 0.6 % Li2O the average thickness of the intercepts is 9.2metres at a grade of 1.52 % Li2O and 1.4 % Fe2O3. If the cut-off grade is lowered to 0.4 % Li2O the average width of mineralised intercepts is 10 metres at a grade of 1.44 % Li2O and 1.5 % Fe2O3, demonstrating the sharp, natural cut-off of the high-grade mineralisation. Intercepts of 10 metres or greater, at a COG of 0.6 % Li2O, are listed in Table 1. All intercepts at a COG of 0.4 % Li2O are included in Appendix A for the three deposits that have been drill tested.

The structure of the pegmatite deposits is relatively simple, forming a series of subparallel stacked sills that dip at 10-20 degrees to the west. Lithium is entirely contained in spodumene crystals and the lithium grade is relatively constant through the pegmatite bodies (cf Figures 2, 3). The pegmatites are comprised generally of spodumene (20-40 % by volume), quartz (25-30 %), feldspar (20-25 %) and muscovite (about 10 %). Some of the spodumene crystals are more than 30 cm long.

Table 1 High-grade intercepts (>0.6 % Li2O) with a down-hole length in excess of 10metres (full details in Appendix A).

FORWARD WORK

Drill results are currently being compiled and validated for inclusion in a comprehensive database from which a geological model of the Mt Marion deposits will be constructed in preparation for resource estimation by April 2010. Further drilling in a Phase 2 programme (45 holes) is currently in progress on the No.5 Deposit, from which it is anticipated that additional resources will be outlined. Drill testing will also be carried out on two additional pegmatite prospect: No.1W and an un-named pegmatite.

The Joint Venturers expect to mobilise a processing plant and related equipment with a production rate of 17,000 tonnes per month of +6.5% Li2O concentrate in 2010 subject to a decision to mine and obtaining all necessary approvals.

C J Reed
MANAGING DIRECTOR

Competent Persons Statement

Geological aspects of this report that relate to Exploration Results have been compiled by Dr Bryan Smith (MAIG), a consultant to Reed Resources Ltd. Dr Smith 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. Dr Smith consents to the inclusion in the report of the matters in the form and context in which it appears.

Although Reed remains optimistic about the potential of the Mount Marion project, any reference to the terms “ore” and “high-grade” in this report is conceptual in nature. Use of the term “grade(s)” is not intended to represent the grade of a resource.

NOTES:

1. Collar coordinates are for a local grid as illustrated in Figures 2 and 3
2. All holes were drilled vertically and drilled to depths of between 6 and 152 metres.
3. All depths and intercept lengths are down-hole distances and not intended to represent the true width of high-grade bands.
4. All samples analysed by Genalysis Laboratories , Maddington, WA. Samples were sorted, dried, split and pulverised then prepared as fused discs for analysis by X-Ray fluorescence spectrometry (method XRF01) for Fe, Si, Al, Mg, Ca, Mn, P, K, Na,Ta and NB. Li was assayed by Atomic Absorption Spectrometry (AAS) following multi acid digest and LOI by gravimetric method. QA/QC was monitored using duplicate samples and a sample of Certified Reference Material (CRM) included at random among batches of samples and submitted blind to the laboratory; and analysis of pulverised CRMs and Reed standards have also been included sample batches.
5. Grades are reported as Li2O and Fe2O3, in accordance with convention for reporting this style of mineralisation.
6. Holes that that did not intersect significant mineralisation (i.e., intercepts >0.4 % Li2O) are not listed.