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1 ABN ASX Release 29 October 2014 Level 1, 672 Murray St West Perth WA 6005 Locked Bag 8 West Perth WA 6872 Tel: Fax: QUARTERLY ACTIVITIES REPORT For the quarter ended 30 September 2014 Highlights: Mt Marion Lithium Project Production of lithium hydroxide catholyte from semi pilot plant in USA continues. Long run trial confirms potential to deliver lowest quartile operating costs as indicated in the Pre feasibility Study Downstream partner selection commenced under management of senior lithium industry executive Mr Michael Tamlin. Barrambie Titanium Project Successful continuous production of high purity titanium dioxide via a proprietary hydrometallurgical process. Results confirm potential to deliver lowest quartile operating costs as indicated in Scoping Study (2013). Sedgman and Snowden Mining Industry Consultants commenced a Pre feasibility Study. Mr D. Michael Spratt, former COO of Minproc, engaged to manage the study. Mt Finnerty Project EIS Co funded diamond drilling approved for December Q Lake Johnston Project New geophysical target identified beneath historic nickel sulphide intersection. Diamond Drilling commenced in October Corporate 24M shares bought back and cancelled following Shareholder Approval at EGM. Cash and restricted access term deposits $11.7 million.

2 PROJECT LOCATIONS MT MARION LITHIUM PROJECT (Reed 70%, Mineral Resources Limited 30%) During the quarter Reed Industrial Minerals Pty Ltd (RIM) continued to advance the Mt Marion Lithium Project (Mt Marion) with the successful continuous production of lithium hydroxide (LiOH) catholyte from a semi pilot plant in the USA. RIM is owned 70:30 by Reed Resources Ltd and leading mining services provider Mineral Resources Limited (MRL). MRL fund and operate the project through their subsidiary, Process Minerals International Pty Ltd. The semi pilot plant was commissioned in March 2014 and continues to demonstrate the successful scale up RIM s proprietary hydrometallurgical flowsheet including the purification and electrolysis of lithium chloride solutions, which can be obtained from either mineral or brine feedstocks. The electrolysis process is similar to the Chlor Alkali process used to produce caustic soda (sodium hydroxide) and hydrochloric acid (Figure 1). Figure 1 Simplified process flowsheet comparison 2

3 Advantages of the RIM process include: ability to utilise existing Chlor alkali and new Chlor Alkali package plants to produce LiOH, high current efficiency in electrolysis that has the potential to deliver competitive unit production costs, and very low impurity levels in final product without additional purification phases. The results to date are particularly encouraging with the purification of lithium chloride exceeding expectations and efficiency across the electrolysis membrane exceeding assumptions in the Prefeasibility Study (PFS). The RIM lithium hydroxide production process is a wholly owned technology of RIM. An International patent application (PCT) has received a positive Preliminary Report on Patentability and national phase patent applications have been filed in Australia, Canada, Chile, China, Malaysia and the USA. The Australian Patent Application was accepted and advertised on 17 July 2014 with the Letters of Patent expected imminently. Project Development and Corporate Strategy Reed and MRL are working to develop RIM into an independently financed, advanced minerals company that will be an integrated lithium compound producer and supplier to the Lithium ion battery industry. The project has a granted Mining Proposal and is awaiting the approval of a Works Approval, necessary for the construction and operation of a lithium concentrate plant. The start up of a lithium concentrate operation at Mt Marion is planned to coincide with a decision to construct a downstream lithium compound operation. A partner selection process commenced in the quarter under the management of Mr Michael Tamlin, a former senior executive of a number of lithium producers, both hard rock and brine based. Strategic discussions are in progress with third parties, including existing Chlor alkali producers, with the aim of developing an appropriate business structure for the commercialisation of the RIM process technology. Discussions remain preliminary and there can be no assurance that a binding proposal will emerge. Reed and MRL will keep the market informed as matters develop further. Lithium market The prominent lithium industry researchers forecast a large and sustained increase in the demand for high purity, battery grade lithium hydroxide and carbonate at compound rates of approximately 20% pa. The growth is underpinned by continuing use of rechargeable batteries in consumer electronics and increased market penetration of battery electric and hybrid electric vehicles (BEV and HEV) in commercial and private applications. The current median prices for battery grade lithium hydroxide and lithium carbonate are US$7,600 and US$6,400 per tonne, respectively, on a CIF basis to Europe and US respectively (source: Industrial Minerals 9 Oct 2014). 3

4 BARRAMBIE TITANIUM PROJECT (Reed 100%) During the quarter the Company continued to advance its Barrambie Titanium Project with the successful demonstration of the scale up from laboratory scale batch testing to continuous operation of a proprietary process flowsheet in its mini pilot plant in Canada. Barrambie is one of the world s highest grade titanium deposits, containing total Indicated and Inferred Mineral Resources of 47.2Mt at 22.2% TiO 2, 0.63% V 2 O 5 and 46.7% Fe 2 O 3, at a cut off grade of 15% TiO 2 (Appendix B). The purpose of the 10kg/day mini plant campaign was to test and demonstrate the successful operation of each of the major unit operations of the proprietary flowsheet on a continuous basis, namely: (i) leaching of the mineralised material; (ii) titanium dioxide precipitation; (iii) iron hydrolysis; and (iv) acid regeneration. The process, pioneered in Canada, has produced high purity (>99%) titanium dioxide from Barrambie oxide ores and concentrates at high recoveries. The Company licenced the patented process to extract all valuable metals from its Barrambie deposit in December A Scoping Study by Snowden Mining Industry Consultants in October 2013, based on this process, indicated the potential for a viable hard rock titanium and vanadium mining and processing operation and recommends progression to a Pre Feasibility Study. Average net operating costs per tonne of titanium dioxide recovered were estimated at A$1,214/t with an indicative accuracy of ±35%. The long term price assumption used in the study was US$3,000/t. Figure 2 Indexed, Relative Operating Costs for Standard Plant models in North America, Europe and China using Chloride or Sulfate Process Flowsheets (Q42013)(Source: TZMI) compared to Reed Scoping Study (Source:Reed). 4

5 CAUTIONARY STATEMENT The Scoping Study referred to in this report is based on low level technical and economic assessments, and is insufficient to support reporting of Ore Reserves using recognised codes or guidelines or to provide definitive assurance of an economic development case, or to provide certainty that the conclusions of the Scoping Study will be realised. Project Development and Corporate Strategy Reed has commenced a Pre feasibility study ( PFS ) to assess the technical feasibility and economic viability of the development of a hard rock titanium mining and processing operation against a set of key commercial parameters. The PFS will investigate the construction of a mineral processing facility to treat concentrates from the Barrambie Project. It is expected that run of mine ore will be beneficiated at the minesite and then trucked to a processing facility near Geraldton with a nominal capacity of 500,000t of feed per annum, where high purity titanium, vanadium and iron compounds will be produced. Reed has engaged the services of Mr D.Michael Spratt, an experienced process/construction engineer and former COO of Minproc, to head the owner s team managing the study. The currently preferred project development strategy is to advance the project to a suitable stage of evaluation to attract a joint venture partner to fund and operate the development of the Barrambie project. Titanium and Vanadium market The majority of titanium feedstocks (US$17 Billion or 85% by value) are used to produce titanium dioxide pigment which is then used as an additive in paints, plastics, paper and ink with the balance (15%) used to produce titanium metal products. The current median price for high quality titanium dioxide pigment is US$3,200 per tonne on a CIF basis to USA (source: Industrial Minerals 9 Oct 2014). MT FINNERTY PROJECT (Reed 100%) The Mt Finnerty Project located about 65km east of Koolyanobbing is currently being explored for iron ore and nickel mineralisation in its own right. Iron Ore Interest in the sale process for wholly owned subsidiary Mount Finnerty Pty Ltd ( MFPL ), which holds the tenements and iron rights, has waned with the fortunes of the iron ore price. The Company has completed a scoping study and mining schedule as part of a proposed Retention Licence Application which will be lodged in October 2014 which upon grant will remove the expenditure obligations from the relevant areas of the Mount Finnerty Project without incurring the costs and risks involved in continuing to apply for exemptions. 5

6 For personal use only Nickel (Barranco 100%, Reed option to acquire 100%) During the quarter a surface IP survey and interpretation were completed to aid in the siting of a single westerly angled diamond drill hole targeting blind Ni S mineralisation. Numerous intercepts of disseminated nickel sulphides have been intersected over a strike length of more than 3km (Figure 3) and whilst the intercepts are not economically significant in isolation, they are geologically significant in providing evidence for multiple sulphide mineralising events, with the metals interpreted to be hydrothermally remobilised into a shear zone(s) that have intersected disseminated and massive nickel sulphides at depth (Figure 4), as illustrated in the conceptual geological model (Figure 5). Importantly, the Central Shear Zone that has impeded exploration previously is interpreted to lie East of the therefore undisturbed footwall basalt contact. The drilling will be partially funded by a Government of Western Australia Exploration Incentive Scheme grant. Figure 3. Nickel Targets on Interpreted Geology Figure 4. Nickel Targets on RTP Magnetics 6

7 Figure 5. Planned Drill Hole on Interpreted Geology LAKE JOHNSTON NICKEL PROJECT (Reed 80%, Hannans Reward 20% free carried to DTM) During the quarter a 3D inversion has been carried out on historical available aeromagnetic data and drill holes have been designed to intersect targets from this work. Inversion is a non unique process and subject to ambiguity. Additionally if remanent magnetisation is present, the inversion may have inaccuracies. The modelling suggests twin apophyses depending off a larger magnetic intrusive body (Figure 8). The geochemical signatures up plunge of the apophyses are suggestive of nickel sulphide mineralisation at depth rather than a barren mafic body. This base metal geochemistry will be checked by more advanced PGE trace element studies of selected auger resampling sites. In 2012 Hannans intersected nickel sulphide mineralisation in a single reverse circulation drill hole (MGRC059) testing a coincident geochemical/magnetic anomaly at Mt Gordon (please refer to Hannans announcement 30 August 2012). Reed petrography on samples from MGRC059 confirmed trace amounts of slightly supergene altered (violarite) pentlandite plus accessory pyrrhotite and chalcopyrite coincident with the end of hole sample that returned approximately 1% sulphur plus subgrade nickel (0.5% Ni). Reed s aim is to add value to its nickel portfolio through early stage exploration success and for it to become independently financed with a dedicated management team. 7

8 Figure 6. Tenement Plan on Interpreted Geology Figure 7. Cross section on Interpreted Geology Figure 8. Historic (blue) and Planned Drill holes and magnetic anomalies over mag ineterp and 80ppm Cu geochemistry (light blue) nterpreted Geology 8

9 CORPORATE Finances (unaudited) Cash and term deposits on hand as of 30 September 2014 totalled $11.7 million, including $6.1 million in restricted use term deposits supporting performance bonds and other contractual obligations. Extraordinary General Meeting On 3 July 2014 the Company provided notice of an extraordinary general meeting of shareholders. The meeting was held at the Celtic Club, 48 Ord Street, West Perth, Western Australia on Friday, 8 August 2014 at 3.00pm for the purpose of considering a special resolution to approve a selective buy back of 24 million shares held by Metals X Limited that was provided as consideration for the purchase of the Meekatharra Gold Project. The resolution was passed unanimously at the meeting and the share buy back was completed on 14 August The Company s revised issued capital is now 499,453,895 ordinary shares on issue. ENDS COMPETENT PERSONS STATEMENT The Company confirms that it is not aware of any new information or data that materially affects the information included in the following ASX Releases subsequently referred to herein: 15/12/2009 Mt Finnerty JV Partners confirm 4.66Mt maiden iron ore resource 17/10/2012 Shareholder Agreement and PFS Results Mt Marion Lithium 13/11/2013 Barrambie Scoping Study Results 6/12/2013 Barrambie Amended JORC 2012 Mineral Resource Estimate 24/6/2014 Hannans Joint Venture at Lake Johnston Nickel Project 30/6/2014 Mt Marion Successful Semi Pilot Plant 2/9/2014 Barrambie Successful Mini Pilot Plant and PFS commenced The Company confirms that all the material assumptions underpinning the production target and the forecast financial information derived from the production target in the Barrambie Scoping Study and the Mt Marion Pre feasibility Study continue to apply and have not materially changed. 9

10 APPENDIX A: TENEMENT INTERESTS As at 30 September 2014 the Company has an interest in the following projects and tenements in Western Australia. PROJECT NAME LICENCE NAME BENEFICIAL INTEREST STATUS Barrambie E57/ % Live Barrambie E57/ % Live Barrambie L57/30 100% Live Barrambie L20/55 100% Live Barrambie M57/ % Live Mount Marion E15/ % (*) Live Mount Marion L15/315 70% (*) Live Mount Marion L15/316 70% (*) Live Mount Marion L15/317 70% (*) Live Mount Marion L15/321 70% (*) Live Mount Marion M15/999 70% (*) Live Mount Marion M15/ % (*) Live Mount Finnerty E15/ % Live Mount Finnerty E16/ % Live Mount Finnerty E16/ % Live Mount Finnerty E16/305 0% (**) Live Mount Finnerty E16/ % Live Mount Finnerty E16/330 0% (**) Live 10

11 Mount Finnerty E16/ % Live Mount Finnerty E16/ % Live Mount Finnerty E16/ % Live Mount Finnerty M15/ % Live Mount Finnerty M15/ % Live Mount Finnerty M16/ % Live Mount Finnerty M16/ % Live Mount Finnerty M16/ % Live Mount Finnerty M16/ % Live Lake Johnson P63/ % Live Lake Johnson P63/ % Live Lake Johnson P63/ % Live Lake Johnson P63/ % Live Lake Johnson P63/ % Live * registered holder is Reed Industrial Minerals Pty Ltd (Reed Resources Ltd 70%, Mineral Resources Ltd 30%). ** registered holder is Barranco Resources NL, Reed Resources Ltd has option to purchase 100% 11

12 Changes in interests in mining tenements Interests in mining tenements acquired or increased PROJECT NAME LICENCE NAME ACQUIRED OR INCREASED Mount Finnerty QVR Mount Finnerty Lake Johnston Forrestania Forrestania Forrestania Forrestania Mount Finnerty Mount Finnerty Mount Finnerty Mount Finnerty Mount Finnerty E15/1416 E63/1701 E77/2207 E77/2219 E77/2220 E77/2239 E15/1430 P16/2823 P16/2824 E16/455 E15/1408 Applied for 25/03/2014 Applied for 25/03/2014 Applied for 08/04/2014 Applied for 29/04/2014 Applied for 29/04/2014 Applied for 18/06/2014 Applied for 26/06/2014 Granted 02/07/2014 Granted 02/07/2014 Granted 11/07/2014 Granted 11/07/2014 Interests in mining tenements relinquished, reduced or lapsed PROJECT NAME LICENCE NAME RELINQUISHED, REDUCED OR LAPSED Barrambie E57/769 Voluntary Partial Surrender of 21 blocks lodged 06/08/2014 Barrambie E57/770 Voluntary Partial surrender of 64 blocks lodged 06/08/2014 Barrambie L20/55 Voluntary Partial Surrender of ha lodged 28/08/2014 Barrambie G57/05,G57/06 G57/07,G57/08 Expired 10/07/2014 Barrambie E57/819 Surrendered 08/09/2014 Barrambie L20/49 Surrendered 06/08/2014 Lake Johnson P63/1962 Surrendered 17/09/2014 Lake Johnson P63/1963 Surrendered 17/09/

13 APPENDIX B Mt Marion Resource Table for 0.3% Li 2 O cut off Category (JORC, 2012) Tonnage (Mt) Li 2 O Fe 2 O 3 Measured Indicated Inferred Total All tonnage and grade figures have been rounded down to two or three significant figures, respectively; slight errors may occur due to rounding of values. Barrambie Mineral Resource Estimate for 15% TiO 2 cut off Category (JORC, 2012) Tonnage (Mt) TiO 2 V 2 O 5 Fe 2 O 3 Al 2 O 3 SiO 2 Indicated Inferred Total All tonnage and grade figures have been rounded down to two or three significant figures, respectively; slight errors may occur due to rounding of values. 13