ASX Announcement / Media Release ASX Announcement 16 October 2009
Reed Resources to retain 100% ownership of high-grade Sand Queen Gold Mine Australian diversified resources company Reed Resources Ltd (ASX: RDR) (the "Company" or "Reed") will retain 100% ownership of the Sand Queen Gold Mine at the Comet Vale Project in Western Australia from 1 June 2010, having reached an agreement with current Production Joint Venture partner Kingsrose Mining Limited (ASX: KRM) ("Kingsrose") to terminate the existing joint venture arrangement. Under the agreement Reed will also assume ownership of all associated joint venture assets and infrastructure. The agreement will enable Reed to further develop its strategy of increasing its level of gold production from the Sand Queen Gold Mine, 100kms north of Kalgoorlie (Figures 1 and 2). Under the terms of the agreement, Reed will: Pay Kingsrose $1M cash on 31 October 2009; Issue Kingsrose $2M in Reed shares at the five business day volumeweighted average price (VWAP) up to and including 31 May 2010; and Purchase all mine assets and infrastructure for $1M cash on 31 May 2010. Reed has commenced an operational review of the Comet Vale Project to define the quantity and grade of the underground resources that may be converted to ore reserves with the aim of increasing production from the existing underground operations. As part of this review, Reed will also evaluate the potential of its existing shallow, open pit gold resources at Comet Vale (e.g.

Sand Prince West and Princess Grace prospects; Figure 2) to provide base-load feed to enable a decision to refurbish and re-commission its recently purchased Nimbus Processing Plant (Figures 3 and 4) at an initial rate of 100,000 tonnes per annum.
Highlights
Reed and Kingsrose have agreed to terminate the Production Joint Venture effective 1 June 2010 Reed will be entitled to 100% of production from 1 June 2010 Cost A$1M in cash and A$2M in shares Acquisition of associated mining assets and infrastructure for A$1M cash Allows expansion of production from underground to compliment open-pit production. The Sand Prince West deposit is adjacent to existing underground operations (Figure 2) and a small open pit could be utilised as a box cut for a potential decline to access deeper levels of the Sand Queen mine. The Company commenced toll treating a parcel of ore on Monday 12th October. The parcel is projected to be between 8,000 and 9,000t, including 6,150t @ 15.8 g/t Au stockpiled as at 30 September 2009 and high-grade stoping ore produced in October. Reed Resources managing director Chris Reed believes the agreement represents significant value to the Company in conjunction with the recent acquisition of the Nimbus Processing Plant. "Kingsrose has done a first class job mining the Sand Queen and Sand George lodes, and the life of mine (LOM) grade of 9 g/t Au compared with an Indicated Resource grade of 9.2 g/t Au is testament to that.

Unfortunately the current operational scale is restricted by haulage capacity in the shaft and by split ownership.

It is more suited to ownership by one company.

We have agreed a fair deal that will allow Reed to concentrate and expand our wholly owned gold projects," he said. Under the agreement, Kingsrose will continue to mine from and above the 4 Level under the existing arrangement unit 31 May 2010.

Reed plans to continue mining the 4 Level from the existing shaft until economic resources are exhausted.
ENDS For the full announcement please see below: http://esp.gewru.com/download/files/12414/960434/Reed%20to%20retain%20100_%20ownership%20of%20high-grade%20Sand%20Queen%20Gold%20Mine.pdf For more information please contact: Reed Resources Chris Reed Managing Director Tel: 08 9322 1182 Media David Tasker/Jasmine Green Professional Public Relations Tel: 9388 0944 About Reed Resources Reed Resources is a diversified mining and exploration Company based in Western Australia, with modest gold production the Company is expanding and diversifying its production base. Reed Resources has four main projects all in Western Australia including; * Comet Vale -- High-grade underground gold mine in JV with Kingsrose Mining Limited.

Nickel Laterite JV with Heron Resources NL. * Barrambie -- Completed a Definitive Feasibility Study on Ferrovanadium operation to produce 6300t of vanadium per annum.

Currently in approvals process. * Mount Finnerty -- Iron Ore JV with Portman Ltd.

Nickel JV with Western Areas NL. * Mount Marion -- Option Agreement over high-grade Lithium project located approximately 40km south of Kalgoorlie
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