REED RESOURCES LTD - ASX: RDR

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Description

Reed Resources Ltd plans on being one of the world's largest producers of lithium bearing spodumene through the development of the Mt Marion Lithium Project. Production is planned to commence in late 2010 subject to a decision to mine and obtaining necessary approvals. Reed Resources is also producing gold, owns Australia's highest-grade vanadium reserve and is actively exploring for gold and base metals in Western Australia. The Company has cash flow from a profitable gold mine and has no debt.

Barrambie - Vanadium

* Average EBITDA per annum of A$105 million using an average ferrovanadium price of US$30/kg and an exchange rate of AUD$1=USD$0.60.
* Operating costs of less than USD$20/kg of vanadium.
* Initial mining reserve of 39.7Mt of ore at a grade of 0.82% V2O5.
* Indicated and Inferred Resource of 65Mt of vanadium ore at a grade of 0.82% V2O5.
* Minimum of 12 years mine life at throughput of 3.2Mt per annum.
* Capital cost estimated at A$628.9 million.

Mt Marion - Lithium

The Mount Marion project comprises two Mining Lease applications, M15/999 and M15/1000, which cover the outcropping pegmatites. The Company will be targeting a Mineral Resource of 4-5Mt of spodumene pegmatite at a grade of 1.5-2 % Li2O. This is based on a previous review of historical estimates of reserves that was undertaken as part of the pre-feasibility study in 1996 and reported in accordance with the JORC Code (1989). The review confirmed the original resource/reserve estimates by Western Mining Corporation (WMC) in the 1970s, supported by some check drilling in the 1990’s. This work identified reserves of 1.49 Mt at an average grade of 1.67 % Li20 in the No.1 deposit (refer Figure 2), including ‘proved reserves’ of 0.54 Mt at 1.9 % Li2O and ‘probable reserves’ of 0.95 Mt at 1.5 % Li2O (at a cut-off grade of 1.2 % Li2O and bulk density of 2.80 t/m3). In addition, the review also confirmed a resource of 1.0 Mt at 1.5 % Li2O at depth in the No.1 deposit (using a 1.2 % Li2O cut-off grade); ‘probable reserves’ of 0.3 Mt at 1.2 % Li20 in the No.2 deposit; and 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 2). A minimum cut-off grade has not been applied at the No.2, No.2 West and No.4 deposits. Strip ratios for the deposits ranged from 1:1 to 2:1.

Comet Vale - Gold

The Comet Vale project is located approximately 100 km north of Kalgoorlie and covers an area of 25 km2 surrounding the historic Comet Vale gold mining centre. Reed’s costs are limited to transport and treatment. Kingsrose Mining are responsible for all mining costs. In December 2008, the gold resource was increased by 34% to 182,600oz Au. The total Indicated and Inferred Mineral Resource now comprises 661,000 tonnes at an average grade of 8.6g/t Au for 182,600 ounces of gold.

Mt Finnerty - Iron

The company has entered into a joint venture with iron ore producer Cliffs Natural Resources to explore and develop the project area's iron deposits. Cliffs has now earned an eighty per cent interest and Reed Resources can now either contribute or revert to a 10% interest free carried up to a decision to mine. Cliffs has already identified a targeted resource of around 3.5 million tonnes grading around 60% Fe (as at May 2007). Initial drill results include: 21m@60% Fe, 12m @ 60% Fe and 10m@60% Fe. Surface iron enrichment has been confirmed at several locations spread over 35km strike. Results from Cliffs' rock chip sampling from FIN11 range between 56-61% Fe.

Mt Finnerty - Nickel

Western Areas are managing the project and are earning a 51% interest by spending $1.5m within 3 years. Drilling in March 2008 returned 25m@0.91%Ni plus anomalous Pt & Pd. Two strong "end of line" anomalies were identified during geophysical work carried out in MarQ08. Four highly anomalous soil geochemical anomalies that are coincident with the basal ultramafic/basalt contact and spread over 10km of strike have been identified.

Bell Rock - Nickel

Bell Rock Range covers some 471 km2 within the western part of the Proterozoic Musgrave Block in central Australia. It is highly prospective for several commodities, particularly Ni-Cu sulphide and PGE mineralisation. A preliminary interpretation of the Bell Rock Range project (E69/2293), using available geological and geophysical data, has identified a key target area (B9 - B10 - B11) coincident with 25-30 kilometres of strike length of an ultramafic basal unit along the northern edge of an ultramafic-mafic complex. Two other target areas (C4 and A6/B8) associated with ultramafic rocks are located to the north of the ultramafic-mafic complex. All of these target areas are considered prospective for Ni- Cu sulphides.

Comet Vale - Nickel

In addition to gold, the Comet Vale project has over 4 km of the Walter Williams Formation (purple), the source bedrock for the large high grade Goongarrie nickel laterite deposits, along strike to the south and the Highway prospect to the north. The ultramafic rocks are overlain by a well preserved lateritic profile, but there has been no previous exploration specifically for lateritic Ni. One intersection of 5m of 2.2% Ni in an RC drill hole is a clear indication of the potential for high-grade lateritic Ni within Reed Resource's tenements.

Mine For

vanadium, titanium, iron ore, nickel, platinum group elements, gold, lithium, zinc, silver, lead

Location of operation(s)

Western Australia

Address

97 Outram St
WEST PERTH, WA, AUSTRALIA

Phone

(08) 9322 1182

Email

Website

http://www.reedresources.com/

Last Updated

02/03/2010