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Reed Resources Executes Key Contracts In The Development Of The Meekatharra Gold Project

Emerging Australian gold producer Reed Resources (ASX: RDR) has taken another step on the path to development at the Meekatharra Gold Project, after executing two key contracts.

GR Engineering Services (ASX: GNG) has been awarded the contract for the installation of the new heavy duty primary crusher, with a subsidiary of Pacific Energy (ASX: PEA) awarded the contract for the supply of power.

In other milestone achievements recently for Reed at the project, just last week the company received written approval from Barclays Bank for a A$23 million debt facility and mandatory hedging programs.

The approval is a major vote of confidence in the company's operations as it nears production, which is scheduled for the December quarter of 2012.

The hedging program includes Reed purchasing puts over 70,000 gold ounces with a strike price of A$1560 per ounce expiring in September 2012.

3.6 million gold ounce bounty

The Meekatharra Gold Project hosts a gold bounty of 3.6 million ounces in a historic greenstone belt with past production of 4.5 million ounces, and not to be forgotten Reserves of 750,000 ounces, a milestone not matched by many gold companies in Western Australia.

Importantly, there is still strong exploration upside given the limited exploration on the majority of Reed's 1,000 square kilometre tenement area.

The project was acquired at a low cost of $11 per ounce of resource, including plant and facilities, and now has an estimated replacement value of over $100 million.

Mining is set to begin in September with commissioning to begin in November 2012. Reed is targeting a low risk start up production of 100,000 ounces per annum at Meekatharra, increasing to 160,000 ounces per annum in stage 2.

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