Metals Finance has an agreement with the Australian listed company, Proto Resources and Investments Limited (Proto), to participate in the development of the Barnes Hill nickel laterite deposit in Tasmania. In accordance with reports issued to the Australian Stock Exchange by Proto and as disclosed in Metals Finance Prospectus dated 26 October 2007, the Barnes Hill project comprises a 12.1 million tonne Australasian Joint Ore Reserves Committee (“JORC”) compliant, indicated resource at 0.83% nickel and 0.07% cobalt, in three interconnected zones.
The Barnes Hill Joint Venture Agreement between Metals Finance and Proto provides generally as follows: 1. Proto will complete the detailed drilling required in order to     convert the indicated resource into a measured resource     category. 2. Proto will obtain the mining tenements and environmental     permits required for establishment of a commercial     operation. 3. Subject to successful completion of 1 and 2 above, Metals     Finance has the option to complete a bulk leach pilot     programme and detailed feasibility study on the project. 4. In the event that the project proceeds to commercial     development, 95% of any surplus derived from operations     will be applied to repayment of capital expended by Metals     Finance in the development of the project. After capital has     been repaid any surplus from operations will be divided     equally between Metals Finance and Proto. For Metals Finance the key milestones for the programme in the short term comprise: A. Confirmation by Proto Resources of the conceptual resource target used in the preliminary study     through the detailed drilling programme currently being undertaken. B. The achievement of appropriate mining tenements and environmental permits for the     potential future operation. C. Confirmation of leach characteristics of the ore through pilot testing of a representative sample of     the resource. Metals Finance personnel are currently assisting Proto Resources with their applications for a mining lease and potential site layouts and infrastructure. The Company has also commenced discussions with potential acid suppliers and purchasers of product from Barnes Hill. Proto Resources has recently completed a detailed drilling programme over the resource and the results are currently under interpretation. The Next Stage at Barnes Hill A comprehensive review of all of the data generated from the drilling programme is currently being completed, with a view to establishing the level of accuracy required to support the completion of the detailed feasibility study.  Upon completion of this drill data review Proto will have fulfilled a major proportion of its obligation under its 50:50 joint venture with Metals Finance.  Under the joint venture terms, Proto has responsibility for the drill-out of the current JORC-compliant Indicated Mineral Resource and for government permitting.  Metals Finance has responsibility for the pilot plant programme and completion of the definitive feasibility study once this drill definition stage has been completed.
	Proto has started preparation for the collection of three 20 tonne bulk samples for the large scale metallurgical validation of the commercial process.  Metals Finance is currently carrying out mid-scale leach testing of three 300kg bulk samples collected from previous drilling and testing is showing good recoveries from 72% to 98%. The 60 tonnes of material that will be collected at the end of the resource definition programme will be used for large scale validation of the processing flowsheet and to provide rigorous data for feasibility modelling.  The leach programme will be conducted at a laboratory in New South Wales.  Proto has already confirmed clearance for the material to be transported with the Australian Quarantine and Inspection Service and the New South Wales Department of Primary Industries and is currently obtaining clearances from the Tasmanian authorities. Subject to the results of the feasibility study, Metals Finance will arrange and/or provide funding for the project in addition to co-managing the development process and ongoing operations.  All cash flows from the project will be initially applied to repayment of capital expenditure expended by Proto and Metals Finance, after which it will be distributed equally between the joint venture partners.  If Metals Finance does not participate in the funding of the project and the project is subsequently developed by Proto utilising Metals Finance's flowsheet, Metals Finance will receive a royalty of 3% of the value of nickel and cobalt produced for a period of 10 years.