Barnes Hill - 100% OWNED - JV WITH METALS FINANCE CORPORATION

Barnes Hill - Proto Resource's flagship project is the 100% owned former Allegiance Mining NL Barnes Hill Nickel Deposit in Tasmania ("Barnes Hill"). A 12.1 million tonne (Mt) Australasian Joint Ore Reserves Committee ("JORC") compliant indicated resource at 0.83% nickel and 0.07% cobalt is defined at Barnes Hill. The project is located 10km northwest of Launceston in northern Tasmania, close to port and other infrastructure in the established Tamar Development Corridor. The TEMCO ferroalloy smelter at the deepwater port of Bell Bay is just 30km by road.

The Company has a financing and technology agreement with its joint venture partner Metals Finance Corporation ("Metals Finance") at Barnes Hill, whereby Metals Finance will finance the project into production in return for 50% of eventual profits. Metals Finance will also provide the technology necessary to beneficiate the ore for sale.

Proto and Metals Finance are currently in Phase Two or the Final Evaluation Period of the formal joint venture arrangement between the parties, being the full evaluation period that will lead to a decision to enter into an Operational Phase at Barnes Hill. The purpose of the Final Evaluation Period is to carry out a pilot programme based on the leaching of a bulk sample from the Barnes Hill deposit, to raise the resource definition to a level sufficient to support a detailed feasibility, and to complete the detailed feasibility on the proposed project.

In late 2008 the Company completed Phase One of its resource drill-out to upgrade the Indicated estimate to measured status with a final phase expected to commence by the end of August, 2009. In the course of this drilling program the widespread occurrence of an iron-rich surficial laterite layer, generally between 0-7m thick, was noted across the northern part of the Barnes Hill nickel deposit where all the recent drill holes were located. Proto Resources is now assessing the potential to develop a small-scale iron ore project to complement the Barnes Hill nickel-cobalt project.

Meanwhile, EL 53/2208 "Barnes Hill West" was granted to Proto in May 2009, applied for to cover the mapped western extensions of the Andersons Creek Ultramafic Complex, the host sequence to the area’s known nickel laterite mineralisation. The application covers 44 km2 and lies immediately adjacent to the Barnes Hill Project above (EL17/2006).

The next phase of work on Barnes Hill will comprise a study of acid supply storage and recovery techniques, a bulk leach programme on the drill samples collected in the last drill programme from November 2008, and further drilling at 50m centres to define a larger measured resource for compilation into the final feasibility study. Proto is targeting acid recovery that will provide a production cost per nickel pound below US$4. The Company is also hopeful that other technology will allow the Barnes Hill project to achieve an even lower production cost per nickel pound.

For further information please see our last Annual Reports¸ also our latest Announcements and Broker Reports.

For a flyover of the Barnes Hill project please Click here.