proto resources & investments ltd

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Ironstone Cap at Barnes Hill-Potential DSO iron ore

Metallurgical testwork in respect to approximately 3K tonnes of iron Duricrust isongoing. Should results prove positive, processing of the Duricrust cap mayprovide a near term DSO iron ore option ex the nearby port of Bell Bay.

Lindeman’s Bore

Results from a recently completed 466 metre vertical diamond drill hole (LBD 3) atLindeman’s bore are due within the next few weeks. The hole is targeting Norilskstyle Cu-Ni-Co-Pt-Pd mineralisation associated with volcanic rocks.

A 20 metre zone of intermittent sulphide stringers, quartz-carbonate veins, intensealteration and shearing has the potential to deliver some interesting assays, whichare due in 2-3 weeks. The presence of vein hosted and disseminated chalcopyritein association with pyrite provides encouragement.

Geophysical Survey at Yerrida Basin complete

An aerial magnetic-radiometric survey on the Yerrida Basin tenements (Casey,Great Doolgunna, Mt Killara and Magellan North) has been completed and resultsfrom the Southern Geoscience interpretation are due shortly.

DFS on Barnes Hill Due imminent

A definitive feasibility study (DFS) on the Barnes Hill Nickel Laterite project(Inferred & Indicated Resource of 6.6Mt @ 0.81% Ni, 0.05% Co) nearBeaconsfield in Tasmania is due from Metals Finance Ltd (ASX: MFC) by lateJune/early July 2012.

MFC is earning 50% via the completion of a DFS and the arrangement of projectfinance, and have signed a supply agreement with Dow Chemicals (NYSE: DOW)to supply their nickel resin for MFC’s Lucy Break nickel (QLD).

The base case scenario is premised on a 500,000tpa plant producing around45000tpa of nickel metal based on a CAPEX of around A$98 million with targetC1+ C2 costs of production under US$3.0/lb. The innovative process design flowsheet has the potential to significantly reduce CAPEX and OPEX through the useof ion exchange to avoid iron removal prior to nickel recovery from leach solutions.

The electrolytic flow sheet is also being trialled at Australian BioRefining’slaboratory at Evans Head (NSW) and aims to recycle acid hence eliminating therequirement for an acid plant, limestone and large tailings ponds.

Price Catalyst

Near term share price drivers - Barnes Hill DFS, DSO Fe metallurgical results andLindeman’s bore diamond drill assay results.

Action and Recommendation

Accumulate between 2.0 to 2.5 cents.

.

Capital Structure

Sector Materials

Share Price (A$) 0.02

Fully Paid Ordinary Shares (m) 517.0

-Opt (ex 5c, exp 31/12/13) (m) 51.7

-Opt (ex 5c, exp 31/12/13) (m) 279.0

-Opt (ex 8c, exp 28/02/13) (m) 5.0

-Opt (ex 10c, exp 28/02/13) (m) 3.5

-Opt (ex 12.5c, exp 28/02/13) (m) 2.0

-Opt (ex 5c, exp 01/09/14) (m) 7.1

Market Cap (undil) (A$m) 10.3

Share Price Year H-L (A$) 0.08-0.016

Approx Cash (A$m) 0.6

Directors & Management

Ian Campbell Non–Exec Chairman

Andrew Mortimer Managing Director

Lia Darby Non-Exec Director

Greg Mellick Exec Director

Kay Philip Non-Exec Director

Major Shareholders

JP Morgan Nomin. <Cash Income A/C> 39.3%

Merrill Lynch Nom. <Berndale A/C> 4.8%

Andrew Mortimer 4.8%

Analyst

GT Le Page +61 8 9488 0800

Share Price Performance

Proto Resources & Investments LtdBarnes Hill DFS imminent…Ironstone Cap at Barnes Hill mayprovide near term DSO iron ore option

2nd May 2012

ASX Code: PRWSpeculative Buy

www.rmresearch.com.au

– Copyright © 2012 RM Research - www.rmresearch.com.au

2 May 2012

INVESTMENT CASEBarnes Hill Financing Complete/Ironstone DSO Potential: We are anticipating thecompletion of the Barnes Hill DFS by joint venture partner Metals Finance Ltd (ASX: MFC) inJune/July this year together with results from metallurgical testwork on the ironstone Duricrustthat may be a potential source of DSO Fe ex Bell Bay in early CY 2013. RM Researchbelieves the new processing options being examined by PRW have the potential tosubstantially reduce CAPEX and OPEX.

Doolgunna-Goodin Dome-Yerrida Basin Exposure: The Company holds some interestingacreage (Station Bore, Great Doolgunna, Casey, Killara and Magellan North Projects) in theDoolgunna-Goodin Dome-Yerrida Basin region. Results from a recently completedgeophysical survey are imminent. The spectacular DeGrussa discovery (14.6Mt @ 4.6% Cu,1.4 g/t Au) of Sandfire Resources (ASX: SFR) DeGrussa Project is situated in similargeological terrain and companies in the region such as continue to enjoy significantexploration success Ventnor Resources Ltd (ASX: VRX).

Lindeman’s Bore Assays due: Assays results from the recently completed diamond drillhole at Lindeman’s Bore are due shortly. Several altered zones have the potential for Cu+/-Au+/-Pt mineralisation. The exploration model is a Norilsk look alike.

COMPANY OVERVIEWProto Resources andInvestments Ltd(“Proto Resourcesand Investments”,PRW or “theCompany”) listed onthe AustralianSecurities Exchange(“ASX”) on 29/11/2006raising A$3.5mthrough the issue17.5m shares @ 20cper share.

The Company sincethat time hasassembled a diverseportfolio of mineralexploration projects inAustralia prospectivefor gold, copper,nickel, rare earths anduranium.

The Company’s recent focus has been on the Barnes Hill nickel-cobalt-iron project nearBeaconsfield in Tasmania which contains JORC Inferred and Indicated Resources of 6.6Mt @0.81% Nickel and 0.05% Cobalt.

Metallurgical testwork at Barnes Hill has focussed on the recycling of acid in an attempt tosignificantly reduce CAPEX/OPEX. A DSO iron ore option is also being investigated.

PRW is also actively exploring at Lindeman's Bore (Cu+/-Ni+/-Co+/-Au+/-Pt) and has recentlycompleted an aerial magnetic and radiometric survey at its Yerrida Basin suite of tenements.

Exploration at the Casey,Killara, Great Doolgunna& Magellan NorthProjects are likely tomaintain investorinterest…

…along with thecompletion of a DFS atBarnes Hill

FIGURE 1: ProtoResources &Investments projectlocations (source: ProtoResources &Investments websiteApril 2012).


– Copyright © 2012 RM Research – www.rmresearch.com.au

2 May 2012

EXPLORATION OVERVIEWBarnes Hill Ni-Co-Fe-Mn Project (PRW: 50-100, MFC earning 50%)

Location & Access

The project is located 40 kilometresnorthwest of Launceston (northernTasmania), close to port andinfrastructure. The Barnes Hillexploration licence (EL 17/2006)covers 76km2 and the Company hasalso a granted Mining Lease(1872P/M) over the central portion ofEL17/2006 (Figure 2).

Resources and Reserves

Snowden Mining IndustryConsultants have estimated(18/10/2010), a resource for theBarnes Hill portion of the deposit (theBarnes Hill project contains threelaterite deposits) of 6.6Mt at 0.82%Ni and 0.06% Co (cut-off grade of a0.5% Ni). This includes 5.6Mt ofIndicated Resources.

The Anderson’s Creek UltramaficComplex is the dominant lithologyand trends NNW over a strike of 20kilometres and is up to 3 kilometres

in width. This consists mostly of serpentinite, pyroxenite and gabbro.

Metals Finance Joint Venture

The Company has a financing andtechnology agreement with MFCwhereby MFC will provide the requiredtechnology and finance to put theproject into production in return for a50% net profit interest. In the interim,PRW will continue to fund theresource drilling and permittingrequired to develop the project.

The next phase of the project’sdevelopment is the completion of apilot programme based on theleaching of a bulk sample from BarnesHill and to further define the BarnesHill resource.

MFC released, (MFC, ASXAnnouncement, 6/02/2012)estimates for CAPEX at Barnes Hill(500,000 tpa) of A$98 million on theback of life of mine revenues > $1.1billion.

FIGURE 2: Barnes HillProject, northernTasmania (source: ProtoResources &Investments, website,April 2012).

Barnes Hill isstrategically locatedclose to infrastructure

FIGURE 3: Barnes HillProject, drill hole locationsand mineralisedenvelopes (source: ProtoResources &Investments, website,April 2012).



2 May 2012

Processing Technology

In recent months there has been ongoing Pilot testwork at Australian BioRefining Pty Ltd’sindependent laboratory in Evans Head, northern New South Wales. The plant is currentlytesting a solution generated by the Barnes Hill leach program. This facility, which is currentlyperforming the testwork on behalf of Barrier Bay Pty Ltd (50% owned by Proto Resources& Investments), is demonstrating the potential for significant OPEX and CAPEX savings inthe treatment of nickel laterites through the recycling of acid and water. The process is now inits fifth year of piloting.

Feasibility Study

MFC is earning 50% of Barnes Hill (via the completion of a DFS and arrangement of projectfinance) and is nearing completion of a DFS on Barnes Hill. A Mining Lease was granted in2011 over the resource with a DFS based on a new flow sheet design that has evolved fromvarious studies at the Lucky Break (Metallica Minerals Limited, ASX: MLM) nickel-cobaltlaterite project (Queensland).

This new process has the potential to significantly reduce CAPEX and OPEX through the useof ion exchange to avoid iron removal prior to nickel recovery from leach solutions. The ionexchange process has been successfully used at MFC’s Palabora project that was sold to RioTinto Ltd in 2011. At the front end of the plant, saleable nickel and cobalt are extracted fromacidic solution using a Dow resin in a low pH process developed and applied by MFC at theirpreviously owned Palabora mine (South Africa). At the back end of the process (which BarrierBay has rights over the world-wide patents to), saleable iron and magnesium are extractedfrom acidic solution with the sulphuric acid being recycled.

In early 2013, the joint venture partners will be aiming to commission a 200 litre per hourdemonstration plant, based on this innovative flow sheet and incorporating the steps that arecurrently being piloted by Barrier Bay at Evans Head (NSW).

Based on published data to date, we believe the following metrics are within the range ofMFC’s current study (Table 1).

The final DFS is scheduled forcompletion in by late June 2012which, if positive, could havesignificant implications for not onlyBarnes Hill, but other lateriticdeposits which are currentlydependant on expensive HighPressure Acid Leach (HPAL) orAtmospheric Leach technology.This technology could materiallyalter economics and open upprojects unsuitable for HPAL.

Ongoing studies in respect to the beneficiation of the ironstone Duricrust has the potential tofast track production (see below). It is anticipated that Caterpillar Finance SARL (“CaterpillarFinance”), subject to the outcome of a positive mining study, are likely to participate in this firstphase production opportunity.

Project Finance Opportunity

MFC announced (24/04/2012) that it had signed a supply agreement with Dow Chemical tosupply their nickel resin for the Lucky Break nickel project (Metallica Minerals 100%). Weanticipate this relationship may be extended to other nickel laterites should Lucky break proveto be a success. The technology sharing in respect to the Ion Exchange Resin (IER) pregnantliquor solution separations technology earmarked for Lucky Break could also be used todevelop the Barnes Hill project.

PRODUCTION Metrics

Resource (mt) 6.6

Throughput (tpa) 500,000

Mine Life (yrs) 13

Ni Production (tonnes p.a.) 3.0

Ni- Price (US$/lb) 8.50

Ni-Recovery (%) 80%

CAPEX (US$m) 98

OPEX Target (US$/lb) <3

Payback Target (yrs) <5

Piloting is now in its fifthyear...

The ion exchange processhas the potential tosignificantly reduceCAPEX and OPEX

TABLE 1: Barnes HillProject, Productionmetrics (source: RMResearch, internalmodelling, April 2012).

Dow Chemical havesigned a supplyagreement with MFC



2 May 2012

Ironstone...Potential Early Production Opportunity

The Company is nearing completion of beneficiation studies on the iron-oxide Duricrust cap(potentially up to 3.0K tonnes) that overlies the Barnes Hill laterite resource. This caprockcomprises predominantly maghaemite, hematite, goethite and limonite. The proximity toinfrastructure including a major highway within 3.0 kilometres of the site and a deep-water portat Bell Bay 20 kilometres away, has the potential to allow for fast tracking of production.

This current round of testwork by PRW and MFC is examining the potential to beneficiate theore to +58%+ Fe, a potential DSO product suitable for Chinese steel mills.

Doolgunna Projects (PRW: 100%)

Location and Access

In the Doolgunna Region of Western Australia (northeast of Meekatharra) (Figure 5), PRWhas two granted exploration licences and three pending applications covering 357km2. Inaddition to the DeGrussa deposit, the region also hosts Ivernia Inc’s Magellan Lead Mine(Measured & Indicated Resource of 22.1Mt @ 4.8% Pb).

Geology and Mineralisation

The Doolgunna-Yerrida Basin-Goodin Domeregion is made up of the Bryah, Padbury andYerrida Basins. The applications areinterpreted to sit within the Palaeo-Proterozoic Yerrida Basin, Proterozoic maficvolcanics and intrusives of the KillaraFormation and sedimentary rocks of theFinlayson Sandstone and the Juderina andMaraloou Formations.

As noted in “Whats Going On?” (RMResearch 1/9/2011), it appears there is nowa concerted exploration push in the YerridaBasin–Goodin Dome area where an ellipsoidshaped highly deformed Archaean Granitethat outcrops approximately 50km south ofSandfire’s DeGrussa deposit appears to beproviding a fluid source for Cu-Aumineralisation. A review of geological,geophysical and geochemical data in thisregion including data from EnterpriseMetals Ltd (ASX: ENT), Dourado

Resources Ltd (ASX: DUO), Great Western Exploration Ltd (ASX: GTE) and ThundelarraExploration Ltd (ASX: THX) reveals extensive Cu+/- Au anomalism associated with regionalstructures which demonstrate good continuity over extensive areas.

FIGURE 4: Close up ofironstone Duricrust at theBarnes Hill Project(source: ProtoResources &Investments, ASXAnnouncement12/4/2012).

FIGURE 5: Doolgunna –Yerrida Basin-GoodinDome Projects (source:Proto Resources &Investments, ASXAnnouncement29/9/2011).

The Company holds fourtenements in the highlyprospective YerridaBasin –Doolgunnaregion.



2 May 2012

Aerial Magnetic Survey Completed

Aerial magnetic and radiometric surveys were completed in March 2012 on the southern andeastern margins of the Yerrida Basin at 100 metre line spacings at a height of 25 metres. Thesurvey covered Station Bore (E69/2872), Mt Killara (E53/1580), Magellan North(E53/1581), Casey (E51/1457) and Great Doolgunna (E51/1455). It is anticipated that thissurvey will identify key regional structures that may be important in localising mineralisingfluids similar to those influencing mineralisation at DeGrussa, Thaduna, Green Dragon andEnigma. Geophysical consultants Southern Geoscience are near completion of this review.

Great Doolgunna and Station Bore Projects

The granted Great Doolgunna project (E51/1455) is situated 60 kilometres southeast of theDeGrussa Deposit and adjoining GTE’s Doolgunna Project. The Station Bore (E69/2872)application is located nearby a further 10 kilometres southeast). Exploration immediately eastof the application area by the Geological Survey of Western Australia and Great WesternExploration has outlined a broad poly-metallic geochemical soil anomaly along with severalVTEM conductors.

Casey Project

The recently granted Casey Project (E51/1457) is situated approximately 55 kilometresnortheast of Meekatharra and covers a portion of the southwest margin of the Yerrida Basin.The large license area covered by the Casey project is near the holdings of DUO. DUO haveconducted extensive geophysical and geochemical exploration programmes and have so farhighlighted 13 anomalous zones (for copper and/or gold) which appear to show a closecorrelation to regional structures.

Killara Project

The project area (E53/1580) is 10 kilometres north of the township of Wiluna and containsvolcanics of the Killara Formation.

Magellan North Project

This project area (E53/1581) lies north of the Magellan Lead Mine and the area prospectivefor further base metals. Compilation of historic exploration work is currently underway.

Lindeman’s Bore (PRW: 60%)

Location and Access

The Lindeman's Bore licences are situated 380 kilometres south-west of Katherine on theLimbunya Cattle. The project encompasses a portion of the regionally extensive Cambrianage Kalkarindji Continental Flood Basalts.

The project includes EL 25307 covering a circular bulls-eye magnetic anomaly (Figure 6),EL27413 and two further licences nearby at Wave Hill (EL27617 and EL27618). TheCompany also has an additional application (ELA27414) pending near Lindeman’s Bore.

Proto holds 60% of EL25307, with 20% held by private individuals and 20% held by NorthwestDiscovery Ltd. PRW has earned its interest by completing two diamond drill holes in thevicinity of an identified bulls-eye magnetic anomaly.

Geology and Mineralisation

Previous studies, including comparisons of geochemical signatures, have drawn analoguesbetween the Antrim Plateau Volcanics and the world-class Norilsk Ni-Cu-Platinum GroupElements (“PGE”) deposit in Russia. The Norilsk deposit reserves comprise 1,310Mt @ 1.77%Ni, 3.57% Cu, 7.3ppm Pd and 1.8ppm Pt.

Exploration over recent years at Lindeman’s Bore has been aimed at identifying potentialfeeder dykes to the APV which may be prospective sites for a Norilsk style super-system.

Results from the recentaerial magnetic-radiometric survey areimminent

Previous studies havedrawn analogous withthe giant Norilsk Ni-Cu-Pt-Pd deposit in Russia



2 May 2012

Recent Exploration

The Company recently completed a 466 metre vertical diamond drill hole (LBD 3) that hasintersected a number of zones of interest including a 20 metre zone of quartz/carbonatestringers within foliated and chloritic mafics containing pyrite and chalcopyrite from 385 metresdownhole.

The target was a tabular 500 metre by 500 metre electromagnetic (“EM”) anomaly identified in2010 and subsequently followed up with ground EM surveys. The target was situated between250-350 metres vertical depth. These anomalies were interpreted to have a possible sulphideorigin under the Mississippi Valley style copper-lead-zinc mineralisation (“MVT”) model.

A total of three mineralised zones within the Inverway Metamorphic complex were intersectedbetween 385-430 metres downhole which comprised:

1. Quartz/Carbonate Stringers- trace pyrite and chalcopyrite within a foliated andchloritic mafic rock (385-405 metres downhole Figure 7);

2. Pyrite Stringers-Trace Chalcopyrite developed within a foliated and partly silicifiedblack shale rock unit (405-419 metres downhole);

3. Minor Pyrite and Chalcopyrite Stringers within a foliated and banded, haematite-magnetite-chlorite meta-sedimentary rock unit (419-430 metres downhole).

FIGURE 6: Lindeman’sBore magnetic target anddrill hole traces (source:Proto Resources &Investments, QuarterlyReport, 30/4/2012).

LBD3 terminated at adepth of 466 metres

Three mineralised zonesof unknown grade wereintersected

FIGURE 7: Quartz –carbonate stringers infoliated and chloritic maficrock at 390.80 metresdownhole (source: ProtoResources &Investments, QuarterlyReport, 12/4/2012).



2 May 2012

OTHER PROJECTS Clara Hills: (PRW 80%, Kimberley-Western Australia): Nickel, Copper & PGE’s.

Ord Basin Projects: (PRW option to acquire 70%, Ord Basin-Northern Territory &Western Australia): Nickel, Copper & PGE’s applications covering 1,648 squarekilometres (Figure 8).

Metal Rocks: (PRW 100%, Yilgarn, Western Australia): Uranium, Gold.

Waterloo: (PRW 100%, SW Katherine, Northern Territory): Nickel, Copper, PGE’s.

Tibooburra: (PRW 8.88%, north Broken Hill, NSW): Gold.

FIGURE 8: Ord BasinProject Projects (source:Proto Resources &Investments, QuarterlyReport, 30/4/2012).

PRW has recently takenan option over a suite ofprojects in the Ord Basinarea of WA and NT



2 May 2012

NICKEL MARKET OUTLOOKMacro themes continue to weigh on nickel outlookBase metals have remained under pressure in recent months and extended the declines ashopes that the eurozone debt crisis will be tackled swiftly have faded. Recent news that theUK and Spain (shrinking 0.20% and 0.30% respectively in 1Q 2012) have slipped back intorecession have hardly come as a surprise.

RM Research remains optimisticthat the eurozone will stabilise in2013, however we see a flatoutlook for commodity prices inthe near term, in particular nickelwhich is heavily reliant onstainless steel production. At leastthe forward curve has moved frombackwardation to positive (Figure9).Today, Nickel closed atUS$8.08/lb (Figure 10), with

nickel stocks according to LME climbing to just under 102,000 tonnes, up from 85,000 tonnessince our last coverage on PRW in October 2011 (Figure 11).

Nickel Laterites increasingly the dominant source

Nickel sulphide deposits have historically been and are currently the dominant source ofmined nickel generally accounting for some 58% of total mine production versus 42% derivedfrom laterite operations. In terms of remaining global resources however, laterite depositsaccount for >70% while sulphide deposits account for <30% due to a long history ofexploitation. Direct shipping of low grade nickel laterite feed (<2% nickel) from the Philippines,Indonesia and New Caledonia to produce a nickel pig iron (NPI) that is used by the Chinesestainless steel industry is likely to remain the primary source of nickel.

Nickel Pig Iron costs reducing

Costs for nickel pig iron production are believed to have been reducing in China whichaccounts for around 50% of global consumption. Nickel comprises around 60% of NPI costswhich indicates break-even costs are in the range of US$18,000 to US$19,000. Theconstruction of more efficient ferronickel operations using electric arc furnaces which rely onhigh-grade DSO nickel laterite ores from the Philippines and Indonesia have reduced powerconsumption by up to 50%.

Nickel to move into Surplus in 2012/2013

The surplus for nickel is projected to rise to 60,000 metric tons from 12,000 tons in 2011, withnew mines projected to boost supply 11% in 2012, the most in 17 years according to a recentstatement by Macquarie Group. Construction and transport account for 37% of nickeldemand, with another 18% used in machinery and electrical applications, according to UBSAG. Following a rebound in demand following industrial disputes at Vale SA’s Sudbury andVoisey Bay mines in Canada, over 50% production increases are projected into 2012.

Negative macro themescontinue to weigh onnickel prices

FIGURE 9: LME forwardnickel price (source:www.lme.com April 2012).

FIGURE 10: LME 1 yearnickel price (source:www.metalprices.com,April 2012).

FIGURE 11: LME 2 yearnickel inventories (source:www.metalprices.com,April 2012).

DSO nickel laterite likelyto remain dominantsource

Efficiency gains in Chinaare likely to reducepower costs...

...hence lowering costs ofproduction


www.lme.com

www.metalprices.com

www.metalprices.com


2 May 2012

RISK ANALYSIS Exploration Risk: Mineral exploration is high risk and there is potential for PRW’s

exploration programs on its tenements (Clara Hills, Ord Basin, Metal Rocks, Waterloo,Tibooburra) to fail to outline any potentially economic mineralisation.

Metallurgical and Processing Risks: Laterite projects (such as Barnes Hill) are highlydependent on favourable metallurgical characteristics to enable profitable exploitation.Energy input and capital costs have traditionally been high and the technology beingproposed by PRW may fail to economically extract iron ore, nickel or cobalt.

Traditional Owners: Failure to execute agreements relating to access and mining withthe traditional owners could impair PRW’s exploration portfolio.

Financial Position: The Company does not currently have the financial reserves to fullyevaluate all of its exploration projects and is likely to be dependent on raising capital fromthe equity markets (in addition to its joint venture partner MFC) in the short to mediumterm.

Infrastructure Risks: Delays in infrastructure (road and rail) and congestion at portfacilities have the potential to significant delay production plans. For example delays atBell Bay (Barnes Hill Project) could hinder production.

Peer Underperformance: Underperformance of peer Iron Ore and Nickel explorersand/or developers has the potential to adversely affect market sentiment and lead tolower valuations for PRW.

Commodity Risks: The Company is primarily exposed to iron ore and nickel. Declines iniron ore and nickel prices may see projects such as Barnes Hill struggle to attract therequired capital to enable development.

Market Risks: Further declines in equity markets may continue to put pressure on juniorresource companies as investors switch out of “risk” into perceived safe haveninvestments.

Currency Risks: A strengthening Australian dollar (as funds flow back into riskiercurrencies) may make the price of iron ore in local (Australian) currency terms lessattractive which could have negative impact on Australianexplorers/developers/producers.

The processing of lateriteores could presentserious technical risks

The Company is likely tobe dependent on raisingfunds from the equitymarkets in the short-medium term

At this stage theCompany is primarilyexposed to Nickel



2 May 2012

DIRECTORS AND MANAGEMENTIan Campbell NON-EXECUTIVE CHAIRMAN

Ian brings knowledge of the Australian regulatory environment with a particular focus onindustry and the environment. In 2008 Mr Campbell retired from Federal politics after 17 yearsin the Australian Senate where he was a member of Cabinet and the Expenditure ReviewCommittee from 2004. During his time as Parliamentary Secretary to the Treasurer, MrCampbell initiated the Corporate Law Economic Reform Program. These reforms coveredTakeovers, Fundraising, Accounting (including the introduction of IFRS), and FinancialMarkets. Mr Campbell is a member of the Boards of Austal Limited, ASG Group, and Solco,a solar energy company. He is on the Advisory Board of the Australian-based internationalgeothermal developer Green Rock Energy Limited.

Andrew Mortimer, BA, LLB, MAusIMM MANAGING DIRECTOR

Andrew is the Managing Director of the Company. With a background in law/metallurgy aswell as experience in investment markets, Mr Mortimer has experience in creating, structuringand preserving the necessary strategic alliances to build solid mining businesses with thepotential for sustained growth. Mr Mortimer is currently Chairman of corporate advisory firmSuperstructure International Pty Ltd, Director of Operations of Global Nickel InvestmentsNL, and a Director of SA Capital Funds Management Ltd.

Lia Darby, BA, LLB NON EXECUTIVE DIRECTOR

Lia Darby is admitted to practice law in the Supreme Court of NSW but now works full-time asa mining company executive. Ms Darby also has a marketing and publishing background fromher work in a legal publishing house and on other publications.

As Executive Director of corporate advisory firm Superstructure International Pty Ltd, MsDarby has worked in corporate advisory on listing mining securities and assisting the seniormanagement of listed companies to improve shareholder value. Ms Darby was instrumental infounding Proto Resources and acquiring and developing its portfolio of projects. Ms Darby isa non-executive director of Condor Blanco Mines Ltd.

Greg Melick NON EXECUTIVE DIRECTOR

Greg Melick is a Senior Counsel with chambers in Sydney and Hobart whose experienceincludes mining investigation, occupational health and safety and corporate law. He hasexperience in advising and working with governments having formerly been a CrownProsecutor/Principal Crown Counsel in the Tasmanian Crown Law Office and a StatutoryMember of both the National Crime Authority and the NSW Casino Control Authority.Greg is a former Major General in the Australian Defence Force and was Assistant Chief ofthe Defence Force (Reserves) and Head of the Reserve and Employer Support Division. MrMelick brings experience in corporate governance, management and legal compliance.

Kay Philip NON EXECUTIVE DIRECTOR

Kay Philip is a geophysicist whose background embraces project acquisition, financialanalysis of resource projects, and logistics. She has experience with capital raisings and holdsa part-time position on the Academic Staff at the University of Sydney. She has been aDirector of a number of listed and unlisted companies in the oil and gas sector. Ms Philip iscurrently a Director of ASX listed Alexanders Securities Ltd and Austex Ltd. Ms Philip wasdecorated by the French Government in 2005 with the award of Chevalier de l’Ordre Nationaldu Mérite, for facilitating collaborations between French and Australian scientists. Ms Philip isa Member of the Australian Institute of Physics, Secretary of the Australian-FrenchAssociation for Science and Technology, and Fellow of the Financial Services Institute ofAustralia.

Ian brings 17 years ofexperience in FederalParliament

Andrew has abackground in law andmetallurgy...

Lia was a foundingdirector of ProtoResources & Investments

Greg’s experience coversmining investigation,occupational health andsafety and corporate law

Kay is a geophysicistwith a background inprojection acquisition,finance and logistics



2 May 2012

CONCLUSIONEquity markets have recently been flat to declining, in particular for small to medium size listedcompanies, however we are cautiously optimistic that Barnes Hill is finally set to deliver a liftfor PRW as it looks to come on stream in CY 2013. The identification of an ironstone Duricrustthat may be cheaply beneficiated as a DSO product ex Bell Bay (20 kilometres away) has thepotential to fast track production and generate an early cash flow at Barnes Hill. We will awaitthe metallurgical testwork results however before drawing any further conclusions.

On the macro economic front, while news of recent recessions in UK and Spain have alsocontributed to soft markets and weakening commodity prices, the tightening of regulations inrespect to direct shipping of unprocessed ores from Indonesia (in particular laterite deposits)together with declining grades of DSO laterite from the Philippines which feed nickel pig ironoperations in China, are likely to put medium term pressure on nickel. We do note howeverthat LME nickel stocks have risen sharply from around 85,000 to just under 102,000 tonnesover the last six months.

While R&D associated with new process flow sheets can be a long arduous task, the nickellaterite industry is desperate for a breakthrough. While RM Research is yet to see sufficientdata to form a firm view, the treatment of nickel laterite ores that involves the recycling of acidand the reduction of iron in solution, thereby reducing the need for large scale acid plants andlarge tailings deposits, has the potential to revolutionise the industry. The next 12 months istherefore a critical period for Barnes Hill and potentially other nickel laterite projects aroundthe world.

On other projects, we are waiting on assays from Lindeman’s Bore where recent diamonddrilling has returned a number of zones of potential interest. The results of a geophysicalinterpretation by Southern Geoscience on PRW’s Yerrida basin tenements may also provideadditional targets for follow up later in CY 2012.

Our near term share price drivers are likely to be centred around metallurgical testwork resultsfrom the ironstone Duricrust at Barnes Hill and assays results from Lindeman’s Bore.

RM Research is maintaining a Speculative Buy.

RM Research considersthe metallurgical resultsfrom Barnes Hill andassays from the recentlycompleted diamonddrilling at Lindeman’sBore to be near termshare price drivers...



2 May 2012

Registered OfficesPerthL 2, 6 Kings Park RdWest Perth WA 6005

Phone: +61 8 9488 0800Fax: +61 8 9488 0899

PO Box 154West Perth WA 6872

Email / [email protected]

RM Research Recommendation CategoriesCare has been taken to define the level of risk to return associated with a particular company.Our recommendation ranking system is as follows:

Buy Companies with ‘Buy’ recommendations have been cash flow positive for some time and have a moderate tolow risk profile. We expect these to outperform the broader market.

Speculative Buy We forecast strong earnings growth or value creation that may achieve a return well above that of thebroader market. These companies also carry a higher than normal level of risk.

Hold A sound well managed company that may achieve market performance or less, perhaps due to anovervalued share price, broader sector issues, or internal challenges.

Sell Risk is high and upside low or very difficult to determine. We expect a strong underperformance relative tothe market and see better opportunities elsewhere.

Disclaimer / DisclosureThis report was produced by RM Research Pty Ltd, which is a Corporate Authorised Representative of RM Capital Pty Ltd (Licence no.221938). RM Research will receive payment of A$35,000 for the compilation and distribution of four research reports. RM Research PtyLtd has made every effort to ensure that the information and material contained in this report is accurate and correct and has beenobtained from reliable sources. However, no representation is made about the accuracy or completeness of the information andmaterial and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law,RM Research Pty Ltd does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on,the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation withrespect to the sale or purchase of any securities. The securities recommended by RM Research carry no guarantee with respect toreturn of capital or the market value of those securities. There are general risks associated with any investment in securities. Investorsshould be aware that these risks might result in loss of income and capital invested. Neither RM Research nor any of its associatesguarantees the repayment of capital.WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to ortaking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on anyrecommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. Allinvestors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs,before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for thatproduct (if any) before making any decision.DISCLOSURE: RM Research Pty Ltd and/or its directors, associates, employees or representatives may not effect a transaction uponits or their own account in the investments referred to in this report or any related investment until the expiry of 24 hours after the reporthas been published. Additionally, RM Research Pty Ltd may have, within the previous twelve months, provided advice or financialservices to the companies mentioned in this report. As at the date of this report, the directors, associates, employees, representativesor Authorised Representatives of RM Research Pty Ltd and RM Capital Pty Ltd may hold shares in Proto Resources Limited.


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