Indonesian Nickel Laterite Project (5%)

The Mandiodo Project is located in Southeast Sulawesi, Indonesia and consists of two permits totalling 31 square kilometres over an area where previous extensive drilling had outlined significant lateritic nickel mineralisation. Drilling in the late 1990s and early 2000s identified nickel mineralisation at shallow depths over an area of 4.2 square kilometres with an average thickness of 13 metres and grading 1.3% nickel.

Stonehenge Metals executed an initial acquisition agreement to purchase the project in October 2007 and a formal Heads of Agreement with PT Global Titik Persada (PT Global), the vendor of the Mandiodo Nickel project in December 2007. Under the terms of the Heads of Agreement Stonehenge could acquire an 85% interest in the project and exclusive right to explore and mine the project.

In April 2008, Pt Global advised Stonehenge Metals that some of the area comprising the Mandiodo exploration permits is subject to competing third party exploration permits ("Competing Permits"). Stonehenge Metals also became aware of a potential additional third party exploration permit ("Additional Competing Permit"). Whilst the validity of the Competing Permits and Additional Competing Permit has not yet been conclusively established the Directors have nevertheless elected not to proceed with the intended acquisition of an 85% interest in the Mandiodo Nickel project in Sulawesi, Indonesia.

Whilst the Company continues to believe that the Mandiodo Nickel project is potentially commercially attractive, issues of competing permits over the area comprising the Mandiodo exploration permits remain unresolved and in this environment of uncertainty Stonehenge believes that it is in the best interests of shareholders not to proceed with settlement of the acquisition at this time.

Stonehenge and the vendors have agreed to terminate the Heads of Agreement and subject to formal documentation Stonehenge will:

• convert its investment to date into a 5% shareholding in the entity that seeks to control the Mandiodo project;

• pay no currently outstanding or further costs in respect of the acquisition; and

• receive a 5% shareholding in the entities that seek to control eight other highly prospective nickel leases (KPs) proximate to the Mandiodo Nickel project.

This outcome provides Stonehenge with ongoing potential exposure to the Mandiodo Project and eight other highly prospective nickel leases whilst significantly reducing risk and eliminating any further financial commitments. The Directors are hopeful that the issue of competing permits over the area comprising the Mandiodo exploration permits will in time be resolved therefore allowing Stonehenge to potentially re-enter negotiations with the vendors.