The atomic and electronic structures of ErAs nanoparticles embedded within a GaAs matrix are examined via cross-sectional scanning tunneling microscopy and spectroscopy (XSTM/XSTS). The local density of states (LDOS) exhibits a finite minimum at the Fermi level demonstrating that the nanoparticles remain semimetallic despite the predictions of previous models of quantum confinement in ErAs. We also use XSTS to measure changes in the LDOS across the ErAs/GaAs interface and propose that the interface atomic structure results in electronic states that prevent the opening of a band gap.