Prepare Fondant according to recipe directions. Let stand (ripen) at room temperature for 24 hours.
Divide ripened fondant into fourths. Shape each piece into a 3-inch-long log. In a heavy 1-1/2-quart saucepan combine caramels, butter, and milk. Cook over low heat, stirring occasionally, until caramels are melted. Meanwhile, spread chopped pecans or peanuts on a piece of waxed paper.
Remove the saucepan from heat. Carefully dip the fondant logs, one at a time, into the melted caramel mixture. Use a fork to turn the log in the caramel mixture to coat it on all sides. Lift the log out of the caramel mixture with the fork. Let excess caramel drip off the log.
Place the dipped log on the chopped pecans or peanuts. Use the waxed paper to roll the dipped log in the chopped nuts until it is covered. Place logs on a baking sheet lined with waxed paper. Chill about 1 hour or until firm. To serve, let logs stand at room temperature about 30 minutes; cut into 1/4-inch slices. Makes about 48 slices.