AC 74 Kurinelli annual report 22 July 2008 to 21 July 2009

Abstract

Arafura Resources Limited (Arafura) advises that no on-ground exploration was undertaken on Authorisation C 74 (Kurinelli) during the last reporting period. During our meeting in Darwin on 17 April 2009, Arafura explained that its focus remains on building a long-term rare earths (REE) production and marketing business centred on our Nolans Project and associated strategic land position in the Reynolds Range and, more generally, in central Australia. Consequently over the past year or two, Arafura has been attempting to either divest its non-core exploration projects, or seek suitable partners to help develop them through joint ventures. The $8 million Arafura-Jiangsu East China Exploration (ECE) Jervois JV letter of intent is a recent example of the latter strategy. Unfortunately our attempts to develop suitable JV partnerships to continue gold exploration of our tenements in the Davenport region have thus far been unsuccessful. As a result, our more speculative gold exploration tenements in the Davenport Ranges were surrendered (ELs 9710 and 9745). Although Kurinelli is a greenfields area with no major recognised gold deposits, Arafura still considers the presence of minor amounts of gold mineralisation within AC 74 worthy of continued exploration. Desktop studies and geological interpretation undertaken by Arafura during the reporting period indicate the presence of a number of favourable untested target zones within AC 74. This information has been offered to a number of potential JV partners (including Zhong Rong Group, Rubicon Resources, Indago Resources and Navigator Resources) but all have declined the opportunity to participate. AC 74 was subsequently reduced by 50 percent as per statutory requirements. All target zones were retained as it is our strong desire to explore these zones through a JV partner.