Annual report for ML 23839 February 2007 to 1 February 2008 Mount Porter

Abstract

Arafura Resources Limited wishes to advise that no on-ground exploration or mining activities were conducted on ML 23839 during the reporting period. The most recent annual report for ERL 116, lodged with the Department of Primary Industry, Fisheries and Mines in September 2007, advised that Arafura was in commercial negotiations with GBS Gold in relation to the sale of Arafura's gold assets in the Pine Creek region (including ML 23839 and the Mt Porter gold resource). These negotiations have now been suspended pending commissioning of GBS's refractory circuit at its Union Reefs gold plant, scheduled for early-2009. Once this circuit is operational, an additional option in the form of toll treatment of material from Mt Porter may be available to Arafura. More recently, the Mt Porter resource, and indeed Arafura's tenement holdings in the Pine Creek region, has attracted intense interest from Chinese organisations seeking to initiate or escalate their investment in the Territory's exploration and mining sector. Discussions are ongoing with several parties. In summary, a large part of Arafura's effort in relation to ML 23839 over the past 15 months has been commercial in nature. Nevertheless, approximately $83,000 was spent during the reporting period on the tenement, primarily on preparing supplemental information as requested by the Department of Natural Resources, Environment and the Arts in support of the Mt Porter PER. This work was undertaken by MBS Environmental Pty Ltd., and a copy of the final report and corresponding data was submitted to DNRETA in February-March 2007. In relation to under reporting of drilling data from ML 23839 (refer correspondence from Arafura dated 7 February 2007), we attach technical reports EPL-04/153 and EPL-07/182. These reports detail the results of recent drilling campaigns by Arafura at Mt Porter in November 2003 and November 2006, respectively.