Arafura Resources Global Investor Update Dr Steve Ward MD & CEO Mr Gavin Lockyer CFO & Company Secretary

December 2011

Page 2

Disclaimer

Important Notice This presentation contains certain statements which may constitute “forward-looking statements”. Such statements are only expectations or beliefs and are subject to inherent risks and uncertainties which could cause actual values, results or performance achievements to differ materially from those expressed or implied in this presentation. No representation or warranty, express or implied is made by Arafura Resources Limited (“Arafura Resources”) that any forward-looking statement contained in this presentation will occur, be achieved or prove to be correct. You are cautioned against relying upon any forward looking statement. Except for statutory liability which cannot be excluded, each of Arafura Resources and its related body corporates and their officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error in it or omission from it. Arafura Resources accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person, nor any obligation to furnish the person with any further information. This presentation does not constitute an offer of securities in Arafura Resources, nor an invitation to apply for such securities. This presentation does not provide investment advice or financial product advice. You should obtain professional advice and carry out your own independent investigations and assessment of the information in this presentation (including any assumptions) before acting. Information in this presentation which is attributed to a third party source has not been checked or verified by Arafura Resources. The information in this presentation that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Richard Brescianini BSc(Hons). Mr Brescianini is a Member of the Australian Institute of Geoscientists and he has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code)”. Mr Brescianini consents to the inclusion in this presentation of the matters based on his information in the form and context in which it appears. Mr Brescianini is a full-time employee of Arafura Resources.

Page 3

Introduction to Arafura

Corporate Summary Australian Public Company – formed 1997 Listed on ASX in 2003 (code ARU) Nolans Project for Rare Earths Own technology developed Bankable Feasibility Study due H2 2012 Project Financing sought by end 2012 First production by end 2014 subject to BFS

Our Vision: ‘ To be the recognised leading producer of rare earths for users worldwide’

‘All Australian’ Business Model – mining, chemical processing and own technology to produce rare earth oxides

Ore

Mineral Concentrate

Rare Earth Intermediates (Carbonate)

Rare Earth Oxides

Metals/Alloys

Components

OEMs

20,000 t p.a.

1. Substantial German-based shareholding amongst many shareholders 2. East China Mineral Exploration & Development Bureau

As at 5 December 2011

Market Statistics Share price 52 Week High / Low Shares on issue Market capitalisation Options on issue

A$0.52

A$1.59 / A$0.445 368 million

~A$191 million ~22.6 million

Balance Sheet Debt - nil Cash ~A$45 million (25 Nov 2011)

Top shareholders JP Morgan Nominees1 ECE2 Board & Management

31.2% 17.5% 2.5%

Page 4

Nolans Project

The Nolans Bore Mine and its supporting infrastructure will act as a catalyst for business opportunities

throughout Central Australia

The Whyalla Rare Earths Complex will be a very substantial chemical processing operation by Australian

standards

Nolans Project is world scale and strategically significant ……………. One of only three well advanced large scale projects Australia – low sovereign risk and world class regulatory environment Excellent locations; Nolans mine is remote, but not isolated, and is close to

infrastructure; Whyalla is a long-standing and well established industrial city

Page 5

Nolans Project – Globally Significant

Annual Production

REO Rare Earths Oxides 20,000 t

Phosphate Product (as P2O5)

80,000 t (approximately)

UO4 Uranium Oxide 150 t

CaSO4 Gypsum

500,000 t

High potential value, long life, multiple revenue streams with upside potential ….

Financial Evaluation October 2010

October 2010 Project Economics

Capital Costs @ 0.95 A$950 million

Sales Revenue US$

Low Mid High

Rare earth oxides US$/kg $22.00 $38.00 $54.00

Rare earth oxides 20,000t US$ $440 $760 $1,080

Phosphoric Acid 80,000t US$1,250/t $100

Gypsum 500,000t US$25/t $12

Uranium 150t US$40/lb $13

Total Revenue p.a. US$M $565 $885 $1,205

A$M

Total Revenue p.a @ 0.95 $595 $932 $1,268

Annual Operating Expenses @ 0.95 ($376)

EBITDA p.a $219 $556 $892

NPV @ 10% after tax and capital payback $1,420 $4,050 $6,549

Capital Payback - years 5 4 3

Current price (1 Dec 2011)

US$129.04/kg

Page 6

Project History and Timeline

Exploration Prefeasibility Study

Bankable Feasibility Study Construction Operations

Complete Complete In progress target

completion end 2012

2013/14 2H2014

Exploration Began 2000 Maiden JORC Resource 2003

Technology Program began 2004 Prefeasibility study completed 2007

Current JORC Resource 2008 Technology piloting 2008/09 Whyalla site announced 2010 Technology demonstration 2010 & 2011 Appointment of specialist engineering

contractor 2011 early Expanded BFS Rare Earth focus 2011 First Customer LOI announced in 2011 Expansion drilling program Complete optimization Finalize design study Secure regulatory approvals Complete sales contracts with target customers Obtain Project Finance

At time of completed BFS 2H 2012: Approx 100km of drilling

completed at Nolans Approx total project expenditure

$250M

Already a long way through a lengthy industry development timeline, one of the few advanced world scale projects …………

Current Status

Approximately 15 years for a rare earths project

Page 7

Nolans Project Timeline for 2012

Q1 2012 Q2 2012 Q3 2012 Q4 2012

Drill Program

Mine Planning

Technology Demonstration - Beneficiation - RE Processing

Study Engineering and Estimating - Mine and Beneficiation - RE Complex

Finalise Project Finance

BFS Report Finalisation

Regulatory Approvals

Supply Contracts

Sales Contracts

Engineering for Construction Readiness

Page 8

Create value, de-risk and use world class expert assistance…………….

Engage world class experts to assist in all aspects of the Nolans Project

Focus on value-creating rare earth oxide production in industry chain

Standard design and low risk co-product plants

Develop own technology for processing Nolans ore into rare earth oxides

Demonstration scale trials of technology to de-risk beyond more normal piloting scale

Minimize capital requirements through simplification

Improve operability – reduce volumes of raw materials and wastes to manage and reduce operating costs;

Optimize product quality/mix to maximize margins

Position for future developments if value-creating, e.g. phosphoric acid.

Arafura’s approach to the Nolans Project

Page 9

WORK STREAM PFS OCT 10 UPDATE DEVELOPED TARGETING

Concentrate Grade 4% 4% 5% 10%+

Pre-Leach Complex Complex Simplified to be demonstrated

Simplified

Rare Earth Sulphation Complex Complex Simplified to be demonstrated

Simplified

Uranium ADU/U3O8 ADU/U3O8 Simplified to be demonstrated

UO4

Phosphate Phosphoric

Acid

Phosphoric Acid

Simplified to be demonstrated

Simpler solid phosphate

Calcium Chloride CaCl2 CaCl2 CaSO4 / HCl CaSO4 / HCl

Rare Earth Oxides 20,000t p.a. 20,000t p.a. 20,000t p.a. 20,000t p.a.

Nolans Project Scope Evolution

Simplified flow sheet

De-risked flow sheet

Value creating

Rare Earths focus

Page 10

Leading Consultants Engaged

Our approach has been to use well-known world wide experts…..

Operational, Technology and Regulatory: Australian Nuclear Science and Technology Organisation (ANSTO) Bureau Veritas - AMDEL ALS - AMMTEC Bateman Litwin Commonwealth Scientific and Industrial Research Organisation (CSIRO) GHD AECOM

Mining & Engineering: Lycopodium Parson Brinkerhoff Battery Limits AMEC Minproc

Page 11

Nolans Bore 2011 Expansion Drilling Program

N

500m

Sampling facilities

Nolans Bore

Drill rigs

Drill rig

Drill rig

Drill rig

Major program (52km) - Initial results confirm the presence of additional mineralisation ………

Page 12

Building a Sustainable Business for the Future

Australian developed & proven flow sheet – not reliant on others

Additional flowsheet demonstration programs at scale are underway to de-risk start up & achieve nameplate capacity quickly – see next slide

Demonstration programs will also provide potential customers and financiers opportunities to observe and assess our operations for their due diligence.

Environmental Guidelines of the highest standards have been issued as anticipated. No surprises, most studies completed or well advanced

Arafura is ‘going the extra mile’ to ‘get it right’ first time and ensure success ……

Page 13

Demonstration Plant

The flow sheet has been proven at pilot scale and is now undergoing final demonstration ….

Gypsum from HCl Regeneration Demonstration Plant 2011 ALS-Ammtec Perth

Mixed REO Carbonate Production 2009 ANSTO Sydney

Water Leach Piloting 2009 ANSTO Sydney

Sulphation Baking 2009 ANSAC Bunbury

Pre leach Demonstration Plant 2011 ALS-Ammtec Perth

HREO sample produced from Nolans Bore 2010 ANSTO Sydney

Page 14

Nolans Project – Government Approvals

Excellent support from Federal, Northern Territory (NT) and South Australian (SA) governments

Major project status from South Australian Government

Strong support from local communities in both NT and SA locations – community engagement ongoing

Technology designed to meet highest environmental standards – EIS guidelines issued and studies underway in both locations

Rare earths recognized as a strategic material

Significant capital expenditure – will bring direct developments worth over $1 Billion in total (Arafura + others) to Australia at Nolans and Whyalla

Page 15

Rare Earths - Introduction

An exciting market outlook in new high technology applications and clean and efficient energy uses, with increasing demand driven by consumers, society & regulators …..

Page 16

Market Overview

Current annual global consumption 130kt

Major geographic markets are China and Japan; lesser amounts in Europe, USA and Korea

Current annual value US$15 Billion

China currently produces 97% of global supplies

Future demand growth very strong: two to five times GDP depending on application

China production declining – closure of polluting and illegal operations

China reducing supplies to rest of world by tightening export quotas

Overall market very tight – supplies short

Worldwide users seeking new supply sources from outside China

Few new supply sources this decade - much ‘probable unrealistic’ speculation

PERFECT STORM & OPPORTUNITY FOR ARAFURA

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Global Strategic Importance - A New Supply Era

Page 17

The industry challenge is for the supply side to keep up with demand growth creating an opportunity for a new supply era involving new western suppliers …..

Global REO Production 2009 Australia

Brazil

China

CIS

India

Malaysia

USA

Other

Geochemistry of each deposit is different Unique separation technology for each deposit Production is high technology and capital intensive Chinese production has reduced and maxed out Opportunity for new supply Western sources – few Great opportunity for Arafura

0%

20%

40%

60%

80%

100%

19

50

19

55

19

60

19

65

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

20

20

REO Supply by Era

China USA All Other

Global REO Reserves 2009 Australia

Brazil

China

CIS

India

Malaysia

USA

Other

Page 18

Supply and Demand

Total Rare Earth Oxide (REO) supply growth does not keep up with demand growth rates in any year!

Capacity utilizations bottoms out in 2015 at 107%

Global demand then requires another ~20,000mt of supply (a Nolans project) each year above current supply forecasts

Unclear where the supply will come from

On an individual rare earth basis ‘Lights’ (Ce and La) are most plentiful but are ‘snug’ at their easiest point and then short

Based on Arafura’s research of the market

80%

100%

120%

140%

160%

180%

200%

100,000

150,000

200,000

250,000

300,000

350,000

400,000

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

Global REO Supply - Demand Balance

Capacity Utilization Suppy Demand

Metric tons % Cap. Util.

Page 19

Price Trends

1990 to 2005 atypical low priced era driven by unsustainable low cost Chinese production

2006 prices begin to rise with first Chinese export quotas

2007 to 2008 prices fall due to soft demand in GFC

2009 prices begin to recover post GFC. Demand increases, Chinese supply reduces

2010 to 2011 prices increase markedly as demand accelerates, Chinese production reduces ( closure of polluting and illegal operations) and Chinese export quotas tighten

2011H2 prices peak, then adjust from highs, rate of decline has slowed and beginning to ‘level out’. Prices still circa 250% above levels 12 months ago

2012+ Low priced era is over, prices will follow

supply/demand dynamics

Prices in real terms have returned to long term levels prior to low price ‘Chinese era’ ……

Page 20

Nolans Bore Resource – Magnet Feed

Nolans Bore has a higher proportion of desirable “magnet feed” Rare Earths Nd, Pr & Dy compared with other deposits.

The permanent magnet market is forecast to have strong growth and will be a key driver for the industry

Nolans is one of only four Rare Earth projects likely to be in operation by 2015.

0%

5%

10%

15%

20%

25%

30%

35%

"Magnet feed"

Nd + Pr + Dy as % of total REE mix

The Nolans Bore resource is well aligned with magnet end markets ….

Page 21

Target Customer Program

Interest in Arafura’s REO products is high

Arafura has identified target customers worldwide with whom it would like to develop mutual long term relationships, key geographical regions include Japan, Korea, Europe and USA

First LOI already signed with Thyssen Krupp

Arafura is only new supplier with significant volumes available for sale

Q4 2011 Q1 2012 Q2 2012 Q3 2012

Key customer specifications refined

Generation of customer samples from Demonstration program

Customer visits to demonstration facilities

Letters of Intent negotiated

Completion of provisional sales contracts

Rare Earth Project Comparison

Exploration Prefeasibility Study Bankable Feasibility Study Construction Operations

Arafura is undervalued compared to industry peers ….

Northern Minerals (ASX: NTU)

Greenland Minerals & Energy (40 kt p.a.) (ASX: GGG) Rare Element Resources (10 kt p.a.) (NYSE: REE)

Arafura (20 kt p.a.) (ASX: ARU) Alkane (1.5 kt p.a.) (ASX: ALK) Avalon Rare Metals (10 kt p.a.) (TSX: AVL)

Molycorp (40 kt p.a.) (NYSE: MCP) Lynas (22 kt p.a.) (ASX: LYC)

Molycorp reprocessing (< 5 kt p.a.)

- 500 1,000 1,500 2,000 2,500 3,000

Northern Minerals Ltd.

Arafura Resources Ltd.

Rare Element Resources Ltd.

Greenland Minerals & Energy Ltd.

Alkane Resources Ltd.

Avalon Rare Metals Inc.

Lynas Corp. Ltd.

Molycorp Inc.

Market Capitalisation (A$m)

Market Capitalisation – Rare Earth Sector

Note: Market capitalisation as at 2 December 2011 converted to AUD at the prevailing exchange rate

Page 23

Investment Opportunity

Funding requirements: Current cash on hand approximately A$45 million with no debt Requirements for next 12 months are approximately an additional A$70 million to

complete the BFS and fund completion of the demonstration plant ahead of project financing at the end of 2012

Recent 1:3 rights issue @ A$0.60 per share was cancelled due to market volatility Macquarie Capital (Australia) Limited has now been appointed to advise on funding

options

Funding sources: Consideration is being given to all possible sources:

– Customers (forward sales) and strategic investments – Debt & equity markets – Suppliers – Sovereign debt markets – Other (hybrid, mezzanine etc) or a combination of the above

A number of recent examples of customers, strategics and institutional investors that have supported financing of new rare earths projects outside of China

Page 24

Summary

Robust and well regarded ‘All Australian’ business model

World scale Nolans Project with high value creation potential

Nolans Project well advanced and likely to be one of very few new supply sources this decade – with upside potential

Significant government and community support – EIS to highest standards underway

Australian developed and proven technology. Now going the extra mile (via the BFS and demonstration plant) to optimize, de-risk, get it right first time and ensure success

On-track for completion of BFS and to have Project Financing in place by end of 2012

Discussions are in progress with target customers worldwide outside of China

‘Undervalued’ compared to peers - investment opportunity

Appendix

Page 26

Experienced Management Team

Dr. Steve Ward

Managing Director &

CEO

Age 56

Holds PhD in Physical

Chemistry and over 30

years experience in the

chemical, mining and

minerals processing

industries.

Formally engaged by

Cristal, a Saudi Arabian

based titanium pigment

producer as Snr Vice

President Strategy and

Development and was

Chairman and CEO of

Bemax Resources

Gavin Lockyer

Company Sec & CFO

Age 44

Has over 15 years

experience in the banking

and mining industries.

Previously with Newmont,

Newcrest, Tethyan

CopperCo, Bankwest and

ANZ, and Bankers Trust

and Deutsche Bank in

London.

Gary Cianfichi

Head of Sales &

Marketing

Age 54

Gary has a degree in

Science and Engineering

and has spent a large part

of his career in senior

executive roles involved

with global sales and

marketing in titanium

dioxide and other specialty

chemicals

.

Richard Brescianini

GM – Exploration &

Development

Age 48

Has over 20 years

experience in the minerals

industry,

He has worked with BHP

Minerals on base and

precious metals exploration

programs throughout

Australasia and North

America.

Recently he held the

position of Director with the

Northern Territory

Geological Survey.

.

Neil Graham

GM – Operations

Age 47

Neil Graham has more

than 25 years of

international experience in

the chemical industry,

encompassing design,

construction, and

commissioning of both start

up and brownfield

installations, in addition to

substantial operations

management experience of

facilities in several different

countries.

John Ganser

GM – Projects

Age 55

John Ganser is a graduate

in Mechanical Engineering

from the University of

Adelaide with over 30

years of experience in the

minerals and metals

industry. He has worked

for Rio Tinto, BHP, Iluka

Resources, Hatch, SKM

GHD and Calibre Projects.

Page 27

-

0.50

1.00

1.50

2.00

2.50

Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11

Shar

e P

rice

(A

$)

Series1 Series2ARU ASX S&P 300 Index (rebased to ARU share price)

Share Price History & Performance vs. Index

$90m raised via placement of 75 million shares @ $1.20 per share

A total of $19.5m raised through a renounceable

rights issue and placement

$7.5m raised through a non-renounceable rights issue

$18.5m raised through placement @ $1.00 per share

Significant new drilling intercepts and assay results

Major resource upgrade at Nolan's

FIRB approval for Nolan’s investment by ECE Nolan’s rare earth feasibility update

Further rare earth oxides produced and technology

update

Nolans phosphate recovery and testwork commercially

and technically feasible

Nolans PFS released

Source: IRESS Note: For the “ASX S&P 300 Index (rebased to ARU share price)” being the red line in the chart, the ASX S&P 300 Index was rebased (made equivalent to Arafura’s share price) on the 4 December 2006. From this point onwards to the present point in time it is increased or decreased by the % amount the index increased/decreased on each trading day. The chart shows that over the relevant period that Arafura has outperformed the ASX S&P 300 Index

Scope of Nolan’s Rare Earth BFS expanded

Further price increases for Nolans Rare Earths

Chinese company ECE invests A$23m to acquire a 25% stake in Arafura

Thank you