Shenghe and Arafura Execute MOU for Development of International Rare Earths Business

September 10, 2013 (Source: Arafura Resources Limited) — Highlights:

• Shenghe and Arafura have executed an MOU for the objective of developing the Arafura owned Nolans Rare Earths Project;
• Shenghe Resources to utilise the development of the Nolans Rare Earths Project as an opportunity for the international expansion of its existing Chinese based Rare Earths business.

Australian rare earths company Arafura Resources Limited (ASX: ARU) (“Arafura”) and Shenghe Resources Holding CO.LTD (600392.SS) (“Shenghe”) a Chinese based Rare Earths Producer are pleased to announce the signing of a Memorandum of Understanding (MOU).

Under the terms of the MOU both parties will work together to achieve the following objectives:

•  Shenghe to conduct scheduled reviews of the Nolans Project definitive feasibility study which is being prepared by Arafura;
•  Upon successful completion of the definitive feasibility by Arafura, Shenghe will be provided with the opportunity to co‐fund the development of the Nolans Project;
•  Arafura and Shenghe to examine opportunities for the sale and distribution of Rare

Earth products to Shenghe’s existing customers;

•  Arafura and Shenghe to continue to look for opportunities and initiatives to add to and  build  the  strategic  partnership  to  develop  an  international  Rare  Earths business; and
•  Negotiate  a  Framework  Agreement  to  formalise  the  arrangements  for  the establishment of a long term strategic partnership.

Shenghe, based in Chengdu in the Sichuan Province, is an industry leader in Rare Earths production  and  technology development. Shenghe is a Shanghai Stock Exchange listed public company and operates a Rare Earths processing plant in Leshan City and markets specialty Rare Earth products to international and Chinese based customers.

Arafura is an Australian based company with a Rare Earths project based near Alice Springs in the Northern Territory. Arafura believes the execution of the MOU with Shenghe will provide  significant  momentum  assisting  it  to  achieve  its  goal  of  making  substantial reductions in the Nolans Project capital costs and operating costs. With the ongoing support of Shenghe and its other strategic partners Arafura is confident it can advance the Nolans Project towards sustainable financing and commercialisation.