ARAFURA RESOURCES NL(ARU)

name changed to Arafura Resources Limited

at a General Meeting on 16 February 2007, the Arafura shareholders agree to a demerger by Arafura of NuPower - resolutions approved a capital reduction by way of an in specie distribution of NuPower ordinary shares and a reduction in the exercise price of the Arafura options on issue - the capital reduction resulted in Arafura distributing 90% of the ordinary shares it owned in NuPower to the Arafura shareholders, who received one NuPower share for every three Arafura shares they held on the Record Date (being 26 February 2007) - also all Arafura option owners at Record Date received one option in NuPower for every three Arafura options they held - Arafura accounted for the distribution of the ordinary shares in NuPower wholly as a return of share capital meaning Arafura shareholders received a capital reduction amount of approximately $0.068 for each of the Arafura shares they owned at Record Date

we understand that on or about this date the company demerged NuPower Resources Limited by way of a 1 for 3 distribution - the Demerged Entity represented 34.01% of the market value of the group as a whole immediately after the demerger

company transfers $8.8 million of cash and a number of mining tenements, tenement applications and tenement rights to NuPower, a wholly-owned subsidiary of Arafura, - these assets relate principally to uranium exploration - as consideration (in part) for the transfer of those assets, NuPower agrees to issue ordinary shares to Arafura