Executive Remuneration aligns with shareholders

Summary of my follow up about Peter Sherrington incentive plan:

Whilst being critical when I first read this plan, now that wehave the rules of engagement, I appreciate that it is completely aligned withus shareholders in that it will support minimal dilution and increase SP withinmanagements control. I am no longer skeptical.

Darryl Cuzzubbo, the Managing Director and CEO of Arafura,responds to concerns regarding the issuance of performance rights to the CFO, Peter Sherrington, the remuneration structure of staff and key management personnel (KMP), and the progress towards delivering the Nolans project. Here are the key points:

1.CFO Performance Rights: The issuance ofperformance rights to the CFO occurred under the Employee Incentive Plan approved by shareholders. These rights are divided into two components: Retention and Capability Plan, and Nolans Success Plan. The latter aligns employee interests with company success through milestone achievements related to the Nolans project. Contrary to my understanding. Darryl has not received these shares until he reaches the milestones- appendix 1.Interestingly, under the Retention and capability plan, these vest only after 3years of being awarded, as long as they remain employed by ARU.

2.Staff and KMP Remuneration Structure: Cuzzubbo addressesconcerns about the structure of remuneration for staff and KMP. He notes that the percentage of outstanding performance rights is modest relative to the company's shares. Additionally, the issuance of shares is tied to theachievement of specific milestones, ensuring no dilution until key project stages are reached. He also noted that the shares were fixed allocation. My personal view is that given this is the case, they need SP growth and limited dilution to support their personal value. This fact aligns entirely with us shareholders.

3.Progress Towards Delivering Nolans: Cuzzubbo highlights recent milestones achieved in securingdebt funding for the Nolans project, including a significant funding packagefrom the Commonwealth. He acknowledges delays in announcing progress butassures that negotiations are well-progressed, aiming to minimize equity raising until optimal share price growth can be realized. My view is that they are looking to release news-flow to support SP value. Notably, any cost overrun (even though we have the circa AU$420M avaialble) in the project prior to drawdown, means they fail on tranche 2. This tranche is important to us, and executive will have to work hard here.

In conclusion, Cuzzubbo reassures stakeholders of the company'scommitment to delivering the Nolans project while aligning employee incentives with shareholder interests and maximizing financial outcomes.

Appendix 1

	Tranche	Milestone Vesting Condition	Weighting
1	Tranche 1	Commencement of Main Construction.	20%
2	Tranche 2	First Draw down of Debt.	20%
3	Tranche 3	First Ore delivered to ROM Pad.	20%
4	Tranche 4	First NdPr Oxide Production.	20%
5	Tranche 5	Project Close Out.	20%