Arafura Resources has announced a big clean-out of its board and admitted it is struggling to raise capital and to resolve technical issues associated with its Nolans rare earths project in the Northern Territory.

The company's managing director and chief executive Steve Ward will immediately step down along with other board members Lloyd Jones and Loretta Reynolds.

Ian Laurance and Terry Jackson, who were expected to step down at the company's next AGM, have decided to retire early.

Chairman Ian Kowalick admitted the company had struggled recently to attract investors given tight global financial markets, stressed by the European debt crisis.

"Consequently it has become very difficult to raise capital for resource developments in newly emerging products such as rare earths," he said.

"Whilst the company has made excellent progress in many aspects of the development of the Nolans project, including the successful production of final rare earths oxide products, the development work has also identified some issues for which it will take more time to refine solutions.

"Given these circumstances, the company will focus its available capital on activities aimed at resolving outstanding technical issues and progressing current discussions with international investors with a strategic interest in rare earths."

Arafura shares were off 1.5 cents, or 4.29 per cent, to 33.5 cents at 8am.