THE Territory's most glamorous mining project is in crisis.

Arafura Resources has suffered three major blows at the Nolans Bore rare earths mine near Alice Springs in quick succession:

IT IS struggling to raise enough money for the Nolans Bore rare earths mine.

FIVE directors, including its managing director Steve Ward, have resigned.

STUDIES have identified more technical issues that would take additional time - and funds - to resolve.

Arafura last year put back its feasibility study into the project by up to a year.

It was then forced to cancel a one-for-three rights issue to raise $74 million to complete the study after its share price fell well below the offer price.

The company's largest shareholder, East China Mineral Exploration and Development Bureau, is known to be unhappy with the delays.

Arafura has now scrapped plans for the feasibility study.

The company said it would focus instead on resolving technical problems and finding project partners.

Arafura's prospects seemed much brighter early last year.

It disappointed Territorians by announcing that the rare earths would not be processed in the NT.

The ore would be freighted south by train to a $1 billion plant located in Whyalla.

China then boosted the project's prospects by announcing that it would restrict exports of rare earths. The People's Republic is the biggest producer of rare earths in the world and its decision threatened to exacerbate a shortage of the minerals.

Despite the name, rare earths are not rare - but they are rarely economical to mine.

The minerals are used in many hi-tech processes, including electronics, energy efficiency and greenhouse gas reduction.

Arafura hopes to mine about 850,000 tonnes of ore a year from an open pit to a depth of about 75m.

The project is expected to operate for at least 20 years.