RARE earths hopeful Arafura Resources has been forced to cut five directors, including its managing director, as it struggles to source funds in a volatile market.

Chairman Ian Kowalick announced the changes yesterday, saying it had been difficult for the company to raise capital in a new emerging product, such as rare earths.

"I think the market shock at the moment is longer than anybody expected and it will come back but, realistically, it could take a while," he said.

"This hangover from the uncertainty about Europe could hang around for a while and we have to learn to live in that environment and be very prudent about what we do for a while."

Mr Kowalick -- a founding director of Arafura who took on the top role in January from Chris Tonkin -- said while the company had made progress on its Nolans project, development work had identified issues that would take time to solve.

"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," he said.

Arafura said given the realignment of the development strategy, Steve Ward would step down as managing director. Lloyd Jones, Loretta Reynolds, Ian Laurance -- the chairman until December last year -- and Terry Jackson are retiring.

Arafura had told the market earlier this month its Nolans project in the Northern Territory would be delayed because it had to scale back work in "very challenging" financial markets.

The Perth-based company cancelled a $74 million rights issue last November, after its share price fell below the offer price amid the market volatility.

It said then that it would instead hire Macquarie to help identify other ways to raise the money needed to complete a bankable feasibility study on its Nolans project.

Mr Kowalick said the company had begun talks with potential strategic investors.