Accused kidnapper extradited from NSW over 12yo boy snatched on Gold Coast

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Neighbours watched on in horror as the boy was dragged "kicking and screaming" into a dark blue Jeep Compass outside his Mudgeeraba home on Friday afternoon.

Detectives will now apply to extradite a 53-year-old man from where he was arrested in New South Wales to face a charge of kidnapping for ransom.

He was then driven 200km interstate where he was found in the northern NSW town of Grafton shortly after midday on Saturday.

Det Insp Hogan said NSW Police were able to track down the pair on road camera networks, which "gave us the idea as to the direction of travel over the border".

Detective Inspector Marc Hogan says the boy was located by NSW officers in the Jeep along with a 53-year-old man, who is understood to be an Australian citizen of Chinese heritage.

He said police believed both parties were known to each other and there were financial issues involved in the lead-up to the abduction of the child.

Police will allege the kidnapping was part of an extortion attempt to settle a financial dispute.

"It's quite a substantial amount (of money) in my book".

He was found by police in Grafton in New South Wales a short time ago and is believed to have suffered no major injuries.

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He was taken to the hospital as a precaution after allegedly receiving cuts consistent with having been bound.

Investigators are also looking into whether or not other people were involved.

Police had feared for the boy's safety after witnesses reported he was pulled into a vehicle outside his house on Friday afternoon as he was walking home from school.

"In the lead-up to the abduction we will allege that requests were made for money and of course that is what led to quickly identifying who we should be looking at", Detective Inspector Hogan told reporters in Burleigh Heads on Saturday afternoon.

"You see that sort of stuff in the movies, but to see if actually happen", said the witness, who did not wish to be named.

The boy was filmed carrying a tennis racquet and wearing a backpack as he walked down a street on the Gold Coast about 3.45pm on Friday.

The breakthrough came after an eagle-eyed member of the spotted the Jeep used in the abduction and phoned police.

"He is a really lovely young kid", he said.