GENESIS RESOURCES LIMITED — Merger & Acquisition 2012

Jul 22, 2012

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Clancy Exploration Limited Phone: (02) 6361 1285
3 Corporation Place Fax: (02) 6361 1202
Orange NSW 2800 www.clancyexploration.com
Australia info@clancyexploration.com
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Second Supplementary Bidder’s Statement for the Offer by Clancy Exploration Limited (ACN 105 578 256) to acquire all the Shares in Genesis Resources Limited (ACN 114 787 469)

This document is a Supplementary Bidder’s Statement given pursuant to Division 4 of Part 6.5 of the Corporations Act 2001 in compliance with the requirements of Section 645 of the Corporations Act ( Supplementary Bidder’s Statement ).

It is the second Supplementary Bidder’s Statement prepared by Clancy Exploration Limited ( Clancy ) in relation to the Offer from Clancy to acquire all the issued shares in Genesis Resources Limited ( Genesis ) to be undertaken under Clancy’s Bidder’s Statement dated 16 May 2012 ( Original Bidder’s Statement ) and the first Supplementary Bidder’s Statement ( First Supplementary Bidder’s Statement ).

This second Supplementary Bidder’s Statement supplements, and should be read together with, the Original Bidder’s Statement and the First Supplementary Bidder’s Statement.

Defined terms used in this second Supplementary Bidder’s Statement are capitalised and have the meaning given to them in Section 12 of the Original Bidder’s Statement.

Genesis Shareholders should ACCEPT the Clancy Offer.

On 20 July 2012, Clancy declared the Offer free of all defeating conditions and extended the Offer Period by 3 weeks. The Offer is now UNCONDITIONAL and FINAL .

The Offer will close at 7pm (Sydney time) on 20 August 2012.

Clancy will not increase its Offer Consideration and the Offer Period will not be extended further other than as required under the Corporations Act. Under the Corporations Act the Offer Period will be automatically extended by 14 days if, within the last 7 days of the Offer Period, Clancy’s voting power in Genesis increases to more than 50%. Genesis Shareholders who have not yet accepted the Offer should do so now.

As at the date of this second Supplementary Bidder’s Statement, Clancy’s voting power in Genesis is 10.09%.

1. Why you should ACCEPT Clancy’s Offer

Clancy’s Offer is now unconditional and final

Clancy will not increase its Offer Consideration and the Offer Period will not be extended further other than as required under the Corporations Act. Accordingly, this is your last chance to accept Clancy’s Offer.

The Clancy board and management team have superior skills

Clancy has a strong board and dedicated management team. Three Clancy board members are highly experienced geologists with extensive experience in the exploration and resources sector. The Clancy board and management team has the stability and technical experience required to unlock the value in the Plavica Project. Genesis’ board and management do not.

Genesis board has limited experience in undertaking the exploration work contemplated for the Plavica Project. Following the resignation of Dr. A. Kerim Sener from the Genesis board on 19 March 2012, the only person on the board with any geological experience is Dr. John Parker who is a non executive director not directly involved in the management of Genesis.

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Independent Expert Report

The independent expert’s report prepared by RSM Bird Cameron Corporate Pty Limited for Genesis and included in Genesis’ Target Statement dated 14 June 2012 overvalues Genesis and undervalues Clancy.

Clancy is a larger ASX listed Company

Genesis Shareholders will benefit from being part of a larger ASX listed company with an increased capacity to develop projects such as the Plavica Project to their full potential.

Greater diversification

The exploration tenements of Clancy and Genesis are complementary. The merged entity will have a diverse portfolio of tenements across numerous geographic regions in Australia as well as Europe. This is expected to reduce operational risks.

Genesis has limited fundraising capabilities

The Clancy board and management team has a strong track record of raising capital which will be necessary to develop the Plavica Project. Genesis’ board and management have not evidenced this ability.

The interest in the Plavica Project joint venture was described in the Genesis prospectus issued on 18 August 2009. Since then, Genesis has only been able to secure access to $1.2 million by way of the Genesis Rights Issue announced in March 2012. This issue was made at a significant discount to the value of Clancy’s Offer Consideration. The shortfall in acceptances under that Rights Issue represented around 26.8% of the shares offered by Genesis.

In the comparable period, Clancy has successfully raised over $8.4 million. In fact, the last rights issue completed by Clancy in June 2011 was at a premium to the prevailing share price, demonstrating Clancy’s supportive shareholder base and financing power.

Combining the entities means that the fundraising will be shared across the combined shareholder base. As discussed above, if Genesis, in its own right, was to raise the $13.74 million that its board has said is required to fund the Plavica Project Feasibility Study at the last rights issue price and no existing Genesis Shareholders participated, existing Genesis Shareholders would hold only 20.7% of the post-issue equity of Genesis. However, if the raising was done by the combined entity at the same price and no existing Genesis Shareholders participated, existing Genesis shareholders would be entitled to 33.7% of the combined entity.

Reduced administration costs

Clancy has historically had a commitment to limited administration costs as a proportion of total expenditure. Costs savings may be achieved through the integration of Genesis with Clancy.

2. Additional disclosure of Clancy’s intentions

Clancy has declared the Offer free from all defeating conditions. As such, it is possible that, at the end of the Offer Period, Clancy will not achieve 90% and so will not be in a position to proceed to compulsory acquisition. In these circumstances, Clancy’s current intentions are set out below.

Genesis Shareholders should note that Clancy’s ability to implement each of these intentions will be subject to the ultimate holding it acquires in Genesis and the limitations on intentions set out in Section 6.6 of the Bidder’s Statement.

Clancy’s intentions if it becomes entitled to more than 50% but less than 90% of Genesis Shares

If at the end of the Offer Period Clancy acquires a relevant interest in 50.1% or more of Genesis Shares but it does not become entitled to compulsorily acquire the outstanding Genesis Shares, then

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Genesis will become a non-wholly owned subsidiary of Clancy. In this event, Clancy’s current intentions are set out below:

• Clancy will seek to reconstitute the board of Genesis to reflect Clancy’s majority ownership of Genesis with a majority of directors nominated by Clancy. Candidates who are likely to be nominated by Clancy include current Clancy directors. As at the date of this second Supplementary Bidder’s Statement no decision has been made as to the identity of these nominees.

• Genesis Shares are likely to remain officially quoted on the ASX as long as it meets the requirements of the Listing Rules (including sufficient spread of shareholders).

• To the extent possible, Clancy will conduct a review of the strategy, operations, activities, assets, accounting policies and employees of Genesis in light of the information which then becomes available to it.

Clancy’s intentions if it becomes entitled to less than 50.1% of Genesis Shares

To the extent that Clancy does not become entitled to more than 50% of Genesis Shares, Clancy will not be in a position to implement its intentions listed above. If Clancy becomes entitled to less than 50% of Genesis Shares, Clancy intends to engage with the board of Genesis to establish a dialogue in relation to reconstituting the board of Genesis. If these discussions are unsuccessful, Clancy intends to exercise its rights to requisition a meeting to pass resolutions to reconstitute the board of Genesis to more closely reflect the shareholding base of the Company to provide the expertise and experience required to progress the Plavica Project. As at the date of this second Supplementary Bidder’s Statement no decision has been made as to the identity of these nominees.

3. Capital gains tax rollover relief

If Clancy does not become the holder of 80% or more of Genesis Shares and Genesis Shareholders make a capital gain in respect of the disposal of their Genesis Shares, Genesis Shareholders will not become entitled to CGT scrip-for-scrip rollover relief.

Genesis Shareholders should ACCEPT the Clancy Offer.

Extension to Offer Period

Clancy announced on 20 July 2012 that the Offer Period has been extended by 3 weeks. The new closing date for the Offer is 7pm (Sydney time) on Monday 20 August 2012.

Acceptance Forms

The Acceptance Form for the Offer accompanies this second Supplementary Bidders Statement.

Authorisation

This second Supplementary Bidder’s Statement is dated 23 July 2012, the date it was lodged with ASIC. This second Supplementary Bidder’s Statement has been approved by a unanimous resolution of the Directors.

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Dated: 23 July 2012

Signed for and on behalf of Clancy Exploration Limited

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Mike Etheridge Director