RAREX LIMITED — AGM Information 2012

Apr 25, 2012

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NOTICE OF ANNUAL GENERAL MEETING AND

EXPLANATORY STATEMENT

For the Annual General Meeting to be held on

Thursday 31st May 2012 at 10.00am (EST) at

The Medina Grand Harbourside Hotel, 55 Shelley Street King Street Wharf, Sydney, NSW, Australia.

As this is an important document, please read it carefully.

For those members who have elected to receive a printed copy of the Annual Report, the 2011 Annual Report accompanies this Notice of Annual General Meeting. The 2011 Annual Report is also available on the Company’s website

www.clancyexploration.com

If you are unable to attend the Annual General Meeting, please complete the proxy form enclosed and return it in accordance with the instructions set out on that form.

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TIME AND PLACE OF MEETING AND HOW TO VOTE

Venue

The Annual General Meeting of the shareholders of Clancy Exploration Limited ("Clancy" or the "Company") will be held at:

The Medina Grand Harbourside

55 Shelley Street King Street Wharf Sydney, NSW, AUSTRALIA Commencing at 10.00am (EST) on Thursday 31 May 2012

How to Vote

You may vote by attending the meeting in person, by proxy or corporate representative.

Voting in Person

To vote in person, attend the meeting on the date and at the place set out above. The meeting will commence at 10.00am.

Voting by Proxy

To vote by proxy, please complete and sign the proxy form enclosed with this Notice of Annual General Meeting as soon as possible and either:

• send the proxy by facsimile to the Company on facsimile number (02) 6361 1202 (International: + 61 2 6361 1202); or

• deliver or mail the proxy to 3 Corporation Place, Orange, NSW, 2800, Australia;

so it is received not later than 10.00am (EST) on 29 May 2012.

Your proxy form is enclosed.

Corporate Representative

Any corporate Shareholder who has appointed a person to act as its corporate representative at the meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company and/or registry in advance of the meeting or handed in at the meeting when registering as a corporate representative. An appointment of corporate representative form is enclosed.

NOTES:

1. A shareholder of the Company who is entitled to attend and vote at a general meeting of shareholders is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company.

2. Where a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form to vote as the proxy decides or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

3. For the purposes of the Corporations Act, the Directors have set a snapshot time and date to determine the identity of those entitled to attend and vote at the Annual General Meeting. The snapshot time and date is 5.00pm (EST) on 29th May 2012.

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CLANCY EXPLORATION LIMITED

ACN 105 578 756

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of shareholders of Clancy Exploration Limited ("Clancy" or the "Company") will be held at The Medina Grand Harbourside, 55 Shelley Street, King Street Wharf Sydney, NSW, Australia, at 10.00am (EST) on Thursday 31st May 2012.

AGENDA

BUSINESS

The Explanatory Statement which accompanies and forms part of this Notice describes the matters to be considered as ordinary business and special business. Certain abbreviations and other defined terms are used throughout this Notice. Defined terms are generally identifiable by the use of an upper case first letter. Details of the definitions and abbreviations used are set out in the Glossary contained in the Explanatory Statement.

ORDINARY BUSINESS

Annual Accounts

To receive and consider the financial report of the Company and the consolidated financial report of the consolidated entity for the year ended 31 December 2011 and the reports by the Directors and Independent Auditor.

Resolution 1: Remuneration Report

To consider and if thought fit, to pass, with or without amendment, the following as an ordinary resolution:

“That for all purposes, the section of the report of the Directors for the financial year ending 31 December 2011 dealing with the remuneration of the Company’s Directors, Company Secretary and Senior Executives be adopted.”

• Although this resolution is advisory only, this resolution shall be determined as if it were an ordinary resolution.

• This resolution does not bind the Directors or the Company.

• If 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive Annual General Meetings, Shareholders will be required to vote at the second of those Annual General Meetings on a resolution (“spill resolution”) that another meeting be held within 90 days at which all of the Company’s directors (other than the Managing Director) must go up for re-election.

In accordance with sections 250R and 250BD of the Corporations Act 2001, the Company will disregard any votes cast on Resolution 1 by any Key Management Personnel (“ KMP ”) and a closely related party of a KMP. However, the Company need not disregard a vote if it is cast by a KMP or a closely related party of a KMP as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or it is cast by a chairperson of the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

The Company’s KMPs are set out in the Remuneration Report. Generally speaking they are people having authority and responsibility for planning, controlling and directing the Company’s activities in a direct or indirect manner. KMPs include the Directors, and senior executives of the Company. A closely related party of a KMP generally speaking means a spouse, child, or dependant of the key management personnel, or a child or dependant of the spouse of the KMP. It includes anyone else who is a member of the key management personnel’s family who would influence or may be expected to influence the KMP in relation to his or her dealings with the Company. It also includes any company which is controlled by the KMP, and includes any other people prescribed as closely related parties by ASIC in the regulations to the Corporations Act (none are prescribed at this time). KMPs and their closely related parties will commit an offence under the Corporations Act if they vote in relation to Resolution 1 in breach of the voting restrictions.

Resolution 2: Re-election of a Director (By Rotation)

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

"That for all purposes, Mr Mark Lester, being a director of the Company retires by rotation in accordance with clause 11.3 of the Constitution and, being eligible, is hereby re‐elected as a director of the Company."

Short Explanation: Clause 11.3 of the Constitution requires that at the Annual General Meeting, one-third of the Directors or if the number of directors is not a multiple of three that number which is nearest to one-third for the time being shall retire from office. A retiring Director is eligible for re-election.

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Resolution 3: Appointment of New Auditor

To consider and if thought fit, to pass the following as an ordinary resolution:

“That for the purposes of section 327B(1) of the Corporations Act and for all other purposes, Ernst & Young, being qualified and having been nominated to act, be appointed as auditor of the Company effective immediately upon the close of this meeting (subject to Ernst & Young’s consent to act as auditor of the Company and ASIC approval) and that they be paid the usual and proper professional fees as remuneration.”

Short Explanation: In accordance with section 329(5) of the Corporations Act, the Company’s auditors at the date of this notice of meeting, Deloitte Touche Tohmatsu have given notice of resignation as auditor that takes effect under section 329(8) of the Corporations Act on the date of this meeting. The Company is required to appoint a new auditor under section 327B(1) of the Corporations Act to fill the vacancy in the office of auditor, and may do so at the meeting subject to ASIC approval.

Resolution 4: Ratify Previous Issue of 3,691,539 Shares

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue and allotment between 1 December 2011 and 18 April 2012 of a total of 3,691,539 Shares at issue prices of between $0.056 and $0.043 per Share, further details of which are set out in the Explanatory Statement.”

The Company will disregard any votes cast on this resolution by a person who participated in the issue and an associate of that person (or those persons). However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Short Explanation: The Company may issue no more than that number of securities that equates to 15% of its issued capital in any 12 month period without shareholder approval.

Resolution 5: Ratify Previous Issue of 2,000,000 Options

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue and allotment of a total of 2,000,000 Options by the Company, further details of which are set out in the Explanatory Statement.”

The Company will disregard any votes cast on this resolution by a person who participated in the issue and an associate of that person (or those persons). However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Short Explanation: The Company may issue no more than that number of securities that equates to 15% of its issued capital in any 12 month period without shareholder approval.

DATED THIS 19th DAY OF APRIL 2012

BY ORDER OF THE BOARD

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Mr Rowan Caren Company Secretary

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EXPLANATORY STATEMENT

This Explanatory Statement and all attachments are important documents. They should be read carefully.

If you have any questions regarding the matters set out in this Explanatory Statement or the preceding Notice, please contact the Company, your stockbroker or other professional adviser.

Certain abbreviations and other defined terms are used throughout this Explanatory Statement. Defined terms are generally identifiable by the use of an upper case first letter. Details of the definitions and abbreviations used are set out in the Glossary contained in this Explanatory Statement.

This Explanatory Statement has been prepared for the shareholders of Clancy in connection with the Annual General Meeting of the Company to be held on Thursday 31st May 2012.

1. ANNUAL ACCOUNTS

The Annual Financial Report, Directors’ Report and Auditor’s Report for the Company for the year ending 31 December 2011 will be tabled before the meeting. There is no requirement for Shareholders to approve these reports. However, the Chairman will allow a reasonable opportunity for Shareholders to ask questions or make comments about those reports and the management of the Company. Shareholders will also be given a reasonable opportunity to ask the Auditor questions about the conduct of the statutory audit and the preparation and content of the Auditor’s report.

Shareholders should note that the Auditor will attend the Meeting by telephone from the Auditor’s Perth offices. All necessary arrangements will be made to ensure that questions and answers are fully and clearly communicated to the Shareholders attending the Meeting and the Auditor attending by telephone.

2. RESOLUTION 1 – REMUNERATION REPORT

In accordance with the Corporations Act, a resolution to adopt the Director’s Remuneration Report must be put to Shareholders. The Remuneration Report which details the Company’s policy on the remuneration of non-executive directors, executive directors, the company secretary and senior executives is set out on pages 17-21 of the Company’s 2011 Annual Report. It is also available on the Clancy website at www.clancyexploration.com.

Voting on this resolution is advisory only and does not bind the Company or the Directors.

Shareholders are informed that under recent reforms to the Corporations Act, if 25% or more of the vote on this Resolution are against adopting the Remuneration Report, the Company will be required to consider and report to Shareholders in the next Remuneration Report on what action is proposed (if any) or has been to be taken in response to Shareholder concerns, and if no action is proposed to be taken, the Board’s reasons for this.

Shareholders also need to be aware that as a result of the new legislation which became effective on 1 July 2011 a “two strikes” process will apply to the results of voting in relation to Resolution 1. This means that if the resolution proposing adoption of the Remuneration Report receives a “no” vote of over 25% of votes cast by those attending in person or by proxy and permitted to vote, at two successive annual general meetings, then at the Company’s 2013 annual general meeting, an extra resolution must be put to the meeting proposing that another general meeting should be held within 90 days of the second annual general meeting. A simple majority of over 50% of the votes cast at the 2013 annual general meeting is required to pass this extra resolution. If the resolution is passed, within 90 days another general meeting must be held at which all the Directors, except the Managing Director and any new Directors appointed since the date of the 2013 annual general meeting, will be required to resign and offer themselves for re-election. These provisions are colloquially referred to as the “two strikes rule” and the “spill resolution” to be put to the “spill meeting”.

If at the spill meeting, the resolutions are all passed against re-electing the relevant Directors, the legislation includes a mechanism to ensure the Board continues with the statutory required minimum of 3 Directors. After the managing director, the remaining two positions will be filled by the Directors whose re-election resolutions at the spill meeting received the highest percentage of votes in favour of re-election. If the number of votes is the same for two Directors, the Managing Director and any other Director whose re-election has been confirmed at this spill meeting, can choose who is to become the third Director, with such appointment to be confirmed by shareholders at the 2014 annual general meeting. The ramifications of this mechanism being invoked include that the Company would not be in compliance with its corporate governance policies as a result of not having three independent directors on the Company’s audit committee or any other committees requiring independent directors.

Furthermore, depending on the outcome of voting at the subsequent annual general meeting, Shareholders may be obliged to consider a resolution requiring the full Board (excluding the Managing Director) to seek re-election.

The Directors unanimously recommend Shareholders vote in favour of adopting the Remuneration Report.

Any undirected proxies held by the Chairperson of the Annual General Meeting, other directors or other key management personnel or any of their closely related parties will not be voted on Resolution 1 (Remuneration Report).

Accordingly, if you appoint the Chairman of the Meeting as your proxy, you should direct him how to vote on Resolution 1 if you want your Shares to be voted on that item of business.

3. RESOLUTION 2 – RE-ELECTION OF A DIRECTOR (BY ROTATION)

Background

Resolution 2 seeks approval for the re-election of Mr Mark Lester as a Director.

Listing Rule 14.4 and Clause 11.3 of the Constitution requires that at an Annual General Meeting of the Company one third of the Directors or if the number of directors is not a multiple of three that number which is nearest onethird (except the Managing Director) for the time being shall retire from office. A retiring Director is eligible for reelection.

Mr Mark Lester retires by rotation in accordance with this requirement, is eligible for re-election and puts himself forward for re-election at this Annual General Meeting.

Directors’ Recommendation

All the Directors (excluding Mr Mark Lester) recommend that Shareholders vote in favour of Resolution 2.

4. RESOLUTION 3 –CHANGE OF AUDITORS

Background

Deloitte Touche Tohmatsu, the Company’s existing auditors, have applied to ASIC for consent to resign their appointment effective from the date of conclusion of this meeting.

Following the conduct of a tender for the audit work, the Directors consider that Ernst & Young offered the best proposal to audit the Company and therefore seeks to appoint Ernst & Young as auditor of the Company. The nomination to the appointment of Ernst & Young as auditor of the Company has been properly received from MAL Super Fund Pty Ltd as trustee for the MAL Superannuation Fund in accordance with section 328B of the Corporations Act 2001 (Cth) and a copy is attached as Annexure A to this Explanatory Statement. Ernst & Young has been nominated to act as auditor of the Company and is currently undertaking internal processes to ensure it is able to consent to act as auditor of the Company. If Ernst & Young’s consent to act as auditor is forthcoming, Ernst & Young will be appointed as auditor of the Company, if this resolution is passed and subject to Deloitte Touche Tohmatsu receiving the consent of the ASIC to its resignation.

If approval is received from Shareholders and the ASIC, Ernst & Young will commence as auditor of the Company on the date and from the conclusion of this meeting.

Directors’ Recommendation

All of the Directors recommend that Ernst & Young be appointed the auditor of the Company as in the Director’s view Ernst & Young tender was the most appropriate for the Company given the nature and scale of its business and activities .

5. RESOLUTION 4 - RATIFY PREVIOUS ISSUE OF SHARES OF 3,691,539 SHARES

Background

On 13 July 2011, the Company announced that it had entered into a binding Memorandum of Understanding with Australian Mineral and Waterwell Drilling Pty Ltd (AMWD) whereby AMWD would become Clancy’s preferred drilling contractor. Clancy is to issue fully paid ordinary shares to AMWD for 25% of the cost of AMWD’s drilling services. Shares issued to AMWD have been priced at 95% of the three day Volume Weighted Average Price at the date of invoice and are escrowed for 12 months from the date of issue.

CLY also made a one off issue of 2,000,000 listed options (CLYO) to AMWD, which are the subject of Resolution 5.

Clancy has issued a total of 3,691,539 Shares at issue prices of between $0.056 and $0.043 per Share in payment of drilling services valued at $183,501. The shares were allotted between 1 December 2011 and 18 April 2012.

Subject to certain exceptions, none of which are relevant here, the Directors are restricted by Listing Rule 7.1 from issuing or agreeing to issue new securities in the Company in any 12 month period, which amount to more than 15% of the Company’s ordinary securities on issue without Shareholder approval (" 15% Limit ").

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior Shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a company's maximum discretionary power to issue further securities up to 15% of the issued capital of the company without requiring Shareholder approval.

The Company wishes to ratify this issue pursuant to Listing Rule 7.4, in order to allow the Company to have the right to place up to a further 15% of its issued capital at any time during the next 12 months.

The number of Shares issued represents approximately 2.25% of the Company’s share capital on issue immediately prior to the issue of the Shares. This previous issue did not breach the 15% threshold set by Listing Rule 7.1. The following information is provided to Shareholders for the purposes of Listing Rule 7.5:

• (a) A total of 3,691,539 Shares were allotted.

• (b) The Shares were issued as follows;

Date	Issue Price/ Share	Value of drilling services	Number of shares
1 December 2011	$0.046	$9,223	200,507
20 December 2011	$0.056	$43,305	771,447
25 January 2012	$0.052	$27,582	527,399
18 April 2012	$0.051	$57,328	1,127,213
18 April 2012	$0.043	$46,063	1,064,973
Total		$183,501	3,691,539

• (c) The Shares are fully paid ordinary shares that rank equally in all respect with existing Shares, the terms of which are already in the public domain.

• (d) The shares were allotted to AMWD.

• (e) None of the allottees are related parties to the Company or its associates.

• (f) No funds were raised from the issue of the Shares

Directors’ Recommendation

If Resolution 4 is passed, the 15% Limit imposed by Listing Rule 7.1 will be renewed to the extent of the ratification. The Directors of the Company unanimously recommend that Shareholders vote in favour of Resolution 4.

6. RESOLUTION 5 – RATIFY PREVIOUS ISSUE OF 2,000,000 OPTIONS

Background

On 13 July 2011, the Company announced that it had entered into a binding Memorandum of Understanding with Australian Mineral and Waterwell Drilling Pty Ltd (AMWD) whereby AMWD would become Clancy’s preferred drilling contractor. Clancy is to issue fully paid ordinary shares to AMWD for 25% of the cost of AMWD’s drilling services, which are the subject of Resultion 4. Clancy also issued 2,000,000 listed options (CLYO) to AMWD.

Subject to certain exceptions, none of which are relevant here, the Directors are restricted by Listing Rule 7.1 from issuing or agreeing to issue new securities in the Company in any 12 month period, which amount to more than 15% of the Company’s ordinary securities on issue without Shareholder approval (" 15% Limit ").

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior Shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a company's maximum discretionary power to issue further securities up to 15% of the issued capital of the company without requiring Shareholder approval.

The Company wishes to ratify this issue pursuant to Listing Rule 7.4, in order to allow the Company to have the right to place up to a further 15% of its issued capital at any time during the next 12 months.

The number of Options issued represents approximately 1.2% of the Company’s share capital on issue immediately prior to the issue of the Options. This previous issue did not breach the 15% threshold set by Listing Rule 7.1.

The following information is provided to Shareholders for the purposes of Listing Rule 7.5:

• (a) A total of 2,000,000 Options were allotted on 21 September 2011

• (b) The Options were issued for nil consideration.

• (c) The Options are each exercisable into one fully paid ordinary share that will rank equally in all respect with existing Shares, the terms of which are already in the public domain. The Options were issued on terms and conditions set out in Annexure B.

• (d) The Options were allotted to AMWD.

• (e) None of the allottees are related parties to the Company or its associates.

• (f) No funds were raised from the issue of the Options

Directors’ Recommendation

If Resolution 5 is passed, the 15% Limit imposed by Listing Rule 7.1 will be renewed to the extent of the ratification. The Directors of the Company unanimously recommend that Shareholders vote in favour of Resolution 5.

7. ENQUIRIES

Shareholders are invited to contact the Company Secretary, Rowan Caren on (08) 9226 0085 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

" ASX " means ASX Limited;

"Board" means the board of Directors;

" Company " or " Clancy " means Clancy Exploration Limited ACN 105 578 756;

" Constitution " means the Company's Constitution;

" Corporations Act " means the Corporations Act 2001 (Cth);

" Directors " means the directors of the Company;

" EST " means Australian Eastern Standard Time;

" Listing Rules " means the Listing Rules of ASX;

" Notice ", " Notice of Meeting " or "Notice of General Meeting " means the notice of meeting which accompanies this Explanatory Statement;

“Options” means options issued on the terms set out in Annexure B;

" Shareholders '" means the holders of the Shares; and

" Shares " means fully paid ordinary shares in the Company.

ACN 105 578 756

CLANCY EXPLORATION LIMITED

Certificate of Appointment of Corporate Representative

This is to certify that by a resolution of the directors of:

.......................................................................................................................................................................................... ( Company ),

(Insert name of company) the Company has appointed: .......................................................................................................................................................................................... Insert name of corporate representative

in accordance with the provisions of section 250D of the Corporations Act 2001, to act as the body corporate representative of that company at the meeting of the Shareholders of Clancy Exploration Limited to be held on 31 May 2012 and at any adjournments of that meeting.

DATED 20__ Executed by the Company ) in accordance with its constituent documents ) ................................................................... ................................................................. Signed by authorised representative Signed by authorised representative ................................................................... ................................................................. Name of authorised representative (print) Name of authorised representative (print) ................................................................... ................................................................. Position of authorised representative (print) Position of authorised representative (print)

INSTRUCTIONS FOR COMPLETION

Under Australian law, an appointment of a body corporate representative will only be valid if the Certificate of Appointment is completed precisely and accurately. Please follow the following instructions to complete the Certificate of Appointment:

1. Insert the name of appointor company and the name or position of the appointee (eg “John Smith” or “each director of the Company”.

2. Execute the Certificate following the procedure required by your company’s constitution or other constituent documents.

3. Print the name and position (eg director) of each company officer who signs this Certificate on behalf of the company.

4. Insert the date of execution where indicated.

5. Send or deliver the Certificate to either facsimile number (02) 6361 1202 (International: + 61 2 6361 1202); or deliver or mail to 3 Corporation Place, Orange, NSW, 2800, Australia, or the Corporate Representative must present the original Certificate when registering attendance at the start of the meeting.

Annexure A

MAL Superannuation Fund Pty Ltd (ACN: 091 863 231) As Trustee For The MAL Superannuation Fund 243 Hay Street Subiaco WA 6008

18 April 2012

The Company Secretary Clancy Exploration Limited 57 Havelock Street West Perth WA 6005

Dear Sir

NOMINATION OF ERNST & YOUNG AS AUDITOR OF CLANCY EXPLORATION LIMITED

We, MAL Superannuation Fund Pty Ltd (ACN: 091 863 231) as Trustee for the MAL Superannuation Fund, being a shareholder of Clancy Exploration Limited (" Company "), hereby nominate Ernst & Young of 680 George Street, Sydney, NSW, for appointment as auditor of the Company at its 2012 Annual General Meeting.

We consent to the distribution of a copy of this notice of nomination as an annexure to the Notice of Annual General Meeting and Explanatory Statement for the 2012 Annual General Meeting of the Company as required by section 328B(3) of the Corporations Act 2001.

SIGNED for and on behalf of MAL Superannuation Fund Pty Ltd by its Director, Mark Lester

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Annexure B

The following is a summary of the key terms of the Options:

• Each Option shall entitle the Option holder, when exercised, to one fully paid ordinary share in the Company (“Share”).

• The Options are exercisable wholly or in part at any time prior to 5.00 pm (WST) on 31 July 2013 of grant (“Expiry Date”). Options not exercised by that date shall lapse.

• Each Option may be exercised by notice in writing to the Company, together with the payment for the number of Shares in respect of which the Options are exercised, at any time before the Expiry Date. Any notice of exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt.

• The Option exercise price is $0.15 per Option.

• An Option does not confer the right to a change in exercise price or a change in the number of the underlying Shares over which the Option can be exercised.

• Shares issued upon exercise of the Options will be issued following receipt of all the relevant Agreements and payments and will rank equally in all respect with the then issued Shares.

• The Company will apply for quotation on ASX of the Options and all Shares issued upon exercise of the Options, subject to 12 months’ voluntary escrow from the date of grant of the Options. The Options are transferable in accordance with the terms of the Listing Rules and voluntary escrow agreement in the form required by the Company and entered into by the parties.

• There are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate in new issues of securities offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced so as to give Option holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.

• If at any time the issued capital of the Company is reorganised, the rights of an Option holder are to be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

PROXY FORM

APPOINTMENT OF PROXY

CLANCY EXPLORATION LIMITED

ACN 105 578 756

ANNUAL GENERAL MEETING

being a Member of Clancy Exploration Limited entitled to attend and vote at the Annual General Meeting, hereby Appoint

Name of proxy ______________

of (address)

______________ or failing the person so named or, if no person is named, the Chairman of the Annual General Meeting, to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the Annual General Meeting to be held at The Medina Grand Harbourside, 55 Shelley Street, King Street Wharf Sydney, NSW, Australia, at 10.00am (EST) on Thursday 31st May 2012 and at any adjournment thereof.

10.00am (EST) on Thursday 31st May 2012 and at any adjournment thereof.
Resolution 1 Remuneration Report Resolution 2 Re-election of a Director Resolution 3 Change of Auditors Resolution 4 Ratification of Share Issues Resolution 5 Ratification of Option Issue	FOR	AGAINST	ABSTAIN

If you do not wish to direct your proxy how to vote, please place a mark “X” in the box

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolutions and votes cast by him other than as proxy holder will be disregarded because of that interest. The Chairman of the Meeting intends to vote any such undirected proxies in favour of all resolutions, other than Resolution 1 (Remuneration Report).

If you do not mark the above box and you have not directed your proxy how to vote in the boxes below, the Chairman of the Meeting will not cast your votes on the resolutions and your votes will not be counted in computing the required majority if a poll is called.

If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is %.

Signed this	day of	2012
By:
Individuals and joint holders		Companies (affix common seal if appropriate)
Signature	_______	Director	____
Signature	_______	Director/Company Secretary	____
Signature	_______	Sole Director and Sole Company Secretary	____

CLANCY EXPLORATION LIMITED ACN 105 578 756

Instructions for Completing Appointment of Proxy Form

1. A member entitled to attend and vote at a general meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.

A duly appointed proxy need not be a member of the Company. In the case of joint holders, all must sign.

1. Corporate shareholders should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:

2. 2 directors of the company;

3. a director and a company secretary of the company; or

4. for a proprietary company that has a sole director who is also the sole company secretary - that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

Completion of a Proxy Form will not prevent individual shareholders from attending the Meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the Meeting in person, then the proxy's authority to speak and vote for that shareholder is suspended while the shareholder is present at the Meeting.

1. Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under power of attorney, the original power of attorney, or certified copy thereof, must be lodged in like manner as this proxy.

2. Any undirected proxies held by the chairperson of the meeting, other directors or other key management personnel or any of their closely related parties will not be voted on Resolution 1 (Remuneration Report). Key management personnel of the Company are the directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The Remuneration Report identifies the Company’s key management personnel for the financial year to 31 December 2011. Their closely related parties are defined in the Corporations Act, and include certain members of their family, dependents and companies they control. If you choose to appoint a proxy, you are encouraged to direct your proxy how to vote on Resolution 1 (Remuneration Report) by marking either “For” or “Against” or Abstain” on the voting form for that item of business.