RAREX LIMITED — AGM Information 2014

Apr 1, 2014

Shareholder Booklet

Annual General Meeting (Including Approval of Exploration Tenement Interests Acquisition From ABM Resources NL)

A notice of meeting is included in Annexure A to this Booklet. A Proxy Form for the meeting accompanies this Booklet. An Independent Expert's Report is also included as Annexure B to this Booklet.

The Independent Expert has concluded that the acquisition of exploration tenement interests from ABM Resources NL is not fair but reasonable to Shareholders not associated with ABM Resources NL.

Your vote is important in determining whether the Acquisition proceeds. This is an important document and requires your urgent attention.

If you are in any doubt as to how to deal with this Booklet, please consult your legal, financial, taxation or other professional adviser immediately.

If you have recently sold all of your Shares, please disregard all enclosed documents.

Important Notices

General

You should read this Booklet in its entirety before making a decision on how to vote on the resolutions to be considered at the Meeting. The notice convening the Meeting is contained in Annexure A. A proxy form for the Meeting is also enclosed.

Defined terms

Capitalised terms in this Booklet are defined either in the Glossary in Section 7 of this Booklet or where the relevant term is first used.

References to dollars or $ are references to the lawful currency of Australia. Any discrepancies between the totals and the sum of all the individual components in the tables contained in this Booklet are due to rounding.

Purpose of this Booklet

The purpose of this Booklet is to:

• ¾ Explain to Shareholders the matters to be considered during the Meeting;
• ¾ Explain the terms and effect of the Acquisition to Shareholders; and
• ¾ Provide such information as is prescribed by the Listing Rules and the Corporations Act.

ASX

A copy of this Booklet has been lodged with ASX. None of ASX, or any of its officers take any responsibility for the contents of this Booklet.

Input from other parties

BDO Corporate Finance (WA) Pty Limited (ACN 124 031 045) (Independent Expert) has prepared the Independent Expert's Report in relation to the Acquisition in Annexure B and takes responsibility for that Annexure. The Independent Expert is not responsible for any other information contained within this Booklet. Shareholders are urged to read the Independent Expert's Report carefully to understand the scope of the report, the methodology of the assessment, the sources of information and the assumptions made.

Other than in respect of the information identified above, the information contained in the remainder of this Booklet has been prepared by Clancy and is the responsibility of Clancy. Clancy does not assume responsibility for the accuracy or completeness of any other part of this Booklet and assumes responsibility only to the extent required by law.

Investment decisions

This Booklet does not take into account the investment objectives, financial situation, tax position and requirements of any particular person. This Booklet should not be relied on as the sole basis for any investment decision in relation to Shares. Independent financial and taxation advice should be sought before making any decision to invest in Clancy or in relation to the Acquisition. It is important that you read the entire Explanatory Memorandum before making any voting or investment decision. In particular, it is important that Shareholders consider the possible disadvantages of the Acquisition identified in Section 4.

Shareholders should carefully consider these factors in light of their particular investment objectives, financial situation, tax position and requirements. If Shareholders are in any doubt on these matters, they should consult their legal, financial, taxation or other professional adviser before deciding how to vote on the Acquisition. Past performance is no indication of future performance.

Forward looking statements

This Booklet may include prospective financial information which has been based on current expectations about future events. Such prospective financial information is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described in such prospective financial information. Factors which may affect future financial performance include, among other things, those identified in Section 4. The assumptions on which prospective financial information is based may prove to be incorrect or may be affected by matters not currently known to, or considered material by Clancy.

Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement, and deviations are both normal and to be expected. None of Clancy, the officers of Clancy or any person named in this Booklet makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement. You are cautioned not to place undue reliance on those statements.

The forward looking statements in this Booklet reflect views held only as at the date of this Booklet.

Date of this Booklet	31 March 2014
Time and date for determining eligibility to vote at the	7:00 pm (Sydney time) on 5
Meeting	May 2014
Last time and date by which the proxy form for the Meeting	10:00am (Sydney time) on 5
can be lodged	May 2014
Meeting* to vote on the Acquisition and other resolutions	10:00am (Sydney time) on 7May 2014

* The Meeting will be held at 3 Corporation Place, Orange NSW 2800.

You should consult your legal, financial, taxation or other professional adviser concerning the impact your decision may have on your own circumstances.

1.	Time and Place of Meeting and How to Vote 1
2.	Summary of AGM-related Resolutions 4
3.	Summary of the Resolutions relating to the Acquisition 10
4.	Relevant Considerations for the Acquisition 13
5.	The Acquisition 20
6.	Additional information 29
7.	Glossary 31
	Annexure A – Notice of Meeting 1
	Annexure B – Independent Expert's Report 1

Chairman's letter

31 March 2014

Dear Shareholder,

I am pleased to present this Booklet which sets out important information regarding Clancy's 2014 Annual General Meeting (Meeting) at which your approval will be sought in relation to a significant acquisition by your company.

On 29 November 2013 Clancy announced that it had entered into an agreement (Agreement) with ABM Resources NL (ACN 009 127 020) (ABM) under which Clancy was granted an option to acquire 100% of ABM's exploration tenement interests (Tenements) in the North Arunta Project Region in the Northern Territory (the Projects), subject to due diligence (Acquisition). On 3 February 2014, Clancy announced that due diligence in respect of the Acquisition had been completed and that it had exercised its option to proceed with the Acquisition.

For the past two years, Clancy has sought to acquire a flagship project with existing mineralised drill intersections to create value for its shareholders. The search has taken some time, but the Board considers that the Acquisition brings a particularly attractive combination of well-defined targets ready for drill testing, and an extensive portfolio of greenfield opportunities.

As consideration for the Acquisition, Clancy has agreed to issue to ABM on completion of the Acquisition (Completion):

• ¾ 125 million fully paid Shares (Consideration Shares);
• ¾ 175 million unlisted options (Consideration Options) which expire on the date that is 3 years from their issue date. The exercise price per Consideration Option will be 50% higher than the price per share under the Placement (see Section 5.4(i) for a list of the terms that apply to the Consideration Options); and
• ¾ $1,167,850 (plus any applicable GST) in cash of which $350,000 has already been paid.

See Sections 5.4(e) for full details of the consideration payable by Clancy.

Completion of the Acquisition will be subject to conditions (Acquisition Conditions) including:

• ¾ Clancy obtaining all necessary approvals including any shareholder approvals required pursuant to the Corporations Act or ASX Listing Rules and any government or third party approvals; and
• ¾ Clancy appointing an investment bank or broker to coordinate a placement of its ordinary Shares (Placement Shares) to sophisticated investors to raise gross proceeds of between $2.5 million and $4 million (Placement). See Section 5.4(c) for a complete list of the Acquisition Conditions.

As at the date of this Booklet, the terms of the Placement have yet to be finalised, but the Board believes the most likely scenario is that $4 million will be raised by issuing 200,000,000 Placement Shares at $0.02 per Placement Share, which represents a 54% premium to the last price at which the Shares traded on the ASX at close of trade on 28 March 2014 (see Section 4.15 for recent data on trading in the Shares on the ASX). Clancy has signed a mandate with R M Capital Pty Ltd (Broker) to coordinate the Placement (RM Capital Mandate). Shareholders will be notified of the final details regarding the Placement closer to the Acquisition's completion (Completion), which is expected to be in May 2014.

Under the Agreement, if the Placement is completed at a price other than $0.02 per Placement Share, the Consideration Shares and Consideration Options issued to ABM will be increased or decreased as necessary, to ensure that ABM's percentage interest in Clancy on Completion is at the level it would otherwise have been had the same amount of gross proceeds raised under the Placement been obtained by issuing the Placement Shares at $0.02 per share instead.

Under the Corporations Act and the Listing Rules, the issue of Consideration Shares and Consideration Options to ABM as part of the Acquisition, and the issue of Placement Shares to sophisticated investors under the Placement requires Shareholder approval. The Resolutions to be considered at the Meeting are directed at obtaining the necessary Shareholder approvals. See Section 3 for further details.

Under the Agreement, ABM is entitled to nominate 2 individuals for appointment to Clancy's Board, one on Completion and the other upon the exercise by ABM of the first tranche of its Consideration Options (see Section 5.4(h) for further details).

Following Completion and the exercise by ABM of all its Consideration Options, ABM's voting power in Clancy will increase from 0% to a maximum of up to 42.5%, assuming $4 million is raised at $0.02 per share (or a maximum of 47.2% assuming $2.5 million is raised at $0.02 per share) under the Placement (see Section 4.10 for further details) and no additional capital is raised in the intervening period.

Clancy has engaged an independent expert, BDO Corporate Finance (WA) Pty Limited, to report on whether the Acquisition is fair and reasonable to Shareholders not associated with ABM. The Independent Expert has concluded that the Acquisition is not fair but reasonable to Shareholders not associated with ABM.

As I am also a director of ABM, I have concluded that it is not appropriate for me to make a recommendation. The other directors unanimously recommend that Shareholders vote in favour of Resolutions 4 to 8, which relate to the Acquisition (Acquisition Resolutions).

In making their recommendation to Shareholders, the Board notes that:

• ¾ The Independent Expert has concluded that the Acquisition is not fair but reasonable to the Shareholders who are not associated with ABM. The Independent Expert did however note that the value ranges on a pre-Transaction and post-Transaction basis overlap and when comparing both on a minority basis, the Acquisition would be fair;
• ¾ The creation of a larger and more diversified asset portfolio will allow it to have greater access to capital markets;
• ¾ The Acquisition will deliver a portfolio of exploration targets within a land package covering more than 12,500km2 in the highly prospective North Arunta region of the Northern Territory; and
• ¾ Clancy's due diligence investigations have re-affirmed the Board's belief in the Projects' potential. (See Section 4.3 for full details of the reasons why you should vote in favour of the Acquisition).

The Board also notes that there are reasons why Shareholders may wish to vote against the Acquisition and these are set out in full in Section 4.4.

As with any transaction of this nature, the Acquisition carries risk. These risks are set out in Section 4.7 and they include the risk that the Acquisition does not complete, the risk that the potential of the Tenements is not realised in full (or at all) and the risk that Clancy's counterparties in the Acquisition do not perform their obligations.

I encourage you to read the enclosed material carefully, particularly the Independent Expert's Report set out in Annexure B. I look forward to seeing you at the Annual General Meeting to be held on Wednesday, 7 May 2014.

Yours sincerely

Dr Mike Etheridge Chairman Clancy Exploration Limited

1. Time and Place of Meeting and How to Vote

1.1. Venue

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

3 Corporation Place Orange NSW 2800, Australia Commencing at 10.00am (AEST) on Wednesday, 7 May 2014

1.2. Entitlement to vote

The Directors have decided that for the purpose of determining entitlements to attend and vote at the Meeting, Shares will be taken to be held by the persons who are the registered holders at 7:00 pm (Sydney time) on 5 May 2014. Accordingly, Share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Voting restrictions and exclusions in respect of the Resolutions are set out below each Resolution (as relevant).

1.3. How to vote

Shareholders entitled to vote at the Meeting may vote:

• ¾ By attending the Meeting and voting in person; or
• ¾ By appointing an attorney to attend the Meeting and vote on their behalf or, in the case of corporate Shareholders or proxies, a corporate representative to attend the Meeting and vote on its behalf; or
• ¾ By appointing a proxy to attend and vote on their behalf, using the proxy form accompanying this Notice of Meeting. A proxy may be an individual or a body corporate.

1.4. Voting in person (or by attorney)

Shareholders or their proxies, attorneys or representatives (including representatives of corporate proxies) wishing to vote in person should attend the Meeting and bring a form of personal identification (such as their driver's licence).

To vote by attorney at this Meeting, the original or a certified copy of the power of attorney or other authority (if any) under which the instrument is signed must be received by Clancy by 10:00am (Sydney time) on 5 May 2014 in any of the following ways:

¾ By post or hand delivery to Security Transfer Registrars Pty Limited at:

Alexandrea House, Suite 1 770 Canning Highway Applecross WA 6153

Or

PO Box 535 Applecross WA 6953

¾ By fax to Security Transfer Registrars on:

(08) 9315 2233 from within Australia, or, +61 8 9315 2233 from outside Australia

To vote in person, you or your proxy, attorney, representative or corporate proxy representative must attend the Meeting on the date and at the place set out above. The Meeting will commence at 10:00am AEST.

A vote cast in accordance with the appointment of a proxy or power of attorney is valid even if before the vote was cast the appointor:

• ¾ Died;
• ¾ Became mentally incapacitated;
• ¾ Revoked the proxy or power; or
• ¾ Transferred the Shares in respect of which the vote was cast,

unless Clancy received written notification of the death, mental incapacity, revocation or transfer before the Meeting or adjourned Meeting (if applicable).

1.5. Voting by proxy

Shareholders wishing to vote by proxy at this Meeting must:

• ¾ Complete and sign or validly authenticate the proxy form, which is enclosed with this Notice of Meeting; and
• ¾ Deliver the signed and completed proxy form by 10:00 am (AEST) on 5 May 2014 in accordance with the instructions below.
• ¾ By post or hand delivery to Security Transfer Registrars Pty Limited at:

Alexandrea House, Suite 1 770 Canning Highway Applecross WA 6153

Or

PO Box 535 Applecross WA 6953

¾ By fax to Security Transfer Registrars on:

(08) 9315 2233 from within Australia, or, +61 8 9315 2233 from outside Australia

¾ Note: proxies may not be returned by email nor is internet voting available.

1.6. Notes for proxies

A Shareholder entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote at the Meeting on that Shareholder's behalf.

A proxy need not be a Shareholder.

A proxy may be an individual or a body corporate. A proxy that is a body corporate may appoint a representative to exercise the powers that the body corporate may exercise as the Shareholder's proxy.

If a Shareholder appoints two proxies and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, each proxy may exercise half the votes.

A proxy may vote or abstain as he or she chooses except where the appointment of the proxy directs the way the proxy is to vote on a particular Resolution. If an appointment directs the way the proxy is to vote on a particular Resolution:

• ¾ If the proxy is the chair the proxy must vote on a poll and must vote in the way directed; and
• ¾ If the proxy is not the chair the proxy need not vote on a poll, but if the proxy does so, the proxy must vote in the way directed.

If a proxy appointment is signed or validly authenticated by the Shareholder but does not name the proxy or proxies in whose favour it is given, the Chairman may either act as proxy or complete the proxy appointment by inserting the name or names of one of more Directors or Company Secretary.

If:

• ¾ A Shareholder nominates the Chairman of the Meeting as the Shareholder's proxy; or
• ¾ The Chairman is to act as proxy if a proxy appointment is signed by a Shareholder but does not name the proxies in whose favour it is given or otherwise under a default appointment according to the terms of the proxy form,

then the person acting as Chairman in respect of an item of business at the Meeting must act as proxy under the appointment in respect of that item of business.

Proxy appointments in favour of the Chairman of the Meeting, Company Secretary or any Director, which do not contain a direction will be voted in support of all Resolutions, except Resolution 1 in relation to which undirected proxies will not be voted in favour of the resolution. However, the Company need not disregard a vote on Resolution 1 if it is cast by the Chairman (as proxy appointed in writing for a person who is entitled to vote) where the proxy vote expressly authorises the Chairman to exercise an undirected proxy, even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company or their closely related parties.

1.7. Corporate representatives

To vote in person at the Meeting, a Shareholder or proxy which is a body corporate may appoint an individual to act as its representative.

To vote by corporate representative at the Meeting, a corporate Shareholder or proxy should provide the representative with a certificate or letter executed in accordance with the Corporations Act authorising the individual to act as that company's representative. The authority may be sent to Clancy in advance of the Meeting or handed in at the Meeting when registering as a corporate representative.

The appointment of a representative may set out restrictions on the representative's powers.

The original form of appointment of a representative, a certified copy of the appointment, or a certificate of the body corporate evidencing the appointment of a representative is prima facie evidence of a representative having been appointed.

The Chairman of the Meeting may permit a person claiming to be a representative to exercise the body's powers even if he or she has not produced a certificate or other satisfactory evidence of his or her appointment.

2. Summary of AGM-related Resolutions

2.1. Tabling of Annual Accounts

The Annual Financial Report, Directors' Report and Auditor's Report for the Company for the year ending 31 December 2013 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 these 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 Sydney 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.

2.2. Resolution 1 - Approval of Remuneration Report

In accordance with the Corporations Act, a resolution to adopt the Remuneration Report must be put to Shareholders at an annual general meeting. The Remuneration Report, which details the Company's policy on the remuneration of non-executive directors, executive directors, and other key management personnel, is set in the Company's 2013 Annual Report. The Annual Report is available on the Company's 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 the Corporations Act, if 25% or more of the vote on this Resolution is against adopting the Remuneration Report, the Company will be required to consider and report to Shareholders in the next Remuneration Report on the actions proposed (if any) or that have been 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 a "two strikes" rule applies to the results of voting in relation to Resolution 1. This means that if Resolution 1 receives a "no" vote of over 25% of the 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 second annual general meeting, an extra resolution (Spill Resolution) must be put to the meeting proposing that another general meeting (Spill Meeting) should be held within 90 days of the second annual general meeting at which all the Directors, except the Managing Director and any new Directors appointed since the date of the second annual general meeting, will be required to resign and offer themselves for re-election (Spill Meeting). A simple majority of over 50% of the votes cast at the second annual general meeting will be required to pass the Spill Resolution.

If at the Spill Meeting, the resolutions are all passed against re-electing the relevant Directors, the Corporations Act includes a mechanism to ensure the Board continues with the statutory minimum number 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 2016 annual general meeting.

Any undirected proxies held by the Chairman, other Directors or other key management personnel or any of their closely related parties will not be voted in favour of this Resolution. However, the Company need not disregard a vote on Resolution 1 if it is cast by the Chairman (as proxy appointed in writing for a person who is entitled to vote) where the proxy form expressly authorises the Chairman to exercise an undirected proxy, even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company or their associates.

Accordingly, if you appoint the Chairman as your proxy, you should direct him how to vote on Resolution 1 or authorise him to vote on undirected proxies on the proxy form, if you want your Shares to be voted on this item of business.

Directors' recommendation

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

2.3. Resolution 2 - Re-election of Director (By Rotation)

Resolution 2 seeks approval for the re-election of Dr. A. James Macdonald as a Director.

Listing Rule 14.4 and Clause 11.3 of the Constitution require 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 to one-third (except the Managing Director) for the time being shall retire from office.

A retiring Director is eligible for re-election.

Dr. A. James Macdonald retires by rotation in accordance with this requirement, is eligible for reelection and puts himself forward for re-election at the Meeting.

Dr. A. James Macdonald, BA (Hon), MSc, PhD, PGeo, FSEG, MAICD

(Non-Executive, (Technical)) 59 Years

Dr Macdonald is a geoscientist. During the past nine years he has operated a consultancy business providing professional geoscientific services to exploration and mining companies, mainly in Australia, Asia and Southern Africa. Dr Macdonald has over 37 years' experience in the global exploration and mining industries. He was Chief Geologist for AGIP Resources focused on exploration in Canada and Europe in the late 1980's. Dr Macdonald managed Andean gold exploration for Homestake Mining Company from 1994 to 1998. In 1998, Dr Macdonald joined Billiton International Metals as Chief Geoscientist, based in the Netherlands. Following the merger with BHP in 2001, he relocated to Brisbane, Australia, in a similar capacity as Global Geoscience Leader. He is currently Chairman of the audit committee and Chairman of the remuneration committee. He was the Chairman of the Company until 25 July 2011.

Dr Macdonald completed a Bachelor of Arts with Honours at Oxford University, majoring in Geology and Mineralogy. He subsequently completed an MSc and a PhD in Economic Geology at the University of Toronto. He is a Member of the Association of Professional Engineers and Geoscientists of British Columbia, a Fellow of the Society of Economic Geologists and a Member of the Australian Institute of Company Directors.

Directors' Recommendation

All the Directors (excluding Dr. A. James Macdonald) recommend that Shareholders vote in favour of Resolution 2.

2.4. Resolution 3 - Approval for the Issue of Shares to Eligible Employees and Directors under the Company's Employee Share and Loan Scheme

Resolution 3 seeks approval for the issue of Shares to employees including directors under the Company's Employee Share and Loan Scheme approved by Shareholders at the Annual General Meeting of the Company held on 31 May 2011 (Plan). Listing Rule 7.2 Exception 9 provides that securities issued to non related parties of the Company under an incentive scheme approved for the purposes of this Listing Rule over a three year period from the date of approval will not reduce the Company's 15% placement capacity in a 12 month period under Listing Rule 7.1 (Placement Capacity). Approval under Listing Rule 10.14 also has this effect, and provides generally that a company may not issue securities to Directors under an employee incentive scheme unless prior shareholder approval for the issue of securities under the scheme is obtained on the basis of information disclosed as required under` either Listing Rule 10.15 or 10.15A.

Approval for the issue of Shares under the Plan expires on 31 May 2014, and the Company seeks Shareholder approval to issue Shares under the Plan (Plan Shares) for a further period of 3 years after the date of the Meeting.

Shareholder approval is sought for the purposes of exception 9(b) of Listing Rule 7.2, Listing Rules 10.14 and 10.15A and Section 260C of the Corporations Act. If approval is given, Plan Shares will not reduce the Company's 15% Placement Capacity. Shareholder approval will therefore allow the Company to retain maximum flexibility in relation to use of this 15% capacity.

(a) Summary of the Plan

The Plan is designed to provide permanent full-time and part-time employees, contractors and subcontractors determined by the Board to be included within the definition of "eligible employee" for the purposes of the Plan and executive and non-executive Directors of the Company or an associated body corporate (Eligible Employees) with an ownership interest in the Company and to provide additional incentives to increase profitability and returns to Shareholders. The Plan also offers financial support for employees of the Company to acquire the Shares pursuant to the Plan, at the discretion of the Directors.

The Directors may invite Eligible Employees to acquire Plan Shares at their discretion. The Shares issued under the Plan will rank equally with other issued Shares. Subject to the restriction on the transfer of Plan Shares outlined below, the Company will apply for the quotation of Plan Shares on the ASX as soon as practicable after the Plan Shares are allotted.

The issue price of each Plan Share will be determined by the Directors at or before the time of the invitation to acquire Plan Shares. The issue price of the Plan Shares is payable in full by the Eligible Employee on the date of issue of the Plan Shares.

Where the Plan Shares are issued for cash consideration, the Directors may, at their absolute discretion, determine that the whole or part of the issue price will be advanced by the Company to the Eligible Employee, who must apply the advance in payment of the issue price.

A participant in the Plan must not sell, transfer, assign, mortgage, charge or otherwise encumber a Plan Share until the later of the following (to the extent applicable):

• ¾ the repayment in full of any loan advanced by the Company to the participant contemporaneously with the issue of Plan Shares;
• ¾ the expiry of any service continuity period specified by the Company at the time of issue of the Plan Shares; and
• ¾ the satisfaction of any performance criteria specified by the Company at the time of issue of the Plan Shares.

The Directors may impose different time periods and performance criteria in relation to different persons, and the Directors will have the absolute discretion to determine whether any such time period or criteria has been satisfied in relation to any Plan Share, or to waive that period or criteria in relation to that Plan Share.

If an Eligible Employee ceases to be employed or engaged by the Company during the period of restriction, or the above criteria are not satisfied by the Eligible Employee, the Company may buyback the Plan Shares the subject of the restriction under Part 2J.1 of the Corporations Act at a price equal to:

• ¾ where the Shares were issued for no cash consideration the lesser of $0.0001 each or the market price of the Shares; or
• ¾ where the Shares were issued for cash consideration either the issue price or the market price of the Shares at the Company's discretion.

The aggregate number of Shares in respect of which invitations may be made under the Plan by the Directors on any date, when added to the number of Plan Shares already issued and to the Company's existing employee share option plan during the 5 years preceding the date on which invitations are made, must not exceed 5% of the total number of Shares on issue in the capital of the Company.

In the event of:

• ¾ an announcement of a takeover bid being made in relation to the Company;
• ¾ the receipt by the Company of a bidder's statement in respect of the Company; or
• ¾ the despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members,

the Directors have the discretion to deem any service continuity or performance conditions to be satisfied in relation to any participating Eligible Employees. This power is only to be exercised subject to compliance with the Corporations Act and ASX Listing Rules.

The Plan is administered by the Directors of the Company, who have the power to:

• ¾ determine procedures for the administration of the Plan;
• ¾ amend or waive the terms and conditions of the Plan; and
• ¾ suspend or terminate the Plan.
• (b) Summary of the loan arrangements forming part of the Plan

Where the Directors determine that the whole or part of the issue price of Plan Shares will be advanced by the Company to the Eligible Employee, that advance must be applied in payment to the Company of the issue price.

During the term of any such loan, dividends paid in respect of the Plan Shares in relation to which the Company made the loan will be retained by the Company as interest paid by the borrower on the loan.

The borrower must repay the loan to the Company on the earlier of 5 years from the date of allotment of the Plan Shares to which the loan relates, or the date the borrower ceases to be employed or engaged by the Company. In such an event, the borrower is required to make available to the Company their Plan Shares in full settlement of the loan.

• (c) Disclosure required under Listing Rule 7.2 Exception 9
• ¾ 3,151,945 Plan Shares have been issued to Directors under the Plan; and
• ¾ 3,053,681 Plan Shares have been issued to Employees and Consultants under the Plan.
• (d) Disclosure required under Listing Rule 10.15A

The maximum number of Shares that may be acquired by the Directors under the Plan will be 5 million.

The number of Shares that may be acquired by the Directors at any time under the Plan will be governed by a formula, such that the aggregate number of Shares in respect of which invitations may be made to all Eligible Employees (which includes non executive and executive Directors) under the Plan on any date, when added to the number of Shares already issued under the Plan and to the number of Shares issued under the Company's existing employee share option plan during the 5 years preceding the date on which invitations are made, must not exceed 5% of the total number of Shares on issue in the capital of the Company.

The issue price of each Plan Share will be determined by the Directors at or before the time of the invitation to acquire Shares under the Plan. The issue price will be no less than the 5 day volume weighted average price for the Shares preceding the date of the invitation to acquire Shares under the Plan.

The names of all the Directors who are entitled to participate in the Plan are A. James Macdonald, Gordon Barnes, Natalie Forsyth-Stock and Michael Etheridge.

The terms of any loan provided to Directors under the Plan to enable them to acquire Plan Shares are as set out above in paragraph (b). Details of any Shares issued under the Plan will be published in each annual report of the Company relating to the period in which Shares have been issued including confirmation that approval for the issue of such Plan Shares was obtained under Listing Rule 10.14.

Any additional Directors who become entitled to participate in the Plan after Resolution 3 is approved, and who are not named in this Booklet, will not participate in the Plan until approval is obtained from Shareholders under Listing Rule 10.14.

The Shares will be issued by the Company no later than 3 years after the date of the Meeting.

(e) Section 260C of the Corporations Act

The operation of the Plan may involve financial assistance in relation to the provision of a loan by the Company to Eligible Employees for the acquisition of Plan Shares. Section 260A of the Corporations Act sets out certain requirements with which a Company must comply in order to be able to financially assist a person to acquire shares in the Company. Section 260C(4) provides that the provision of financial assistance under an employee share scheme that is approved by a resolution passed at a general meeting of the Company will be exempted from the requirements of Section 260A. Accordingly, Shareholder approval is also sought pursuant to Section 260C(4).

2.5. Resolution 9 - Approval for the Issue of Broker Options to Broker

ASX Listing Rule 7.1 requires the prior approval of security-holders to issue securities if the number of those securities exceeds 15% of the number of those securities at the commencement of the 12 month period prior to the issue.

Pursuant to the terms of the R M Capital Mandate the Company will be required to issue Broker Options to the Broker or its nominee as a success fee, depending upon the amount of the Placement. The number of Broker Options to be issued is as set out in the following table;

Placement Amount	Number of BrokerOptions to be Issued
$2,500,000	5,000,000
$3,000,000	10,000,000
$4,000,000	20,000,000

The terms and conditions of the Broker Options are identical to the terms and conditions of the Consideration Options. Terms and conditions of the Consideration Options are set out in Section 5.4(i).

Resolution 9 seeks approval, subject to the approval of Resolution 7, for the issue of up to 20,000,000 Broker Options (and the issue of up to 20,000,000 Shares on conversion of those Broker Options) to the Broker or its related entities pursuant to Listing Rule 7.1, 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 Broker Options will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules);

No funds will be raised from the issue of the Broker Options.

Directors' Recommendation

All the Directors recommend that Shareholders vote in favour of Resolution 9.

3. Summary of the Resolutions relating to the Acquisition

3.1. Introduction to the Acquisition

On 29 November 2013, Clancy announced that it had entered into an agreement with ABM to acquire 100% of ABM's exploration tenement interests in the North Arunta Project Region (the Projects) in the Northern Territory (Agreement).

As consideration for the Transaction, Clancy has agreed on Completion to (among other things):

• ¾ Issue to ABM, 125 million Consideration Shares; and
• ¾ Issue to ABM, 175 million Consideration Options to acquire an equivalent number of fully paid Shares, exercisable in full or in part and if exercised in part, in tranches of not less than one third within three years of issue. (See Section 5.4(e) for a full description of the consideration for the Transaction).

The Meeting has been convened to also consider resolutions necessary to authorise the issue of the Consideration Shares and Consideration Options and the subsequent exercise of the Consideration Options and issue of further Consideration Shares and the issue of Placement Shares under the Placement.

In relation to the issue of the Consideration Shares and Consideration Options to ABM, if the Placement is completed at a price other than $0.02 per Share, the Consideration Shares and Consideration Options issued to ABM will be increased or decreased as necessary to ensure that ABM's interest in Clancy on Completion of the Acquisition is at the level it would otherwise have been had the same amount of gross Placement proceeds been raised by pricing the Placement Shares at $0.02 per Share instead.

3.2. Introduction to the Placement

In order to fund its planned exploration effort on the Projects, the Company intends to undertake a placement of up to 266,666,667 fully paid Placement Shares to sophisticated investors at an issue price of at least $0.015 per Share, to raise up to $4 million.

Clancy cannot raise more than $4,000,000 under the Placement without ABM's consent. As at the date of this Booklet, the Board anticipates that the most likely scenario will be for 200,000,000 Placement Shares to be issued to sophisticated investors at $0.02 to raise $4 million. However, the final details of the Placement will be announced closer to Completion, which is expected to be in May 2014.

The following table shows the proposed application of funds from the Placement. Actual expenditure incurred will depend on the exploration results achieved.

	$4 MillionPlacement	$2.5 MillionPlacement
Exploration Expenditure	2,102,150	602,150
Balance of Cash Consideration	767,850	767,850
Stamp Duty	250,000	250,000
Restricted Cash	600,000	600,000
Capital Raising Costs	280,000	280,000
	4,000,000	2,500,000

The Placement Shares will rank equally with, and have the same terms as, the existing Shares. Shareholders will also be asked to approve the Placement at the Meeting.

3.3. Approval of Issue of Placement Shares to Dr. Mike Etheridge

Listing Rule 10.11 requires the Company to obtain the approval of Shareholders before issuing Shares to a related party of the Company. A "related party" includes a Director of the Company or an entity controlled by that Director.

Accordingly, approving Resolution 8 permits Dr. Mike Etheridge to participate in the Placement by acquiring up to a further 1,000,000 Shares to be acquired by Tectonex Geoconsultants Pty Ltd ATF .

Subject to Shareholder approval, Dr. Etheridge will participate in the Placement on the same terms and conditions as the other sophisticated investors.

The proceeds of the issue of the Placement Shares to Dr. Etheridge will be used by the Company as set out in Section 3.2 above. The issue and allotment of these Placement Shares to Dr. Etheridge is conditional on the approval of the Placement by the Shareholders at the Meeting and it will take place by 7 June 2014.

ASX Listing Rule 7.1 requires the prior approval of security-holders to issue securities if the number of those securities exceeds 15% of the number of those securities at the commencement of the 12 month period prior to the issue. Listing Rule 7.1 does not apply in respect of an issue made with the approval of holders of ordinary securities under Listing Rule 10.11. If approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

3.4. Shareholder approvals

The Acquisition will only proceed if Resolutions 4 to 7 to be considered at the Meeting are all approved by Shareholders. Resolutions 4 to 8 are the Acquisition Resolutions.

Shareholder approval is required pursuant to:

• ¾ Listing Rule 7.1 approval of the issue of Consideration Options to ABM and Placement Shares to sophisticated investors under the Placement;
• ¾ Listing Rule 10.11 approval of the issue of up to 1,000,000 Placement Shares to Dr. Mike Etheridge; and
• ¾ Section 611 exception 7 of the Corporations Act to approve the issue of:
  • o Consideration Shares to ABM; and
  • o further Shares to ABM upon exercise of the Consideration Options.

The Acquisition Resolutions require approval by a simple majority of votes cast by eligible Shareholders at the Meeting.

The voting restrictions or exclusions that apply in relation to each Acquisition Resolution are set out in the Notice of Meeting.

3.5. Independent Expert's Report

Clancy engaged the Independent Expert to prepare an Independent Expert's Report expressing an opinion on whether or not the Acquisition is fair and reasonable to Shareholders who are not associated with ABM.

The Independent Expert concludes that:

"the Transaction is not fair but reasonable to Shareholders. In our opinion, the Transaction is not fair because the value of a Clancy share Pre-Transaction on a controlling basis is greater than the value of a Clancy share Post-Transaction on a minority basis. However, we consider the Transaction to be reasonable because the advantages of the Transaction to Shareholders are greater than the disadvantages. In particular, the creation of a larger and more diversified asset portfolio will allow it to have greater access to capital markets. We note the value ranges on a Pre-Transaction and Post-Transaction basis overlap and when comparing both on a Minority basis, the Transaction would be fair."

The Independent Expert's Report is set out in Annexure B to this Booklet and you should read it as part of your assessment of the Acquisition.

3.6. New Director Appointments

Under the Agreement, ABM is entitled to nominate (and Clancy must appoint) 2 nominees to Clancy's Board as follows:

• ¾ ABM's first nominee must be appointed to Clancy's Board on Completion; and
• ¾ ABM's second nominee must be appointed to Clancy's Board upon completion of the issue of further Consideration Shares to ABM following its exercise of the first tranche of Consideration Options.

As a condition to Completion, Clancy must ensure that, if a person is nominated by ABM as an additional director of Clancy, a Board meeting is held to appoint that person (see Section 5.4(f)).

3.7. Implementation and Timetable

If all necessary approvals and conditions for the Acquisition are satisfied or waived (as applicable), it is expected that:

• ¾ The Consideration Shares and Consideration Options will be issued on Completion;
• ¾ ABM's first nominee to the Clancy Board will be appointed with effect from Completion;
• ¾ The Placement will be conducted by no later than 2 August 2014, with the Placement Shares to be issued to the sophisticated investors by no later than 2 August 2014. However, if Resolution 8 is approved by Shareholders at the Meeting, Clancy will issue Placement Shares to Dr. Mike Etheridge by no later than 1 month after the date of the Meeting, in accordance with the requirements of Listing Rule 10.13.3;
• ¾ ABM's second nominee to the Clancy Board will be appointed upon completion of the issue of further Consideration Shares to ABM following its exercise of the first tranche of its Consideration Options; and
• ¾ The Consideration Options will expire at 5:00 pm (Perth time) on the date that is 3 years after their issue date.

3.8. What to do next

(a) Read the remainder of this Booklet

You should read and consider the remainder of this Booklet in full before making any decision on the Placement or the Plan.

(b) Consider your options

Shareholders should refer to Section 4 of this Booklet for further guidance on the expected advantages and possible disadvantages of the Acquisition. However, this Booklet does not take into account the financial situation, investments objectives and particular needs of any particular Shareholder.

(c) Vote at the Meeting

The Board urges all Shareholders to vote on the Acquisition at the Meeting. The Acquisition affects your investment in Clancy and your vote at the Meeting is important in determining whether the Acquisition proceeds.

4. Relevant Considerations for the Acquisition

4.1. Introduction

The purpose of this Section 4 is to identify significant issues for Shareholders to consider in relation to the Acquisition.

Before deciding how to vote at the Meeting in respect of the Acquisition, Shareholders should carefully consider the factors discussed below, as well as the other information contained in this Booklet.

4.2. Recommendation of Directors

All the Directors, except Dr Mike Etheridge recommend that Shareholders vote in favour of the Acquisition Resolutions, for all the reasons set out in Section 4.3.

As Dr Mike Etheridge is also a director of ABM, he has concluded that it is not appropriate for him to make a recommendation.

4.3. Why you should vote in favour of the Acquisition Resolutions: Resolutions 4 to 8

Reasons why Shareholders may decide to vote in favour of the Acquisition Resolutions include the following:

• ¾ The Directors (other than Dr Mike Etheridge who is also a director of ABM) have recommended that Shareholders vote in favour of the Acquisition Resolutions, for the reasons set out in this Section 4.3.

• ¾ The Independent Expert has concluded that the Acquisition is not fair but reasonable to the Shareholders who are not associated with ABM. The Independent Expert did note that the value ranges on a pre-Transaction and post-Transaction basis overlap and when comparing both on a minority basis the Acquisition would be fair.

• ¾ Shareholders may disagree with the conclusions of the Independent Expert's Report that the Acquisition is not fair;

• ¾ Clancy has for the past two years sought to acquire a flagship project with existing mineralised drill intersections to create value for Shareholders. The Board considers that the Acquisition provides Clancy with a particularly attractive combination of well-defined targets ready for drill testing and an extensive portfolio of greenfield opportunities. ABM and previous explorers have defined extensive gold systems at the Barrow Creek and Reynolds Range projects with strike lengths in excess of 10 kilometres. Limited drilling to date has demonstrated the potential of these gold systems.

• ¾ The Acquisition will deliver a portfolio of exploration targets within a land package covering more than 12,500km2 in the highly prospective North Arunta region of the Northern Territory. Clancy's due diligence investigations have re-affirmed the Board's belief in the Projects' potential as follows:

  • o the Projects are located in the North Arunta region, part of the Proterozoic Tanami-Arunta Orogen in the Northern Territory where over 11.5 million ounces of gold have been discovered since 1985;
  • o the Tanami-Arunta Orogen is highly prospective for gold, copper and nickel and shares many similarities with the Albany-Fraser Orogen in Western Australia;
  • o the North Arunta Project is prospective for Intrusion Related Gold Systems and magmatic nickel deposits, the potential for which may have been overlooked in the past; and

• o modern techniques and technologies, a new exploration model and a fresh approach, all to be provided by Clancy, could provide the key to unlocking the potential of the Projects.1

• ¾ The Acquisition will provide the Company with a larger and more diversified portfolio of assets.

• ¾ The Acquisition will provide the Company with greater potential to access required capital for continued exploration.

4.4. Why you may vote against the Acquisition Resolutions

Shareholders may decline to approve the Acquisition Resolutions for a number of reasons. These may include the following:

• ¾ The Independent Expert has concluded that the Acquisition is not fair to the Shareholders who are not associated with ABM.
• ¾ Shareholders may disagree with the conclusions of the Independent Expert's Report that the Acquisition is reasonable.
• ¾ Shareholders may consider that the issue of Shares by Clancy as part of the Acquisition with no opportunity for Shareholders to participate represents an unacceptable dilution of their interests. Following the completion of the Acquisition and Placement, and following the exercise of all the Consideration Options (and depending on the number of Placement Shares issued under the Placement), the combined interest of the existing Shareholders in Clancy would drop from 100% to as low as 24.5% (see Section 4.9 for details).
• ¾ Following the completion of the Acquisition and Placement, and following the exercise of all its Consideration Options, (and depending on the number of Placement Shares issued under the Placement) ABM's interest in Clancy would rise from 0% to a maximum of 47.2% (see Section 4.9 for details). While representing less than 50% of the issued Shares and therefore insufficient to deliver control of Clancy to ABM, this shareholding may provide ABM with significant influence over the affairs of Clancy which may result in a corresponding loss of influence by the existing Shareholders, especially considering that ABM will have the right to nominate up to 2 Directors to the Board (see Section 5.4(h) for details). Clancy's Board currently comprises 4 Directors, one of whom (Dr Mike Etheridge) is also a director of ABM.
• ¾ Under the Agreement and subject to all necessary regulatory and Shareholder approvals, Clancy grants ABM (or its nominee) the right to participate in all future Clancy capital raisings (other than the Placement, the issue of shares under any employee incentive plan or on exercise of Consideration Options then on issue) on a pro-rata basis for a period of two years following Completion. This right will enable ABM to maintain the percentage interest it had in Clancy immediately prior to the relevant issue (see Sections 4.6, Error! Reference source not found. and 0 for further details). If Shareholders object to the grant of this right to ABM, they may determine to vote against the Acquisition.
• ¾ Shareholders may consider that the risks of the Acquisition as set out in Section 4.7 outweigh its benefits as set out in Section 4.3.

4.5. Key implications if the Acquisition Resolutions are not passed

If Shareholders do not pass the Acquisition Resolutions:

• ¾ The Acquisition would not proceed and Clancy would not receive any of the benefits identified in Section 4.3.
• ¾ Shareholders would not have their interest in Clancy diluted and Clancy would avoid the other negative effects identified in Section 4.4.

1 Refer to Clancy's ASX Release dated 3 February 2014.

• ¾ Clancy may not be able to recover all the payments it has already made to ABM in respect of the Acquisition (See Section 5.4(d) for details) and the costs it has already incurred in respect of the Acquisition for example fees paid to advisers such as the Independent Expert.
• ¾ Clancy may have to raise capital to fund its operations at prices less than those that may be achievable if the Acquisition was to proceed.

4.6. Anti-Dilution Right

Under the Agreement, and subject to all necessary regulatory and shareholder approvals, Clancy grants ABM (or its nominee) the right to participate in all future Clancy capital raisings (other than the Placement, the issue of shares under any employee incentive plan or on exercise of Options then on issue) on a pro-rata basis for a period of two years following the Completion of the Acquisition.

This right will enable ABM to maintain the percentage interest it had in Clancy immediately prior to the relevant issue. This right will be personal to ABM and may not be assigned or made available for the benefit of any third party.

4.7. Risks of the Acquisition

The major risks associated with the Acquisition include the risk that:

• ¾ The Acquisition does not proceed. The Acquisition is subject to a number of Acquisition Conditions and to the compliance by ABM and Clancy with a number of obligations (see Sections 5.4(c) and 5.4(f)). If any of the Acquisition Conditions or other obligations of the parties are not satisfied, the Acquisition will not proceed. In this situation, Clancy would only have some limited rights to obtain refunds of payments already made to ABM (see Section 5.4(d)).
• ¾ The potential of the Tenements is not realised. The rationale for the Acquisition is based on the prospectivity of the Projects and the Tenements as described in detail in Sections 5.1 and 5.2. There is a risk that the potential of the Tenements and the Projects will not be realised in full (or at all) after Clancy undertakes its planned exploration effort on the Projects, in which case little or no Shareholder value may be realised as a result of the Acquisition.
• ¾ Clancy's counterparties in the Acquisition do not perform their obligations. As part of the Acquisition, Clancy will engage with a number of counterparties including ABM, the Independent Expert and the Broker in relation to the Placement. If any of these counterparties do not perform their obligations, Completion may not occur, or the returns from the Acquisition may be affected. Clancy will seek to reduce this risk by engaging only with reputable parties and by ensuring that counterparties are bound by legal agreements for material transactions.
• ¾ Key staff or consultants with particular expertise in exploration may depart from employment with Clancy, which would affect its ability to exploit the potential of the Tenements.

4.8. Financial Impact of the Acquisition on Clancy

If the Acquisition is approved by Shareholders and proceeds, Clancy will:

• ¾ Issue to ABM 125 million fully paid Consideration Shares and 175 million unlisted Consideration Options (the final number of Consideration Shares and Consideration Options issued to ABM may vary depending on the pricing of Placement Shares under the Placement); and

• ¾ To the extent it has not already done so pay to ABM in cash amounts totalling $1,167,850 (plus any applicable GST) as follows:

  • o $567,850 representing the net proceeds of the sale of Clancy's shareholding in Genesis Resources Limited;
  • o $250,000 being the Option Fee (which was paid in November 2013);

• o $150,000 being the Exercise Fee (which was paid in February 2014); and

• o $200,000 being the Acquisition Fee.

If the Acquisition proceeds and $2.5 million is raised under the Placement, Clancy's annual exploration expenditure would be $862,000, comprising $260,000 to be spent on Clancy's projects in NSW, and $602,000 to be spent on the Projects.

If the Acquisition proceeds and $4 million is raised under the Placement, Clancy's annual exploration expenditure would be $2,362,000, comprising $260,000 to be spent on Clancy's projects in NSW, and $2,102,000 to be spent on the Projects.

Shareholders should note that the majority of Clancy's current exploration expenditure on its NSW projects is funded by joint venture partners Mitsubishi Materials Corporation and Kaizen Discovery, Inc. The Board does not expect Clancy's other annual expenditure amounts to alter to any significant extent as a result of the Acquisition proceeding.

If the Acquisition does not proceed, the Placement would also not proceed and Clancy's annual exploration expenditure would be approximately $260,000, which would all be spent on Clancy's projects in NSW.

Clancy currently has cash balances of approximately $1,278,000 excluding restricted cash. Based on cash forecasts it anticipates that if the Acquisition does not proceed, it would need to undertake a further capital raising by no later than October 2014.

Clancy would not have sufficient funds to explore the Projects without the proceeds from the Placement.

4.9. Impact of the Acquisition on Clancy's capital structure

Under the Agreement, if the Placement is completed at a price other than $0.02 per Placement Share, the Consideration Shares and Consideration Options issued to ABM will be increased or decreased as necessary, to ensure that ABM's percentage interest in Clancy on Completion is at the level it would otherwise have been had the same amount of gross proceeds raised under the Placement been obtained by pricing the Placement Shares at $0.02 per share instead.

This therefore means that the actual impact of the Acquisition on Clancy's capital structure will depend on the actual number of Placement Shares that will be issued. As at the date of this Booklet, the terms of the Placement were yet to be finalised, but the Board believes the most likely scenario is that $4 million will be raised by issuing 200,000,000 Placement Shares at $0.02 per Placement Share.

Table 1 below shows the impact of the Acquisition on Clancy's capital structure assuming $4 million is raised under the Placement by issuing Placement Shares at $0.015, $0.02 and $0.03, and assuming 20,000,000 Broker Options are issued to the Broker.

	$0.015		$0.02		$0.03
	Number	%	Number	%	Number	%
			Shares
ExistingShareholders	206,254,392	33.4	206,254,392	38.8	206,254,392	46.5
ABM(ConsiderationShares)	145,276,404	23.5	125,000,000	23.5	104,317,798	23.5
Placees(PlacementShares)	266,666,667	43.1	200,000,000	37.6	133,333,333	30

Table 1

Total	618,197,463	100	531,254,392	100	443,905,523	100
	Options
ABM(ConsiderationOptions)	203,386,965	91	175,000,000	90	146,044,917	88
R M Capital(BrokerOptions)	20,000,000	9	20,000,000	10	20,000,000	12
ExistingClancyoptions (listedand unlisted)	Nil	Nil	Nil	Nil	Nil	Nil
Total	223,386,965	100	195,000,000	100	166,044,917	100
			Fully diluted capital (assuming the exercise of all Consideration Options and Broker Options)
ExistingShareholders	206,254,392	24.5	206,254,392	28.4	206,254,392	33.8
ABM	348,663,369	41.4	300,000,000	41.3	250,362,715	41
Placees	266,666,667	31.7	200,000,000	27.5	133,333,333	21.9
R M Capital	20,000,000	2.4	20,000,000	2.8	20,000,000	3.3
Total	841,584,428	100	726,254,392	100	609,950,440	100

Table 2 below shows the impact of the Acquisition on Clancy's capital structure assuming $2.5 million is raised under the Placement by issuing Placement Shares at $0.015, $0.02 and $0.03, and assuming 5,000,000 Broker Options are issued to the Broker.

Table 2

	$0.015		$0.02		$0.03
	Number	%	Number	%	Number	%
			Shares
ExistingShareholders	206,254,392	40.2	206,254,392	45.2	206,254,392	51.7
ABM(ConsiderationShares)	140,744,311	27.4	125,000,000	27.4	109,293,439	27.4
Placees(PlacementShares)	166,666,667	32.4	125,000,000	27.4	83,333,333	20.9
Total	513,665,370	100	456,254,392	100	398,881,164	100
			Options
ABM(ConsiderationOptions)	197,042,037	97.5	175,000,000	97	153,010,815	96.8
R M Capital(BrokerOptions)	5,000,000	2.5	5,000,000	3	5,000,000	3.2
ExistingClancy	Nil	Nil	Nil	Nil	Nil	Nil

options (listedand unlisted)
Total	202,042,037	100	180,000,000	100	158,010,815	100
	Fully diluted capital (assuming the exercise of all Consideration Options and Broker Options)
ExistingShareholders	206,254,392	28.8	206,254,392	32.4	206,254,392	37
ABM	337,786,347	47.2	300,000,000	47.2	262,304,254	47.1
Placees	166,666,667	23.3	125,000,000	19.6	83,333,333	15
R M Capital	5,000,000	0.7	5,000,000	0.8	5,000,000	0.9
Total	715,707,406	100	636,254,392	100	556,891,979	100

4.10. Impact of the Acquisition on the control of Clancy

Based on the tables in Section 4.9, as a result of the Acquisition:

• ¾ ABM's voting power in Clancy would rise from 0% to a maximum of 47.2% (if the Broker Options are not issued, ABM's voting power would rise to a maximum of 47.5%); and
• ¾ The voting power of the existing Shareholders would drop from 100% to a minimum of 24.5% (if the Broker Options are not issued, the voting power of the existing Shareholders would drop to a minimum of 25.1%).

On Completion therefore, and irrespective of the number of Placement Shares ultimately issued, ABM would be Clancy's single largest Shareholder.

Based on the last substantial shareholder notice lodged as at the date of this Booklet, Gold Fields Limited is the largest Clancy Shareholder with an 8.62% interest. If the Acquisition proceeds and assuming ABM immediately exercises all its Consideration Options (and irrespective of the number of Placement Shares ultimately issued):

• ¾ Clancy will have no substantial Shareholder other than ABM; and
• ¾ ABM will have the right to nominate 2 Directors to the Clancy's Board, which currently has 4 Directors, one of whom (Dr Mike Etheridge) is also a director of ABM.

Therefore, while ABM will not be in a position to control Clancy, it will be in a position to exert significant influence over the affairs of Clancy.

4.11. Voting power of ABM Associates as a result of the Acquisition

As at the date of this Booklet, ABM has three associates (ABM Resources Operations Pty Limited ACN 095 033 597, RARE Resources NL ACN 009 260 566 and Australian Tenement Holdings Pty Limited ACN 128 575 682), none of which currently holds any interest in Clancy.

As a result of the Acquisition, the voting power of these associates in Clancy would rise from 0% to a maximum of 47.2%.

4.12. Intentions of ABM

The Company understands that ABM:

• ¾ has no intention of making any significant changes to the business of the Company;

• ¾ does not have any present intention to inject further capital into the entity (other than upon the potential exercise of the Consideration Options);

• ¾ does not propose to change the employment arrangements of the present employees of the Company;

• ¾ does not intend to transfer any property between the Company and ABM or any person associated with any of them, other than pursuant to the Acquisition;

• ¾ does not intend to redeploy the fixed assets of the Company; and

• ¾ has no current intention to significantly change the financial or dividend distribution policies of the entity.

These statements are based on the present intentions of ABM on the basis of facts and information known to ABM concerning Clancy and the existing circumstances that affect Clancy at the date of this Booklet. These present intentions may change as new information becomes available, as circumstances change or in the light of material information, facts or circumstances which make it necessary to assess the operational, commercial, taxation and financial implications of those decisions at the relevant time.

4.13. Director Interests

Dr Mike Etheridge, the Chairman of Clancy, is also the Chairman of ABM. Dr Etheridge has disclosed an interest in 17,000,000 fully paid ordinary shares in ABM.

Dr. A. James Macdonald has disclosed an interest in 50,000 fully paid ordinary shares in ABM. The shares are held jointly with his spouse, Sandra Bishop.

No other Director holds any shares in ABM.

Other than as noted above, no Director has any interest in the Acquisition or any agreement relating to the Acquisition.

4.14. Independent Expert

The Independent Expert has concluded that:

"The Transaction is not fair because the value of a Clancy share pre-Transaction on a controlling basis is greater than the value of a Clancy share post-Transaction on a minority basis. However, we consider the Transaction to be reasonable because the advantages of the Transaction to Shareholders are greater than the disadvantages. In particular, the creation of a larger and more diversified asset portfolio will allow it to have greater access to capital markets. We note the value ranges on a pre-Transaction and post-Transaction basis overlap and when comparing both on a minority basis the Transaction would be fair.

The Independent Expert's Report is set out in full in Annexure B of this Booklet and you are strongly encouraged to read that report as part of your assessment of the Acquisition.

4.15. Financial Information and Share Trading History

Clancy's 2013 Annual Report is available on the Company's website at www.clancyexploration.com. For those Shareholders who have elected to receive a printed copy of the Annual Report, the 2013 Annual Report accompanies this Notice of Annual General Meeting. The Annual Report contains audited financial reports of Clancy for the year ended 31 December 2013.

The Independent Expert's Report contains unaudited pro forma statements of financial position which have been prepared to illustrate Clancy's financial position following completion of the Acquisition and expenditure of funds associated with the Acquisition.

The Independent Expert's Report also contains information on trading in the Shares on the ASX over the 12 months to 28 November 2013, which was the last trading day prior to the announcement of the Acquisition. This information has been prepared to enable Shareholders to better analyse the prices at which the Placement Shares will be issued, as well as the exercise price of the Consideration Options.

5. The Acquisition

5.1. Background to the Acquisition

On 29 November 2013 Clancy announced that it had entered into the Agreement with ABM under which Clancy will have the option to acquire 100% of ABM's exploration tenement interests in the North Arunta Project Region (Projects) in the Northern Territory.

Clancy has for the past two years sought to acquire a flagship project with existing mineralised drill intersections to create value for its shareholders. The search has taken some time, but the Board considers that this Acquisition brings a particularly attractive combination of well-defined targets ready for drill testing and an extensive portfolio of greenfield opportunities.

The Barrow Creek project (part of the Projects) includes the Kroda prospect which has been subject to a drilling program by ABM. Significant drill intercepts from Kroda include 57m @ 3.83g/t Au (see Figure 3)1 . A concerted drilling campaign has the potential for further discovery of other high-grade breccia pipes within the Kroda mineralised trend, which extends for 14km.

At Reynolds Range (also part of the Projects), ABM drill tested four targets in the Stafford Gold Zone with the best intercept from the Sabre prospect of 35m @ 2.02g/t Au including 17m @ 3.93g/t Au2 . Further reconnaissance work at Stafford Gold Zone also revealed high grade copper and silver rock chip samples from the Reward Prospect (~9km SE of Sabre) with 20.3% Cu and 271g/t Ag3 near a down-dip EM conductor identified by an airborne electromagnetic survey in 2012. These very encouraging results have not been followed up to date, due to ABM's focus on its Old Pirate trial mining program. The location of the projects is shown in Figures 1 and 2.

Shareholders should note that to the extent there is information included in this Booklet regarding any potential quantity and grade of a mineral, this is conceptual in nature as there has been insufficient exploration completed to define a mineral resource under the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC 2012 Code) and it is uncertain if further exploration will result in the determination of a mineral resource under the JORC 2012 Code.

5.2. The Projects

The location of the Projects is shown in Figures 1 and 2. A brief description of the Projects is provided below 4

1 Refer to ABM ASX release dated 27 September 2011.

2 Refer to ABM ASX release dated 24 May 2010.

3 Refer to ABM ASX release dated 13 May 2010.

4 Sourced from ABM's 2012 and 2013 annual reports.

Figure 1 – Map of ABM's tenements in the Northern Territory. The North Arunta Project Region is shown in the oval (Source: ABM 2013 annual report).

Figure 2 – Map of North Arunta Project Region showing the ABM tenements that will be acquired by Clancy (Source: ABM).

(a) Barrow Creek and Lander River

The Barrow Creek and Lander River projects consists of a 160 kilometre long gravity trend with associated metamorphosed sedimentary rocks, dolerite intrusions and large granite intrusions. The region has several known mineral occurrences including gold, copper, nickel, zinc, tin and tantalum. The main focus of work to date has been at the Kroda prospect which is located 18km west of the Stuart Highway, 30km north of the town of Barrow Creek and 200km south of Tennant Creek (see Figure 2). The project consists of 4 individual prospects (Kroda 1 to 4) with a combined anomalous gold strike length of 14km. The principal target commodity is gold, however, Kroda 2 also has anomalous copper associated with the gold.

The Kroda prospect in the Barrow Creek project has the potential to become a flagship project for Clancy. Gold mineralisation at Kroda is hosted in inter-layered dolerite and schist and is associated with quartz veins and breccia. At Kroda 3, high-grade gold is hosted by breccia pipes that are near surface, steeply plunging and are confirmed by drilling to extend beyond 200m depth1 . Significant drill intercepts from Kroda 3 include 57m @ 3.83g/t Au (see Figure 3). The breccia pipes defined to date are hosted by a WNW-ESE striking structure with associated gold anomalism over a 14km strike length. The potential for further discovery of other high-grade breccia pipes within the Kroda mineralised trend of 14km is considered to be significant.

Other emerging prospects within the Barrow Creek project include the Tulsa prospect where geochemical sampling by ABM has uncovered another 10km trend of surface gold anomalism similar to Kroda which remains untested by drilling2 .

Figure 3 – Drill intercepts and cross section of the Kroda 3 prospect with significant ABM gold drill intercepts labelled1 . (Source: ABM September 2012 technical and corporate update presentation released to ASX on 6 September 2012).

1 ABM technical and corporate update presentation released to ASX on 6 September 2012.

2 ABM 2012 annual report.

(b) Reynolds Range

The Reynolds Range project has had a considerable amount of shallow RAB and vacuum drilling completed by previous explorers, which has defined large, low-level gold anomalies (+5ppb Au). Around 3300 holes have been drilled and the average hole depth is 9.8m. The fresh-rock beneath the depleted surface cover is largely untested, with just 5 diamond holes completed to a maximum depth of 156m in the entire project area2. ABM's assessment of the previous work highlighted the Stafford Gold Zone with a strike length of over 20km and 10 individual prospects with target area in excess of 80km2. The Sabre and Falchion prospects were targeted by ABM for follow-up and drilling by ABM at the Sabre prospect intersected 35m @ 2.02g/t Au including 17m @ 3.93g/t Au3. Further reconnaissance work at Stafford Gold Zone also revealed high grade copper and silver rock chip samples from the Reward Prospect (~9km SE of Sabre) with 20.3% Cu and 271g/t Ag near a downdip EM conductor identified by an airborne electromagnetic survey in 2012. A rock sample grading 1.79g/t Au was also returned from the Pine Hill Prospect (~3.5km SE of Reward). Shortly after this work was completed in the June 2010 quarter, the drill rig was shifted to ABM's Twin Bonanza project, which incorporates the Old Pirate and Buccaneer deposits where ABM's focus has remained since. Consequently these very encouraging results have not been followed up.

(c) Walkeley and Bonita

The Walkeley and Bonita projects are at an early stage of exploration. The Bonita tenements have been recently granted and the Walkeley tenements are still under application (see Figure 2). The project covers ~60km of strike length of the Trans-Tanami structure and a 6km diameter magnetic anomaly known as the Swampy target has been defined at the intersection of tectonic scale geological structures within the Bonita tenements.

5.3. Subsequent Report of Exploration Results

The information on the Projects contained in this Section (including exploration results) has been extracted from Clancy's media announcements dated 29 November 2013 and 3 February 2014 given to the ASX and released to the market on the same respective days (29 November Announcement and 3 February Announcement). Clancy is not aware of any new information or data that materially affects the information contained in the 29 November Announcement and 3 February Announcement.

This information in the 29 November Announcement was prepared and first disclosed under the 2004 edition of the JORC Code. It has not been updated since to comply with the 2012 edition of the JORC Code, on the basis that the information has not materially changed since the release of the 29 November Announcement.

5.4. Material Terms of the Acquisition

The following is a summary of the material terms of the Acquisition as set out in the Agreement:

(a) Right of ABM to participate in future capital raisings

Subject to all necessary regulatory and shareholder approvals, Clancy grants ABM (or its nominee) the right to participate in all future Clancy capital raisings (other than the Placement, the issue of shares under any employee incentive plan or on exercise of Options then on issue) on a pro-rata basis for a period of two years following the Completion of the Acquisition.

This right will enable ABM to maintain the percentage interest it had in Clancy immediately prior to the relevant issue. This right will be personal to ABM and may not be assigned or made available for the benefit of any third party.

(b) Option Fee and Exercise Fee

Clancy has paid an option fee of $250,000 (Option Fee) to ABM for the exclusive option to complete due diligence on the Projects. On 3 February 2014, Clancy announced that due diligence in respect

1 Refer to ABM ASX release dated 27 September 2011 for details on intercept calculations.

2 ABM ASX release dated 18/01/2010.

3 ABM ASX release dated 24/05/2010.

of the Acquisition had been completed and that it had exercised its option to proceed with the Acquisition. Under the Agreement, the exercise fee for the exercise of the option by Clancy is $150,000 (Exercise Fee). The Option Fee and Exercise Fees are refundable in certain circumstances (see 5.4(d) below) should the Acquisition not proceed.

(c) Acquisition Conditions

Under the Agreement, ABM agrees, subject to the Acquisition Conditions below, to transfer 100% of its legal and beneficial interest in the Projects to Clancy, on Completion:

• (i) ABM obtaining all necessary approvals, consents or waivers to give effect to the Acquisition including, without limitation, any shareholder approvals required pursuant to the Corporations Act or Listing Rules and any government or third party approvals. ABM has advised that it does not require any shareholder approvals in order to give effect to the Acquisition;
• (ii) Clancy obtaining all necessary approvals, consents or waivers to give effect to the Acquisition including, without limitation, any shareholder approvals required pursuant to the Corporations Act or Listing Rules. (Under the Agreement, this Acquisition Condition does not apply to any approvals, consents or waivers necessary to give effect to the right of ABM to participate in future Clancy capital raisings as set out in 5.4(a) above);
• (iii) Clancy appointing an investment bank/broker to advise on an asset re-structuring and to coordinate a Placement of Clancy ordinary shares to raise gross proceeds of a minimum of $2,500,000 and maximum of $4,000,000. Clancy must not raise more than $4,000,000 under the Placement without the prior consent of ABM;
• (iv) ABM and Clancy entering into an agreement (Services Agreement) on terms acceptable to both of them for ABM to provide technical exploration services to Clancy for a period of 24 months from Completion, including logistical support, geological services, Alice Springs support base and other incidental services in connection with exploration of the Projects, at cost plus a 10% administration fee;
• (v) ABM obtaining the consent of the Central Land Council (CLC) to assign all of ABM's native title rights and Deeds for Exploration entered into with the CLC and the relevant traditional owners relating to the Tenements to Clancy, on terms that are no less favourable to Clancy; and
• (vi) Clancy delivering to ABM a proposed work program and budget for exploration expenditure to be incurred by Clancy on the Projects commencing at Completion, and ABM agreeing to the budget or reaching agreement with Clancy on an amended budget. This work program will be subject to approval by the CLC and the Northern Territory Department of Mines and Energy (Department).

The above Acquisition Conditions must be satisfied by 2 August 2014, or such other date agreed in writing by the parties (End Date).

(d) Refund of Option Fee and Exercise Fee

The Option Fee paid by Clancy to ABM is refundable if:

• ¾ The Acquisition Condition in paragraph (c)(v) above is not satisfied by the End Date; or
• ¾ Clancy validly terminates the Agreement as a result of a failure by ABM to comply with its obligations at completion (see paragraph (f) below).

The Exercise Fee is only refundable if any of the Acquisition Conditions in paragraphs (c)(i), (c)(iii) or (c)(v) is not satisfied or waived by the End Date or if Clancy validly terminates the Agreement as a result of a failure by ABM to comply with its obligations at completion (see paragraph (f) below). If any of the Acquisition Conditions in paragraphs (c)(iv) or (c)(vi) above is not satisfied or waived by the End Date, the parties will negotiate in good faith for the refund of the Exercise Fee.

(e) Consideration

Under the Agreement, the consideration payable by Clancy to ABM on Completion comprises:

• ¾ An Acquisition Fee of $200,000 (plus any applicable GST) in cash;
• ¾ The issue to ABM of 125,000,000 fully paid ordinary Consideration Shares in the capital of Clancy;
• ¾ The issue to ABM of 175,000,000 unlisted Consideration Options each to acquire a fully paid ordinary Share in the capital of Clancy; and
• ¾ The payment to ABM of the net proceeds of the sale by Clancy of its shares in Genesis Resources Limited (ACN 114 787 469) (Genesis Consideration).

In relation to the issue of the Consideration Shares and Consideration Options to ABM, if the Placement is completed at a price other than $0.02 per Share, the Consideration Shares and Consideration Options issued to ABM will be increased or decreased as necessary to ensure that ABM's interest in Clancy on Completion is at the level it would otherwise have been had the same amount of gross Placement proceeds been raised by pricing the Placement Shares at $0.02 per Share instead.

(f) Completion

Completion of the Acquisition will occur at the offices of ABM on the date which is 10 Business Days after the Completion Date.

At or prior to Completion:

• ¾ ABM must deliver to Clancy:

  • o a duly executed letter from ABM to the Department instructing that from Completion all notices relating to the Tenements be sent to Clancy;
  • o an executed power of attorney in favour of Clancy to do all things with regards to those Tenements which are under application as at Completion;
  • o confirmation of the grant of all necessary consents and approvals to give effect to the Acquisition in a form acceptable to Clancy, acting reasonably;
  • o a release of any security over the Tenements (if any);
  • o duly executed transfers in registrable form (except for stamping) of ABM's interest in the Tenements in favour of Clancy;
  • o any other documents or information required to give effect to the transfer of the Tenements to Clancy;
  • o all mining information, all administration files, technical reports and digital data held by ABM in relation to the Tenements;
  • o a signed restriction agreement (if required) in respect of the Consideration Shares and Consideration Options (see Section 5.4(j) below); and
  • o an executed deed (or deeds) pursuant to which ABM assigns, with effect from Completion, all of its rights and obligations under any native title agreements, Indigenous land rights agreements and deeds for exploration entered into with the CLC and the relevant traditional owners relating to the Tenements to Clancy, and pursuant to which Clancy agrees to assume of all ABM's rights and obligations under those agreements.

• ¾ Clancy must:

  • o undertake unconditionally to pay the Acquisition Fee to ABM (net of any GST payable) on Completion and any GST payable in respect of the Acquisition Fee on the 20th day of the month after a tax invoice is issued in respect of the Acquisition Fee;
  • o allot and issue the Consideration Shares and the Consideration Options to ABM;
  • o pay the Genesis Consideration to ABM; and
  • o if a person is nominated by ABM as an additional director of Clancy, ensure that a directors' meeting of Clancy is held to appoint that person.

• ¾ Clancy must also deliver to ABM at Completion:

  • o a holding statement for the Consideration Shares;
  • o a certificate for the Consideration Options; and
  • o confirmation of the grant of all necessary consents and approvals to give effect to the Acquisition in a form acceptable to ABM, acting reasonably.

Completion is conditional on Clancy and ABM complying with all of their obligations as set out above.

(g) Representations

Under the Agreement, ABM represents to Clancy (among other things) that:

• ¾ Except with respect to Tenement number EL23655 (in which it holds a 60% interest), it has absolute legal and beneficial title to all the Tenements.
• ¾ It has full right, power and authority to transfer the Tenements in accordance with the Agreement, subject only to approvals to be given by the CLC under the terms of the various deeds for exploration, native title agreements and Indigenous land use agreements and such assignment shall convey to Clancy lawful, valid and unencumbered legal and beneficial title to the Tenements.
• ¾ On Completion, the Tenements transferred to Clancy will be free from all encumbrances of whatsoever nature other than as disclosed in writing by ABM to Clancy prior to the date of the Agreement.
• ¾ It has not disposed of, agreed to dispose of, granted or agreed to grant any option or right of pre-emption in respect of the Acquisition to any other person.
• ¾ There is no current, pending or threatened litigation or proceeding of any nature concerning the Tenements, other than as disclosed in writing by ABM to Clancy prior to the date of the Agreement.
• ¾ The Tenements have been duly applied for in accordance with the relevant mining legislation.
• ¾ The Tenements are currently in good standing and not liable to cancellation or forfeiture for any reason and ABM is not in breach or contravention of any of the terms and conditions of the Tenements or of any relevant mining legislation or any other statute relating to the Tenements other than as disclosed in writing by ABM to Clancy prior to the date of the Agreement.
• ¾ It will do all things possible to keep the Tenements validly subsisting, in good standing and in full force and effect until Completion.
• ¾ To the best of its knowledge, there are no environmental liabilities relating to or affecting the Tenements, nor are there any circumstances relating to the Tenements which may reasonably

be expected to give rise to future environmental liabilities other than as disclosed in writing by ABM to Clancy prior to the date of the Agreement.

• ¾ It is not aware of any current claim by any Aboriginal person to assert native title over any part of the area covered by the Tenements other than those disclosed in writing by ABM to Clancy prior to the date of the Agreement.
• ¾ It is not aware of any fact or circumstance which would preclude the:
  • o granting of any of the Tenements which are under application as at the date of the Agreement; or
  • o reaching of an agreement as to native title as between the native title holders and the applicant in respect of each of the Tenements which are under application as at the date of the Agreement.

Clancy, in turn, represents to ABM (among other things) that there is no litigation or proceeding of any nature pending or threatened against it or any other person which may defeat, impair, detrimentally affect or reduce the right, title and interest of ABM in the Consideration Shares and Consideration Options to be issued under the Agreement.

(h) Director appointment

ABM is entitled to nominate a director to Clancy's Board and Clancy must appoint ABM's nominee to the Board on Completion.

Further, upon completion of the issue of Shares to ABM following exercise of the first tranche of Consideration Options, ABM is entitled to nominate a second director to Clancy's Board and Clancy must appoint that nominee to the Board.

(i) Summary of Consideration Options

The key terms of the Consideration Options are as follows:

• ¾ Each Consideration Option gives the ABM the right, upon exercise, to subscribe for one Share.

• ¾ The Consideration Options will expire at 5:00 pm (Perth time) on the date that is 3 years after their issue date (Expiry Date).

• ¾ Any Consideration Option not exercised by ABM before the Expiry Date will automatically lapse on the Expiry Date.

• ¾ The amount payable by ABM to Clancy upon exercise of each Consideration Option will be 50% higher than the price per Share under the Placement.

• ¾ The Consideration Options held by ABM may be exercised in whole or in part, and if exercised in part, in tranches of not less than one third of the Consideration Options.

• ¾ The Consideration Options are not transferable by ABM.

• ¾ All Shares allotted to ABM upon the exercise of Consideration Options will upon allotment rank pari passu in all respects with other Shares.

• ¾ Clancy will not apply for quotation of the Consideration Options on ASX. However, Clancy will apply for quotation of all Shares allotted pursuant to the exercise of Consideration Options on ASX within 10 Business Days after the date of allotment of those Shares.

• ¾ In the event of any reconstruction (including a consolidation, subdivision, reduction or return) of Clancy's issued capital prior to the expiry of any Consideration Options, the number of Consideration Options to which ABM is entitled or the Exercise Price of its Consideration Options, or both, or any other terms of the Consideration Options, will be reconstructed in a manner determined by the Board which complies with the provisions of the Listing Rules.

• ¾ There are no participating rights or entitlements inherent in the Consideration Options and ABM will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Consideration Options. However, Clancy 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 to give ABM the opportunity to exercise their Consideration Options prior to the date for determining entitlements to participate in any such issue.

• ¾ If Clancy makes an issue of Shares to its Shareholders by way of capitalisation of profits or reserves (Bonus Issue), to the extent that ABM holds any unexpired Consideration Options as at the time of the record date for determining entitlements to the Bonus Issue, it will be entitled to receive, upon exercise of any of those Consideration Options, the number of Shares which would have been issued under the Bonus Issue to a Shareholder registered as holding the same number of Shares as that number of Shares to which ABM may subscribe for, pursuant to the exercise of those Consideration Options immediately before the record date for determining entitlements under the Bonus Issue (in addition to the Shares which ABM is otherwise entitled to have issued to it upon such exercise).

(j) Escrow

Under the Agreement, the:

• ¾ Consideration Shares shall only be subject to a restriction period if they are classified by the ASX as restricted securities and, if so classified, will be required to be held in escrow for a period as imposed by ASX; and
• ¾ Consideration Options, and any Shares issued to ABM upon the exercise of the Consideration Options, shall only be subject to a restriction period, if they are classified by the ASX as restricted securities and, if so classified, will be required to be held in escrow for a period as imposed by ASX from the date of issue of those securities.

(k) Termination

If the Acquisition Conditions are not satisfied (or waived by Clancy or ABM as applicable) on or before 5.00pm (WST) on the End Date, or such other date agreed by the Parties in writing, the Agreement terminates and the parties are released from their obligations, with the exception of the refundability of the Option Fee and the Exercise Fee as set out in Section 5.4(d).

If the Agreement terminates, Clancy must immediately remove any caveats lodged by it in respect of the Tenements.

Additionally, Clancy and ABM each have obligations they must fulfil on Completion to ensure that the Acquisition is completed. If either party fails to comply with its obligations at Completion, and further fails to comply with those obligations within 5 Business Days of Receipt of a written notice from the other party, that other party may terminate the Agreement by giving written notice to the defaulting party.

5.5. Material Terms of the Service Agreement

The Terms of the Service Agreement have not been agreed as at the date of this Booklet. However they will provide for ABM to provide technical exploration services to Clancy for a period of 24 months from Completion, including logistical support, geological services, Alice Springs support base and other incidental services at cost plus a 10% administration fee.

6. Additional information

6.1. Introduction

This Section includes additional information that Clancy considers is relevant to the decision on how to vote on the Acquisition Resolutions to be considered at the Meeting.

6.2. Resolutions

All Acquisition Resolutions are proposed as ordinary resolutions, requiring the approval by a simple majority of votes cast by eligible Shareholders present and voting at the Meeting. Resolutions 4 to 7 are inter-conditional. This means that each of these Resolutions needs to be passed for the approval sought in respect of the Acquisition to be effective.

6.3. Regulatory requirements

Under Listing Rule 7.1, Clancy cannot issue or agree to issue equity securities without Shareholder approval if the number of equity securities to be issued would, when taken together with all equity issues undertaken in the last 12 months without Shareholder approval or pursuant to an exception to Listing Rule 7.1, would exceed 15% of the number of equity securities then on issue.

In a shareholder meeting convened to vote on a resolution to approve an issue of securities pursuant to Listing Rule 7.1, any votes cast on the resolution by:

• ¾ A person who may participate in the proposed issue if the resolution is passed; and
• ¾ A person who might obtain a benefit (except a benefit solely in their capacity as a shareholder) if the resolution is passed,

must be disregarded.

Section 606(1) of the Corporations Act prohibits a person from acquiring a relevant interest in the issued voting shares in a listed entity, through a transaction entered into by or on behalf of the person in relation to the securities of the listed entity, if as a result of the transaction that person's or someone else's voting power in the listed entity increases from:

• ¾ 20% or below to more than 20%; or
• ¾ A starting point that is above 20% and below 90%.

Under the Corporations Act, a person acquires a relevant interest in securities by (among other ways) being the holder of those securities.

Item 7 of Section 611 of the Corporations Act provides an exception to the prohibition in Section 606(1), which applies if the acquisition of the relevant interest is approved by a resolution passed at a general meeting of the listed entity if:

• ¾ No votes are cast in favour of the resolution by the:

  • o person proposing to make the acquisition and their associates; or
  • o persons (if any) from whom the acquisition is to be made and their associates; and

• ¾ The listed entity's shareholders were given all information known to the person proposing to make the acquisition or their associates, or known to the listed entity, that was material to the decision on how to vote on the resolution, including the:

  • o identity of the person proposing to make the acquisition and their associates; and
  • o maximum extent of the increase in that person's voting power that would result from the acquisition; and

• o voting power that that person would have as a result of the acquisition; and

• o maximum extent of the increase in the voting power of each of that person's associates that would result from the acquisition; and

• o voting power that each of that person's associates would have as a result of the acquisition.

Under Exception 16 of Listing Rule 7.2, an issue of securities approved by shareholders for the purposes of Item 7 of Section 611 of the Corporations Act would be exempted from the requirements of Listing Rule 7.1.

Under Listing Rule 10.11, Clancy must not issue or agree to issue securities to a related party (including directors) without shareholder approval unless any of the exceptions in Listing Rule 10.12 applies. In a shareholder meeting to obtain approval under Listing Rule 10.11, the Company must disregard any votes cast on the resolution by a person who is to receive securities.

Exception 9 of Listing Rule 7.2 details the circumstances under which an issue of securities under an employee incentive scheme would be exempted from the requirements of Listing Rule 7.1. Listing Rule 10.14 provides that security-holder approval is required for the issue of securities to directors under an employee incentive scheme. The notice of meeting to obtain this approval must comply with either Listing Rule 10.15 or 10.15A. Exception 4 of Listing Rule 10.12 exempts an entity from the requirement to obtain shareholder approval under Listing Rule 10.11 in relation to an issue of securities to directors, if the securities are issued to directors under an employee incentive scheme pursuant to which approval under Listing Rule 10.14 has been obtained.

In relation to the Acquisition Resolutions, the Notice of Meeting identifies the regulatory requirements that apply to each one of them.

6.4. Voting exclusions or restrictions

The Notice of Meeting identifies the voting exclusions or restrictions that apply to each resolution.

6.5. Independent advice

Shareholders should consult their legal, financial, taxation or other professional adviser if they have any queries regarding:

• ¾ The Acquisition;
• ¾ The taxation implications for them if the Acquisition is implemented; or
• ¾ Any other aspects of this Booklet.

6.6. Clancy is a disclosing entity

As a company listed on the ASX and a "disclosing entity" under the Corporations Act, Clancy is subject to regular reporting and disclosure obligations which require it to announce price sensitive information as soon as it becomes aware of that information. Clancy's most recent announcements are available from its website www.clancyexploration.com or from the ASX website www.asx.com.au.

Further announcements concerning Clancy will continue to be made available on Clancy's website and on the ASX website after the date of this Booklet.

Clancy is required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Clancy may be obtained, or inspected at, ASIC's offices.

7. Glossary

The following terms used in this Booklet (including the Notice of Meeting in Annexure A to this Booklet) have the meanings given to them below, unless the context otherwise requires.

ABM	ABM Resources NL (ACN 009 127 020)
Acquisition	the acquisition by Clancy of the Tenements
Acquisition Conditions	the conditions precedent to the Acquisition set out in Section 5.4
Acquisition Fee	the $200,000 (plus any applicable GST) cash amount payable byClancy to ABM as part consideration for the Acquisition
Acquisition Resolutions	Resolutions 4 to 8 in the Notice of Meeting in relation to theAcquisition
AGM	Clancy's 2014 Annual General Meeting, the Notice of Meeting forwhich is in Annexure A to this Booklet
Agreement	the agreement entered into by Clancy and ABM in respect of theAcquisition
ASIC	Australian Securities & Investment Commission
ASX	ASX Limited (ACN 008 624 691) or, as the context requires, thefinancial market conducted by it
Auditor	Ernst & Young
Board	the board of directors of Clancy
Booklet	this Booklet and all its annexures, including the Notice of Meetingand the Independent Expert's Report
Broker	R M Capital Pty Limited (ACN 065 412 820)
Broker Options	Up to 20,000,000 unlisted Options to be issued by Clancy to R MCapital if the Placement is completed
Business Day	a day (other than a Saturday, Sunday or public holiday) on whichbanks are open for general banking business in Perth, WesternAustralia
Chairman	the chairman of the Meeting
Clancy	Clancy Exploration Limited (ACN 105 578 756)
Company	Clancy Exploration Limited (ACN 105 578 756)
Company Secretary	the company secretary of Clancy
Completion	the completion of the Acquisition, which will occur at the offices ofABM on the date which is 10 Business Days after the CompletionDate
Completion Date	the date on which all of the Acquisition Conditions have beensatisfied or waived;
Consideration Options	up to 203,386,965 unlisted Options to be issued to ABM by Clancyon Completion as part consideration for the Acquisition
Consideration Shares	up to 145,276,404 fully paid Ordinary Shares to be issued to ABMby Clancy on Completion as part consideration for the Acquisition
Corporations Act	Corporations Act 2001 (Cth)

Director	a director of Clancy
End Date	the date by which the Acquisition Conditions must be satisfied,which is 2 August 2014, or such other date agreed in writing by theparties
Exercise Fee	the $150,000 (plus any applicable GST) cash payment paid byClancy to ABM upon the exercise of the exclusive option tocomplete due diligence in respect of the Acquisition granted toClancy by ABM
Independent Expert	BDO Corporate Finance (WA) Pty Limited (ACN 124 031 045)
Independent Expert's Report	the report of the Independent Expert expressing an opinion on thePlacement.The Independent Expert's Report is set out inAnnexure B of this Booklet
JORC Code	Australasian Code for Reporting Exploration Results, MineralResources and Ore Reserves
Key Management Personnel	Clancy'skeymanagementpersonnelasidentifiedintheRemuneration Report
Listing Rules	the listing rules of ASX
Meeting	Clancy's 2014 Annual General Meeting, the Notice of Meeting forwhich is in Annexure A to this Booklet
Notice of Meeting	the notice for the Meeting set out in Annexure A of this Booklet
Option	an option to acquire an ordinary Share
Option Fee	the $250,000 (plus any applicable GST) cash payment paid byClancy to ABM for the exclusive option to complete due diligence inrespect of the Acquisition granted to Clancy by ABM
Placement	the proposed placement of Clancy's Shares to sophisticatedinvestors to raise gross proceeds of between $2.5 million to 4million at an issue price per Share of between $0.015 to $0.03
Placement Shares	Shares issued pursuant to the Placement
Projects	the North Arunta Project Region in the Northern Territory
Remuneration Report	the remuneration report contained in Clancy's 2013 Annual Report
Resolutions	the resolutions set out in the Notice of Meeting
R M Capital Mandate	The mandate entered into between Clancy and R M Capital PtyLimited dated 20 November 2013
Services Agreement	the service agreement to be entered into between Clancy and ABMas part of the Acquisition for ABM to provide technical explorationservices to Clancy for a period of 24 months from Completion
Share	a fully paid ordinary share in the capital of Clancy
Shareholder	a registered holder of Shares
Tenements	ABM's exploration tenement interests in the Projects
Transaction	the acquisition by Clancy of the Tenements

CLANCY EXPLORATION LIMITED (ACN 105 578 756)

Notice of Meeting For the Annual General Meeting to be held on Wednesday, 7 May 2014 at 10:00am AEST at 3 Corporation Place, Orange NSW 2800, Australia.

IMPORTANT INFORMATION

This is an important document that should be read carefully and in its entirety.

This Notice of Meeting is an annexure to this Booklet. An Independent Expert's Report is also annexed to this Booklet. This Booklet and its annexures have been prepared to assist Shareholders in determining whether or not to vote in favour of the Resolutions set out in this Notice of Meeting.

This Booklet and its annexures should be read in conjunction with this Notice of Meeting.

For those Shareholders who have elected to receive a printed copy of the Annual Report, the 2013 Annual Report accompanies this Notice of Annual General Meeting. The 2013 Annual Report is also available on the Company's website www.clancyexploration.com

You are encouraged to attend the meeting, but if you cannot, you are requested to complete and return the enclosed proxy form without delay:

¾ By post or hand delivery to Security Transfer Registrars Pty Limited at:

Alexandrea House, Suite 1 770 Canning Highway Applecross WA 6153

Or

PO Box 535 Applecross WA 6953

• ¾ By fax to Security Transfer Registrars on:
  • (08) 9315 2233 from within Australia, or, +61 8 9315 2233 from outside Australia

Proxy forms must be received by Clancy by 10:00 am (AEST) on 5 May 2014 to be valid (refer to Section 1 of this Booklet for instructions on how to vote).

ITEMS OF BUSINESS

The business of the meeting is to consider the following proposed resolutions.

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 2013 and the reports by the Directors and Independent Auditor.

1. Adoption of the Remuneration Report

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

That in accordance with Section 250R(2) of the Corporations Act, and for all purposes, the Company adopt the Remuneration Report for the year ended 31 December 2013 in the form set out in the Directors' Report.

Voting exclusion

The Company will disregard any votes cast (in any capacity) on Resolution 1 by or on behalf of:

• ¾ A member of the key management personnel of the Company as disclosed in the Remuneration Report; and
• ¾ A closely related party of those persons (such as close family members and any companies the person controls),

unless the vote is cast as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form.

Any undirected proxies held by the Chairman, other directors or other key management personnel or any of their closely related parties will not be voted on Resolution 1. However, the Company need not disregard a vote on Resolution 1 if it is cast by the Chairman (as proxy appointed in writing for a person who is entitled to vote) where the proxy vote expressly authorises the Chairman to exercise an undirected proxy, even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company or their closely related parties.

2. Re-election of a Director (By Rotation)

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

That for all purposes, Dr A. James Macdonald, being a director of the Company who retires by rotation in accordance with Clause 11.3 of the Constitution and, being eligible, offers himself for reelection, be re-elected as a director of the Company.

Without limitation, Listing Rule 14.5 is relevant to this resolution.

3. Approve Issue of Shares to Employees including Directors Under the Company's Employee Share and Loan Scheme

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

That for the purpose of Listing Rule 7.2 exception 9, Listing Rule 10.14 and Section 260C of the Corporations Act 2001 and for all other purposes, Directors are authorised for the next 3 years from the date of the Meeting to issue fully paid ordinary shares in the Company in accordance with the Company's Employee Share and Loan Scheme as approved by Shareholders on 31 May 2011 (Plan), in accordance with the rules of the Plan and subject to the terms and conditions set out in this Booklet.

Listing Rules 7.1 and 10.14, Exception 4 of Listing Rule 10.12 and Section 260C of the Corporations Act 2001 are relevant to this resolution.

The Company will disregard any votes cast (in any capacity) on Resolution 3 by or on behalf of any Director of the Company who is eligible to participate in the Scheme, employees of the Company who are eligible to participate in the Plan and any of their associates.

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 on this Resolution:

• ¾ In accordance with their directions on how to vote on the proxy form; or
• ¾ By the Chairman of the Meeting in accordance with a direction on the proxy form to vote as the proxy decides.

4. Approval of Issue of Consideration Shares to ABM

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

That the issue of up to 145,276,404 fully paid ordinary Shares to ABM on the terms set out in this Booklet and the acquisition by ABM of a relevant interest in those Shares is approved for all purposes.

Without limitation, Exception 16 of ASX Listing Rule 7.2 and Item 7 of Section 611 of the Corporations Act are relevant to this Resolution.

Voting restriction

Pursuant to Item 7 of Section 611 of the Corporations Act, the Company will disregard any votes cast in favour of this Resolution by ABM and its associates.

5. Approval of Issue of Consideration Options to ABM

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

That the issue of up to 203,386,965 unlisted Options to ABM on the terms set out in this Booklet is approved for all purposes.

Without limitation, Listing Rule 7.1 is relevant to this Resolution.

Voting exclusion

The Company will disregard any votes cast (in any capacity) on this Resolution by ABM or any of its associates.

However, the Company will not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote on this Resolution:

• ¾ In accordance with their directions of how to vote on the proxy form; or
• ¾ By the Chairman of the Meeting in accordance with a direction on the proxy form to vote as the proxy decides.

6. Approval of Exercise of Consideration Options by ABM

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

That the exercise of up to 203,386,965 unlisted Options issued to ABM and ABM's acquisition of a relevant interest in up to 203,386,965 Shares as a result of the exercise of those Options on the terms set out in this Booklet is approved for all purposes.

Without limitation, Exception 16 of ASX Listing Rule 7.2 and Item 7 of Section 611 of the Corporations Act are relevant to this Resolution.

Voting restriction

Pursuant to Item 7 of Section 611 of the Corporations Act, the Company will disregard any votes cast in favour of this Resolution by ABM and its associates.

7. Approval of Share Placement to Sophisticated Investors

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

That the issue of up to 266,666,667 Shares to sophisticated investors at an issue price per Share of at least $0.015 to raise no more than $4,000,000, on the terms set out in this Booklet, is approved for all purposes.

Without limitation, ASX Listing Rule 7.1 is relevant to this Resolution.

Voting exclusion

The Company will disregard any votes cast (in any capacity) on this Resolution by:

• ¾ A person who may participate in the proposed issue or who might obtain a benefit (except a benefit they obtain solely in their capacity as a Shareholder) if the Resolution is passed; or
• ¾ Their associates.

However, the Company will not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote on this Resolution:

• ¾ In accordance with their directions of how to vote on the proxy form; or
• ¾ By the Chairman of the Meeting in accordance with a direction on the proxy form to vote as the proxy decides.

8. Approval of Issue of Placement Shares to Dr. Mike Etheridge

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

That, conditional upon the approval of Resolution 7, the issue of up to 1,000,000 Placement Shares to Dr. Mike Etheridge or his related entities, on the same terms as set out in this Booklet, is approved for all purposes.

Without limitation, Listing Rule 10.11 is relevant to this resolution.

Voting exclusion

The Company will disregard any votes cast (in any capacity) on this Resolution by Dr. Mike Etheridge and his associates.

However, the Company will not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote on this Resolution:

• ¾ In accordance with their directions of how to vote on the proxy form; or
• ¾ By the Chairman of the Meeting in accordance with a direction on the proxy form to vote as the proxy decides.

9. Approval of issue of Broker Options and Shares to the Broker

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

That, conditional upon the approval of Resolution 7, the issue of up to 20,000,000 Broker Options (and the issue of up to 20,000,000 Shares on conversion of those Broker Options) to the Broker or its related entities, on the terms as set out in this Booklet, is approved for all purposes.

Without limitation, ASX Listing Rule 7.1 and Exception 4 of Listing Rule 7.2 are relevant to this Resolution.

Voting exclusion

The Company will disregard any votes cast (in any capacity) on this Resolution by the Broker or any of its associates.

However, the Company will not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote on this Resolution:

• ¾ In accordance with their directions of how to vote on the proxy form; or
• ¾ By the Chairman of the Meeting in accordance with a direction on the proxy form to vote as the proxy decides.

DATED THIS 31 DAY OF MARCH 2014

BY ORDER OF THE BOARD

Mr Rowan Caren Company Secretary

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CLANCY EXPLORATION LIMITED Independent Expert's Report

6 March 2014

Financial Services Guide

6 March 2014

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 ('we' or 'us' or 'ours' as appropriate) has been engaged by Clancy Exploration Limited ('Clancy') to provide an independent expert's report on the proposal to issue shares, options and cash to ABM Resources NL ('ABM') as consideration for the acquisition of ABM's North Arunta Project. You will be provided with a copy of our report as a retail client because you are a shareholder of Clancy.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ('FSG'). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

• i Who we are and how we can be contacted;
• i The services we are authorised to provide under our Australian Financial Services Licence, Licence No. 316158;
• i Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
• i Any relevant associations or relationships we have; and
• i Our internal and external complaints handling procedures and how you may access them.

Information about us

BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients.

When we provide the authorised financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you.

General Financial Product Advice

We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice.

Financial Services Guide

Page 2

Fees, commissions and other benefits that we may receive

We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $20,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Other Assignments

BDO Corporate Finance (WA) Pty Ltd prepared a memo for Clancy in 2012 for a fee of $3,350, commenting on the independent expert report included in the target's statement prepared by Genesis Resources Limited.

BDO Audit and Assurance (WA) Pty Ltd is the appointed Auditor of ABM Resources NL who is a party to this transaction. We do not consider that this impacts on our independence in accordance with the requirements of Regulatory Guide 112 'Independence of Experts'. We have completed a conflict search of BDO affiliated organisations within Australia. This conflict search incorporates all Partners, Directors and Managers of BDO affiliated organisations. We are not aware of any circumstances that, in our view, would constitute a conflict of interest or would impair our ability to provide objective assistance in this matter.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Clancy for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Complaints resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 West Perth WA 6872.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service ('FOS'). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter. Our FOS Membership Number is 12561. Further details about FOS are available at the FOS website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399 Email: info@fos.org.au

Contact details

You may contact us using the details set out on page 1 of the accompanying report.

TABLE OF CONTENTS

1.	Introduction	1
2.	Summary and Opinion	1
3.	Scope of the Report	4
4.	Outline of the Transaction	6
5.	Profile of Clancy Exploration Limited	9
6.	Profile of ABM Resources NL	15
7.	Economic analysis	19
8.	Industry analysis	20
9.	Valuation approach adopted	25
10.	Valuation of Clancy share pre-Transaction	26
11.	Valuation of Clancy share post-Transaction	34
12.	Is the Transaction fair?	39
13.	Is the Transaction reasonable?	39
14.	Conclusion	42
15.	Sources of information	42
16.	Independence	43
17.	Qualifications	43
18.	Disclaimers and consents	44

Appendix 1 – Glossary

Appendix 2 – Valuation Methodologies

Appendix 3 - Independent Valuation Report prepared by Aurel Consulting Ltd

6 March 2014

The Directors Clancy Exploration Limited 3 Corporation Place Orange NSW 2800

Dear Directors

INDEPENDENT EXPERT'S REPORT

1. Introduction

On 29 November 2013, Clancy Exploration Limited ('Clancy' or 'the Company') announced that it had entered into an agreement with ABM Resources NL ('ABM') whereby Clancy will have the option to acquire 100% of ABM's interests in the North Arunta Project located in the Northern Territory ('the Transaction'). The acquisition is contingent upon shareholder approval, as well as a successful placement to sophisticated investors to raise up to $4,000,000 ('Proposed Placement'). On 3 February 2014 Clancy announced that it had exercised its option to acquire ABM's 100% interest in the North Arunta Project.

The Transaction consideration consists of:

• x 125 million Clancy shares ('Consideration Shares')
• x 175 million unlisted options in Clancy ('Consideration Options')
• x Transfer of Clancy's 8.157 million shares held in Genesis Resources Limited ('Genesis') or the net proceeds of the sale by Clancy ('Genesis Consideration')
• x An acquisition fee of $200,000 ('Cash Consideration')

In addition, ABM has the right to have two nominees on the Board of Clancy; one upon the issue on the Consideration Shares and a second nominee upon the exercise of the first Consideration Options.

2. Summary and Opinion

2.1 Purpose of the report

The directors of Clancy have requested that BDO Corporate Finance (WA) Pty Ltd ('BDO') prepare an independent expert's report ('our Report') to express an opinion as to whether or not the Transaction is fair and reasonable to the non-associated shareholders of Clancy ('Shareholders').

Our Report is prepared pursuant to section 611 of the Corporations Act 2001 and is to be included in a Notice of Meeting for Clancy in order to assist the Shareholders in their decision whether to approve the Transaction.

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 AFS Licence No 316158 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

2.2 Approach

Our Report has been prepared having regard to Australian Securities and Investments Commission ('ASIC'), Regulatory Guide 111 'Content of Expert's Reports' ('RG 111') and Regulatory Guide 112 'Independence of Experts' ('RG 112').

In arriving at our opinion, we have assessed the terms of the Transaction as outlined in the body of this report. We have considered:

• x How the value of a Clancy share prior to the Transaction compares to the value of Clancy share following the Transaction;
• x Other factors which we consider to be relevant to the Shareholders in their assessment of the Transaction; and
• x The position of Shareholders should the Transaction not proceed.

2.3 Opinion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that, the Transaction is not fair but reasonable to Shareholders.

In our opinion, the Transaction is not fair because the value of a Clancy share pre-Transaction on a controlling basis is greater than the value of a Clancy share post-Transaction on a minority basis. However, we consider the Transaction to be reasonable because the advantages of the Transaction to Shareholders are greater than the disadvantages. In particular, the creation of a larger and more diversified asset portfolio will allow it to have greater access to capital markets. We note the value ranges on a pre-Transaction and post-Transaction basis overlap and when comparing both on a minority basis the Transaction would be fair.

2.4 Fairness

In section 12 we determined how the value of a Clancy share pre-Transaction (on a control basis) compares to the value of a Clancy share post-Transaction (on a minority interest basis), as detailed below:

	Ref	Low$	Preferred$	High$
Valuation of a Clancy share Pre-Transaction on acontrolling interest basis	10.3	0.031	0.047	0.072
Valuation of a Clancy share Post-Transaction on a minorityinterest basis:
Scenario 1-	12	0.019	0.027	0.038
Scenario 2-	12	0.018	0.029	0.042

Source: BDO analysis

The above valuation ranges are graphically presented below:

Scenario 1- Assuming Consideration Options are exercised

Scenario 2 – Assuming Consideration Options are not exercised

The above pricing indicates that, in the absence of any other relevant information the Transaction is not fair for Shareholders.

2.5 Reasonableness

We have considered the analysis in section 13 of this report, in terms of both:

• x the advantages and disadvantages of the Transaction; and
• x other considerations, including the position of Shareholders if the Transaction does not proceed and the consequences of not approving the Transaction.

In our opinion, the position of Shareholders if the Transaction is approved is more advantageous than the position if the Transaction is not approved. Accordingly, in the absence of any other relevant information we believe that the Transaction is reasonable for Shareholders.

The respective advantages and disadvantages considered are summarised below:

ADVANTAGES AND DISADVANTAGES
Section	Advantages	Section	Disadvantages
13.4	Creation of a company with a larger andmore diversified portfolio of assets	13.5	Dilution of existing Shareholders' interest
13.4	Greater potential to access requiredcapital for continued exploration	13.5	ABM is able to nominate representative(s) tothe board of Clancy
13.4	The Transaction supports the Board'sstrategic direction

Other key matters we have considered include:

Section	Description
13.1	Alternative proposals
13.2	Practical level of control
13.3	Consequences of not approving the TransactionWhilst unfair the pre-Transaction and post-Transaction values overlap-On a like for like minority comparison basis the Transaction is fair-

3. Scope of the Report

3.1 Purpose of the Report

Section 606 of the Corporations Act Regulations ('the Act') expressly prohibits the acquisition of shares by a party if that acquisition will result in that person (or someone else) holding an interest in 20% or more of the issued shares of a public company, unless a full takeover offer is made to all shareholders. ABM currently has zero shares in Clancy pre-Transaction and can get between 23.5% and 47.5% of the issued capital of Clancy post-Transaction, dependent upon the capital raising amount and number of options issued, refer Section 4.

Section 611 permits such an acquisition if the shareholders of that entity have agreed to the issue of such shares. This agreement must be by resolution passed at a general meeting at which no votes are cast in favour of the resolution by any party who is associated with the party acquiring the shares, or by the party acquiring the shares. Section 611 states that shareholders of the company must be given all information that is material to the decision on how to vote at the meeting.

RG 74 states that the obligation to supply shareholders with all information that is material can be satisfied by the non-associated directors of Clancy, by either:

x undertaking a detailed examination of the Transaction themselves, if they consider that they have sufficient expertise; or

x by commissioning an Independent Expert's Report.

The directors of Clancy have commissioned this Independent Expert's Report to satisfy this obligation.

3.2 Regulatory guidance

Neither the Listing Rules nor the Corporations Act defines the meaning of 'fair and reasonable'. In determining whether the Transaction is fair and reasonable, we have had regard to the views expressed by ASIC in RG 111. This regulatory guide provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions.

This regulatory guide suggests that where the transaction is a control transaction, the expert should focus on the substance of the control transaction rather than the legal mechanism to affect it. RG 111 suggests that where a transaction is a control transaction, it should be analysed on a basis consistent with a takeover bid.

In our opinion, the Transaction is a control transaction as defined by RG 111 and we have therefore assessed the Transaction as a control transaction to consider whether, in our opinion, it is fair and reasonable to Shareholders.

3.3 Adopted basis of evaluation

RG 111 states that a transaction is fair if the value of the offer price or consideration is greater than the value of the securities subject of the offer. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm's length. When considering the value of the securities subject of the offer in a control transaction the expert should consider this value inclusive of a control premium. Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being 'not fair' the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid.

Having regard to the above, BDO has completed this comparison in two parts:

• x A comparison between the value of a Clancy share prior to the Transaction on a control basis and the value of a Clancy share following the Transaction on a minority interest basis (Fairness – section 12 'Is the Transaction fair'); and
• x An investigation into other significant factors to which Shareholders might give consideration, prior to approving the resolution, after reference to the value derived above (reasonableness – see Section 13 'Is the Transaction Reasonable?').

This assignment is a Valuation Engagement as defined by Accounting Professional & Ethical Standards Board professional standard APES 225 'Valuation Services' ('APES 225').

A Valuation Engagement is defined by APES 225 as follows:

'an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.'

This Valuation Engagement has been undertaken in accordance with the requirements set out in APES 225.

4. Outline of the Transaction

Clancy has entered into an agreement with ABM whereby Clancy had the option to acquire 100% of ABM's interests in the North Arunta Project located in the Northern Territory. On 3 February 2014 Clancy announced that it has exercised its option to acquire ABM's 100% interest in the North Arunta Project. The option exercise fee payable by Clancy was $150,000.

The Transaction consideration consists of:

• x 125 million Clancy shares ('Consideration Shares')
• x 175 million unlisted options in Clancy ('Consideration Options') with the exercise price being 150% of the Placement price with a three year life;
• x Transfer of Clancy's 8.157 million shares held in Genesis Resources Limited or the net proceeds of the sale by Clancy ('Genesis Consideration'); and
• x An acquisition fee of $200,000 ('Cash Consideration').

In addition, ABM has the right to have two nominees on the Board of Clancy; one nominee upon the issue on the Consideration Shares and a second nominee upon the exercise of the first Consideration Options.

Completion of the Transaction will be subject to:

• x The success of the Proposed Placement to raise between $2,500,000 and $4,000,000. Corporate advisors have been appointed to assist with the capital raising, which is to take place at no less than $0.015 per share. The Proposed Placement will be to sophisticated investors and ABM is not eligible to participate in the Proposed Placement.
• x If the capital raising is completed at a price other than $0.02 per Clancy share, the Shares Consideration and Option Consideration issued to ABM will be increased or decreased as necessary to ensure that ABM's percentage interest in Clancy on the settlement date is at the level it would have been if placement took place at $0.02 per share. Clancy's Board has stated that the preferred outcome is to raise $4 million at $0.02 per share.
• x Shareholder approval to be obtained by ABM, if required and Clancy.

In order to examine the impact of the Transaction on the current share structure, and likely implications on the ownership of Clancy by ABM, we have performed a scenario analysis. The maximum interest that can be obtained by ABM is 47.5%.

Scenario 1

In scenario 1 we have assumed that the Consideration Options are exercised and the share capital is diluted.

We have shown the share capital outcomes below varying the total cash raised under the Proposed Placement to show the minimum and maximum to be raised. We note that Clancy's Board is aiming to raise $4 million at $0.02 per share and, following the Board's discussions with its brokers, is currently of the view that such an outcome is achievable.

Following the Transaction, existing Shareholders' interest may decrease to between 29.2% and 32.7% as shown below.

Scenario 1	Low	Mid	High
Amount to be raised per Placement	$2.5m	$3.25m	$4m
Shares on issue post-Transaction
Current number of shares on issue	206,254,392	206,254,392	206,254,392
% held by ABM	0%	0%	0%
% held by existing Shareholders	100%	100%	100%
Adjustments post acquisition:
Consideration Shares issued	125,000,000	125,000,000	125,000,000
Shares issued upon exercise of Consideration Options	175,000,000	175,000,000	175,000,000
Number of shares issued under the Proposed Placement	125,000,000	162,500,000	200,000,000
Total Shares on issue post-Transaction	631,254,392	668,754,392	706,254,392
% held by ABM post-Transaction	47.5%	44.9%	42.5%
% held by existing Shareholders post-Transaction	32.7%	30.8%	29.2%
% held by Placement shareholders post-Transaction	19.8%	24.3%	28.3%
Total	100.0%	100.0%	100.0%

Scenario 2

In scenario 2, we have assumed that the Consideration Options are not exercised. We have shown the share capital outcomes below varying the total cash raised under the Proposed Placement to show the minimum and maximum to be raised. We note that Clancy's Board is aiming to raise $4 million at $0.02 per share and, following the Board's discussions with its brokers, is currently of the view that such an outcome is achievable.

Following the Transaction, existing Shareholders interest may decrease to between 38.8% and 45.2% as shown below.

Scenario 2	Low	Mid	High
Amount to be raised per Placement	$2.5m	$3.25m	$4m
Shares on issue post-Transaction
Current number of shares on issue	206,254,392	206,254,392	206,254,392
% held by ABM	0%	0%	0%
% held by existing Shareholders	100%	100%	100%
Adjustments post acquisition:
Consideration Shares issued	125,000,000	125,000,000	125,000,000
Shares issued upon exercise of Consideration Options	-	-	-
Number of shares issued under the Proposed Placement	125,000,000	162,500,000	200,000,000
Total Shares on issue post-Transaction	456,254,392	493,754,392	531,254,392
% held by ABM post-Transaction	27.4%	25.3%	23.5%
% held by existing Shareholders post-Transaction	45.2%	41.8%	38.8%
% held by Placement shareholders post-Transaction	27.4%	32.9%	37.7%
Total	100.0%	100.0%	100.0%

If the placement were to occur at the minimum price of $0.015 then the impact on existing shareholders is detailed below:

Raising at minimum price of $0.015	Low	Mid	High
Includes dilution for Consideration Options exercised	$2.5m	$3.25m	$4m
% held by ABM post-Transaction	47.5%	44.8%	42.5%
% held by existing Shareholders post-Transaction	29.0%	26.9%	25.1%
% held by Placement shareholders post-Transaction	23.5%	28.3%	32.4%
Total	100.0%	100.0%	100.0%
No dilution for Consideration Options exercised	$2.5m	$3.25m	$4m
% held by ABM post-Transaction	27.4%	25.3%	23.5%
% held by existing Shareholders post-Transaction	40.2%	36.4%	33.4%
% held by Placement shareholders post-Transaction	32.4%	38.3%	43.1%
Total	100.0%	100.0%	100.0%

As stated previously, if the Proposed Placement does not occur at $0.02 then the consideration shares and options will be adjusted to allow the ABM percentage interest to remain the same as Scenarios 1 and 2. If the Placement price is $0.015, existing shareholders will be diluted further than under Scenario 1 and 2 which both anticipate a $0.02 capital raising.

5. Profile of Clancy Exploration Limited

5.1 History

Clancy is headquartered in Orange, New South Wales. The Company explores for copper, gold, silver, base metals and tin deposits in Australia. Clancy listed on the Australian Securities Exchange ('ASX') on 11 July 2007 following the issue of 25 million shares. The Company's current board members are:

• Dr Michael Etheridge Non-Executive Chairman (also on the board of ABM)
• Mr Gordon Barnes Managing Director
• Ms Natalie Forsyth Stock Executive Director and Chief Financial Officer
• Dr James MacDonald Non-Executive Director

The Company has interests in 16 exploration licences that cover an area of approximately 1,842 square kilometres in the Lachlan Fold Belt, New South Wales. Its property portfolio includes:

• Nine 100% owned projects and three copper-gold joint ventures, New South Wales; and
• Two base metal joint ventures and one tin joint venture in Tasmania.

The Company's primary focus is its nine 100% owned projects in New South Wales. For the past two years, the Company has sought to acquire a flagship project as a catalyst to raise the capital required to advance its business.

In 2012 Clancy made an off-market takeover offer for Genesis Resources Limited. The takeover was unsuccessful and the offer closed in August 2012 with Clancy's voting interest in Genesis being 8.92%.

5.2 New South Wales Projects

The Condobolin project

The Condobolin project is located north of the township of Condobolin, in central New South Wales. The Condobolin tenement has a substantial mining history and a gold and base metals field (lead, zinc, copper and silver).

During 2013, the highlights of the Condobolin project included:

• Noting the presence of a low sulphidation epithermal system;
• Demonstrating that the mineralised system is polymetallic;
• Determining that the alteration and geochemical footprint of the system is 3km x 3km;
• Finding that the system coincides with an approximately 20km gravity anomaly; and
• Confirming that the host of mineralisation is a volcanic sandstone.

The Fairholme project – Kaizen Discovery JV

The Fairholme project consists of two tenements that cover 172km2 of the Fairholme Igneous Complex to the north of the Cowal gold mine. The geophysical characteristics of the Fairholme Igneous Complex are similar to the Cowal Complex to the south. An IP survey over a 74km2 area was successfully completed by HPX using its proprietary system. Data processing and inversion modelling has been completed by Computational Geosciences Inc and several key targets were defined with the commencement of followup drill testing in December 2013.

The Cundumbul Project- Mitsubishi JV

The Cundumbul project consists of two exploration licences that cover 204.9 km2 of prospective arc units in the Molong Volcanic Belt between Molong and Wellington. During the September quarter 2013, gravity surveys were completed at a number of locations and inversion modelling of magnetic and IP data collected in previous quarters was finalised. Follow-up RC drilling of targets commenced in the second half of the December 2013 quarter.

The Genaren project- Mitsubishi JV

The Genaren project is located at the Northern end of the Northpakes Igneous Complex 29 kilometres north of China Molybdenum Co ("CMOC") Northpakes copper-gold mine. A petrographic study on drill core collected in the June 2013 quarter confirmed the presence of Goonumbla-Wombin Volcanics equivalents in the project area. Additional petrological studies are planned to shed light on the structural or stratigraphic model with follow-up fieldwork planned for March 2014.

The Currumburrama project- Mitsubishi JV

The Currumburrama project is located 40 kilometres east of West Wyalong and covers a large basement magnetic complex that is inferred to be Ordovican arc based on magnetic and gravity data. During the June 1013 quarter, mud rotary pre-collar diamond drilling was undertaken to test geophysical, geochemical and structural targets defined previous.

The Trundle project

The Trundle project consists of one exploration licence located 25 kilometres west of CMOC's Northpakes copper-gold mine. By 31 December 2012, RC drilling to test the iron potential of magnetite skarn horizons at Trundle Park and Mordialloc was completed, however no significant iron assays were returned.

The Orange East project

The Orange East project is located near Orange, New South Wales and contains several target styles including Ordovician porphyry copper-gold and post-Ordovician copper-gold targets. The project contains the Godolphin Fault and the Company is the first explorer to drill deeper than 50 metres in the area.

The Kiola project

The Kiola project consists of 100 units on the southern portion of the Ordovician Molong Volcanic Belt. A number of copper and gold prospects lie within the Kiola project's boundaries.

See Appendix 3 for further details on the projects.

5.3 Historical Balance Sheet

	Unaudited as at	Reviewed as at	Audited as at
Statement of Financial Position	30-Nov-13	30-Jun-13	31-Dec-12
	$	$	$
CURRENT ASSETS
Cash and cash equivalents	1,460,757	1,775,014	1,839,986
Restricted cash asset	300,000	300,000	300,000
Trade and other receivables and prepayments	432,311	291,537	575,447
Deposits paid	250,000	-	-
Financial asset	786,999	786,999	911,483
TOTAL CURRENT ASSETS	3,230,067	3,153,550	3,626,916
NON-CURRENT ASSETS
Property, plant and equipment	68,121	83,658	99,425
Mineral Assets	-	-	-
Intangible assets	4,134	6,067	1,221
TOTAL NON-CURRENT ASSETS	72,255	89,725	100,646
TOTAL ASSETS	3,302,322	3,243,275	3,727,562
CURRENT LIABILITIES
Trade and other payables	203,806	177,351	320,353
Provisions	64,516	53,525	40,841
Unearned revenue	34,819	22,191	89,891
Exploration expenditure reimbursed in advance	485,833	221,918	898,913
TOTAL CURRENT LIABILITIES	788,974	474,985	1,349,998
NON-CURRENT LIABILITIES
Provisions	61,725	58,527	45,935
TOTAL NON-CURRENT LIABILITIES	61,725	58,527	45,935
TOTAL LIABILITIES	850,699	533,512	1,395,933
NET ASSETS	2,451,623	2,709,763	2,331,629

Source: Clancy's 2012 Annual Report, 30 June 2013 half-year financial statements and unaudited management accounts as at 30 November 2013

5.4 Historical Statement of Comprehensive Income

	Unaudited	Audited
Statement of Comprehensive Income	11 month perioduntil 30 Nov 2013	Year ended 31Dec 2012
	$	$
Revenue
Other Income	1,262,869	977,069
Expenses
Employee benefits expense	(984,236)	(1,044,753)
Consulting and outsourced services expense	(302,507)	(594,523)
Exploration expenditure	(64,000)	(1,031,008)
Travel expense	(25,759)	(32,778)
Share based payment expense	(43,390)	(30,078)
Computer related costs	(1,527)	(13,454)
Occupancy costs	(8,635)	(2,346)
Insurance expense	(24,987)	(26,783)
Marketing expense	(4,032)	(11,385)
Depreciation, amortisation and impairment expense	(28,702)	(72,166)
Other expenses	(30,086)	(49,166)
Unrealised loss on Financial Assets	(124,484)	-
Loss from continuing operations before income tax	(379,476)	(1,931,371)
Income tax expense	-	-
Loss from continuing operations after income tax	(379,476)	(1,931,371)
Total comprehensive loss for the year	(379,476)	(1,931,371)

Source: Clancy's 2012 Annual Report and unaudited management accounts for the period ended 30 November 2013

We have not undertaken a review of Clancy's unaudited management accounts in accordance with Australian Auditing and Assurance Standard 2405 'Review of Historical Financial Information' and do not express an opinion on this financial information. However nothing has come to our attention as a result of our procedures that would suggest the financial information within the management accounts has not been prepared on a reasonable basis.

• x There were no significant movements in the balance sheet between 30 June 2013 and 30 November 2013. Cash decreased from $1.77 million to $1.46 million.
• x During the period ended 30 November 2013, Clancy entered into an option agreement to acquire a 100% stake in the North Arunta Project. The option fee was $250,000, which was paid to ABM and as such has been capitalised to the balance sheet as deposits paid.
• x The restricted cash asset of $300,000 relates to a deposit held in escrow as a requirement of tenements held and security over corporate credit cards.

• x The financial assets relate to Genesis shares and unlisted Genesis options held by Clancy. Since 30 November 2013, the Genesis shares have been sold for net proceeds of approximately $568,000, and the options have been written down to a nil value.
• x The exploration expenditure reimbursed in advance in current liabilities relates to amounts received from joint venture partners for exploration that is yet to be incurred by Clancy.
• x Exploration expenditure is net of all expenses recovered from joint venture partners, including a portion of the employee benefits and other overheads in the statement of comprehensive income above. In total, $1,549,312 exploration expenditure was incurred in respect of joint ventures prior to the recovery and $427,990 was expended on self funded projects.
• x Other income relates to the following items:
  • o Profit on the sale of interests in tenements from Clancy's sale of its joint venture interests in six copper-gold projects in NSW. The joint venture was with Clancy and Goldfields Australia Pty Ltd;
  • o Management fees in relation to a Farm In and Joint Venture Agreement with High Power Exploration Inc ('HPX'); and
  • o Interest income.

5.5 Capital Structure

The share structure of Clancy as at 31 January 2014 is outlined below:

	Number
Total ordinary shares on issue	206,254,392
Top 20 shareholders	123,720,008
Top 20 shareholders - % of shares on issueSource: Clancy Management	59.98%

The range of shares held in Clancy as at 31 January 2014 is as follows:

Range of Shares Held	Number ofOrdinaryShareholders	Number ofOrdinary Shares	Percentage ofIssued Shares (%)
1 - 1,000	68	9,289	0.00%
1,001 - 5,000	29	101,634	0.05%
5,001 - 10,000	68	575,357	0.28%
10,001 - 100,000	317	13,935,515	6.76%
100,001 - and over	187	191,632,597	92.91%
TOTAL	669	206,254,392	100.00%
Source: Clancy Management

The ordinary shares held by the most significant shareholders as at 31 January 2014 are detailed below:

	Number of Ordinary	Percentage of Issued
Name	Shares Held	Shares (%)
HSBC CUSTODY NOMINEES 2	20,662,441	10.02%
MOTTE & BAILEY PL	18,180,437	8.81%
ST IVES GOLD MINING CO PL	17,764,783	8.61%
WALLIS-MANCE PL	13,232,785	6.42%
CITIGROUP NOM PL1	5,611,937	2.72%
Sub-total of Top 5	75,452,383	36.58%
Others	130,802,009	63.42%
Total ordinary shares on Issue	206,254,392	100.00%

1 – Represents one beneficiary

2- Represents multiple beneficiaries

Source: Clancy Management

We note that Clancy does not have any options on issue.

6. Profile of ABM Resources NL

6.1 History

ABM explores and develops gold properties in the Central Desert region of the Northern Territory. ABM listed on the ASX on 21 August 1986. ABM's current board members and senior management are shown below:

• Dr Michael Etheridge Non-Executive Chairman
• Dr Darren Holden—Managing Director, Executive Director
• Mr Andrew Charles Ferguson—Non-Executive Director
• Mr Graeme John Sloan—Non-Executive Director
• Mr Bradley Valiukas—Chief Operations officer
• Ms Jutta Zimmermann—Chief Financial Officer

ABM has a multi-tiered approach to exploration and development with a combination of high-grade potentially short-term production scenarios, large scale discoveries and regional exploration discoveries. ABM's principal project is the Twin Bonanza Gold Camp, which incorporates the Old Pirate High-Grade Project and the Buccaneer Porphyry Deposit.

The Twin Bonanza Project

The Twin Bonanza Project is located in the Tanami Region of the Northern Territory. The Project includes:

• 1. The Buccaneer Porphyry Deposit: consists of a resource estimation of 15.3Mt averaging 2.23g/t gold for 1.098 million ounces. It includes a 3km by 1.6km gold anomaly defined by shallow drilling. Within this zone, an area of 650m by 550m has received further deeper drilling.
• 2. The Old Pirate High-Grade Project: has a total uncut mineral resource estimate of 1.88Mt averaging 11.96g/t gold for 723,800 ounces. Mineralised veins extend from the surface to at least 200m depth.

North Arunta Project Region

The North Arunta Trans-Tanami Extension covers greater than 6,000 km2 of Exploration Licences. The region is intersected by the Trans-Tanami Fault Zone, the same structure that hosts Nemont's Callie Mine. The North Arunta Project is located between 200 and 400 kilometres north-northwest of Alice Springs and 85 kilometres to Newmont's Callie/ Granites Mine.

The North Arunta Project area includes the following projects:

• 1. The Barrow Creek Regional Project: consists of a 160 km long geophysical gravity trend with associated metamorphosed sedimentary rocks, dolerite intrusions and large granite intrusions, The region has several known mineral occurrences such as gold, copper, nickel, zinc, tin and tantalum. The primary focus has been the Kroda Project which includes the emerging prospects of Emma and Tulsa.
• 1. The Reynolds Range: has had a considerable amount of shallow RAB and vacuum drilling completed. The Reynolds Range project includes the Stafford Gold Zone, an area approximately 96km north-northeast of Alice Springs with a strike length of over 20km and 10 individual prospects with target areas in excess of 80km 2 .

1. North Arunta: the remainder of the Project, which covers approximately 60km of strike length of the Trans-Tanami structure, is still at early stages of exploration. The Bonita tenements have been recently granted and the Walkeley are still under application.

See Appendix 3 for further details on the projects.

6.2 Historical Balance Sheet of ABM Resources NL

	Reviewed as at	Audited as at	Reviewed as at
Statement of Financial Position	31-Dec-13	30-Jun-13	31-Dec-12
	$	$	$
CURRENT ASSETS
Cash and cash equivalents	5,094,194	8,344,284	14,105,303
Trade and other receivables	70,897	135,905	187,826
Inventories	1,319,674	122,466	-
Other current assets	378,087	173,952	86,050
TOTAL CURRENT ASSETS	6,862,852	8,776,607	14,379,179
NON-CURRENT ASSETS
Trade and other receivables	536,086	1,830,899	888,302
Other financial assets	-	40,000	40,000
Property, plant and equipment	5,446,425	3,292,593	1,451,138
Exploration, evaluation and development
expenditure	17,617,075	17,617,075	17,985,795
TOTAL NON-CURRENT ASSETS	23,599,586	22,780,567	20,365,235
TOTAL ASSETS	30,462,438	31,557,174	34,744,414
CURRENT LIABILITIES
Trade and other liabilities	2,378,408	2,410,023	838,776
Provisions	58,796	44,118	41,265
Other current liabilities	250,000	-	-
TOTAL CURRENT LIABILITIES	2,687,204	2,454,141	880,041
NON-CURRENT LIABILITIES
Provisions	1,437,234	1,511,252	546,523
TOTAL NON-CURRENT LIABILITIES	1,437,234	1,511,252	546,523
TOTAL LIABILITIES	4,124,438	3,965,393	1,426,564
NET ASSETS	26,338,000	27,591,781	33,317,850
UNIT HOLDERS EQUITY
Contributed equity	131,448,413	131,415,533	131,260,733
Reserves	8,505,206	8,555,017	8,622,653
Accumulated losses	(113,615,619)	(112,378,769)	(106,565,536)
TOTAL UNIT HOLDERS EQUITY	26,338,000	27,591,781	33,317,850

Source: ABM's 2013 Annual Report and half-year statements for the periods ended 31 Dec 2012 and 31 Dec 2013.

6.3 Historical Statement of Comprehensive Income

	Reviewed for	Reviewed for	Reviewed for
	the	the	the
	half-year ended	half-year ended	half-year ended
	31-Dec-13	31-Dec-12	31-Dec-11
Statement of Comprehensive Income	$	$	$
Revenue
Revenue from continuing activities	4,313,040	473,482	336,481
Other income	166,281	358,877	587,541
Expenses
Employee and directors benefits expense	(1,671,549)	(2,196,862)	(1,719,758)
Lease expense	(34,636)	(34,951)	(30,376)
Depreciation	(352,399)	(429,609)	(129,070)
Write down of property, plant and equipment	-	(30,796)	(43,887)
Consultancy	(50,837)	(77,795)	(215,810)
Exploration and evaluation expense	(3,335,824)	(6,744,164)	(5,133,666)
Legal fees	(59,390)	(21,483)	(32,001)
Other expenses	(261,347)	(443,355)	(476,081)
Loss from continuing operations before income tax	(1,286,661)	(9,146,656)	(6,856,627)
Income tax expense	-	-	-
Loss from continuing operations after income tax	(1,286,661)	(9,146,656)	(6,856,627)
Net change in fair value of available-for-sale financial	-	(13,750)	(71,250)
assets
Total comprehensive loss for the year	(1,286,661)	(9,160,406)	(6,927,877)

Source: ABM's half-year statements for the periods ended 31 Dec 2011, 31 Dec 2012 and 31 Dec 2013.

7. Economic analysis

Growth in the global economy was a bit below trend in 2013, but there are reasonable prospects of a pickup this year. The United States economy, while affected by adverse weather, continues its expansion and the Euro area has begun a recovery from recession, albeit a fragile one. Japan has recorded a significant pick-up in growth, while China's growth remains in line with policymakers' objectives. Commodity prices have declined from their peaks but in historical terms remain high.

Financial conditions overall remain very accommodative. Long-term interest rates and most risk spreads remain low. Equity and credit markets are well placed to provide adequate funding, though for some emerging market countries conditions are considerably more challenging than they were a year ago.

In Australia, recent information suggests slightly firmer consumer demand and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have shown improvement and exports are rising. At the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative. Public spending is scheduled to be subdued.

The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. Growth in wages has declined noticeably. If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and savers continue to look for higher returns in response to low rates on safe instruments. Credit growth remains low overall but is picking up gradually for households. Dwelling prices have increased significantly over the past year. The decline in the exchange rate seen to date will assist in achieving balanced growth in the economy, though the exchange rate remains high by historical standards.

Looking ahead, the Reserve Bank of Australia expects unemployment to rise further before it peaks. Over time, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate. Inflation is expected to be consistent with the 2–3 percent target over the next two years.

In the Reserve Bank of Australia's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.

Source: www.rba.gov.au Statement by Glenn Stevens, Governor: Monetary Policy Decision 4 March 2014

8. Industry analysis

8.1 Gold

Gold is both a commodity and an international store of monetary value. Once mined, gold continues to exist indefinitely, often melted down and recycled to produce alternative or replacement products. This characteristic means that gold demand is supported by both mine production and gold recycling.

As illustrated in the chart below, gold mine production was approximately 2,917 metric tonnes in 2013 and gold consumption was 4,578 metric tonnes. Demand for gold has consistently exceeded supply over the last 10 years, and the escalated level of economic and financial uncertainly during recent years has caused investors to move capital from risky assets to gold assets, which are perceived to be a good store of monetary value. As a result, total gold demand increased by approximately 14% between 2008 and 2013, with demand as a percentage of supply remaining at over 150% for the same period.

Source: Bloomberg and BDO Analysis

Until the late 1980's, South Africa produced approximately half of the total gold produced. More recently however, gold production has become geographically segmented, as shown in the chart below, with production dominated by China, Australia and the United States.

Source: Bloomberg and BDO Analysis

Gold prices

The price of gold fluctuates on a daily basis depending on global demand and supply factors. The price trend over the last two years is reflective of weak global economic conditions driving demand. As can be seen in the graph below, the value of gold peaked at US$1,900 per ounce on 5 September 2011. This peak was largely caused by the debt market crisis in Europe, but it was also driven by the Standard and Poor's downgrade of the US credit rating. This sent global stock markets tumbling and a flood of investors towards safer havens such as gold. Prices contracted in December 2011 reaching a low of US$1,545 per ounce; however 2012 a recovery of the gold price with it reaching US$1,790 per ounce on 4 October 2012, before declining to US$1,675 per ounce at 31 December 2012. Gold prices have declined in 2013 and most recently was US$1,351 per ounce on 6 March 2014.

According to Bloomberg forecasts and consensus economics, gold prices are forecast to stabilise in the coming years, with the long term forecast around US$1,324.

Source: Bloomberg, Consensus Economics and BDO Analysis

Recent gold transactions

The decline in gold price in 2013 has also lead to a decline in the number of transactions involving gold companies, with only a limited number of transactions announced in 2013:

• x On 30 January 2013, Kumarina Resources Limited, a Western Australian based gold and base metals explorer, announced that it had signed a merger implementation agreement with Zeta Resources Limited which has seen the two companies merge. The value of this deal was approximately $37.8 million.
• x On 28 March 2013, Troy Resources Ltd (dual listed on the ASX and TSX) announced that it had signed a Takeover Bid Implementation Deed under which Troy Resources Ltd will acquire all of the

issued capital of ASX-listed gold explorer Azimuth Resources Ltd by way of an off-market takeover offer. The deal value was approximately $216 million.

• x On 8 April 2013 it was announced that Polymetals Mining Limited and Southern Cross Goldfields Limited had entered into an agreement to merge the two companies. The deal worth $14.3 million. This deal was completed on 20 August 2013.
• x On 9 September 2013, Perilya Limited announced they entered into a binding Scheme Implementation Agreement with its major shareholder, Zhongjin Lingnan Mining (HK) Company Limited under which Zhongjin Lingnan acquired all the outstanding shares in Perilya that it did not already own, by way of a Court approved Scheme of Arrangement for an offer consideration of $0.35 per share.
• x On 12 September 2013, Shanxi Donghui announced the successful completion of its unconditional off-market takeover offer for the ordinary shares in Inova Resources Limited at AUD$0.22 per share.

8.2 Copper

Copper is a soft malleable, ductile metal used primarily for its excellent electrical and thermal conductive properties and its resistance to corrosion. As well as electrical and electronic applications, copper is utilised extensively as an alloy. Copper is produced from an oxide or sulphide ore from which it is converted to copper metal.

The majority of copper ore bodies can be classified as either porphyries (where copper occurs in igneous rock), strata bound ore bodies (sedimentary rock), and volcanic hosted massive sulphide deposits (volcanic rock along with other base metal sulphides). In these deposits copper is mined in very low concentrations and consequently is a volume intensive process. For this reason open pit mining is the preferred method of extraction, however underground mining and leach mining are also used in limited circumstances.

Prices

Copper is a global commodity and, as such, prices are determined by global supply and demand factors. Due to this, copper prices have historically reflected global economic cycles and experienced major fluctuations reflecting equity market movements. At the beginning of 2008, supply concerns, falling inventories and increased demand from emerging economies provoked a significant and accelerated rise in the copper price. As with most commodities, prices fell during the GFC. Prices have since overtaken the increases which occurred in 2008, occurring during the latter half of 2010 and throughout the beginning of 2011, reaching a peak of just over US$10,000/Mt in February 2011. Since that peak, prices have stabilised at around $8,000 per tonne. The consensus view expects copper prices to stay at approximately $7,000 during 2014 before declining.

London Metals Exchange Copper Price

Source: Bloomberg, Consensus Economics and BDO Analysis

Outlook

After falling by over 20% in 2011, copper prices recovered in the first months of 2012 before falling again from the start of 2013. For the past twelve months, the price has fluctuated between $6,600 and $8,300 per tonne. The turnaround has been driven by both subsiding fears over the European debt crisis and by positive outlooks for Chinese manufacturing. Looking forward the consensus indicates that copper prices will decline to $7,200 per tonne by 2016.

Production and Usage

Most of the world's copper comes from South and Central America, particularly in Chile and Peru. In 2013, Chile and Peru accounted for approximately 40% of the world's copper production. The graph below shows the split between the different country's productions for the year to November 2013:

Global Copper Production YTD to November 2013

Source: Bloomberg

According to the International Copper Study Group, in the first ten months of 2013, world apparent usage grew by 4% compared with that in the same period of 2012. Chinese apparent demand in the first ten months of 2013 increased by 8%. Excluding China, world usage increased by 1%, with growth in the United States, the Gulf countries, Brazil and Russia offsetting declines in Japan, South Korea and the European Union.

China's apparent demand was based on an increase in refined production of copper of around 842,000 tonnes which more than offset the decline in net imports of refined cooper of 366,000 tonnes. Actual demand in China during the first ten months of 2013 may have exceeded apparent demand as the lower import level in the first half of 2013 was accompanied by a decline in unreported inventories held in bonded warehouses in China.

In the first ten months of 2013, world mine production increased by 8% compared with production in the same period of 2012. Concentrate production increased by 10% while solvent extraction-electrowinning (SX-EW) was up by 3%. On a regional basis, production rose by 27% in Africa, 7% in the Americas, 10% in Asia, 2% in Europe, and 5% in Oceania.

World refined production increased by around 6.2% in the first ten months of 2013 compared with refined production in the same period of 2012: primary production was up by 5%, and secondary production (from scrap) increased by 12%. The main contributor to growth was China, where production increased by 18%. Production also increased in Brazil, the Democratic Republic of Congo and Zambia.

Source: International Copper Study Group

9. Valuation approach adopted

There are a number of methodologies which can be used to value a business or the shares in a company. The principal methodologies which can be used are as follows:

• x Capitalisation of future maintainable earnings ('FME')
• x Discounted cash flow ('DCF')
• x Quoted market price basis ('QMP')
• x Net asset value ('NAV')
• x Market based assessment

A summary of each of these methodologies is outlined in Appendix 2.

Different methodologies are appropriate in valuing particular companies, based on the individual circumstances of that company and available information.

9.1 Valuation of a Clancy share pre-Transaction

In our assessment of the value of a Clancy share pre-Transaction we have chosen to employ the following methodologies:

• x Net asset value ('NAV') primary methodology
• x Quoted market price basis ('QMP') secondary methodology

We have chosen these methodologies for the following reasons:

• x Clancy's most significant assets are its exploration rights to tenements in NSW. As such we have instructed Aurel Consulting Ltd ('Aurel') to provide an independent market valuation of these exploration assets in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports 2005 ('the Valmin Code'). Aurel's full report may be found in Appendix 3;
• x Clancy is listed on the ASX. This provides an indication of the market value where an observable market for the securities exists;
• x Clancy does not have assets that generate regular trading income. Therefore there are no historic profits that could be used to represent future earnings. This means that the FME valuation approach is not appropriate; and
• x Clancy has no foreseeable future net cash inflows and therefore the application of DCF is not possible. Under RG111, it is only considered appropriate to use a DCF where reserves are present.

9.2 Valuation of a Clancy share post-Transaction

We have assessed the value of a Clancy share post-Transaction using the NAV of Clancy pre-Transaction plus adjustments to exploration assets, listed investments, cash and equity.

The number of shares on issue post-Transaction will increase as a result of the Share Consideration and Proposed Placement. A minority discount is applied to the net asset value per share to arrive at the value of a Clancy share post-Transaction on a minority interest basis.

In assessing the value of a Clancy share post-Transaction we instructed Aurel to provide an independent market valuation of the North Arunta Project in accordance with the Valmin Code. Aurel's full report may be found in Appendix 3.

10. Valuation of Clancy share pre-Transaction

10.1 Net Asset Valuation of Clancy

The value of Clancy's assets on a going concern basis is reflected in our valuation below:

		30-Nov-13	Adjusted	Adjusted	Adjusted
Statement of Financial Position			Low value	Preferred value	High value
	Note	$	$	$	$
CURRENT ASSETS
Cash and cash equivalents	1	1,460,757	2,028,607	2,028,607	2,028,607
Restricted cash asset		300,000	300,000	300,000	300,000
Trade and other receivablesand prepayments		432,311	432,311	432,311	432,311
Deposits paid	2	250,000	-	-	-
Financial asset	1	786,999	-	-	-
TOTAL CURRENT ASSETS		3,230,067	2,760,918	2,760,918	2,760,918
NON-CURRENT ASSETS
Property, plant and equipment		68,121	68,121	68,121	68,121
Mineral assets	3	-	4,388,000	7,628,000	12,941,000
Intangible assets		4,134	4,134	4,134	4,134
TOTAL NON-CURRENT ASSETS		72,255	4,460,255	7,700,255	13,013,255
TOTAL ASSETS		3,302,322	7,221,173	10,461,173	15,774,173
CURRENT LIABILITIES
Trade and other payables		203,806	203,806	203,806	203,806
Provisions		64,516	64,516	64,516	64,516
Unearned revenue		34,819	34,819	34,819	34,819
Exploration expenditurereimbursed in advance		485,833	485,833	485,833	485,833
TOTAL CURRENT LIABILITIES		788,974	788,974	788,974	788,974
NON-CURRENT LIABILITIES
Provisions		61,725	61,725	61,725	61,725
TOTAL NON-CURRENTLIABILITIES		61,725	61,725	61,725	61,725
TOTAL LIABILITIES		850,699	850,699	850,699	850,699
NET ASSETS		2,451,623	6,370,474	9,610,474	14,923,474
Number of shares on issue			206,254,392	206,254,392	206,254,392
Value per share			$0.031	$0.047	$0.072

Source: BDO analysis

Based on the results above we consider the NAV of a Clancy share pre-Transaction on a control basis to be between $0.031 and $0.072, with a preferred value of $0.047

We have been advised that there has not been a significant change in the net assets of Clancy since 30 November 2013 other than those noted below.

Note 1- Cash and cash equivalents & financial assets

In December 2013, Clancy sold 8.157 million shares in Genesis for net proceeds of $567,850. We have excluded the value of the financial assets and added the cash proceeds to the cash balance.

Note 2 – Deposits paid

In November 2013, Clancy paid ABM $250,000 for the option to acquire ABM's North Arunta Project. Clancy has capitalised the fee that was paid. We have excluded the value of the Option Fee because if the Transaction is not approved by Shareholders, the fee will not be refunded and as such it is a sunk cost.

Note 3- Mineral Assets

We instructed Aurel to provide an independent market valuation of the mineral assets currently held by Clancy. Aurel applied a number of different valuation methods whilst considering the nature and stage of the exploration projects:

• x Geological Risk Method. Projects assessed using this method were the 100% Clancy tenements at stage B and above, and the Kaizen Discovery JV tenement. This method returns inconsistent results for early stage tenements, as a result of the lack of exploration budgets for these tenements to determine a realistic cost of future exploration, and these were excluded.
• x Analysis of farm-in agreements. This method was appropriate for the Clancy joint ventures in NSW, the Kaizen Discovery JV and the Mitsubishi Metals JV.
• x Multiples of Exploration Expenditure. Several of the exploration projects have already produced exploration data against which projects can be assessed. This method has been applied to the Clancy tenements.
• x Kilburn Method. This method has been used across a range of early stage projects to provide a direct comparison of the Clancy tenements.
• x Comparative transactions. A range of tenement transactions over the past 2 years have been collated, and the value per unit area of the tenements was used to determine a factor for valuing the Clancy tenements.

We are satisfied that the valuation methodologies adopted by Aurel are in accordance with industry practices and compliant with the requirements of the Valmin Code. The values range of these tenements as calculated by Aurel is set out below:

			Preferred
Clancy	Ownership	Low value	value	High value
Mineral Asset Valuation	interest	$	$	$
Trundle	100%	659,000	842,000	1,211,000
Orange East	100%	158,000	327,000	1,745,000
Kiola	100%	890,000	1,176,000	1,518,000
Condobolin	100%	1,430,000	2,565,000	3,300,000
Mount Tennyson	100%	137,000	153,000	169,000
Mount Pleasant	100%	250,000	584,000	1,215,000
Mitsubishi JV
Cundumbul	69.2%	176,000	437,000	1,593,000
Currumburrama	74.1%	-	51,000	103,000
Genaren	66.4%	200,000	413,000	599,000
Ex Goldfields JV (2.5% NSRRoyalty)		35,000	55,000	80,000
Kaizen Discovery JV
Fairholme	51%	327,000	702,000	899,000
Manna	51%	66,000	230,000	383,000
Bass Metals JV
Lake Margaret	25%	16,000	28,000	40,000
Sock Creek	25%	2,000	4,000	7,000
Minemakers JV
Oonah	25%	42,000	61,000	79,000
		4,388,000	7,628,000	12,941,000

Source: Aurel Independent valuation report- Appendix 3

The table above indicates a range of values between $4.39 million and $12.94 million, with a preferred value of $7.63 million.

10.2 Quoted Market Prices for Clancy Securities

To provide a comparison to the valuation of Clancy in Section 10.1, we have also assessed the quoted market price for a Clancy share.

The quoted market value of a company's shares is reflective of a minority interest. A minority interest is an interest in a company that is not significant enough for the holder to have an individual influence in the operations and value of that company.

RG 111.11 suggests that when considering the value of a company's shares for the purposes of approval under Item 7 of s611 the expert should consider a premium for control. An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain 100% control of another company. These advantages include the following:

• x control over decision making and strategic direction;
• x access to underlying cash flows;
• x control over dividend policies; and
• x access to potential tax losses.

Whilst ABM will not be obtaining 100% of Clancy, RG 111 states that the expert should calculate the value of a target's shares as if 100% control were being obtained. RG 111.13 states that the expert can then consider an acquirer's practical level of control when considering reasonableness. Reasonableness has been considered in Section 13.

Therefore, our calculation of the quoted market price of a Clancy share including a premium for control has been prepared in two parts. The first part is to calculate the quoted market price on a minority interest basis. The second part is to add a premium for control to the minority interest value to arrive at a quoted market price value that includes a premium for control.

Minority interest value

Our analysis of the quoted market price of a Clancy share is based on the pricing prior to the announcement of the Transaction. This is because the value of a Clancy share after the announcement may include the affects of any change in value as a result of the Transaction. However, we have considered the value of a Clancy share following the announcement when we have considered reasonableness in Section 13.

Information on the Transaction was announced to the market on 29 November 2013. Therefore, the following chart provides a summary of the share price movement over the 12 months to 28 November 2013 was the last trading day prior to the announcement.

Clancy share price and trading volume history

Source: Bloomberg

The daily price of Clancy shares for the 12 months prior to 29 November 2013 has ranged from a low of $0.006 in June 2013 to a high of $0.027 in December 2012. The share price showed a relatively consistent downward trend over the period December 2012 to June 2013 and trading was sporadic with many days of no trades noted. From June to September 2013 the share price recovered to a peak of $0.019. The most significant trading volumes were experienced in the four months between June 2013 and September 2013. The highest single day of trading was on 24 October 2013 when 4.14 million shares changed hands. There were no announcements on or around 24 October 2013 to account for the increase in trading volumes.

During this period a number of announcements were made to the market. The key announcements are set out below:

Date	Announcement	Closing Share PriceFollowingAnnouncement$ (movement)			Closing Share PriceThree Days AfterAnnouncement$ (movement)
15/10/2013	Quarterly Activities and Cashflow Report	0.015		25.0%	0.013		13.3%
31/07/2013	Quarterly Activities and Cashflow Report	0.010		11.1%	0.010		0.0%
17/06/2013	Further gold and silver hits for Clancy at Condobolin	0.010		25.0%	0.008		20.0%
20/05/2013	Clancy signs JV with HPX on Fairholme copper-goldproject	0.015		25.0%	0.012		20.0%
29/04/2013	Quarterly Cashflow Report	0.016		0.0%	0.016		0.0%
29/04/2013	Quarterly Activities Report	0.016		0.0%	0.016		0.0%
25/03/2013	Full Year Statutory Accounts	0.018		0.0%	0.018		0.0%
13/02/2013	Sale of JV Interests to Gold Fields Clancy to Raise$1.5m	0.020		0.0%	0.024		20.0%
29/01/2013	Quarterly Activities Report	0.020		0.0%	0.020		0.0%
29/01/2013	Quarterly Cashflow Report	0.020		0.0%	0.020		0.0%

On 13 February 2013 Clancy announced that it has agreed to sell its joint venture interests in the six copper-gold projects in NSW to its joint venture partner, Gold Fields Australasia Pty Ltd, a wholly owned subsidiary of Gold Fields Limited. Clancy received $1.5 million from a combination of the sale consideration and a placement of shares to a related body corporate of Gold Fields. The share price increased 20% in the three days following the announcement.

On 20 May 2013 Clancy announced that it signed a Farm-In joint venture agreement with High Power Exploration Inc ('HPX') on the Fairholme copper-gold project in New South Wales. HPX has the right to earn an initial 49% in the Fairholme project by funding $1 million in exploration. On the day of the announcement, the market reacted positively with the share price increasing by 25%. In the three days following the announcement the share price fell by 20%.

On 17 June 2013 Clancy announced drilling results from the Condobolin Project in New South Wales, which confirmed a mineralised system. On the day of the announcement the share price rose by 25% before falling by 20% in the three days following.

To provide further analysis of the market prices for a Clancy share, we have also considered the weighted average market price for 10, 30, 60 and 90 day periods to 28 November 2013.

Share Price per unit	28-Nov-13	10 Days	30 Days	60 Days	90 Days
Closing price	$0.015
Volume weighted average price (VWAP)		$0.015	$0.011	$0.012	$0.012

Source: Bloomberg, BDO analysis

The above weighted average prices are prior to the date of the announcement of the Transaction, to avoid the influence of any increase in price of Clancy shares that has occurred since the Transaction was announced.

An analysis of the volume of trading in Clancy shares for the twelve months to 28 November 2013 is set out below:

Trading days	Share pricelow	Share pricehigh	Cumulative volumetraded	As a % ofIssued capital
1 Day	$0.015	$0.015	-	0.00%
10 Days	$0.015	$0.015	200,000	0.10%
30 Days	$0.010	$0.015	5,751,170	2.79%
60 Days	$0.010	$0.017	6,851,323	3.32%
90 Days	$0.008	$0.019	10,395,587	5.04%
180 Days	$0.006	$0.019	18,976,055	9.20%
1 Year	$0.006	$0.027	22,274,090	10.80%

Source: Bloomberg, BDO analysis

This table indicates that Clancy's shares display a low level of liquidity, with 10.8% of the Company's current issued capital being traded in a twelve month period. For the quoted market price methodology to be reliable there needs to be a 'deep' market in the shares. RG 111.69 indicates that a 'deep' market should reflect a liquid and active market. We consider the following characteristics to be representative of a deep market:

• x Regular trading in a company's securities;
• x Approximately 1% of a company's securities are traded on a weekly basis;
• x The spread of a company's shares must not be so great that a single minority trade can significantly affect the market capitalisation of a company; and
• x There are no significant but unexplained movements in share price.

A company's shares should meet all of the above criteria to be considered 'deep', however, failure of a company's securities to exhibit all of the above characteristics does not necessarily mean that the value of its shares cannot be considered relevant.

In the case of Clancy, we do not consider the market to be deep. Clancy only traded 10.8% of its shares on issue over the last twelve months and 4.14 million shares were traded on one day (24 October 2013). When this is excluded then only 8.8% of its shares were traded. There were also large fluctuations in the volume of securities traded with numerous days with no trades.

Our assessment is that a range of values for Clancy shares based on market pricing, after disregarding post announcement pricing, is between $0.012 and $0.015.

Control Premium

We have reviewed the control premiums paid by acquirers of mining companies listed on the ASX. We have summarised our findings below:

Year	Number of Transactions	Average Deal Value (A$m)	Average Control Premium(%)
2013	13	56.43	55.41
2012	19	135.78	42.67
2011	20	634.68	31.40
2010	23	755.97	45.04
2009	29	86.80	39.23
2008	8	553.76	38.87
2007	25	541.21	28.20
2006	20	70.15	31.11
	Median	338.49	39.05
	Mean	354.35	38.99

Source: Bloomberg

In arriving at an appropriate control premium to apply we note that observed control premiums can vary due to the:

• x Nature and magnitude of non-operating assets;
• x Nature and magnitude of discretionary expenses;

• x Perceived quality of existing management;
• x Nature and magnitude of business opportunities not currently being exploited;
• x Ability to integrate the acquiree into the acquirer's business;
• x Level of pre-announcement speculation of the transaction;
• x Level of liquidity in the trade of the acquiree's securities.

The average and median announced control premium paid by acquirers of general mining companies from 2006 to 2013 has been 38.99% and 39.05% respectively.

In determining what premium for control should be paid by ABM, we considered the percentage interest ABM will hold post-Transaction. Under Scenario 1, ABM will a hold a minimum of 42.4% of the issued capital and under Scenario 2, ABM will hold a minimum of 23.5% of the issued capital. Both interests are considered to be controlling stakes. Therefore, we consider an appropriate control premium to be applied in this instance to be between 30% and 40%.

Quoted market price including control premium

Applying a control premium to Clancy's quoted market share price results in the following QMP value including a premium for control:

	Low	Midpoint	High
	$	$	$
Quoted market price value	0.012	0.013	0.015
Control premium	30%	35%	40%
Quoted market price valuation including a premium for control	0.016	0.018	0.021

Source: BDO analysis

Therefore, our valuation of a Clancy share based on the QMP method and including a premium for control is between $0.016 and $0.021, with a midpoint value of $0.018.

10.3 Assessment of Clancy Value

The results of the valuations performed are summarised in the table below:

	Low	Preferred	High
	$	$	$
NAV methodology (Section 10.1)	0.031	0.047	0.072
QMP methodology (Section 10.2)	0.016	0.018	0.021

Source: BDO analysis

We consider that due to Clancy's low level of liquidity and price volatility that the QMP methodology is not appropriate as a primary valuation technique. The Clancy cash balance of $2.05 million contributes for approximately $0.01 of the QMP value on a per share basis. The residual QMP range excluding that

attributable to cash, is between $0.006 and $0.011. When considering the independent specialist valuation prepared by Aurel, the value attributable to the projects on a QMP basis appears to be understated, emphasising that the QMP method is not appropriate as a primary valuation technique. Therefore we have adopted the valuation range derived under the NAV methodology. Based on the results above we consider the value of a Clancy share to be between 0.031 and 0.072, with a preferred value of 0.047.

11. Valuation of Clancy share post-Transaction

11.1 Valuation of Clancy post-Transaction Scenario 1

As described in Section 4, in Scenario 1 we assume that the Consideration Options are exercised and have therefore calculated the value of a Clancy share following the exercise of all the Consideration Options.

		Low value	Preferred value	High value
	Note	$	$	$
NAV of Clancy pre-Transaction	Section 10.1	6,370,474	9,610,474	14,923,474
Value of the North Arunta Project	1	3,891,000	7,354,000	11,226,000
Adjustments for the Transaction Consideration
Proceeds from the sale of the Genesis shares	2	(567,850)	(567,850)	(567,850)
Exercise fee payable	2	(150,000)	(150,000)	(150,000)
Acquisition fee payable	2	(200,000)	(200,000)	(200,000)
Proposed Placement
Cash received from contingent Proposed Placement	3	2,500,000	3,250,000	4,000,000
Exercise of Consideration Options
Cash received from Consideration Options exercised	4	5,250,000	5,250,000	5,250,000
NAV of Clancy post-Transaction		17,093,624	24,546,624	34,481,624
Number of shares on issue post-Transaction	5	631,254,392	668,754,392	706,254,392
Value per share ($)		0.027	0.037	0.049
Minority interest discount	6	29%	26%	23%
NAV of a Clancy share post-Transaction ($)		0.019	0.027	0.038

Note 1- Valuation of the North Arunta Project

We instructed Aurel to provide an independent market valuation of the North Arunta Project to be acquired from ABM. This is shown in Appendix 3. Aurel considered a number of different valuation methods when valuing the exploration assets of Clancy, depending on the exploration stage and data available for the various projects.

Aurel applied a combination of valuation methodologies including; the Geological Risk Method, review of exploration expenditure multiples, the Kilburn method, which is useful for newer tenements with limited exploration history and comparable transactions review which computes a value per unit of comparable tenements acquired. Based on these valuation methods the following results were derived:

	Ownership	Low value	Preferred value	High value
Mineral Assets acquired	interest	$	$	$
North Arunta Project	100%
Barrow Creek		1,261,000	2,286,000	3,354,000
Lander River		430,000	1,218,000	2,311,000
Reynolds Range		599,000	1,142,000	1,519,000
Home of Bullion		531,000	710,000	890,000
Walkeley		294,000	1,013,000	2,042,000
Bonita		776,000	985,000	1,110,000
Total value of North Arunta Project		3,891,000	7,354,000	11,226,000
Source: Aurel Independent valuation report- Appendix 3

The table above indicates a range of values projects of between $3.89 million and $11.23 million, with a preferred value of $7.35 million.

Note 2 – Cash Consideration of the Transaction

If the Transaction is approved, Clancy will pay ABM the following unpaid cash amounts:

• o $567,850 representing the net proceeds of the sale of Clancy's shareholding in Genesis;
• o $250,000 being the Option Fee (paid Nov 2013);
• o $150,000 being the Option Exercise Fee (paid Feb 2014); and
• o $200,000 being the Acquisition Fee.

We note that the Option Fee was paid in November 2013 and is included in the pre-Transaction net asset value. As such, we have not made an adjustment for the Option Fee.

Note 3 – Proposed Placement

Contingent upon the Transaction being approved is the success of a placement to sophisticated investors to raise a minimum of $2.5 million and up to $4 million. We have assumed that the capital raising takes place at $0.02 per share which, the Board following discussions with its brokers is currently of the view that such an outcome is achievable.

Note 4 – Exercise of the Consideration Options

The exercise price of the Consideration Options is based on 150% of the Proposed Placement price as set out below.

	$2,500,000	$3,250,000	$4,000,000
	Placement	Placement	Placement
Number of Consideration Options issued	175,000,000	175,000,000	175,000,000
Exercise price (150% of the Placement price)	0.030	0.030	0.030
Cash raised upon the exercise of Consideration Options	5,250,000	5,250,000	5,250,000

Note 5 - Shares on issue

Scenario 1	Low	Mid	High
Shares on issue post-Transaction
Current number of shares on issue	206,254,392	206,254,392	206,254,392
Adjustments post acquisition:
Consideration Shares issued	125,000,000	125,000,000	125,000,000
Shares issued upon exercise of Consideration Options	175,000,000	175,000,000	175,000,000
Number of shares issued under the Proposed Placement	125,000,000	162,500,000	200,000,000
Total Shares on issue post-Transaction	631,254,392	668,754,392	706,254,392

Note 6 - Minority interest discount

The value of a Clancy share post-Transaction that has been derived from the NAV method is reflective of a controlling interest. This suggests that the acquirer obtains an interest in the company which allows them to have an individual influence over the operations and the value of the company.

If the Transaction is approved, Shareholders will become minority interest shareholders in Clancy as ABM will hold a controlling interest.

We have adjusted our valuation of a Clancy share post-Transaction, to reflect a minority interest holding. A minority interest discount is the inverse of a premium for control. As discussed in section 10.2, we determined that an appropriate premium for control, based on our analysis, is within the range of 30% to 40%. We therefore consider that a reasonable range for a minority interest discount to be between 23% and 29%.

11.2 Valuation of Clancy post-Transaction Scenario 2

As described in Section 4, in Scenario 2 we assume that the Consideration Options are not exercised.

		Low value	Preferredvalue	High value
	Note	$	$	$
NAV of Clancy pre-Transaction	Section 10.1	6,370,474	9,610,474	14,923,474
Add: Value of the North Arunta Project	1	3,891,000	7,354,000	11,226,000
Adjustments for the Transaction Consideration
Proceeds from the sale of the Genesis shares	2	(567,850)	(567,850)	(567,850)
Exercise fee payable	2	(150,000)	(150,000)	(150,000)
Acquisition fee payable	2	(200,000)	(200,000)	(200,000)
Proposed Placement
Cash received from contingent Proposed Placement	3	2,500,000	3,250,000	4,000,000
NAV of Clancy post-Transaction		11,843,624	19,296,624	29,231,624
Number of shares on issue post-Transaction	4	456,254,392	493,754,392	531,254,392
Value per share ($)		0.026	0.039	0.055
Minority interest discount	5	29%	26%	23%
NAV of a Clancy share post-Transaction ($)		0.018	0.029	0.042

Note 1- Valuation of the North Arunta Project

We instructed Aurel to provide an independent market valuation of the North Arunta Project to be acquired from ABM. Aurel considered a number of different valuation methods when valuing the exploration assets of Clancy, depending on the exploration stage and data available for the various projects.

Aurel applied a combination of valuation methodologies including; the Geological Risk Method, review of exploration expenditure multiples, the Kilburn method, which is useful for newer tenements with limited exploration history and comparable transactions review which computes a value per unit of comparable tenements acquired. Based on these valuation methods the following results were derived:

	Ownership	Low value	Preferred value	High value
Mineral Assets acquired	interest	$	$	$
North Arunta Project	100%
Barrow Creek		1,261,000	2,286,000	3,354,000
Lander River		430,000	1,218,000	2,311,000
Reynolds Range		599,000	1,142,000	1,519,000
Home of Bullion		531,000	710,000	890,000
Walkeley		294,000	1,013,000	2,042,000
Bonita		776,000	985,000	1,110,000
Total value of North Arunta Project		3,891,000	7,354,000	11,226,000

Source: Aurel Independent valuation report- Appendix 3

Note 2 – Cash Consideration of the Transaction

If the Transaction is approved, Clancy will pay ABM the following unpaid cash amounts:

• o $567,850 representing the net proceeds of the sale of Clancy's shareholding in Genesis;
• o $250,000 being the Option Fee (Paid Nov 2013);
• o $150,000 being the Option Exercise Fee (Paid Feb 2014); and
• o $200,000 being the Acquisition Fee.

We note that the Option Fee was paid in November 2013 and is included in the pre-Transaction net asset value. As such, we have not made an adjustment for the Option Fee.

Note 3 – Proposed Placement

Contingent upon the Transaction being approved is the success of a placement to sophisticated investors to raise a minimum of $2.5 million and up to $4 million. We have assumed that the capital raising takes place at $0.02 per share which, the Board following discussions with its brokers is currently of the view that such an outcome is achievable.

Note 4 - Shares on issue

Scenario 2	Low	Mid	High
Shares on issue post-Transaction
Current number of shares on issue	206,254,392	206,254,392	206,254,392
Adjustments post acquisition:
Consideration Shares issued	125,000,000	125,000,000	125,000,000
Shares issued upon exercise of Consideration Options	-	-	-
Number of shares issued under the Proposed Placement	125,000,000	162,500,000	200,000,000
Total Shares on issue post-Transaction	456,254,392	493,754,392	531,254,392

Note 5 - Minority interest discount

The value of a Clancy share post-Transaction derived from the NAV method is reflective of a controlling interest. This suggests that the acquirer obtains an interest in the company which allows them to have an individual influence over the operations and the value of the company.

If the Transaction is approved, Shareholders will become minority interest shareholders in Clancy as ABM will hold a controlling interest.

We have adjusted our valuation of a Clancy share post-Transaction, to reflect a minority interest holding. A minority interest discount is the inverse of a premium for control. As discussed in section 10.2, we determined that an appropriate premium for control, based on our analysis, is within the range of 30% to 40%. We therefore consider that a reasonable range for a minority interest discount to be between 23% and 29%.

12. Is the Transaction fair?

The value of the Transaction is compared below:

	Ref	Low$	Preferred$	High$
Value of a Clancy share pre-Transaction	10.3	0.031	0.047	0.072
Value of a Clancy share post-Transaction
Scenario 1-	11.1	0.019	0.027	0.038
Scenario 2-	11.2	0.018	0.029	0.042

We note from the table above that the value range pre-Transaction on a controlling basis is greater than the value range post-Transaction on a minority basis. Therefore, we consider that the Transaction is not fair.

13. Is the Transaction reasonable?

13.1 Alternative Proposal

We are unaware of any alternative proposal that might offer the Shareholders of Clancy a premium over the value ascribed to, resulting from the Transaction.

13.2 Practical Level of Control

Under Scenario one if the Transaction is approved then ABM will hold a maximum interest of approximately 47.5% in Clancy. In addition to this, Clancy will have two Board members nominated by ABM. Clancy's Board currently comprises four directors, one of which also sits as a board member of ABM. As a result, ABM board members would make up half of the total six board members.

Under Scenario two if the Transaction is approved then ABM will hold a maximum interest of approximately 27.4% in Clancy. In addition to this, Clancy will have one Board member nominated by ABM.

When shareholders are required to approve an issue that relates to a company there are two types of approval levels. These are general resolutions and special resolutions. A general resolution requires 50% of shares to be voted in favour to approve a matter and a special resolution required 75% of shares on issue to be voted in favour to approve a matter. If the Transaction is approved, under both scenarios ABM will be able to gain greater than a 25% interest and hence will be able to block special resolutions.

ABM's control of Clancy following the Transaction will be significant when compared to all other shareholders. Under Scenario 1 ABM will a hold a minimum of 47.5% in Clancy and under Scenario 2 ABM will hold a maximum of 27.4% which combined with board representation is considered to be a significant and controlling stake. As such, ABM should be expected to pay a similar premium for control as if it were acquiring 100% of Clancy.

13.3 Consequences of not Approving the Scheme

Potential decline in share price

We have analysed movements in Clancy's share price since the Transaction was announced. A graph of Clancy's share price since the announcement is set out below.

Source: Bloomberg

On the day prior to the announcement on 28 November 2013, Clancy's share price closed at $0.015. In the days following the announcement the share price increased slightly to $0.016. On 3 February 2014 Clancy announced that following due diligence with ABM it had decided to exercise its option to acquire the North Arunta asset. In the week following this confirmation the share price increased by 16%, but only by enough to revert back the original pre announcement price. Therefore, if the Transaction was not successful, Clancy's share price may not decline.

Value post-Transaction on Minority basis

In section 10.3 we assessed Clancy's value per share on a pre-Transaction controlling basis and in section 11.1 and 11.2 the post-Transaction value of Clancy has been assessed on a minority interest basis. Whilst the Transactions come under the technical definition of a control transaction, for illustrative purposes we have considered the pre-Transaction value of a Clancy share on a minority basis excluding any control premium and compared it to the post-Transaction value on a minority basis. This comparison is shown below, however BDO has assessed the Transaction on a controlling basis, as per section 2.4.

Scenario 1

Scenario 2

13.4 Advantages of approving the Transaction

We have considered the following advantages when assessing whether the Transaction is reasonable.

Advantage	Description
Creation of a company with a larger and morediversified portfolio of assets	If the Transaction is approved, the Company will hold variousexploration assets in North Arunta in the Northern Territory andexisting assets in New South Wales. Clancy may benefit fromproject diversification and the potential upside of the projectsbeing acquired.
Greater potential to access required capital forcontinued exploration	With a diversified portfolio of assets, Clancy may be moresuccessful in raising required funds to conduct exploration activitieson its assets. This is evident in the Transaction being contingentupon Clancy's ability to raise capital to fund exploration.
	The Proposed Placement that is contingent upon this Transaction isan example of Clancy's ability to raise capital upon acquiring theNorth Arunta Project from ABM.
The acquisition supports the Board's strategicdirection	For the past two years, Clancy has sought to acquire a flagshipproject with existing mineralised drill intersections to create valuefor the Clancy shareholders. The Transaction will support theBoard's strategic goals.

13.5 Disadvantages of approving the Transaction

If the Transaction is approved, in our opinion, the potential disadvantages to Shareholders include those listed in the table below:

Disadvantage	Description
Dilution of existingShareholders' interest	As consideration for the Transaction, Clancy will issue a total of 125 million shares and175 million options. In addition, the Company will undertake the Proposed Placement.We note that Clancy's Board is aiming to raise $4 million at $0.02 per share and,following the Board's discussions with its brokers, is currently of the view that such anoutcome is achievable.
	The interests of existing Shareholders' following the Transaction will be significantlydiluted, decreasing to a minimum of 29.2% if the Consideration Options are exercised.
ABM are able to nominaterepresentative(s) to theboard of Clancy	Upon completion of the Transaction ABM will be able to nominate one director to theboard of Clancy and an additional nominee director on exercise of the first third ofthe Consideration Options. The Clancy Board will then approve the ABM nominee(s).
	If ABM has two nominees elected, the Board will comprise six members. One of thecurrent Clancy board members also sits on ABM's Board.

14. Conclusion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that, the Transaction is not fair but reasonable to Shareholders.

In our opinion, the Transaction is not fair because the value of a Clancy share pre-Transaction on a controlling basis is greater than the value of a Clancy share post-Transaction on a minority basis. However, we consider the Transaction to be reasonable because the advantages of the Transaction to Shareholders are greater than the disadvantages. In particular, the creation of a larger and more diversified asset portfolio will allow it to have greater access to capital markets. We note the value ranges on a pre-Transaction and post-Transaction basis overlap and when comparing both on a minority basis the Transaction would be fair.

15. Sources of information

This report has been based on the following information:

• x Draft Notice of General Meeting and Explanatory Statement on or about the date of this report;
• x The Tenement Purchase Agreement;
• x Audited financial statements of Clancy for the years ended 31 December 2012 and half year reviewed financial statements for the period ended 30 June 2013;
• x Unaudited management accounts of Clancy for the period ended 30 November 2013;
• x Audited financial statements of ABM for the year ended 30 June 2013 and half year reviewed financial statements for the periods ended 31 December 2013 and 2012;
• x Independent Valuation Report of Clancy's minerals assets and the North Arunta mineral assets dated 25 February 2014 performed by Aurel;
• x Share registry information;
• x Information in the public domain; and

x Discussions with Directors and Management of Clancy.

16. Independence

BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of $20,000 (excluding GST and reimbursement of out of pocket expenses). The fee is not contingent on the conclusion, content or future use of this Report. Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.

BDO Corporate Finance (WA) Pty Ltd has been indemnified by Clancy in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd's reliance on information provided by the Clancy, including the non provision of material information, in relation to the preparation of this report.

Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to ABM and Clancy and any of their respective associates with reference to ASIC Regulatory Guide 112 'Independence of Experts'. In BDO Corporate Finance (WA) Pty Ltd's opinion it is independent of ABM and Clancy and their respective associates.

The provision of our services is not considered a threat to our independence as auditors of ABM under Professional Statement APES 110 – Professional Independence. The services provided have no material impact on the financial report of ABM.

A draft of this report was provided to Clancy and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review.

BDO is the brand name for the BDO International network and for each of the BDO Member firms.

BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International).

17. Qualifications

BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Sherif Andrawes and Adam Myers of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff.

Adam Myers is a member of the Australian Institute of Chartered Accountants. Adam's career spans 15 years in the Audit and Assurance and Corporate Finance areas. Adam has considerable experience in the preparation of independent expert reports and valuations in general for companies in a wide number of industry sectors.

Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Member of the Institute of Chartered Accountants in Australia. He has over twenty five years experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 200 public company independent expert's reports under the Corporations Act or ASX Listing Rules. These experts' reports cover a wide range of industries in Australia with a focus on companies in the natural resources sector. Sherif Andrawes is the Chairman of BDO in Western Australia, Corporate Finance Practice Group Leader of BDO in Western Australia and the Natural Resources Leader for BDO in Australia.

18. Disclaimers and consents

This report has been prepared at the request of Clancy for inclusion in the Explanatory Memorandum which will be sent to all Clancy Shareholders. Clancy engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider the acquisition of the North Arunta Project from ABM for scrip, options and cash consideration.

BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Explanatory Memorandum. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Explanatory Memorandum other than this report.

We have no reason to believe that any of the information or explanations supplied to us are false or that material information has been withheld. Under regulatory guidance we have made all enquiries deemed appropriate and desirable in the preparation of this report. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to ABM and the asset acquired. BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process.

The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time.

With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Transaction, tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Shareholders of Clancy or any other party.

BDO Corporate Finance (WA) Pty Ltd has also considered and relied upon independent valuations for mineral assets held by Clancy as well as the mineral asset acquired.

The valuer engaged for the mineral asset valuation, Aurel possesses the appropriate qualifications and experience in the industry to make such assessments. The approaches adopted and assumptions made in arriving at their valuation is appropriate for this report. We have received consent from the valuer for the use of their valuation report in the preparation of this report and to append a copy of their report to this report.

The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd has no obligation to update this report for events occurring subsequent to the date of this report.

Yours faithfully BDO CORPORATE FINANCE (WA) PTY LTD

Adam Myers Director

Sherif Andrawes Director

Appendix 1 – Glossary of Terms

Reference	Definition
The Act	The Corporations Act
APES 225	Accounting Professional & Ethical Standards Board professional standard APES 225'Valuation Services'
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
BDO	BDO Corporate Finance (WA) Pty Ltd
Clancy	Clancy Exploration Limited
The Company	Clancy Exploration Limited
DCF	Discounted Future Cash Flows
EBIT	Earnings before interest and tax
EBITDA	Earnings before interest, tax, depreciation and amortisation
FME	Future Maintainable Earnings
NAV	Net Asset Value
Our Report	This Independent Expert's Report prepared by BDO
RG 111	Content of expert reports (March 2011)
RG 112	Independence of experts (March 2011)
The Transaction	The proposal to issue scrip, options and cash to ABM for the acquisition of the NorthArunta Project.
Scenario 1	Under Scenario 1 the options offered as part of the consideration are expected to beexercised and as such share capital has been diluted accordingly.
Scenario 2	Under Scenario 2 the options offered as part of the consideration are not expected tobe exercised and as such share capital has not been diluted.
Shareholders	Shareholders of Clancy not associated with the Transaction.
VWAP	Volume Weighted Average Price

Valuation Engagement	An Engagement or Assignment to perform a Valuation and provide a Valuation Report
	where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and
	Valuation Procedures that a reasonable and informed third party would perform taking
	into consideration all the specific facts and circumstances of the Engagement or
	Assignment available to the Valuer at that time.

Appendix 2 – Valuation Methodologies

Methodologies commonly used for valuing assets and businesses are as follows:

1 Net asset value ('NAV')

Asset based methods estimate the market value of an entity's securities based on the realisable value of its identifiable net assets. Asset based methods include:

• 10 Orderly realisation of assets method
• 11 Liquidation of assets method
• 12 Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity's valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity's value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when an entity is not making an adequate return on its assets, a significant proportion of the entity's assets are liquid or for asset holding companies.

2 Quoted Market Price Basis ('QMP')

A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a 'deep' market in that security.

3 Capitalisation of future maintainable earnings ('FME')

This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax ('EBIT') or earnings before interest, tax, depreciation and amortisation ('EBITDA'). The capitalisation rate or 'earnings multiple' is adjusted to reflect which base is being used for FME.

4 Discounted future cash flows ('DCF')

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

Considerable judgement is required to estimate the future cash flows which must be able to be reliably estimated for a sufficiently long period to make this valuation methodology appropriate.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows.

5 Market Based Assessment

The market based approach seeks to arrive at a value for a business by reference to comparable transactions involving the sale of similar businesses. This is based on the premise that companies with similar characteristics, such as operating in similar industries, command similar values. In performing this analysis it is important to acknowledge the differences between the comparable companies being analysed and the company that is being valued and then to reflect these differences in the valuation.

Appendix 3 – Independent Specialist Valuation

Valuation of the exploration properties of Clancy Exploration Limited and ABM Resources North Arunta package

Report Prepared for

BDO Corporate Finance (WA) Pty Ltd

Report Prepared by

Aurel Consulting

Aurel Consulting Project ID: 201408 Valuation Date: 25 February 2014

Valuation of the exploration properties of Clancy Exploration Limited and ABM Resources North Arunta package

BDO Corporate Finance (WA) Pty Ltd

Aurel Consulting

e-mail: p.r.williams@bigpond.com

Tel: +61 8 9244 7731 Mob: +61 4 09779042

Project Number 201408

February 2014

Authors

Peter Williams Principal Consultant Trivindren Naidoo Senior Consultant, SRK Consulting

Email: p.r.williams@bigpond.com

Clancy Exploration Limited (CLY) is an ASX listed company which is currently considering the acquisition of exploration assets in the Northern Territory, currently assets of ABM Resources NL (ABM). CLY has exercised a purchase option over the relevant tenements, and now requires shareholder approval to allow the transaction to proceed.

CLY is required to lodge an Independent Expert's Report with the appropriate authorities which reports on the fairness and reasonableness of the transaction to shareholders. BDO Corporate Finance (WA) Pty Ltd (BDO) has been appointed as the Independent Expert to prepare this report, and BDO has subsequently appointed Aurel Consulting (Aurel) to provide a market valuation of the exploration properties of both companies as input to forming its opinion regarding the transaction.

The work program was divided into two separate components as follows:

Valuation of the CLY tenements namely:

• x CLY 100% projects
• x Kaizen Discovery (HPX) JV project areas
• x CLY Mitsubishi Metals Corporation JV areas
• x Gold Fields projects, in which CLY has a royalty
• x Tasmania

Valuation of North Arunta tenements, the subject of the transaction, in four distinct areas, currently held by ABM Resources:

• x Barrow Creek-Lander River area
• x Reynolds Range area
• x Bonita and Walkeley areas
• x Home of Bullion area

This report contains Aurel's opinion on the current market value of the projects held by both CLY and ABM.

Results

CLY holds tenements in New South Wales and Tasmania. The NSW tenements are located within the Macquarie Arc, a volcanic belt characterised by a number of large mineral deposits, including Northparkes and Cadia Valley. CLY has acquired a ground holding to explore for porphyry-style gold and copper-gold deposits, and epithermal deposits. CLY also has a 25% interest in two joint ventures over three tenements in northwest Tasmania. The tenements are prospective for silver and base metals deposits, and potentially gold.

The ABM North Arunta tenements are located in the eastern continuation of a poorly explored Proterozoic mobile belt, considered to be the eastern extension of the Tanami Region. Target mineralisation is Proterozoic lode gold and Intrusion Related Gold Systems, similar to the styles discovered in the Tanami Region.

Aurel has undertaken a valuation of the projects using a number of different methods appropriate to the nature and stage of exploration of the projects, as follows:

• x Geological Risk Method. Projects assessed using this method were the ABM tenements, the 100% CLY tenements at stage B and above, and the Fairholme JV tenement. This method returns inconsistent results for early stage tenements, as a result of the lack of exploration budgets for these tenements to determine a realistic cost of future exploration, and these were excluded.
• x Analysis of farm-in agreements. This method was appropriate for the CLY joint ventures in NSW, the Kaizen Discovery JV and the Mitsubishi Metals JV.
• x Multiples of Exploration Expenditure. Several of the exploration projects have already produced exploration data against which projects can be assessed. This method has been applied to both CLY and ABM tenements.
• x Kilburn Method. This method has been used across a range of early stage projects to provide a direct comparison of the CLY and ABM tenements. It is particularly useful for the ABM tenements, as several of these are fairly new with little historical data and no modern exploration.
• x Comparative transactions. A range of tenement transactions over the past 2 years have been collated, and the value per unit area of the tenements was used to determine a factor for valuing the CLY and ABM tenements.

Table E-1 shows the valuation results.

Project	Low	Preferred	High
Clancy 100%
Trundle	$659,000	$842,000	$1,211,000
Orange East	$158,000	$327,000	$1,745,000
Kiola	$890,000	$1,176,000	$1,518,000
Condobolin	$1,430,000	$2,565,000	$3,300,000
Mount Tennyson	$137,000	$153,000	$169,000
Mount Pleasant	$250,000	$584,000	$1,215,000
Mitsubishi Metals Corporation JV
Cundumbul	$176,000	$437,000	$1,593,000
Currumburrama	$0	$51,000	$103,000
Genaren	$200,000	$413,000	$599,000
Ex Goldfields JV (royalty)	$35,000	$55,000	$80,000
Kaizen Discovery JV
Fairholme	$327,000	$702,000	$899,000
Manna	$66,000	$230,000	$383,000
Bass Metals JV
Lake Margaret	$16,000	$28,000	$40,000
Sock Creek	$2,000	$4,000	$7,000
Minemakers JV
Oonah	$42,000	$61,000	$79,000
Subtotal CLY	$4,388,000	$7,628,000	$12,941,000
Barrow Creek	$1,261,000	$2,286,000	$3,354,000
Lander River	$430,000	$1,218,000	$2,311,000
Reynolds Range	$599,000	$1,142,000	$1,519,000
Home of Bullion	$531,000	$710,000	$890,000
Walkeley	$294,000	$1,013,000	$2,042,000
Bonita	$776,000	$985,000	$1,110,000
Subtotal ABM	$3,891,000	$7,354,000	$11,226,000

Table E-1: Valuation result for CLY and ABM exploration assets

			Executive Summary ii
			Results ii
			Disclaimer ix
1			Introduction and Scope of Report1
	1.1		Standard of the Report1
	1.2		Scope and Work programme 1
	1.3		Statement of Independence2
	1.4		Indemnities2
	1.5		Representation2
	1.6		Consents 2
	1.7		Key personnel 2
2		Tenements	4
	2.1		CLY tenements 4
	2.2		ABM tenements6
3			Geology and Exploration9
	3.1		CLY NSW Projects9
		3.1.1	Trundle 9
		3.1.2	Orange East 9
		3.1.3	Kiola10
		3.1.4	Condobolin 10
		3.1.5	Mount Tennyson11
		3.1.6	Mount Pleasant (Application) 11
		3.1.7	Mitsubishi Metals Corporation JV11
		3.1.8	Kaizen Discovery JV 13
		3.1.9	Goldfields Royalty tenements 13
	3.2		CLY Tasmanian Tenements 14
		3.2.1	Oonah14
		3.2.2	Lake Margaret 14
		3.2.3	Sock Creek14
4			ABM North Arunta Tenements16
	4.1		Barrow Creek – Lander River 17
		4.1.1	Barrow Creek 19
		4.1.2	Lander River25
		4.1.3	Home of Bullion 28
	4.2		Reynolds Range28
		4.2.1	Sabre29
		4.2.2	Falchion31
		4.2.3	Other prospects33

	4.3	Bonita and Walkeley tenement groups 34
5		Valuation36
	5.1	Geological Risk Method (GRM) 36
		5.1.1Exploration Stage 37
		5.1.2Probabilities of projects proceeding to the next stage of exploration38
	5.2	Multiples of Exploration Expenditure Method 40
	5.3	Farm-In Arrangements and Joint Venture Method 41
	5.4	Geoscience Rating (Modified Kilburn) Valuation Methodology 43
	5.5	Area-based Method46
	5.6	Residual Royalties 46
	5.7	Results 46
		5.7.1Joint Ventures 46
6		Conclusions48
7		References51
	7.1	Websites 51

List of Tables

Table 2-1:	Status of tenements of CLY 5
Table 2-2:	Status of North Arunta tenements of ABM7
Table 2-3:	Status of North Arunta tenement applications of ABM. 8
	Table 3-1: Tenements on which CLY has a 2.5% royalty interest14
Table 5-1:	Exploration Stage assessment for input to valuation38
Table 5-2:	Probability of exploration leading to the next stage – based on mineral systems models 39
Table 5-3:	Prospectivity Enhancement Multipliers, ABM and CLY Projects 40
Table 5-4:	Recent Transactions involving early stage Exploration Ground in Australia 42
Table 5-5:	Geoscience rating criteria (Modified after Xstract, 2010)43
Table 5-6:	Kilburn valuation matrix for Clancy tenements 44
Table 5-7:	Kilburn valuation matrix for ABM tenements45
	Table 5-8: Deemed project equity (MMC) based on expenditure to end of January 2014 46
Table 5-9:	Summary table of results, JV terms, Multiples of expenditure, Geological Risk, Kilburn,Comparable transactions methods 47
Table 6-1:	Valuation result for CLY and ABM exploration assets 49

List of Figures

Figure 2-1:	Location of the CLY tenements in NSW 4
Figure 2-2:	Location of ABM North Arunta tenements in the NT6
Figure 2-3:	Grouping of the ABM tenements into project areas, with status7
Figure 4-1:	North Arunta tenements in relation to the major trans-Tanami –North Arunta structuralelements16
Figure 4-2:	Colour scheme for grade shells and drill core assays 17
Figure 4-3:	Main prospects in cyan, Lander River and Barrow Creek 18
Figure 4-4:	Relative location of K1, K2 and Emma 19
Figure 4-5:	Kroda 1 drilling and geological model 19
Figure 4-6:	Kroda 1 Leapfrog model, looking to the northwest 20
Figure 4-7:	Kroda 2 drilling looking down 20
Figure 4-8:	Long section Kroda 2, looking towards 020° 21
Figure 4-9:	Vacuum drill line 376730 mE looking west. blue >0.01 g/t, grey is below detection 21
Figure 4-10:	Vacuum drill line 376830 mE looking west 21
Figure 4-11:	Kroda 3 drilling with Leapfrog grade shells23
Figure 4-12:	Leapfrog model of Kroda 3, looking to 020° 23
Figure 4-13:	Cross section 382630 mE24
Figure 4-14:	Kroda 3A mineralisation outlines 24
Figure 4-15:	Kroda 4 drilling pattern, showing vacuum drilling and follow-up percussion holes25
Figure 4-16:	3D visualisation of Kroda 4 drilling25
Figure 4-17:	Waldron's Hill drill pattern, continuity at 0.05 g/t26
Figure 4-18:	Waldron's Long section – note V/H = 2 for visualisation purposes26
Figure 4-19:	Harrison drilling pattern – note drilling on northern and southern limbs of fold 27
Figure 4-20:	3D view of Harrison drilling – scale V/H = 2. Three lines show ore grade intersections 27
Figure 4-21:	Home of Bullion tenements and mine 28
Figure 4-22:	Sabre drilling pattern (A) NW trend, (B) NS trend29
Figure 4-23:	3D view of Sabre drilling and associated grade shells 30
Figure 4-24:	Sabre cross sections through regolith model31
Figure 4-25	Falchion prospect drilling 32
Figure 4-26:	3D view of Falchion drilling, interpreted as a steeply plunging shoot 32
Figure 4-27:	Other prospects in the Reynolds Range tenements 33
Figure 4-28:	Possible metal zoning as identified by prospects in the package34
Figure 4-29:	Geological setting – Bonita-Walkeley tenements (applications in purple) 35
Figure 5-1:	Probability Function of progression of a farm-in agreement41

Disclaimer

The opinions expressed in this Report have been based on the information supplied to Aurel Consulting (Aurel) by Clancy Exploration Limited. The opinions in this Report are provided in response to a specific request from Clancy Exploration Limited to do so. Aurel has exercised all due care in reviewing the supplied information. Whilst Aurel has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. Aurel does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them. Opinions presented in this Report apply to the site conditions and features as they existed at the time of Aurel's investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this Report, about which Aurel had no prior knowledge nor had the opportunity to evaluate.

1 Introduction and Scope of Report

Aurel Consulting (Aurel) was engaged by Clancy Exploration Limited (CLY) to undertake a valuation of exploration properties held by CLY and the North Arunta component of ABM Resources NL (ABM) tenements in the Northern Territory (NT) which CLY has exercised an option to acquire.

Clancy Exploration Limited (CLY) is an ASX listed company which is currently considering the acquisition of exploration assets in the Northern Territory, currently assets of ABM Resources NL (ABM). CLY has exercised a purchase option over the relevant tenements, and now requires shareholder approval to allow the transaction to proceed.

CLY is required to lodge an Independent Expert Report with the appropriate authorities which reports on the fairness and reasonableness of the transaction to shareholders. BDO Corporate Finance (WA) Pty Ltd (BDO) has been appointed as the Independent Expert to prepare this report, and BDO has subsequently appointed Aurel Consulting (Aurel) to provide a market valuation of the exploration properties of both companies as input to forming its opinion regarding the transaction.

The work program was divided into two separate components as follows:

Valuation of the CLY tenements namely:

• x CLY 100% projects (7)
• x HPX JV project areas
• x CLY Mitsubishi JV areas
• x Gold Fields projects, in which CLY has a royalty
• x Tasmania

Valuation of North Arunta tenements, the subject of the transaction, in four distinct areas, currently held by ABM Resources:

• x Barrow Creek-Lander River area
• x Reynolds Range area
• x Bonita and Walkeley areas
• x Home of Bullion area

This report contains Aurel's opinion on the current market value of the projects held by both CLY and ABM, which are the subject of this transaction.

The scope of the work conducted did not include a site visit to the ABM tenements. The ABM portfolio does not contain any properties with reportable resources, and the majority of the projects are at an early stage of exploration. Aurel considers that site visits will not add material information to assist in the valuation. In addition, field conditions are not amenable to vehicle access during the Northern Territory (NT) wet season. A site visit to the major projects in the CLY portfolio in NSW was undertaken as part of the work program.

1.1 Standard of the Report

This Report has been prepared to the standard of, and is considered by Aurel to be, an Independent Technical Report under the guidelines of the VALMIN Code (2005).

1.2 Scope and Work programme

The project was been undertaken between 4 February 2014 and 25 February 2014. The valuation date is 3 March 2014.

Field work was undertaken on the CLY New South Wales tenements, to verify the work carried out where possible. Peter Williams visited the tenements on the Molong Volcanic Belt between 7 January and 10 January 2014, and reviewed core and drilling chips from tenements in the Junee-Narromine Belt located at the company head office in Orange, NSW. Trivindren Naidoo also visited the Fairholme and Manna prospects in December 2013, in the course of preparing an independent report on those tenements. Due to the wet season and remote location of the ABM tenements, these were not included in the field work program. However, Peter Williams had full access to all information held by ABM that related to these tenements, as part of a previous due diligence on these tenements in November and December 2013.

1.3 Statement of Independence

Aurel does not have any material present or contingent interest in the outcome of this Report, nor does it have any pecuniary or other interest that could be reasonably regarded as being capable of affecting the independence of Aurel.

Aurel has no prior association with CLY or ABM in regard to the mineral assets that are the subject of this Report. Aurel has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

Aurel's fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The total fee inclusive of all expenses and taxes is approximately $24,000. The payment of that professional fee is not contingent upon the outcome of the Report.

1.4 Indemnities

As recommended by the VALMIN Code, CLY has provided Aurel with an indemnity under which Aurel is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

• x which results from Aurel's reliance on information provided by CLY or ABM or to CLY or ABM not providing material information; or
• x which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

1.5 Representation

CLY has represented in writing to Aurel that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

1.6 Consents

BDO will rely on and refer to the Aurel valuations above in the BDO Report, and will append a copy of the Aurel report, or a summary of the Aurel report, to the BDO Report.

Aurel consents to this Report being included, in full, in the BDO Report, in the form and context in which the technical assessment and valuation is provided, and not for any other purpose.

1.7 Key personnel

This report has been prepared by Dr Peter Williams, assisted by Trivindren Naidoo.

Peter Williams (PhD, FAusIMM, MAIG, MGSA, FAICD) – Peter has over 40 years' experience in the minerals industry, including 20 years as a consultant. Peter consults on a range of projects from project reviews and audits and public reporting, to structural studies on both a regional and orebody scale.

Trivindren Naidoo (MSc, MAusIMM, MGSSA, Pr.Sci.Nat.) – Trivindren is an exploration geologist with over 14 years' experience in the minerals industry, including 8 years as a consultant. He specialises in project evaluations and technical reviews, as well as code-compliant reporting and valuations. Trivindren is an experienced project manager, and has extensive experience in consulting and the technical management of projects, including desktop studies ranging from initial area and project assessments to early-stage orebody modelling, volume calculation and global grade estimates, as well as the preparation of code-compliant Independent Technical Reports for listed entities.

As per the VALMIN Code, the expert and specialist meet the requirements of "competence" by way of the experience, qualifications and expertise and professional memberships disclosed above. The expert as defined in the VALMIN code for this report is Peter Williams. Peter Williams takes overall responsibility for the report as the expert, as defined in the VALMIN Code.

2 Tenements

2.1 CLY tenements

CLY holds tenements in NSW and Tasmania. The NSW tenements are shown in Figure 2-1.

Figure 2-1: Location of the CLY tenements in NSW

The tenement holding details as of 10 February 2014 are listed in Table 2-1. The projects include granted tenements and one application. Aurel has been advised by CLY that EL6534 (Gobondery) will not be renewed after the expiry date on 15 March 2014. As a result, this tenement has not been included in the valuation.

Page 5
Aurel Consulting

ments of CLY
Status of tene
Table 2-1:

Project	Lease name	Status	Lease No	Blks	Area (km2)	Appl. Date	Grant Date	Expires	commitExp
W)Clancy 100% Projects (NS
Trundle	Trundle Block	Granted	EL8222	58	167.0	9/10/2012	15/01/2014	14/01/2016	$50,000
Orange East	Orange East	Renewed	EL6181	14	40.2	2/05/2003	19/01/2004	18/01/2014	$59,000
Gobondery	Gobondery	Renewed	EL6534	30	86.5	18/10/2005	16/03/2006	15/03/2014	$60,000
Kiola	Kiola	Granted	EL8151	100	284.1	31/08/2012	20/08/2013	19/08/2016	$70,000
Condobolin	Condobolin	Renewed	EL7748	126	362.4	27/10/2010	26/05/2011	26/05/2015	$83,000
Mount Tennyson	Mount Tennyson	Granted	EL8226	16	42.9	19/09/2013	21/01/2014	21/01/2017	$28,000
Mount Pleasant	Mount Pleasant	Granted	ELA4894	22	63.5	8/10/2013	19/01/2014	0/01/1900	$31,000
Total 100% NSW - Projects: 7				7	1046.6			Sub-total	$381,000
W)MMC JV Projects (NS
	Cundumbul	Renewed	EL6661	49	141.4	19/05/2006	15/11/2006	14/11/2014	$79,000
Cundumbul	Bakers Swamp	Renewed	EL7399	22	63.5	18/05/2009	28/09/2009	28/09/2015	$52,000
Currumburrama	Currumburrama	Renewed	EL6784	16	45.6	6/11/2006	22/05/2007	22/05/2015	$46,000
Genaren	Genaren	Granted	EL7927	67	193.4	3/05/2011	4/05/2012	3/05/2014	$53,500
Total MMC JV's NSW - Projects: 3				4	443.9			Sub-total	$230,500
Kaizen Discovery JV Project (NS	W)
	Fairholme	Renewed	EL6552	19	54.4	18/10/2005	3/04/2006	2/04/2014	$49,000
Fairholme	Manna	Renewed	EL6915	40	114.5	16/05/2007	18/10/2007	18/10/2015	$70,000
Total Kaizen JV's NSW - Projects: 1				2	2	168.9			Sub-total
Total NSW - Projects: 11				13	1659.4				$730,500
Bass Metals Joint Ventures (TAS) - Bass earning 75%
	Lake Margaret	Granted	EL28/2009		59	20/11/2009			$44,250
	Sock Creek	Granted	EL20/2010		10.99	2/06/2010			$8,243
Total Bass Joint Venture projects				2	69.99			Sub-total	$52,493
Minemakers Joint Ventures (TAS) - Minemakers 75% Clancy 25%
	Oonah	Renewed	EL63/2004		24	19/11/2004	8/08/2005	7/08/2014	$137,900
Total 100% projects				1	24				$137,900
Tasmania Total				3	93.99				$190,393
Source: CLY, modified to match State database records confirmed by search on Minview on 10 February 2014 and Tasmanian tenements verified on http://www.mrt.tas.gov.au on 10 February 2014.

Clancy's tenement portfolio in NSW consists of 12 exploration projects covering 1,715 km2 in the Lachlan Fold Belt, focused on the Ordovician Macquarie Arc, which hosts several large porphyry copperǦgold deposits, including the world class deposits in the Cadia Valley near Orange. Clancy's targeting indicates that the geological environment within the Macquarie Arc projects is prospective for porphyry copperǦgold deposits. Clancy also has the Condobolin project outside of the Macquarie Arc that is prospective for gold and base metals.

The Tasmanian projects are located in the Mount Read Volcanic Belt in northwest Tasmania. This area is host to a wide variety of mineral deposits styles, including Renison Bell (tin and silver), Mt Lyell (copper and gold) and the VHMS deposits Rosebery, Hellyer, Que River and Hercules (zinc, silver, lead, copper and gold). More recent discoveries include intrusiveǦrelated skarnǦstyle nickel deposits (Avebury) and skarnǦstyle tin-tungstenǦiron deposits (Mt Lindsay). Most of the base metals deposits are hosted by Cambrian rocks of the Mount Read Volcanic Belt. These tenement interests are currently all subject to Joint Venture agreements (Table 2-1).

2.2 ABM tenements

The ABM North Arunta Tenements are located in the Northern Territory, in the geological unit known as the Arunta Inlier, north and northwest of Alice Springs and south of Tennant Creek (Figure 2-2).

Figure 2-2: Location of ABM North Arunta tenements in the NT Source: ABM ASX release 29 November 2013

Figure 2-3: Grouping of the ABM tenements into project areas, with status

Tenement status: Red – granted; blue – renew retain; purple – application; green – revised application Source Data: ABM. Grid is MGA Zone 53, scale in metres.

Note that the tenements with renew retain status have near-term expiry dates, with the Barrow Creek and Lander River tenements in October 2014 and January 2015 the Reynolds Range tenements in August 2014 and June 2015.

Most of the target prospects are located on these particular tenements.

The ABM tenement holding details are shown in Figure 2-2.

Tenement	Status	Grant date	Expirydate	Re-grantdate	Areakm2	Area(subblocks)	Area(Aurel km2estimate)
				Barrow Creek Project
EL26825	renewretained	27/01/2009	26/01/2015	18/06/2013	773.3	250	774.97
EL28515	grant	3/10/2011	2/10/2017		41.58	13	41.71
EL29723	grant	17/05/2013	16/05/2019		266.01	83	266.52
EL29896	renewretained	27/01/2009	26/01/2015	18/06/2013		159	494.67
Bonita Project
EL23926	grant	11/04/2012	10/04/2018		766.42	240	765.21
EL23927	grant	16/03/2012	15/03/2018		780.69	244	779.31
EL29367	grant	16/03/2012	15/03/2018		742.96	238	742.03
EL29368	grant	11/04/2012	10/04/2018		779.49	247	778.62
				Home of Bullion Project
EL28727	grant	3/10/2011	2/10/2017		137.54	43	138.10
EL28748	grant	31/10/2011	30/10/2017		606.8	195	609.35

Table 2-2:Status of North Arunta tenements of ABM
-------------------------------------------------------	--

Tenement	Status	Grant date	Expirydate	Re-grantdate	Areakm2	Area(subblocks)	Area(Aurel km2estimate)
EL29724	grant	17/05/2013	16/05/2019		166.11	52	166.64
EL29725	grant	17/05/2013	16/05/2019		268.29	84	269.27
				Lander River Project
EL8766	renewretained	10/10/2006	9/10/2014	19/02/2013		179	525.50
EL23880	renewretained	10/10/2006	9/10/2014	19/02/2013		15	30.50
EL23883	renewretained	10/10/2006	9/10/2014	19/02/2013		20	51.79
EL23884	renewretained	10/10/2006	9/10/2014	19/02/2013		83	262.68
EL23885	renewretained	10/10/2006	9/10/2014	19/02/2013		157	497.79
renewEL23886retained10/10/20069/10/201419/02/2013101							300.25
				Reynolds Range Project
EL23655	renewretained	12/06/2003	11/06/2015	30/08/2013		43	136.9435
EL23888	renewretained	12/08/2004	11/08/2014	19/02/2013		56	178.1977
EL28083	grant	31/01/2011	30/01/2017		117.45	37	117.5212
				Walkeley Project
EL22554	grant	3/01/2014	2/01/2020		757.15	245	756.6275
EL22555	grant	3/01/2014	2/01/2020		788.04	245	786.5252
EL30153	grant	3/01/2014	2/01/2020		625.26	200	624.6222
EL30155	grant	3/01/2014	2/01/2020		781.44	247	780.2547
							10875.61

Source: Northern Territory TIS electronic database accessed 5/2/2014

Table 2-3: Status of North Arunta tenement applications of ABM.

Tenement	Status	Effectivedate	Cons date	Ve startdate	Ve fin date	Area(Aurel km2estimate)	Area(subblocks)
			Lander River Project
EL25031	application	30/04/2003	8/08/2003	16/09/2005	16/09/2010	25.69	8
EL25033	revisedapplication	19/11/2012	15/09/2003	16/09/2005	16/09/2010	27.94	12
EL25036	application	19/05/1994	30/08/1994	5/11/2012	4/11/2017	142.7	52
EL25042	application	30/04/2003	15/09/2003	16/09/2005	16/09/2010	111.5	38
Walkeley Project
EL26903	application	26/04/2000	29/05/2001	29/05/2008	29/05/2013	200.28	74
			Bonita Project
EL29833	application	16/01/2013	30/04/2013			675.54	243
EL29834	application	16/01/2013	30/04/2013			383.64	138
						1567.29

3 Geology and Exploration

3.1 CLY NSW Projects

The NSW tenements are located on volcanic belts within the Macquarie Arc of the Lachlan Orogen. The Macquarie Arc is interpreted as an intra-oceanic volcanic arc which accreted to the eastern margin of Australia during the Ordovician and Silurian periods. There are three belts of Ordovician volcanics and intrusives with arc-like characteristics in the central NSW section of the Lachlan Orogen (Glen and others, 2012), of which two are targeted by the CLY tenements (Figure 2-1). These are the western Junee-Narromine Belt and the central Molong Belt. The Ordovician volcanic arcs are separated by Silurian basinal sedimentary rocks in the Cowra Trough and Hill End Trough.

The Ordovician Arc sequences are of considerable economic significance. The Junee-Narromine Belt hosts the Cowal and Northparkes gold and copper gold deposits, and the Molong Belt hosts the Cadia and Ridgeway deposits west of Orange. Both belts contain a number of other significant resources and undeveloped deposits.

3.1.1 Trundle

Trundle consists of exploration licence EL8222 and is located 25 km west of the Northparkes copper-gold mine and bears many similarities to Northparkes. A 10 hole (1,239 m) RC drilling program was completed by CLY in 2010 (Quarterly report, March 2011). The drilling was designed to test shallow copper-gold skarn targets at the Trundle Park prospect. Eight of the ten holes returned significant gold-copper and/or silver results, including the following intercepts:

• x TPRC003: 56 m @ 0.88g/t gold from 34 m; including 2 m @ 20g/t gold, 6.97% copper and 81g/t silver from 64 m
• x TPRC009: 52 m @ 0.45g/t gold from 32 m; including 6 m @ 0.99g/t gold from 38 m
• x TPRC005: 58 m @ 0.44g/t gold, 0.17% copper from 22 m; including 4 m @ 1.19g/t gold and 0.41% copper from 28 m.

The high grade gold, copper, silver intercept in hole TPRC003 is associated with quartz veining. The veining is also elevated in arsenic, bismuth, tellurium and antimony, typical of epithermal style mineralisation. The epithermal veining overprints the gold-copper magnetite skarn, which indicates that there are at least two distinct phases of gold-copper mineralisation at Trundle Park. The high grade intercept may be consistent for at least 75 m along strike to old workings in the area.

The broad intervals of moderate grade gold and copper in the skarn are typified by the intercept in TPRC005. The known strike length of the gold-copper rich magnetite skarn to date is 2.2 km, the majority of which has not been drill tested.

Other prospects in the Trundle project include Mordialloc Cu-Au-Mo porphyry tested by 3 drill holes, and Ravenswood.

The project is classified as Stage B, as currently most intercepts are below ore grade.

3.1.2 Orange East

The Orange East tenement EL6181 is located east of the city of Orange. There are two target mineralisation styles, being Ordovician Cu-Au targets and post Ordovician Cu-Au targets. Old workings in the area are located along the regional Lucknow and Godolphin Faults. Three main prospects have been identified based largely on rock chip sampling. These are the Carangera, Pendarves and Wentworth prospects along the Godolphin Fault, and the Carangera South and Favell prospects. The first four prospects lie within a demagnetised zone parallel to the Godolophin Fault, and Favell lies in a similar parallel demagnetised zone to the west.

IP surveys were completed over the area between Pendarves and Carangera South and chargeability anomalies were interpreted and later drilled by CLY. The results identified strong alteration and sulphide mineralisation was intersected, but the grades were low for both gold and copper. The Carangera prospect was identified as a porphyry-related system, and Carangera South and Pendarves were identified as fault-related quartz stockwork mineralisation.

Orange East is classified as Stage B, as no unequivocal ore grade intersections have been identified.

3.1.3 Kiola

This project tenement is located in the southern part of the Molong volcanic belt, and was granted in August 2013. Kiola has been explored before by Minotaur (2008-2009), Goldminco, (2004-2006) and Gateway (2001-2003) and has a geophysical database comprising magnetics, project-wide VTEM, IP surveys and ground EM surveys. Seven RC and 6 diamond drill holes have been recorded, mostly in the Nasdaq-Kiola prospect near the centre of the project area. Significant drill results from the Nasdaq-Kiola skarn were:

• x 4 m @ 4.90g/t Au and 0.17% Cu from 31 m (Gateway, CWC002)
• x 0.8 m @ 8.4g/t Au from 157.5 m
• x 0.2 m @ 25.3g/t Au from 218.9 m
• x 26 m @ 2.27% Zn

Chalcopyrite-pyrrhotite mineralisation was also noted by Minotaur in KIORC003. Geophysical work suggests that targets at Kiola may not be effectively tested.

Kiola is classified as at Stage C, with some ore grade intersections for gold.

3.1.4 Condobolin

Condobolin area lies to the west of the Junee-Narromine volcanic arc within the rifted Silurian-Devonian sequences that occur between the Macquarie Arc volcanic belts, north of the town of Condobolin. The tenement covers the historical mines of Phoenix, Bluebell, Mascotte and Potters, which were mined in between 1893 and 1925. There has been a significant amount of shallow RAB drilling in the area, mainly in the 1970's and 1990's, but no previous deep drilling below the water table.

Clancy has completed rock chip sampling, magnetic, gravity and radiometric surveys, auger soil geochemistry, and IP survey and some drilling. Five prospects have been identified, and all have had an initial drilling program completed on them. The results are summarised below.

• x High-grade gold discovery at Meritilga:

  • 4 m @ 20g/t Au & 30.1g/t Ag from 75 m; including 1 m @ 62g/t Au & 60g/t Ag (CORC029)
  • 15 m @ 2.76g/t Au from 90 m including 5 m @ 7.89 g/t Au and 22.28 g/t Ag from 99 m. (CORC041).

• x Confirmed depth extension to gold mineralisation at the Phoenix prospect:

  • 9 m @ 4.08g/t Au from 72 m; including 2 m @ 14.18g/t Au
  • The host rock sequence is most likely Silurian in age suggesting the mineralisation is the same age as Mineral Hill

• x Confirmed extensions to base metal mineralisation at the Potters prospect:

  • 2 m @ 7.1% Pb, 2.4% Zn and 83.5g/t Ag from 51 m
  • 4 m @ 4.1% Zn, 2.87% Pb and 29.6g/t Ag from 136 m

• x Bluebell prospect

  • 4 m @ 0.51 g/t Au and 1.24% Cu from 105 m (CORC039)
  • 1 m @ 0.41 g/t Au, 4.8 % Cu, 39.7 g/t Ag and 4.37ppm Mo (from 100 m, CORC056),
  • 1 m @ 0.35 g/t Au, 1.34% Cu, 15.95 g/t Ag and 8.29ppm Mo (from 81 m, CORC055),
  • 2 m @ 1.4 g/t Au, 0.14% Cu, 2.31 g/t Ag and 3.96ppm Mo (from 70 m, CORC057).

• x Visible gold in AC hole at Eureka NE of Meritilga

• x Several other basement AC intercepts to be followed up:

  • 2 m @ 3.99 g/t Au from 28 m
  • 1 m @ 4.75 g/t Au from 44 m

• x Potential for alluvial gold identified in shallow AC drilling

  • x 1 m @ 28.4 g/t Au from 4 m

Detailed drilling results from the recent Condobolin drilling are reported in ASX announcement by CLY dated 17 June 2013.

The Condobolin prospect is rated at Stage C, with numerous ore grade intersections having been identified in the area. No resource has yet been defined at Condobolin.

3.1.5 Mount Tennyson

The Mount Tennyson Project is located about 30 km east of Bathurst, within the Silurian – Devonian rift sequences east of the Molong Volcanic Belt. The tenement was granted in September 2013. The prospect is located in Early Devonian rocks on the margin of the Bathurst Granite, and represents a garnet-quartz-calcite-diopside skarn assemblage. There is a small historical Mo resource in the prospect, with a Mo grade of 0.11%, which is very high grade. Major ore minerals are molybdenite and scheelite with accessory powellite.

Moly Mines carried out some work in the prospect in 2011 comprising an IP survey and a 5-hole drilling program to test the best targets from the survey. Moly Mines did not proceed due to exploration cut backs.

This is a stage C exploration project because of the existing historical high grade Mo resource.

3.1.6 Mount Pleasant (Application)

This project is located 25 km south of Mudgee, and was granted in October 2013. It is a porphyrystyle Mo-W target in granite. Mineralisation consists predominantly of pyrite with subordinate molybdenum, scheelite, chalcopyrite and bismuthinite. The mineralisation is in a fracture-controlled stockwork of quartz veins. The prospect has an historical resource based on data collected between 1979 and 1983. However there is no certainty that exploration will result in a JORC resource in future of a similar size to the historical resource.

The prospect is rated as stage C as a result of the historical resource in this prospect.

3.1.7 Mitsubishi Metals Corporation JV

The MMC JV tenements are the current focus of exploration for CLY, and have been valued based on the exploration expenditure as well as the implied value of the term of the joint venture agreement and area-based methods. Because of this, the GRM method was not applied to the MMC JV tenemens.

Cundumbul

The Cundumbul project covers 22 km of strike length of the MVB between Molong and Wellington. This section of the MVB is reasonably well exposed; the geology comprises N-striking fault-bounded slices of Ordovician, Silurian and Devonian rocks. The MVB is bounded by major E-dipping regional thrusts faults. The Neurea Fault divides the Ordovician arc into two sections within the project area, and brings latest Ordovician to Silurian rocks in the hanging wall, into contact with Early Ordovician Mitchell Formation and Hensleigh Siltstone in the footwall. The Narragal Fault is the bounding Edipping thrust on the eastern side of the MVB.

CLY and previous workers have confirmed the presence of intrusive complexes by mapping, rock-chip sampling and lithochemical sampling, at the Mehruda, Owens, Bakers Swamp, Finches Flat, Lyons and Bellevue prospects. All of these prospects have some copper and/or gold associated with them, and most are associated with monzonite or monzonite porphyry. At Bellevue, weakly porphyritic quartz monzodiorite to granodiorite dykes and intermediate feldspar porphyry dykes are the main intrusive phases.

Currumburrama

Currumburrama consists of a single EL6784 located 40 km east of West Wyalong. The surface geology is dominated by overburden of Quaternary alluvium, clay and gravel, often >100 m thick. The presence of Ordovician basement is inferred from magnetic and gravity data, which define a large north trending interpreted Ordovician arc fragment (~ 40 x 12 km), named the Currumburrama Igneous Complex. Scattered exploration drilling in different parts of the complex has confirmed the presence of Ordovician volcanic, intrusive and sedimentary rocks.

Clancy has interpreted the Currumburrama Igneous Complex as dominated by sedimentary and volcaniclastic rocks, with volcanic and intrusive units within the central and eastern sections of the complex. The complex is completely fault bounded and is internally segmented by N- to NNEtrending faults and subsidiary NNW- to NW-trending structures. Clancy has interpreted a small elongate intrusive complex in the central part of EL6784, based on radially symmetric signatures in magnetic data.

Recent exploration by CLY completed 1246 line-km, 50 m line-spaced airborne magnetic and radioelement survey, gravity survey, 54 AC holes for 5610 m of drilling and 6 diamond drill holes. Overall the drilling results identified anomalous areas for copper and zinc, but did not return ore grade intersections.

In addition, a petrological study of the core has suggested that the volcanics may be Late Ordovician or younger as they apparently overlie the Jingerangle Formation, which has been dated (Percival and others, 2006) to be as young as Bolindian 2 (450-443 Ma). This would downgrade prospectivity for porphyry – style mineralisation in the Currumurrama area.

The results from this tenement suggest that the prospect remains at stage B of exploration, and has been downgraded somewhat by the latest exploration results.

Genaren

The Genaren tenement (EL7927) is located about 40 km north of Northparkes, and the exploration model is for a porphyry system similar to the Northparkes monzonite porphyry. The magnetic signatures are similar to the magnetics over the Northparkes area, suggesting that the stratigraphy is the same as that at Northparkes. The current geophysical inversion model for Genaren is complex, and CLY is currently revising this interpretation by constraining the model with results from recent drilling programs, to improve targeting.

Recent petrological studies suggest that the rocks belong to the early or middle Ordovician sequences, and are therefore prospective for porphyry – style mineralisation. Drilling to date has not identified a porphyry, but porphyry-style phyllic alteration with anomalous copper mineralisation has been identified in one drill hole (GAMD001).

3.1.8 Kaizen Discovery JV

Fairholme

The Fairholme area is located north of the Cowal deposit in the southern part of the Junee-Narromine Volcanic Arc. The geophysical characteristics of the Fairholme Igneous Complex are similar to those of the Cowal Complex. The project is a JV with Kaizen, who has earned 49% of the project through completion of the specialised IP survey equipment proprietary to Kaizen. Drilling is expected to commence on targets identified from the geophysical survey (Kaizen Press release dated 13 January 2014).

Previous exploration, documented in the 2007 CLY Information Memorandum, has resulted in significant drill intersections at three prospects, Boundary (6 drill holes), Dungarvan (2 drill holes) and Gateway (5 drill holes).

Fairholme is rated at exploration stage B.

3.1.9 Goldfields Royalty tenements

CLY retains a 2.5% royalty on seven (7) tenements in the region, as a result of previous tenement disposal arrangements. Any of these royalties can be re-purchased by the current tenement holder for $20 M, limiting the potential value for CLY.

The underlying royalty tenements are currently registered to Gold Fields Australia and are listed in Table 3-1.

Table 3-1: Tenements on which CLY has a 2.5% royalty interest

Titleref	Last renew	Expiry date	Company	Title area(units)	Operation	Areakm2
EL6178	14 Jun 2012	18 Jan 2015	Gold Fields AustralasiaPty Ltd	39	Exploring	112.98
EL6328	31 Jul 2013	24 Oct 2015	Gold Fields AustralasiaPty Ltd	14	Exploring	40.61752
EL6553	21 Nov 2012	02 Apr 2014	Gold Fields AustralasiaPty Ltd	10	Exploring	28.555
EL6554	21 Nov 2012	02 Apr 2014	Gold Fields AustralasiaPty Ltd	12	Exploring	34.20739
EL6662	21 Jan 2014	14 Nov 2015	Gold Fields AustralasiaPty Ltd	7	Exploring	20.31492
EL6913	28 Mar 2013	18 Oct 2014	Gold Fields AustralasiaPty Ltd	84	Exploring	243.4161
EL6937	RenewalSought	08 Nov 2013	Gold Fields AustralasiaPty Ltd	28	Exploring	80.03319
EL7200	RenewalSought	08 Sep 2012	Gold Fields AustralasiaPty Ltd	20	Exploring	57.93121
EL7440	26 Nov 2012	08 Jan 2015	Gold Fields AustralasiaPty Ltd	13	Exploring	37.64431
EL7675	18 Jun 2013	11 Jan 2015	Gold Fields AustralasiaPty Ltd	100	Exploring	288.105
EL7676	18 Jun 2013	11 Jan 2015	Gold Fields AustralasiaPty Ltd	66	Exploring	189.6478
EL7677	18 Jun 2013	11 Jan 2015	Gold Fields AustralasiaPty Ltd	99	Exploring	282.1134
					Total area	1415.566

Tenement listing was by search on Minview on 10 February 2014.

3.2 CLY Tasmanian Tenements

3.2.1 Oonah

Details of the geology of the Oonah tenement is provided in the Mining One report prepared for the takeover of TNT Mines by Niuminco Group Ltd.

3.2.2 Lake Margaret

The Lake Margaret tenement contains glacial erratics with ore grade copper in a high sulfidation epithermal assemblage. The mineralogy of this erratic – an intensely silicified rock with pyrite, enargite and tennantite and trace covellite, stannoidite and mawsonite is very similar to the mineralogy at North Lyell and the high copper grade part of the Iron Blow. The fact that this mineralisation occurs in glacial float suggests that the original source may be outcropping but covered by glacial deposits. Further geophysical surveying, geochemistry, mapping and drilling is planned for this prospect.

Lake Margaret is at exploration Stage B.

3.2.3 Sock Creek

The Sock Creek tenement is located in the Mt Charter region of the Mount Read Volcanics Belt in northwest Tasmania. The tenements comprise Cambrian volcanics in the north, a central belt of Cambrian mafic volcanics and a southern belt of Cambrian siltstone flank on the southern side by Cambrian sandstones and conglomerate. No exploration data has been provided against which to assess this tenement. Accordingly, the valuation is assessed to be the base acquisition cost of the tenement, and assessed to be at exploration stage A.

4 ABM North Arunta Tenements

The North Arunta Region is a relatively poorly explored part of Australia. The geology is also poorly constrained as a result of poor outcrop and inaccessibility. There appears to be structural and temporal continuity between the Tanami Province, which straddles the WA - NT border, and the northern Arunta region. This interpretation is based on gravity and magnetic data, and the similarity of the stratigraphic sequences in both areas, and similar geochronology dates from both regions. The Lander River to Barrow Creek tenements lie along the northern margin of the Willowra gravity ridge which marks the northern edge of the Arunta region. To the north, Cambrian Wiso basin sediments fill a down-thrown basin formed by reverse faulting along the northern edge of the Arunta region. South of the Willowra gravity ridge the metasediments are mapped as the Lander Rock Formation which have been metamorphosed to amphibolite and granulite facies. The Lander Rock Formation is a time equivalent of the Killi Killi Formation in the Tanami Region. The location of major structures extending from the Tanami Region and the location of the North Arunta tenement package is shown in Figure 4-1.

The Lander River to Barrow Creek, and the Home of Bullion areas are located in the northern margin of the Arunta Region, bounded to the north by a major crustal shear zone, reactivated as a thrust and controlling the margin of the Wiso Basin. The Reynolds range and Bonita tenement groupings are selected to cover the southern extensions of the Trans Tanami structures. These may be continuous with the structures controlling the large Callie and Dead Bullock Soak deposits in the Tanami Region. The Walkeley tenement grouping was acquired to cover direct extension of the major crustal-scale Trans-Tanami structures.

Figure 4-1: North Arunta tenements in relation to the major trans-Tanami – North Arunta structural elements

Source: Magnetic data and interpretation from Clancy Exploration, unpublished data

Because several of the North Arunta projects have has an exploration history dating back to the 1970's, the reviews presented here for valuation purposes are designed to provide summaries of the previous literature and to standardise the approach for the purpose of rating the more advanced exploration projects at their current stage, and allow an assessment of their further exploration potential. The reviews do not provide a full description of all data available. In particular, this report does not repeat the numerous tables and figures showing best intersections on each project, as these data are available from the source literature. In addition, these data can bias an objective overview of grade and volume and the comparative geometry of the various projects.

The projects vary considerably in terms of grade and volume, and Aurel has taken an objective approach to presenting the available drilling data. All projects have been analysed independently, but have been presented in the same framework. Where possible, identical parameters have been used in developing the Leapfrog models; and presentation is identical (Figure 4-2). For most models fewer grade shells at 0.1, 0.2 and 0.5 g/t have been used to keep the presentation simplified.

Figure 4-2: Colour scheme for grade shells and drill core assays

4.1 Barrow Creek – Lander River

The geology of the northern Arunta region was summarised by Newmont (2009), and no additional geological framework study work has been completed since then. The following is summarised from the Newmont Information Memorandum (2009).

The northern Arunta region is considered structurally continuous with the Tanami region geology. In the Tanami region, large orogenic gold deposits are hosted by the Proterozoic Tanami Group. Newmont believes that lateral equivalents of the Tanami stratigraphy extend into the northern Arunta province.

The Waldron's Hill and Harrison prospects are thought to be hosted by equivalents of the Killi Killi Formation and Dead Bullock Formation rocks of the Tanami Group. The northern Arunta province is dominated by upper greenschist to amphibolite facies metamorphism, whereas in the Tanami metamorphism is typically lower greenschist facies. The Kroda prospect is hosted by rocks of the Ooradidgee subgroup (Davenport Province stratigraphy). Overlying the Tanami Group equivalents, Hatches Creek Felsic volcanics are also evident along the northern margin of the Arunta province between Kroda and Harrison. The Bullion Schists host a number of small mineralised prospects in the east of the tenement package and the Home of Bullion Au and Cu prospect.

The Waldron's Hill, Harrison and Kroda prospects lie within a 10-20 km wide band of imbricate fault bounded metasedimentary blocks. Detailed aeromagnetic surveys flown by Newmont in June 2007 show tight folding of metasediments and dolerites within the fault bounded blocks. Faulting appears to largely wrap around granite plutons in the vicinity of Waldron's Hill and Harrison. Long east-west quartz ridges are a feature of the larger faults, it's likely that these structures were remobilised during later events such as the Alice Spring Orogeny and the quartz infill may date from that era.

The Barrow Creek Project represents the eastern part of the Lander River – Barrow Creek contiguous package of tenements shown in Figure 2-3. The boundary between Lander River and Barrow Creek is at approximately grid line 326100 mE, the boundary between EL 25042 (Lander River) and EL26825 (Barrow Creek).

Newmont and ABM have identified a number of prospects in the Lander River – Barrow Creek package. Prospects that are currently of interest to ABM are shown in Figure 4-3. Several prospects identified by Newmont (2009) are not included in the ABM digital file.

Red square is the Mt Strzelecki Mine, blue square is a magnetic anomaly. Source data ABM.

Mineralisation identified to date in the Barrow Creek Project is around the Kroda Prospects. Other prospects have been tested by limited shallow drilling and surface geochemical surveys.

The only prospect with sufficient drilling to potentially define a resource is Kroda 3. For this review, a Leapfrog model was developed for Kroda 3, for the NW extension of Kroda 3 (called Kroda 3A in this report) and for Kroda 1 and Kroda 2, to assist in visualising the mineralisation and quantifying the exploration potential.

4.1.1 Barrow Creek

Kroda 1

The location of Kroda 1 and 2 is shown in Figure 4-4.

Figure 4-4: Relative location of K1, K2 and Emma

Kroda 1 represents anomalism identified in the regional vacuum drill program. It comprises 6 lines at 100 m line spacing and 25 m along lines. These have been in-filled over anomalous areas to 5 - 10 m spacing along line. The distribution of drilling and the form of the anomaly are shown in Figure 4-5. Reverse Circulation drilling by Newmont and ABM has been undertaken, and these are shown in the Leapfrog model (Figure 4-6).

Figure 4-5: Kroda 1 drilling and geological model

Shells at 0.05, 0.1 and 0.2 g/t

There is good continuity of the anomalies at 0.05 g/t, with moderate continuity at 0.1 g/t. The model continuity breaks up at 0.2 g/t.

Figure 4-6: Kroda 1 Leapfrog model, looking to the northwest

Shells at 0.05, 0.1 and 0.2 g/t

The RC drilling by ABM has extended the mineralisation at a 0.1 g/t cut-off to depth in KRRC10008, but KRRC100009 was drilled completely in the footwall of mineralisation. This tends to confirm a northerly dip to the mineralisation. The overall tenor of the mineralisation is low, with a rapid drop of volume from the 0.1 to the 0.2 g/t grade shell (1,130,000 m3 to 40,000 m3). This suggests that opportunities for discovery of higher grade material at Kroda 1 are limited.

Kroda 2

Kroda 2 is located on EL 26825. The prospect has been tested with vacuum drilling on 14 lines spaced 100 m apart, with drill holes between 10 m and 25 m spacing along the lines. The anomalism extends over 1,400 m. Over some anomalous zones the 10 m spacing was infilled to 5 m or less along lines (Figure 4-7).

The model suggests that there may be two or more narrow veins contributing to most of the mineralisation (for example line 6 east of 376800 mE). A vein width of less than 5 m is suggested by the density of infill used along lines to test the anomalies.

Figure 4-7: Kroda 2 drilling looking down

The Leapfrog model of the anomaly was based on using a mineralised trend striking 290 and dipping 70 north, consistent with Kroda 3. The line-to-line correlation of mineralisation appears reasonable using this trend; however the dip and plunge are unknown. The model shows reasonable anomaly continuity at 0.05 g/t and to a lesser extent at 0.1 g/t.

A long section shows the density of drilling defining the anomalies; drilling is to a maximum depth of 98 m in the west and 60 m in the east. The absence of any drilling below the surface vacuum sampling lines results in isolation of the anomalies at depth.

and it is an at most of the first and the previous followingDALLACONTRACTOR CONTRACTOR	Service StateMARINERE d'armentino	RIFARE CONTACT ARTISTS & EARLY MILLERSERREL-AM
. .+300		$+300$Plunge 80Azimuth 020200300

Figure 4-8: Long section Kroda 2, looking towards 020°

Shells: 0.05, 0.1, 0.2, 0.5, 1.0 g/t.

The vacuum drilling is surface sampling below the windblown sand, and therefore potentially biased by any underlying regolith, particularly transported materials. A cross section of the line that sterilises the area between the westernmost and more eastern anomaly (section line 376730 mE) is shown in Figure 4-9.

	#KTV0083WXTV0084	PKTV0082	KTV0081 KTV0080		- @ KTV0079---@KTV0078---®KTV0077--®KTV0076-----	gktvoozs gktvooz4 gktvoozs gktvooza			#KTV0071
$+450$	East Section +376730.23							Plunge 00Čooking West	$+450$

Figure 4-9: Vacuum drill line 376730 mE looking west. blue >0.01 g/t, grey is below detection

Maximum depth of the vacuum sampling is 5 m on this section, and detection of gold occurs on the higher area in KTV0076 to KTV0078. If the lower lying areas to the north and south include a transported horizon below the surface soil and windblown materials, it is possible that the sampling is not effective.

In comparison, on section line 376830 mE (Figure 4-10), anomalous vacuum results occurred in three samples on the northern vein (of 0.16, 0.55 and 0.13 g/t), and 1 sample in the southern vein (0.16 g/t).

Figure 4-10: Vacuum drill line 376830 mE looking west

Cyan >0.01, green >0.1 g/t, yellow > 0.2g/t, orange >0.5 g/t. Blue is below detection

Although results underneath these anomalies are less than spectacular, it is noteworthy that none of the vacuum results in the low area between the two sub-cropping "veins" show any anomalism. It is therefore questionable as to whether the vacuum sampling has effectively tested the intervening low areas, especially as these areas would be zones of thicker transported cover (potentially). If the follow-up percussion drilling is RAB to blade refusal, then the depth of cover here is up to about 40 m. Unfortunately, the metadata in the current database does not provide details of equipment and contractors used, and the details of drilling specifications on each campaign will need to be researched further. Allowing for some obvious survey errors, this pattern is consistent on all drill lines with the exception of 377230 mE where a single intercept of 0.27 g/t at end of hole occurred in a valley (KTV0805).

Kroda 3

Newmont describe Kroda as an elongate zone of anomalism with gold in a stockwork of quartzsericite-sulphide veinlets, on sheared contact between Bullion schist and amphibolites. The shears are interpreted to be steep north dipping structures. Gold is associated with pyrite-arsenopyritepyrrhotite-chalcopyrite. Visible Au < 150 μm in size was noted, occurring adjacent to or as inclusions within arsenopyrite. According to petrographic reports, there is less arsenic in the Kroda 3 deposit than other Kroda prospects. However, the issue of whether the ore is refractory does not seem to have been addressed by any of the studies available in the data pack received.

Two parallel zones of mineralisation were reported by Payne (2000) in his report on the resource potential at Kroda. More recent releases to ASX by ABM discuss the potential of the Kroda mineralisation to be in steeply plunging breccia pipes.

Drilling at Kroda 3 is shown in Figure 4-11. The prospect has mineralisation over a 440 m strike length, and reasonable grade continuity at 0.5 g/t. The original anomaly was defined over four vacuum drill lines, and the prospect has been progressively in-filled by percussion drilling and reverse circulation drilling.

A long section of Kroda 3 is shown in Figure 4-12. The steep plunge is evident in the model, with the deeper RC drilling defining mineralisation below the best surface mineralisation in what appears to be steeply east plunging shoots. However, the overall lateral extent of the mineralised envelope would suggest that the geometry is controlled by a steeply north-dipping shear zone but with steep ore shoots developed within the more planar zone.

The ore shoot geometry has been confirmed by deeper RC drilling conducted by ABM in 2011. This is shown in cross section 382630 mE (Figure 4-13), which provides the better intersections reported in the ABM press release of 27 September 2011.

Figure 4-11: Kroda 3 drilling with Leapfrog grade shells Grade shells are 0.1, 0.2 and 0.5 g/t

Figure 4-12: Leapfrog model of Kroda 3, looking to 020°

Grade shells are 0.1, 0.2 and 0.5 g/t

Figure 4-13: Cross section 382630 mE

Kroda 3A

Kroda 3A is located 800 m northeast of Kroda 3, and has similar characteristics to Kroda 3. There are ore grade intersections on 3 lines of RAB drilling, and shows excellent continuity at the 0.05 g/t grade level (Figure 4-14).

Figure 4-14: Kroda 3A mineralisation outlines

Shells 0.05, 0.1, 0.2, 0.5 g/t

Kroda 4

Kroda 4 is located approximately 5 km southwest of Kroda 3, on a different structure. As elsewhere, soil anomalies were followed up with vacuum drilling on 100 m spaced lines, with infill percussion drilling under anomalies identified in the vacuum drilling results. The drilling pattern is shown in Figure 4-15.

					■ IIA mion
	■TTV图76	■ TTW0154	TTV3232	*TTV0081TTV0082	■ TTV@65	TTV0023	듾			degest-
	*TTV6175	*TTV0155	$+TTW5131$	$+TTV0083$*TTV0084*TTV008S	* TTV BS68	$+TTV0024$	ğ
	$+TTV0174$	*TTV01S6	*TV0130	T TV0086TV0087	* TTV0868	*TTV002S
	$+TTV0173$	TTV0157	TTRC0008#TTV0129	TTV00BBTTMO00001TTV0090	*TTW0062	*TTV0028
$+7662200$	#TTW0172	*TTV0158	*TW0128	中燃脆。	#TTW0862	*TTV0029				$+7662200$
	*TTV0171	*TTV0159	TRCO009*TJV0127	TTV0093STEPS00003$+TTV0095$	*TTW0860	■ TTV0028	■ TTV03S4	*TTV0021*TTV0020
	*TTV0170	TTV0160	* TE V0126TTRC0010	TTV0096TTV0097	*TTW0050	*TTV0029	■ TTV0353	*TTV0019$+TIV0018$
	TTV0169	*TTV0161	TTV0125	TTV0098*TTM008804$+TTV0100$	* TTVO062	*TTV0030	*TTV0352	TTV0017TTV0016-HRICOSS
	TTV0168	TTV0162	TTV0124	$+$ TV0101TV0102TV0103	TTV0000	*TTV0031	*TTV0351	=TTV0014■ TTV0013· TTV0012
	TTV0167	$+TTV0163$	$+TTV0123$	TTEXCOOS$+TTV0105$	$-TTV0006$	*TTV0032	*TTW0350	$T$ TTV0011*TTV0010
		$+TTV0164$	*TTV0122	TV0106TTV0107TV0108	TTRC0022TTV0055	*TTV0033	*TTV0349	TTV0009中心线
		$+TTV0165$	TTV0121	MTTWC0906	TTROUGH!	■ TTV0034	TTV0348	■ TTV0006*TTV000S
$+7662000$		TTV0166	*TTV0120	TTV0110	TTM0088TTRC0020	*TTV0035	TTV0347	*TTV0004*TTV0003		$+7662000$
			$+TTV0119$	T10010007	TTV00B3	■ TTV0836	*TTV0346	$+TTV0002$TTV0001
			*TTV0118	*TTV0112	TTV 6:002 °	*TTV0832	■ TTV0345		Looking down
	OZBLCC-		#TTV0817	$+TTV0113$	T٣V@ 80oo	*TTV0928	*TTV(語44	50	100150	1S200o

Figure 4-15: Kroda 4 drilling pattern, showing vacuum drilling and follow-up percussion holes

There is no infill RAB or RC drilling at Kroda 4 and a Leapfrog model is not justified. However, the distribution of the grade in the percussion holes is shown in Figure 4-16.

Figure 4-16: 3D visualisation of Kroda 4 drilling

The best result was 3 m at 2.34 g/t from 33 m (TTRC0002). Follow-up has not been considered worthwhile to date.

4.1.2 Lander River

The Lander River tenements have been explored most recently by Newmont Asia Pacific. Newmont gained access to the Lander River package in 2006 (Newmont IM, 2009). The current exploration package comprises 1 km by 1 km gravity, wider 2 km by 2 km gravity, 100 m line spaced aeromagnetic survey data, and interpretation data for these surveys. The data package includes regolith mapping using satellite interpretation. Four paleo-drainage channels have been identified, containing over 60 m of colluvium fill. Outcrop is sparse.

Exploration methodology

The Lander River tenements have been subject to systematic exploration by Newmont as follows:

• x Soil sampling in areas with less than 15 m of transported cover (interpreted). Lines from 640 m apart and 320 m along lines (closer over known prospects). This was widened to 1280 m and then to 2560 m to reduce sample numbers.
• x Lag sampling and rock chips when available

x Orientation soil sampling programs over the Harrison and Waldron's Hill prospects prior to drilling. Soil samples were typically 100-120 m apart on lines 320-440 m apart although parts of the outcropping portion of Waldron's Hill have been sampled at 20x80 m spacing.

Waldron's Hill

Mineralisation at Waldron's is described by Newmont as orogenic lode gold (Newmont IM 2009), in two NNW striking shear zones or lodes. The petrology descriptions show the mineralisation is hosted in amphibolite facies metamorphosed dolerite / mafic and sediments. Sediments are typically sillimanite-garnet-cordierite gneisses while the dolerites are dominated by hornblende / actinolite with relict clinopyroxene, plagioclase that has been variably altered to sericite / zoisite / carbonate, "foxy" red biotite and minor quartz. Gold has been seen in a number of polished thin sections, occurring as grains (<20 μm) or clusters of finer blebs (1-2 μm) often in close proximity to disseminated arsenopyrite. Other sulphides associated with gold mineralisation include enargite, chalcopyrite, bornite, chalcocite, covellite, pyrrhotite, pyrite and native copper. The copper grades in the Waldron's model only average 275 ppm. Away from the primary mineralised zones remobilised pentlandite / violarite were observed in one sample of mafic gneiss along with pyrrhotite, chalcopyrite, bornite and minor sphalerite.

The metal association is somewhat different to typical orogenic lode gold deposits. In addition, Newmont suggest that unusual granites, possibly mantle-sourced, are present in the area. There may be a case that Waldron's is indicative of an intrusion-related gold system (IGRS) rather than a typical shear-hosted orogenic system, and alternative targets may be available for exploration.

The linear nature of the current known Waldron's Hill vein system is shown in Figure 4-17.

Figure 4-17: Waldron's Hill drill pattern, continuity at 0.05 g/t. A long section of the Waldron's drilling is shown in Figure 4-18.

Figure 4-18: Waldron's Long section – note V/H = 2 for visualisation purposes

Harrison

The drilling at Harrison is also wide-spaced. Newmont describe the mineralisation as orogenic gold hosted in a metadolerite horizon found in both limbs of an isoclinal anticline that plunges to the ESE. The best grades intersected in drilling to date are found in the hinge zone of the fold, with widespread pyrite and arsenopyrite mineralisation along both limbs. The hinge zone may be stoped out to the east by granite. There is some indication that the tenor and width of mineralisation increases to the west along the northern limb, providing a target for further drill testing. Current best results in 2008 RAB drilling at Harrison are RAB drilling 2008 were 1 m @ 6.96g/t, 1 m @ 1.09g/t, and in the 2009 drilling was 4 m @ 2.27g/t, 4 m @ 2.67g/t, 4 m @ 2.16g/t, and 4 m @ 1.27g/t.

Newmont considered Harrison to be their first priority target for follow-up, as the westernmost line was mineralised (4 m @ 2.27g/t), and the geochemical continues another 1200 m west.

Drilling at Harrison is shown on Figure 4-19.

Figure 4-19: Harrison drilling pattern – note drilling on northern and southern limbs of fold

Line spacing of the drilling is 320 m, so this area is still very preliminary drilling. The 3D view showing the drilling depth and also the areas with best grade (orange colours and above) is shown in Figure 4-20.

Figure 4-20: 3D view of Harrison drilling – scale V/H = 2. Three lines show ore grade intersections

4.1.3 Home of Bullion

The Home of Bullion tenements are located southeast of the Barrow Creek tenements and to the south of the Home of Bullion mine (operated intermittently between 1923 and 1957) (Figure 2-3). Home of Bullion is a copper-lead-zinc deposit located within the Bullion Schist. The Bullion Schist is thinly bedded pelite and sandstone with minor amphibolite, metamorphosed to upper greenschist facies (Scrimgeour, 2013). The Bullion Schist is considered a likely correlative of the Lander Rock Formation. The Bullion Schist may also have a transitional relationship with the Ooradidgee Group, which is a time equivalent of the Tanami Group in the Davenport and Warramunga Provinces (Scrimgeour, 2013).

A significant area of the Home of Bullion tenements is covered by Georgina Basin sediments, which will render geochemical prospecting difficult. The geological setting of the tenements in relation to the Home of Bullion mine is shown in Figure 4-21.

Figure 4-21: Home of Bullion tenements and mine

Source: NTGS 1:2.5M geological map. Grey and blue colours are Georgina Basin sedimentary cover, brown Lander Rock Formation and equivalents, red granitic intrusives.

4.2 Reynolds Range

The geology of the Reynolds Range project area was described by Rohde (2012) in the ABM 2012 annual tenement report on EL 23655. The project covers Paleoproterozoic metasediments and intrusives in the central Aileron Province of the Arunta region. The surface geology has been mapped and described by the Northern Territory Geological Survey (NTGS) in the 1:250,000 scale Napperby (SF53-09) sheet and in more detail by the Bureau of Mineral Resources on the special edition Reynolds Range Region 1:100,000 scale geological map.

On a regional scale the area comprises polydeformed Paleoproterozoic Lander Group metasediments intruded by numerous felsic and mafic intrusive phases and overlain by slightly

younger siliciclastic metasediments, including the Reynolds Range Group. The area is covered by complex regolith, with scree shedding from substantial hills cut by large drainage systems.

The project area is interpreted to be underlain by three major north-west orientated lithological units: High magnetic / high metamorphic grade Lander Rock Group along the north eastern tenement boundary is bordered to the southwest by low magnetic / low metamorphic grade Lander Rock Group which form the main lithological unit in the centre of the tenement. Minor low magnetic / moderate to high magnetic granitic as well as dolerite are located on the tenements. Where there is good exposure in the central north-eastern part of the belt, folding in the Lander Rock Group has northwest-striking axes, plunging towards the southeast and verging towards the southwest with steep south-western limbs and gently dipping north-eastern limbs (English, 2006).

Widespread gold anomalism was identified within greenschist-facies metasediments along the eastern side of the Reynolds Range in the early 1990's. Gold is hosted by sulphidic quartz veins and has been interpreted to broadly correlate with gold mineralisation in the Tanami region.

Most of the gold mineralisation in the Reynolds Range Region appears to be concentrated along a relatively narrow corridor of greenschist facies Lander Rock Formation metaturbidites.

The highest grade gold mineralisation is at the Sabre and Falchion prospects. A sharp increase in metamorphic grade occurs towards the northeast where granulite facies is encountered and these rocks have been named the Mt Stafford Formation. High grade intercepts do occur in rocks of higher metamorphic grade, such as the Black Knight Prospect, but in this case it appears to be associated with retrograde greenschist facies metamorphism. Gold mineralisation occurs in a number of different geological settings and with a number of different metal associations.

4.2.1 Sabre

Drilling at Sabre has been both to the northeast and southwest, and the anomaly is defined across 12 lines 50 m apart (600 m). Three lines drilled at 25 m infill were completed in the main part of the anomaly. The drilling pattern is shown in Figure 4-22A, and in 3D in Figure 4-23. The shells were generated using a NW-SW trend, parallel to the structure in the belt.

Figure 4-22: Sabre drilling pattern (A) NW trend, (B) NS trend

Shells 0.1, 0.2, 0.3, 1.0 g/t

The model suggests mineralisation may be in 2-3 en-echelon N-S trending narrow veins The model also suggests that 25 m infill of the two lines north of the current infill may also be fruitful in term of extending the mineralisation. This geometry may be indicative of mineralisation in extension veins in a northwest striking shear zone with overall dextral movement, providing a model for further testing by some E-W oriented drilling.

Figure 4-23: 3D view of Sabre drilling and associated grade shells

Shells 0.1 g/t, 0.2 g/t, 0.5 g/t, 1.0 g/t

ABM suggests that the mineralisation drilled at Sabre is supergene, with a depth of oxidation of about 50 – 55 m. Cross sections showing the depth of weathering through the main mineralised region are shown in Figure 4-24.

Figure 4-24: Sabre cross sections through regolith model

Note base of regolith domain boundary is 50 m below topography.

4.2.2 Falchion

Falchion has been drilled on seven lines at 50 m spacing over the main soil anomaly (6 lines) and a further line 100 m northeast and 100 m southwest. Absence of intersections on these lines tends to close off the Falchion system, although the north-eastern line had two intersections of 1 m @ 0.49 g/t from 6 m and 1 m @ 0.4 g/t from 37 m. Both of these are in RAB drilling in the regolith. A plan view of the drilling at Falchion is shown in Figure 4-25. Mineralisation appears to be restricted to a small pod intersected on the two central lines, and is sterilised in the RAB drilling by the two adjacent lines to the northwest and southeast.

Figure 4-25 Falchion prospect drilling

Shells are 0.05 g/t, 0.1 g/t and 0.2 g/t; Interpreted with a horizontal plunge

A 3D view of the same drilling is shown in Figure 4-26 (looking southwest). The higher grade intersections at Falchion are narrow, and do not resolve into grade shells using a 5 m resolution wireframe.

Figure 4-26: 3D view of Falchion drilling, interpreted as a steeply plunging shoot

Shells 0.1 g/t, 0.2 g/t, 0.5 g/t, 1.0 g/t

Note that the ABM deep RC drilling failed to intersect significant mineralisation, except immediately below the best surface mineralisation (2 m at 2g/t from 78 m).

4.2.3 Other prospects

The Reynolds Range tenements hold other prospects, as shown in Figure 4-27.

Figure 4-27: Other prospects in the Reynolds Range tenements

Source: ABM annual report for EL23888, Plate 1

Note that the distribution of prospects appears to be zoned around the central intrusions of Agn marked on the map, and appearing to be preferentially emplaced along the Lander River Beds (Aall). The inner zone is marked by Sn and W deposits, followed outwards by gold, Cu and Cu-Au, and then copper and other base metals. This interpretation is shown graphically in Figure 4-28.

The pattern suggests that exploration may be enhanced by multi-element geochemistry and a review of granite geochemistry, as at Waldron's Hill. In addition, if the deposits are intrusion related, a structural study to locate structures active during granite emplacement may also be warranted.

Figure 4-28: Possible metal zoning as identified by prospects in the package Contours: Sn, W – blue, Au – Yellow, Cu-Au – Red, (Cu), Pb, Zn - grey

4.3 Bonita and Walkeley tenement groups

The geological setting of the Bonita and Walkeley tenements and applications is shown in Figure 4-29. The tenements have been acquired to test the continuity of structures and stratigraphy from the Tanami into the Aileron province of the Arunta region. The regional map compilation from the Northern Territory Geological Survey (Figure 4-29) supports this geological setting, providing an initial view that these tenements are prospective for Tanami-style or granite-related styles deposits.

Figure 4-29: Geological setting – Bonita-Walkeley tenements (applications in purple)

Source: NTGS 1:2.5M geological map. Grey and blue colours are Wiso and Georgina Basin sedimentary cover, brown is Tanami Group, brown hatch Lander Rock Formation and equivalents, red granitic intrusives, blue mafic intrusives.

The Bonita tenement group covers significant areas of the Georgina Basin equivalent rocks, of unknown thickness, in particular EL29367 and EL29368. ABM has identified a magnetic anomaly in the southern part of EL29368, and referred to this as the Swampy prospect. ABM has conducted a preliminary geochemical survey, but results are not yet in the ABM database.

The Walkeley tenements were granted in January 2014, so no work has been completed on these tenements by ABM.

Both project areas are considered to be at Stage A of exploration, requiring initial prospect definition and prospecting.

5 Valuation

The projects of CLY and ABM are at a range of stages of exploration and have varying amounts of data available for them. The CLY projects are also covered by joint venture arrangements, and there have been recent transactions with the joint venture partners. As such, the purchase price and joint venture agreement terms provide a method of determining the market value of part of the CLY portfolio.

Projects with recent exploration expenditure and drilling results have also been reviewed in relation to whether the projects have been enhanced or degraded by the exploration work. The multiples of exploration expenditure method has been used in these cases as part of determining the range of values.

The ABM tenements have had a history of exploration extending back to the early 1990's. There are significant issues with some of the historical data, and as such only recent exploration by ABM has been included in the exploration expenditure review of these projects. The more advanced projects in the ABM portfolio are the Barrow Creek prospects, and there have been estimates undertaken on drilling results which do not meet current JORC reporting standards. However, there is enough data in terms of potential targets in this area to justify use of the Geological Risk Method.

As a base method for all of the areas in the early stages of exploration, a Kilburn Method has been applied to all tenements, as this is directly comparable across both the CLY and ABM properties.

Where possible, Aurel has used two or more methods for estimating a market value for each project. The decision on the method for each project is shown in Table 5-9.

5.1 Geological Risk Method (GRM)

The valuation method developed initially by SRK Consulting and applied to the several projects is primarily designed to inform exploration value and progress to discovery, based on the following criteria:

• x Exploration Stage, being the position of the exploration project on the pathway to discovery.
• x Probability of the exploration project proceeding to the next Exploration Stage.
• x Cost of proceeding to the next Exploration Stage.
• x Exploration target value

In Aurel's approach, the Expected Value of an economic discovery is the probability of the exploration project advancing to the next Exploration Stage times the Target Value, less the cost of discovery, as shown in the following formula:

EV = (TV x P) – C

(where EV = Expected Value; TV = Target Value; P = Probability of advancing exploration project; and C = Cost of advancing exploration project).

This valuation method generates an Expected Value for each project at each of the main exploration stages, or decision points, by working back from a project's target value. This requires an assessment of the risk profile and the cost of each of the principal exploration stages. This process can be considered as a simplified 'roll-back' evaluation similar to one arm of a 'successful' decision tree analysis. Because the decision to proceed to the next stage is a forward-looking one, present dollar values are used for costs, based either on actual or budgeted costs that the exploring company can provide at the time.

The determination of the stage from which to apply the risk method is important. It is possible to use an NPV approach to define a target value, or a market based approach can be used, where for example, resources equivalent to an exploration target can be valued against market, and the added risk associated with the Exploration Target (and costs) can be assessed using the risk-based approach.

The methods applied to the valuation of the CLY and ABM prospects follow the GRM. Aurel has assumed that a minimum potentially economic target size for a resource in these areas is 500 Koz gold or gold equivalent (for Molybdenum resources) and has assumed that an Inferred Resource of 500 Koz would have a market value of about $15.00 per troy ounce in normal market conditions.

The method requires making an assessment of the likelihood of discovery of resources of ore in the tenements, and this remains the largest uncertainty in the results obtained.

Aurel has made an independent assessment of the following key inputs in arriving at a valuation model:

• x The likely exploration target tonnes for the tenements (where for example a historical resource provides guidance)
• x The stage of exploration for each individual tenement / target
• x The likely transition probability (or probability of success) to the next stage of exploration for each tenement / target.

In effect, these variables represent the uncertainties in assessing the merits of the valuation.

5.1.1 Exploration Stage

Aurel considers a 5-stage exploration model in assessing exploration projects, as follows:

• A. Project generation
• B. Reconnaissance exploration
• C. Drill testing
• D. Resource definition
• E. Feasibility.

Table 5-1 outlines Aurel's allocation of Exploration Stage for each of the projects under consideration. The definition of a price-point in this model depends on the information available and the data which can be relied upon to link the prospects under consideration to the exploration property market.

The CLY and ABM projects under consideration are in general early stage. Some historical drill testing has been carried out on prospects, and some tenements have historical resources defined. Prospects have been assigned an exploration Stage C where there are ore grade intersections reported in the drilling results or there is an historical resource on the tenement. Where projects are currently being mapped or previous drilling being reviewed to generate new targets, these have been assessed as Stage B. In some cases, no previous exploration can be relied upon, and these projects are assigned to Stage A of exploration. Using the geological information obtained from published sources and discussions with the appropriate exploration personnel, Aurel has assessed the tenements under consideration as in Table 5-1. Only projects for which the GRM was applied are tabled. The method has not been applied where there is insufficient geological information, or the cost parameters and target size is unknown.

Project	ExplorationStage(A - E)	Exploration Stage comments	Mineralisation style
Barrow Creek	C	Historical Resource	Lode gold
Lander River	B	Waldron's Hill, other targets	Lode gold, IRGS
Home of Bullion	A	Targets not defined	Lode gold, VHMS
Walkeley	A	Targets not defined	Lode gold
Bonita	A	Targets not defined, except onemagnetic high	Lode gold
Reynolds Range	B	Ore grade intersections	Lode gold, polymetallic IRGS
Clancy 100%
Trundle	B	Sub ore grade intersections	Au-Cu
Orange East	B	Sub ore grade intersections	Au, Pb-Zn
Kiola	C	Historical Resources	Skarn Au-Cu
Condobolin	C	Ore grade intersections	Porphyry - Au-Cu-Mo
Mount Pleasant	C	Historical Resources	Mo- W porphyry, epithermals(high and low sulphidation, mainlyAu
Kaizen DiscoveryJV
Fairholme	C	Ore grade intersections	Porphyry - Au-Cu
Manna	B	Aircore drilling, geochemicalanomalies	Porphyry - Au-Cu

Table 5-1:	Exploration Stage assessment for input to valuation
------------	-----------------------------------------------------

5.1.2 Probabilities of projects proceeding to the next stage of exploration

Aurel has reviewed the probabilities of each project assessed using this method in proceeding to the next stage of exploration. The method was the Mineral Systems approach to deposit modelling. The results of Aurel's assessment are shown in Table 5-2.

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					Probabilities
Prospect Name	SourceP1	P1 Comments	PathwayP2	P2 Comments	P3 Fluid	P3 Comments	P4 Trap	P4 comments	P Total
Trundle	0.9	Au ore gradeintersections	0.8	Trundle Park andMordiallocprospects	0.8	Moderate gradeintersection	0.7	Uncertain of size andgrade	0.4032
Orange East	0.8	Au and Cupresent	1	Godolphin Fault,Favell mag low	0.6	Grade of identifiedmineralisation low	0.7	Uncertain size and grade	0.336
Gobondery	0.8	Porphyryidentified	0.8	Porphyry locationsknown	0.4	Demonstrated lack ofeconomic metals	0.5	No trap found	0.128
Kiola	0.9	Au ore gradeintersections	0.7	Skarns identified inmajor faults not yetNasdaq prospectidentified	0.8	mineralisation known, Cumineralisation identifiedOre grade Au	0.6	geophysics (anticline, notTrap identified intested	0.3024
Condobolin	1	Historic mining	0.8	mapped, remnanthistorical resourceMeritilga zone	0.9	Ore grade intersections	0.75	Meriilga Zone mapped,but size still small	0.54
Mount Tennyson	0.9	Small HistoricalResource	0.9	Not yet mapped indrilling	0.9	Ore known	0.9	Size to be determined bydrilling	0.6561
Mount Pleasant	0.95	Large low gradehistoricalresource	0.9	High grade zoneneeds identifying	0.9	Ore known	0.9	Size to be determined bydrilling	0.69255
Ex Goldfields JV(royalty)	0.9	Drill Intersections	0.8	Several structuresidentified	0.7	consistent high gradeOre grade, but no	0.6	Size to be determined bydrilling	0.3024
Fairholme	0.9	Previous drillingintersections	0.8	Porphyry identifiedin geophysics	0.8	Ore grade intersections	0.5	Target depth for targetsnot yet reached (> 450m)	0.288
Manna	0.9	Previous drillingintersections	0.8	Porphyry identifiedin geophysics	0.8	Ore grade intersections	0.5	Target depth for targetsnot yet reached (> 450m)	0.288
Barrow Creek	0.8		0.9		0.9	Know small deposits	0.8	Known, but size an issue	0.5184
Bonita	0.5		0.6		0.6	Mag anomaly	0.8	Unknown	0.18
Home of Bullion	0.6		0.6		0.6	Home of Bullion close by	0.8	Unknown	0.216
Lander River	0.8		0.9		0.8	Waldron's Hill	0.8	Known, but size an issue	0.4608
Reynolds Range	0.9		0.8		0.9	Sabre	0.7	Known, but size an issue	0.4536
Walkeley	0.5		0.7		0.5	Unknown	0.8	Unknown	0.175

Table 5-2: Probability of exploration leading to the next stage – based on mineral systems models

5.2 Multiples of Exploration Expenditure Method

Where projects have had a continuous, recent period of exploration effort related to the current tenements of interest, the expenditure on these tenements should normally be recoverable on transfer of the tenements, provided the expenditure has added value equivalent to the expenditure. For example, should a company undertake an airborne geophysical survey, and the results show structural connection with known mineralised structures, the outcome is positive, and an incoming company can utilise that information and not have to undertake the same expenditure. This represents a value of intellectual property to the vendor.

Whether expenditure can be considered as value adding or value destructive relative to the expenditure amount is commonly captured in a "prospectivity enhancement multiplier" or PEM. Aurel considers this a subjective, but useful concept. For example, in the CLY situation, drilling at some prospects has not resulted in the discovery expected, and this results in a PEM of less than 1 for these prospects. PEM assessments for the CLY and ABM projects are tabulated in Table 5-3, and represent the highest uncertainty in this type of valuation.

Several projects have not been subject to recent exploration, or exploration expenditure data from previous tenement holders is either not available or not relevant. In these cases, the expenditure method has not been applied.

Project	PEM assignment comments	PEMHigh
	Clancy 100%
Trundle	Sub ore grade intersections, defined porphyry system (Mordialloc)	1.25
Orange East	Sub ore grade intersections, well-defined zones of old workings	1.25
Gobondery	Sub ore grade intersections, most areas tested	0.75
Kiola	Historical Resources, no current exploration	1.00
Condobolin	Ore grade intersections, ore zone continuity	1.50
Mount Tennyson	Historical Resources, no current exploration	1.00
Mount Pleasant	Historical Resources, no current exploration	1.00
	Mitsubishi JV
Cundumbul	Several targets identified, promising drilling results require follow-up	1.50
Currumburrama	Probable relinquishment, negative results from current exploration	0.00
Genaren	Drilling to date has identified porphyry-style phyllic alteration withanomalous copper mineralisation. Early stage exploration	1.25
	Kaizen Discovery JV
Fairholme	Quartz vein, geophysical targets ready for drill testing	1.50
Manna	Aircore drilling, geochemical anomalies, not yet tested by deeper drilling	1.20
	Bass Metals JV
Lake Margaret	Mineralised glacial float, target defined, no further data	1.00
Sock Creek	No data	1.00
	Minemakers JV
Oonah	Historical resource	1.00
Barrow Creek	Identified mineralisation at four prospects, additional geochemical targets tofollow-up	1.50

Table 5-3: Prospectivity Enhancement Multipliers, ABM and CLY Projects

Project	PEM assignment comments	PEMHigh
Lander River	Identified mineralisation at three prospects, additional geochemical targetsto follow-up	1.00
Home of Bullion	No exploration results to date – early stage	1.00
Walkeley	No exploration results to date – early stage, but well-defined structuralcorridors	1.50
Bonita	No exploration results to date – early stage, but well-defined structuralcorridors	1.50

5.3 Farm-In Arrangements and Joint Venture Method

Farm-in arrangements are mechanisms for an incoming party to acquire equity in a project through expenditure of money on exploration on the project, commonly as a precursor to establishing a formal Joint Venture. The party farming-in is not obliged to continue spending, and therefore the total project valuation at any point during the life of the farm-in agreement has to be discounted by a risk factor recognising that eventual joint venture equity may not be achieved.

Aurel has developed a method for the assessment of risk to eventual completion of a farm-in by considering the probability for progressing from one stage of the agreement to the next. The probability function is shown in Figure 5-1. The total probability of completion of a JV using this function is 2%-4%. In comparison to the global probability of successful exploration on prospects to a resource is about 1%, based on project turnover data. The increase in total probability is justified on the basis that there is usually some indications of mineralisation from prior exploration before a farm-in agreement is started.

Figure 5-1: Probability Function of progression of a farm-in agreement

The project valuation is then calculated as the sum of the present value of the staged probabilitydiscounted expenditure commitments and any up-front committed expenditure, divided by the final percentage equity to be earned.

This method has been applied in two ways:

• x As a method to directly value the current CLY joint ventures in Tasmania and NSW
• x As a method to determine the value of transaction in the comparative transaction study

The results for the comparative transaction study are shown in Table 5-4.

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Project	State	Stage	Area (km2)	Date announced	Buyer	Seller	Deal type	Equity	$/km2
Ambrosia	South Australia	Exploration	855	Jun-09	Marmosa Pty Ltd	Monax Mining Ltd	ContingentPayments	50%	3,870.68
Arthurville	New South Wales	Exploration	292	Apr-12	Mitsubishi Corp	Minotaur ExplorationLtd	ContingentPayments	49%	5,215.85
Billa Kalina	South Australia	Exploration	2,342	Nov-13	Monax Alliance PtyLtd	RESOURCES LTDMAXIMUS	ContingentPayments	80%	1,117.93
Bonaparte	Western Australia	Exploration	998	Aug-09	JOGMEC	Mincor Resources Inc	ContingentPayments	40%	3,735.34
Boomara	Queensland	Exploration	650	Dec-11	Xstrata Plc	Mt Isa Metals Ltd	ContingentPayments	80%	4,418.13
Borroloola West	Northern Territory	Target Outline	2,062	Jul-13	Exploration Inc.Cliffs NaturalResources	Sandfire ResourcesNL	ContingentPayments	80%	2,642.25
Calingiri	Western Australia	Exploration	593	Dec-13	First QuantumMinerals Ltd	Caravel Minerals Ltd	Cash	13%	16,340.51
Queensland JVCentral	Queensland	Exploration	785	Jul-12	Gold Fields Ltd	Zamia Metals Ltd	ContingentPayments	51%	8,347.71
Cloncurry	Queensland	Target Outline	546	Feb-10	JOGMEC	Minotaur ExplorationLtd	ContingentPayments	51%	10,387.79
Cundumbul	New South Wales	Exploration	444	Aug-12	Materials CorpMitsubishi	Clancy Exploration Ltd	ContingentPayments	49%	10,135.47
EPM14111	Queensland	Exploration	83	Jan-11	GBM ResourcesLtd	Newcrest Mining Ltd	Cash, ContingentPayments	100%	1,116.84
Erayinia	Western Australia	Exploration	220	Jan-13	Black Raven PtyLtd	ABM Resources NL	Cash	70%	1,945.84
Gawler Craton	South Australia	Target Outline	2,555	Sep-12	BHP Billiton Group	Minotaur ExplorationLtd	Cash	100%	4,031.31
Intercept Hill	South Australia	Target Outline	423	Mar-10	Xstrata Plc	Argo Exploration Ltd	ContingentPayments	51%	14,755.27
Millers Creek	South Australia	Exploration	3,165	Nov-11	Antofagasta PLC	Monax Mining Ltd	ContingentPayments	70%	2,504.96
MountainsWingate	Northern Territory	Exploration	1,940	Apr-12	Hunan Non-ferrousGeology andExploration	Outback Metals Ltd	Cash	100%	773.28

Table 5-4: Recent Transactions involving early stage Exploration Ground in Australia

Data sourced from SNL and Intierra databases

5.4 Geoscience Rating (Modified Kilburn) Valuation Methodology

The Geoscientific or modified Kilburn method of valuation, as described by Kilburn (1990), attempts to quantify the relevant technical aspects of a property through the use of appropriate multipliers (factors) applied to an appropriate base (or intrinsic) value. The intrinsic value is referred to as the Base Acquisition Cost (BAC), and is critical as it forms the standard base from which to commence a valuation. It represents "the average cost to identify, apply for and retain a base unit of area of title".

Multipliers or factors are considered for off-property aspects, on-property aspects, anomaly aspects and geological aspects. These multipliers are applied sequentially to the BAC to estimate the Technical Value for each tenement. A further Market Factor is then considered to derive a Fair Market Value.

A BAC of $380/km2 has been calculated for Tasmania and the Northern Territory, and has been assumed for New South Wales. A Market Factor of 0.5 has been applied.

The rating criteria used for assessing the modifying factors are provided in Table 5-5.

Rating	Off property factor	On property factor	Anomaly Factor	Geological Factor
0.1				Unfavourable geological setting
0.5			Extensive previous explorationgave poor results	Poor geological setting
0.9			Poor results to date	Generally favourable geologicalsetting, under cover
1	No knownmineralisation in district	No known mineralisation onlease	No targets outlined	Generally favourable geologicalsetting
1.5	Minor workings	Minor workings or mineralisedzones exposed	Target identified, initial
2	Several old workings in	Several old workings or	indications positive	Favourable geological setting, with
2.5	district	exploration targets identified	Significant grade intercepts	structures or mineralised zones
3	Mine or abundantworkings with significant	Mine or abundant workingswith significant previous	evident, but not linked oncross or long sections	Significant minerslised zones exposedin prospective host rock
3.5	previous production	production	Several economic gradeintercepts on adjacentsections
4	Along strike from amajor deposit (s)	Major mine with significant
5	Along strike of a worldclass deposit	historical production
10		World class mine

Table 5-5: Geoscience rating criteria (Modified after Xstract, 2010)

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Clancy 100% Projects (NSW)
		Tenement					Off property		On Property		Anomaly		Geology		Technical Value				Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High	Preferred
Trundle	EL8222	Trundle Block	Granted	167.0	63460	100%	3	4	2	2.5	2	2.5	1	2		761520 3173000	0.5	380,760	1,586,500	983,630
Orange East	EL6181	Orange East	Renewed	40.2	15276	100%	2	3	2	3	1.5	2.5	1	2	91656	687420	0.5	45,828	343,710	194,769
Gobondery	EL6534	Gobondery	Renewed	86.5	32870	100%	1.5	2	1	1.5	1.5	2	0.9		1 66561.75	197220	0.5	33,281	98,610	65,945
Kiola	EL8151	Kiola	Granted	284.1	107958	100%	1.5	2	2	3	1	2.5	1	2		323874 3238740	0.5	161,937	1,619,370	890,654
Condobolin	EL7748	Condobolin	Renewed	362.4	137712	100%	2	3	2	3	2.5	3	1		2 1377120 7436448		0.5	688,560	3,718,224	2,203,392
Mount Tennyson	EL8226	Mount Tennyson Granted		42.9	16302	100%	1.5	2	1.5	2	2.5	3.5	1		2 91698.75	456456	0.5	45,849	228,228	137,039
Mount Pleasant	ELA4894	Mount Pleasant Granted		63.5	24130	100%	1.5	3	1.5	2	2.5	3.5	1		2 135731.3 1013460		0.5	67,866	506,730	287,298
HPX JV Areas (NSW)
		Tenement					Off property		On Property		Anomaly		Geology		Technical Value				Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High	Preferred
	EL6552	Fairholme	Renewed	54.4	20672	51%	2	4	1.5	2	1.5	2.5	1		2 47442.24 421708.8		0.5	23,721	210,854	117,288
Fairholme	EL6915	Manna	Renewed	114.5	43510	51%	2	4	1	1.5	1.5	1.5	1	1		66570.3 199710.9	0.5	33,285	99,855	66,570
MMC JV Projects (NSW)
		Tenement					Off property		On Property		Anomaly		Geology		Technical Value				Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High	Preferred
	EL6661	Cundumbul	Renewed	141.4	53732	51%	1.5	2	1.5	2	1	1.5	1		2 61657.47 328839.8		0.5	30,829	164,420	97,624
Cundumbul	EL7399	Bakers Swamp Renewed		63.5	24130	51%	1.5	2	1	1.5	1	1.5	1		2 18459.45 110756.7		0.5	9,230	55,378	32,304
Currumburrama	EL6784	Currumburrama Renewed		45.6	17339.4	51%	1	2	1	1.5	0.9	1	0.9		1 7162.906 26529.28		0.5	3,581	13,265	8,423
Genaren	EL7927	Genaren	Granted	193.4	73492	51%	3	4	1	1	1	1.5	0.9		2 101198.5	449771	0.5	50,599	224,886	137,742
Bass Metals JV Areas (TAS)
		Tenement					Off property		On Property		Anomaly		Geology		Technical Value				Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High	Preferred
		EL28/2009 Lake Margaret	Granted	59	22420	25%	3	4	1	1.5	1	1.5	0.9	1	15133.5	50445	0.5	7,567	25,223	16,395
		EL20/2010 Sock Creek	Granted	10.99	4176.2	25%	3	4	1	1.5	1	1	1	1	3132.15	6264.3	0.5	1,566	3,132	2,349
Minemakers Joint Ventures (TAS)
		Tenement					Off property		On Property		Anomaly		Geology		Technical Value				Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High	Preferred

Table 5-6: Kilburn valuation matrix for Clancy tenements

EL63/2004 Oonah Renewed 24 9120 25% 2 4 1.5 2 1.5 3.5 1 2.5 10260 159600 0.5 5,130 79,800 42,465

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ABM Arunta		Tenement					Off property		On Property		Anomaly			Geology		Technical Value			Valuation
Project	Number	Name	Status	Area	BAC	Equity	HighLow		HighLow		Low	High	Low	High	Low	High	MarketFactor	Low	High
	EL26825			renew retained 774.9662 294487.1		100%	1.5	2	1	1.5	1	1.5		1		1 441730.7 1325192	0.5	220,865	662,596
	EL28515		grant		41.70758 15848.88	1	1.5	2	1.5	2	1	1		0.9		2 32093.98 126791.1	0.5	16,047	63,396
Barrow Creek	EL29723		grant		266.5195 101277.4	1	1.5	2	1	1.5	1	1		0.9		1 136724.5 303832.3	0.5	68,362	151,916
	EL29896			renew retained 494.6733 187975.8		1	1.5	2	1.5	2	1	1.5		1		2 422945.7 2255710	0.5	211,473	1,127,855
	EL23926		grant		765.209 290779.4	1	1	1.5	1	1	1	1		0.9		1 261701.5 436169.1	0.5	130,851	218,085
	EL23927		grant		779.3121 296138.6	1	1	1.5	1	1	1	1		0.9		2 266524.7 888415.7	0.5	133,262	444,208
	EL29367		grant		742.0322 281972.2	1	1	1.5	1	1	1	1		0.9	1	253775 422958.4	0.5	126,888	211,479
Bonita	EL29368		grant		778.6206 295875.8	1	1	1.5	1	1	1	1.5		0.9		1 266288.2 665720.6	0.5	133,144	332,860
	EL29833		Application		675.54 256705.2	0.7	1	1.5	1	1	1	1		0.9		1 161724.3 269540.5	0.5	80,862	134,770
	EL29834		Application		383.64 145783.2	0.7	1	1.5	1	1.5	1	1		0.9		2 91843.42 459217.1	0.5	45,922	229,609
	EL28727		grant		138.0964 52476.62	1	1.5	3	1	1	1	1		1		2 78714.94 314859.7	0.5	39,357	157,430
	EL28748		grant		609.3548 231554.8	1	1.5	3	1	1	1	1		1		2 347332.2 1389329	0.5	173,666	694,664
Home of Bullion	EL29724		grant		166.6377 63322.33	1	1.5	3	1	1.5	1	1		1		2 94983.49 569900.9	0.5	47,492	284,950
	EL29725		grant		269.2708 102322.9	1	1.5	3	1	1	1	1		1		2 153484.4 613937.4	0.5	76,742	306,969
	EL8766			renew retained 525.4958 199688.4		1	1	1.5	1	1.5	1	1.5		0.9		1 179719.6 673948.4	0.5	89,860	336,974
	EL23880			renew retained 30.50311 11591.18		1	1	1.5	1	1	1	1		0.9		1 10432.06 17386.77	0.5	5,216	8,693
	EL23883		renew retained		51.7942 19681.8	1	1	1.5	1	3	1.5		2	0.9		2 26570.43 354272.3	0.5	13,285	177,136
	EL23884			renew retained 262.6777 99817.53		1	1	1.5	1	1	1	1		0.9		1 89835.78 149726.3	0.5	44,918	74,863
Lander River	EL23885			renew retained 497.7939 189161.7		1	1	1.5	1	2	1.5		2	0.9		1 255368.3 1134970	0.5	127,684	567,485
	EL23886		renew retained		300.251 114095.4	1	1	1.5	1	1.5	1	1.5		0.9		1 102685.9 385071.9	0.5	51,343	192,536
	EL25031		application	25.69	9762.2	0.7	1	1.5	1	1	1	1		0.9		1 6150.186 10250.31	0.5	3,075	5,125
	EL25033		revised applica		27.94 10617.2	0.7	1	1.5	1	1	1	1		0.9		1 6688.836 11148.06	0.5	3,344	5,574
	EL25036		application	142.7	54226	0.7	1	1.5	1	1	1	1		0.9		1 34162.38 56937.3	0.5	17,081	28,469
	EL25042		application	111.5	42370	0.7	1	1.5	1	1	1	1		0.9	26693.11	44488.5	0.5	13,347	22,244
	EL23655			renew retained 136.9435 52038.53		1	1.5	2	1.5	2	1	1.5		0.9	1	105378 312231.2	0.5	52,689	156,116
Reynolds Range	EL23888			renew retained 178.1977 67715.12		1	1.5	2	1.5	3	1.5	2.5		1		2 228538.5 2031454	0.5	114,269	1,015,727
	EL28083		grant		117.5212 44658.07	1	1.5	2	1	1.5	1	1.5		1		2 66987.1 401922.6	0.5	33,494	200,961
	EL22554		grant		756.6275 287518.5	1	1	1	1	1	1	1		0.9		1 258766.6 287518.5	0.5	129,383	143,759
	EL22555		grant		786.5252 298879.6	1	1	1	1	1	1	1		0.9		1 268991.6 298879.6	0.5	134,496	149,440
Walkeley	EL30153		grant		624.6222 237356.4	1	1	1	1	1	1	1		1		2 237356.4 474712.9	0.5	118,678	237,356
	EL30155		grant		780.2547 296496.8	1	1	1	1	1	1	1		1		2 296496.8 592993.5	0.5	148,248	296,497

Table 5-7: Kilburn valuation matrix for ABM tenements

EL26903 application 200.28 76106.4 0.7 1 1 1 1 1 1 0.9 1 47947.03 53274.48 0.5 23,974 26,637 25,305

5.5 Area-based Method

In the area-based method, the projects are valued based on the areal extent of the licence areas, using valuation factors derived from the analysis of comparative market transactions. The factors used were $1,385 for licences in the Northern Territory, $3,984 for licences in New South Wales, and $2,750 for licences in Tasmania. The valuations were adjusted to reflect equity holding.

Area-based method has not been applied to small project areas where there is advanced exploration, in particular the Fairholme and Oonah tenements.

5.6 Residual Royalties

Aurel has used a method for valuing the royalties that is based on the value of the underlying exploration properties.

This method is based on the assumption that the value derived for the exploration property is effectively a risked value that a mineable deposit will be discovered on the property. Therefore, although a royalty inherently infers a future production, the value at an early stage, preliminary to a definitive feasibility study, is similar to an option value; it has either a zero value, or a value based on the probability that the option will be "in the money". For a royalty, that probability is similar to the probability of exploration success, and therefore the royalty has a value proportional to the value placed on the exploration property itself.

Because in this case the royalty is capped, Aurel has used a proportionate value of the target gold potential and the gold equivalent ounces of the capped amount. This value is based on 20 February 2014 Australian dollar gold price of $1450 per oz.

5.7 Results

Valuation results for all methods applied to the different tenements are shown in Table 5-9. All projects have at least two methods applied to them, and Aurel has taken the range of the valuation to be the lowest valuation from the applicable methods and the highest valuation from the applicable methods. The preferred valuation result has been taken as the median valuation result where more than three methods have been applied, and the average of the valuation results where less than three methods have been applicable.

5.7.1 Joint Ventures

Two joint ventures were valued directly using the Joint Venture method, the Kaizen Discovery JV and the Mitsubishi Metals Corporation (MMC) JV. Kaizen has achieved a 49% earn in as announced in December 2013. At the end of January MMC had achieved expenditure commitments on the three projects as shown in Table 5-8: Deemed project equity (MMC) based on expenditure to end of January 2014

Project	Expenditure(AUD)	Earn-inamount(AUD)	Earn-in %	Deemed %
Cundumbul	942,341.23	1,500,000	49.0%	30.8%
Genaren	513,955.17	750,000	49.0%	33.6%
Currumburrama	395,681.38	750,000	49.0%	25.9%

Table 5-8: Deemed project equity (MMC) based on expenditure to end of January 2014

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Aurel Consulting

Project	JV Terms	MME	GRM	Kilburn	Area-based Comparativetransactions	Low	Preferred	High
Barrow Creek		$3,354,998	$2,388,000	$1,261,255	$2,185,979	$1,261,000	$2,286,000	$3,354,000
Bonita		$776,342		$1,110,970	$1,070,343	$776,000	$985,000	$1,110,000
Home of Bullion				$890,635	$531,107	$531,000	$710,000	$890,000
Lander River		$430,993	$1,543,680	$894,127	$2,311,565	$430,000	$1,218,000	$2,311,000
Reynolds Range		$1,497,457	$1,519,560	$786,628	$599,411	$599,000	$1,142,000	$1,519,000
Walkeley		$294,171		$704,234	$2,042,103	$294,000	$1,013,000	$2,042,000
Subtotal ABM						$3,891,000	$7,354,000	$11,226,000
Clancy 100% projects
Trundle		$1,211,695	$701,520	$983,630	$659,314	$659,000	$842,000	$1,211,000
Orange East		$1,745,973	$459,600	$194,769	$158,709	$158,000	$327,000	$1,745,000
Kiola			$1,518,000	$890,654	$1,121,624	$890,000	$1,176,000	$1,518,000
Condobolin		$2,927,420	$3,300,000	$2,203,392	$1,430,751	$1,430,000	$2,565,000	$3,300,000
Mount Tennyson				$137,039	$169,369	$137,000	$153,000	$169,000
Mount Pleasant			$1,215,000	$287,298	$250,697	$250,000	$584,000	$1,215,000
Mitsubishi JV
Cundumbul	$463,376	$1,593,561		$176,338	$412,561	$176,000	$437,000	$1,593,000
Currumburrama	$103,191	$0		$10,970	$91,875	$0	$51,000	$103,000
Genaren	$437,369	$599,919		$200,263	$389,406	$200,000	$413,000	$599,000
Ex Goldfields JV (royalty)		$51,318	$80,027		$35,207	$35,000	$55,000	$80,000
Kaizen Discovery JV
Fairholme	$327,443	$899,002	$881,280			$327,000	$702,000	$899,000
Manna	$140,333	$360,334	$383,642	$66,570	$230,543	$66,000	$230,000	$383,000
Bass Metals JV
Lake Margaret				$16,395	$40,570	$16,000	$28,000	$40,000
Sock Creek				$2,349	$7,557	$2,000	$4,000	$7,000
Minemakers JV
Oonah	$79,836			$42,465		$42,000	$61,000	$79,000
Subtotal CLY						$4,388,000	$7,628,000	12,941,000

Table 5-9: Summary table of results, JV terms, Multiples of expenditure, Geological Risk, Kilburn, Comparable transactions methods

6 Conclusions

Aurel was appointment by BDO to prepare a Technical Expert Report compliant with the VALMIN code to support an opinion as to the current Market Value of the exploration assets of both CLY and ABM.

CLY holds tenements in New South Wales and Tasmania. The NSW tenements are located within the Macquarie Arc, a volcanic belt characterised by a number of large mineral deposits, including Northparkes and Cadia Valley. CLY has acquired a ground holding to explore for porphyry-style gold and copper-gold deposits, and epithermal deposits CLY also has a 25% interest in two joint ventures over three tenements in northwest Tasmania. The tenements are prospective for silver and base metals deposits, and potentially gold.

The ABM North Arunta tenements are located in the eastern continuation of a poorly explored Proterozoic mobile belt, considered to be the eastern extension of the Tanami Region. Target mineralisation is Proterozoic lode gold and Intrusion Related Gold Systems, similar to the styles discovered in the Tanami Region.

Aurel has undertaken a valuation of the projects using a number of different methods appropriate to the nature and stage of exploration of the projects, as follows:

• x Geological Risk Method. Projects assessed using this method were the ABM tenements, the 100% CLY tenements at stage B and above, and the Fairholme JV tenement. This method returns inconsistent results for early stage tenements, as a result of the lack of exploration budgets for these tenements to determine a realistic cost of future exploration, and these were excluded.
• x Analysis of farm-in agreements. This method was appropriate for the CLY joint ventures in NSW, the Kaizen Discovery JV and the Mitsubishi Metals JV.
• x Multiples of Exploration Expenditure. Several of the exploration projects have already produced exploration data against which projects can be assessed. This method has been applied to both CLY and ABM tenements.
• x Kilburn Method. This method has been used across a range of early stage projects to provide a direct comparison of the CLY and ABM tenements. It is particularly useful for the ABM tenements, as several of these are fairly new with little historical data and no modern exploration.
• x Comparative transactions. A range of tenement transactions over the past 2 years have been collated, and the value per unit area of the tenements was used to determine a factor for valuing the CLY and ABM tenements.

The table below shows the valuation results (Table 6-1).

Project	Low	Preferred	High
Clancy 100%
Trundle	$659,000	$842,000	$1,211,000
Orange East	$158,000	$327,000	$1,745,000
Kiola	$890,000	$1,176,000	$1,518,000
Condobolin	$1,430,000	$2,565,000	$3,300,000
Mount Tennyson	$137,000	$153,000	$169,000
Mount Pleasant	$250,000	$584,000	$1,215,000
Mitsubishi JV
Cundumbul	$176,000	$437,000	$1,593,000
Currumburrama	$0	$51,000	$103,000
Genaren	$200,000	$413,000	$599,000
Ex Goldfields JV (royalty)	$35,000	$55,000	$80,000
Kaizen Discovery JV
Fairholme	$327,000	$702,000	$899,000
Manna	$66,000	$230,000	$383,000
Bass Metals JV
Lake Margaret	$16,000	$28,000	$40,000
Sock Creek	$2,000	$4,000	$7,000
Minemakers JV
Oonah	$42,000	$61,000	$79,000
Subtotal CLY	$4,388,000	$7,628,000	$12,941,000
Barrow Creek	$1,261,000	$2,286,000	$3,354,000
Lander River	$430,000	$1,218,000	$2,311,000
Reynolds Range	$599,000	$1,142,000	$1,519,000
Home of Bullion	$531,000	$710,000	$890,000
Walkeley	$294,000	$1,013,000	$2,042,000
Bonita	$776,000	$985,000	$1,110,000
Subtotal ABM	$3,891,000	$7,354,000	$11,226,000

Table 6-1:	Valuation result for CLY and ABM exploration assets
------------	-----------------------------------------------------	--	--

Signature Page

Prepared by

Peter Williams

Principal Consultant (Aurel Consulting)

7 References

This report has been prepared using unpublished data provided by CLY

• Barnes, G. and Ward, D. 2007. Clancy Exploration Pty Ltd Information Memorandum Porphyry Au-Cu Projects Lachlan Fold Belt NSW, Australia. Geoinformatics Exploration Inc. March, 2007
• Corbett, K.D. and Komyshan, P. 1986. MRV Project 1:25 000 series. Map 1: Geology of the Mt Charter – Hellyer area. Map Report Geol Survey of Tasmania.
• English, L.T.P., 2006. Reynolds Range Project, Northern Territory, Drilling Completion Report. Tanami Exploration NL internal report.
• Glen, R.A, C.D. Quinn, C.D. and Cooke, D.R (2012). The Macquarie Arc, Lachlan Orogen, New South Wales: its evolution, tectonic setting and mineral deposits. Episodes, 35, 177-186.
• Lord, D, Etheridge, M, Wilson, M, Hall, G and Uttley, P, (2001). Measuring exploration success: An alternate to the discovery-cost-per-ounce method of quantifying exploration effectiveness, in Society of Economic Geologists Newsletter, 45, April.
• Newmont Asia Pacific, 2009. Information Memorandum Tanami Non Core Assets. Tanami and Barrow Creek Regions, Northern Territory.
• Payne, P. 2000. Barrow Creek Project. Kroda Prospect Estimate of Resource Potential. Normandy report CR25908.
• Rohde, J. 2012. Annual Report EL 23655 'Lander' Reynolds Range Project from 04 October 2011 to 11 June 2012. ABM Resources NL.
• Rohde, J. 2013. Bridging Report EL 23888 "Stafford", Reynolds Range Project From 12 August 2011 to 4 September 2012. ABM Resources NL.
• Scrimgeour, I.R. 2013. Aileron Province in Geology and Mineral Resources of the Northern Territory. Ahmed, M. and Munson, T.J. (compilers). Special Publication 5.
• Summons, T.G., Hutchin, S. and Williams, B. 2013. Valuation of the Mineral Assets of TNT Mines Ltd & Niuminco Group Ltd. Mining One Consultants September 2013.
• VALMIN (2005). Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports – The VALMIN Code (2005 Edition), prepared by the VALMIN Committee, 23pp.

7.1 Websites

Mining One Consultants report is available from http://www.tntmines.com.au

Aurel Report Client Distribution Record

Project Number: 201408

Date Issued: 5 March 2014

Name/Title	Company
Peter Menchetti	BDO Corporate Finance (WA) Pty Ltd

Rev No.	Date	Revised By	Revision Details
1	5 March 2014	Peter Williams	Final Report

This Report is protected by copyright vested in Aurel Consulting (Australasia) Pty Ltd. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, Aurel.