RAREX LIMITED — Annual Report 2007

Mar 30, 2008

FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2007

DIRECTORS' REPORT

The Board of Directors has pleasure in presenting its report on the consolidated entity consisting of Clancy Exploration Limited and the entity it controlled at the end of, or during, the year ended 31 December 2007.

1. Directors

(i) Names, Qualifications and Experience

The names and details of the company's directors in office at any time during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

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

(Non-Executive Chairman) 53 Years

Dr Macdonald is a geoscientist. During the past three years he has operated a Brisbane-based consultancy business which has provided professional geoscientific services to exploration and mining companies. Dr Macdonald has over 30 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. In 2006, Dr Macdonald became a nonexecutive director of Mantle Diamonds Limited. He has not held a directorship in any other listed entity in the past three years.

Dr Macdonald completed a Bachelor of Arts with Honours at Oxford University, majoring in Geology. 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 and a Fellow of the Society of Economic Geologists and a Member of the Australian Institute of Company Directors.

Mr Mark Stewart, BJourn, LLB, HDip Co. Law, HDip Tax Law

(Managing Director) 50 Years

Mr Stewart is a lawyer by profession and is admitted as a barrister and solicitor in Western Australia and is an admitted attorney in South Africa. Mr Stewart has over 16 years experience in the mining and junior exploration sectors having joined Clancy's former major shareholder, Geoinformatics, in September 2003 where as a Vice President he was responsible for corporate and business development. He has been a director of the Company since 16 March 2005. He also has extensive public company experience having been a director of Uranex NL from 18 July 2005 until 28 February 2006, Goldstream Mining NL from 31 August 2004 until 28 February 2006, and Indo Mines Limited from 8 September 2003 until 12 December 2006. He has not held a directorship in any other listed entities in the past three years. He was also formerly Regional Manager of Anglo American for Asia and Australia and was based in Singapore and then in Perth. Prior to that position he was a senior executive of Anglo American in Johannesburg.

Mr Stewart holds a Bachelor of Journalism majoring in Journalism and Law from Rhodes University and a Bachelor of Laws from the University of Cape Town. He also holds post-graduate diplomas in both Company Law and Tax from the University of Witwatersrand.

Dr Nick Archibald, BSc (Hon), PhD, FTSE, FAusIMM, CP(Geo), FSEG, FAIG

(Non-Executive Director, (Technical**)) 56 Years**

Dr Archibald is recognised as one of Australia's leading structural geology consultants, and has extensive experience in applying geological expertise to solve problems in exploration and mining. Dr Archibald was a joint founder and remains Executive Vice Chairman and CEO of Clancy's former major shareholder, TSX-listed Geoinformatics Exploration Inc. He devised its strategic business model and in the 1990s devoted considerable time to developing strategic collaborations with CSIRO's Divisions of Exploration and Mining and Mathematical and Information Sciences. Dr Archibald remains, however, actively involved in the core business of Geoinformatics and is a director of each its various controlled entities Dr Archibald is also a director of Sanatana Diamonds Inc. which is listed on the TSX Venture Exchange (TSX-V: STA) and the London Alternate Investment Market ("AIM"). He has not held a directorship in any other listed entity in the past three years.

Dr Archibald is an Honours Graduate in Geology from James Cook University of North Queensland. He completed his PhD at the University of Western Australia.

Mark Lester, B.Com, CA

(Non-Executive Director, (Financial)) 54 Years

Mr Lester is a Chartered Accountant in public practice. He is currently a partner in a Chartered Accounting practice based in Subiaco, Western Australia. He is also a Registered Auditor and a director of a Registered Tax Agent and is involved in advising a wide range of clients including public companies, large private groups, not for profit organisations and trustee entities. Previously, Mr Lester was company secretary of Melbourne-based biotech company Meditech Research Limited for six years until its recent acquisition by Alchemia Limited. During that period of time Mr Lester acted as chief financial officer and was responsible for all ASIC and ASX compliance matters. Following his graduation, he joined a major international accounting firm where he worked for six years. In 1982, Mr Lester left public accounting to work in commerce gaining experience in the financial services and manufacturing sectors. In 1988 he returned to public practice. He has not held a directorship in any listed entity in the past three years.

Mr Lester graduated from the University of Western Australia with a Bachelor of Commerce.

		Number of Shares	Number of Unlisted Options Expiring 30 April 2010
	Held atBeginning ofYear	AcquiredDuring theYear	Held at End ofYear	Held atBeginning ofYear	Granted Duringthe Year	Held at Endof Year
M Stewart	Nil	301,000	301,000	Nil	1,000,000	1,000,000
J Macdonald	Nil	250,000	250,000	Nil	250,000	250,000
N Archibald 1	Nil	25,000	25,000	Nil	200,000	200,000
M Lester	Nil	50,000	50,000	Nil	200,000	200,000
	Nil	626,000	626,000	Nil	1,650,000	1,650,000

(ii) Interests in the Shares and Options of the Company

The ordinary shares acquired by the directors and executives during the year were from on-market trades and/or a Prospectus Offer of shares (at 20 cents per share) to the public. The shares acquired through the Prospectus Offer were subject to the same terms as the other shares issued pursuant to that Prospectus. The options were granted on 23 April 2007.

1 Dr Archibald is a director of Geoinformatics Exploration Australia Pty Ltd which holds 22,805,506 shares in Clancy. Dr Archibald is also a director and shareholder of Geoinformatics Exploration Inc. which ultimately holds 100% of the shares in Geoinformatics Exploration Australia.

2. Company Secretary

Rowan Caren, B.Com, CA

(Company Secretary) 41 Years Mr Caren is a Chartered Accountant with over 16 years commercial experience. He has been directly involved in the minerals exploration industry for 11 years. In 2004 he created a specialist company secretarial and advisory consultancy, Dabinett Corporate Pty Ltd. He has provided financial and corporate services to several listed and unlisted companies involved in the resources sector. Prior to that he was an executive and company secretary with Indo Mines Ltd. He qualified with Price Waterhouse Coopers and worked for them in Australia and overseas for six years.

Mr Caren graduated with a Bachelor of Commerce (Accounting) from the University of Western Australia and is a member of the Institute of Chartered Accountants in Australia.

3. Principal Activities

The principal activities during the year of the entities within the consolidated entity are mineral exploration and development.

4. Operating Results for the Year

The net consolidated loss for the year after income tax amounted to $840,265 (2006: $109,363).

5. Dividends

No dividend has been declared or paid by the company since the end of the previous financial year and the directors do not at present recommend a dividend.

6. Review of Operations

The review of operations of the consolidated entity, and the results of those operations are incorporated in the Operations Report.

7. Likely Developments and Expected Results

The Company will continue the evaluation of its mineral projects and undertake generative work to identify and acquire new resource projects. Other than as referred to in this report, due to the nature of the business, further information as to likely developments in the operations of the Company and likely results of those operations in future financial years would, in the opinion of the directors, be speculative.

8. Significant Changes in the State of Affairs

The Company issued a prospectus dated 22 May 2007 offering 25,000,000 shares for subscription at 20 cents per share. The offering was successfully completed, raising a total of $5,000,000 before costs of the issue, and the Company's shares were officially listed on the Australian Stock Exchange on 11 July 2007.

The Company commenced exploration activities in its own right in April 2007. Prior to that, all exploration activities had been carried out and funded by its then parent entity Geoinformatics Exploration Australia Pty Ltd, in its capacity as manager, and additionally, in relation to joint venture projects, in association with Gold Fields Australasia Pty Ltd.

9. Significant Events After Balance Date

Since the end of the financial year no matters or circumstances have occurred that have or may significantly affect the operations or the state of affairs of the Company and the consolidated entity in subsequent financial years.

10. Review of Financial Condition

At 31 December 2007 the consolidated entity had cash reserves of $3,767,671 after paying suppliers and employees $1,654,746, of which $1,197,208 was expended on direct exploration activities. A further $166,196 was spent on capital expenditure and strategic investments. The consolidated entity raised $5,000,000 from a capital raising, of which $725, 821 was applied to the costs of the share issue. A further $1,008,100 was received from a joint venture partner as well as $131,228 in interest. Of the current year loans of $500,607 received from the former parent entity, an amount of $323,365 was repaid, with the balance plus an amount of $112,758 owing at 31 December 2006 settled by the issue of ordinary shares in the Company. This comprised the issue on 7 March 2007 of 2,600,000 shares at 5 cents each amounting to $130,000, and on 8 May 2007, 800,000 shares at 20 cents each amounting to $160,000.

11. Remuneration Report - Audited

This report details the nature and amount of remuneration for each director of Clancy Exploration Limited and the Group, and for the executives receiving the highest remuneration in accordance with the requirements of the Corporations Act 2001 and its Regulations. It also provides the remuneration disclosures required by paragraphs Aus 25.4 to Aus 25.7.2 of AASB 124 Related Party Disclosures, which have been transferred to the Remuneration Report in accordance with Corporations Regulation 2M.6.04. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the three executives in the Parent and the Group receiving the highest remuneration.

For the purposes of this report, the term "executive" encompasses the Managing Director, senior executives and the secretary of the Parent and the Group.

Remuneration Policy

The remuneration policy of Clancy Exploration Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives. The board of Clancy Exploration Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.

Options to acquire ordinary shares have been granted to all directors and key management personnel. The Board believes that options are an effective remuneration tool which preserve the cash reserves of the company whilst providing valuable remuneration. The options may not be exercised for two years from the date of grant and may be cancelled at any time during the option term should the grantee voluntarily terminate his employment or the company terminate his employment for reasons of serious misconduct.

The board's policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated group is as follows:

• The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the board after seeking professional advice from independent external consultants.
• All executives receive a base salary (which is based on factors such as length of service and experience) and options granted to acquire ordinary shares.
• The board reviews executive packages annually by reference to the consolidated group's performance, executive performance and comparable information from industry sectors.

All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Binomial Tree methodology. Option valuations are not discounted for escrow. All options have been escrowed for two years.

Non-Executives Directors

The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.

The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Currently there is a maximum aggregate sum of $200,000 per annum, which is to be divided between the Non-Executive Directors in the proportions agreed between them or, failing agreement, equally. Directors are encouraged to hold shares in the company and are granted options.

Remuneration Sub-Committee

The Board has established a sub-committee to consider remuneration of the Board and key management personnel. The Remuneration Sub-Committee will seek independent professional advice to formulate remuneration policy recommendations which are then submitted to the Board for approval. It is anticipated that the Remuneration Sub-Committee will meet at least annually. The Remuneration Sub-Committee is comprised of the Chairman, the independent non-executive director and the Company Secretary.

Company performance, shareholder wealth and director and executive remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The achievement of this aim has been through the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests.

Executive and non-executive directors, other key management personnel and other senior employees have been granted options over ordinary shares. The options will vest on 11 July 2009 if the grantee has not voluntarily terminated his position with the Company, or the Company has not terminated the grantee's position with the Company for reasons of serious misconduct. The recipients of options are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the options granted to them will also increase. Therefore the options provide an incentive to the recipients to remain with the Company and to continue to work to enhance the Company's value.

Key Management Personnel Remuneration Policy

The board's policy for determining the nature and amount of remuneration of key management for the group is as follows:

The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned and their role within the organisation. The contracts of service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future.

Key Management Personnel Remuneration

Remuneration for the year ended 31 December 2007

Key Management Person &Position	Short-term Benefits		Share-basedPayment1	Post-employmentBenefits	Total	Options as% of Total1
	Salary	Consulting fees	Options	Superannuation
	$	$	$	$	$	%
M StewartManaging Director	94,624	-	20,183	8,516	123,323	19.6
J MacdonaldChairman	-	-	5,934	42,226	48,160	14.1
N ArchibaldNon-Executive Director	-	-	4,743	13,080	17,823	36.3
M LesterNon-Executive Director	-	-	4,747	21,179	25,926	22.4
R CarenCompany Secretary	-	73,730	2,295	-	76,025	3.1
G BarnesExploration Manager	70,968	-	11,600	6,387	88,955	15.0
G DoigChief Financial Officer	-	43,806	2,295	-	46,101	5.2
	165,592	117,536	51,797	91,388	426,313	13.8

1 There is no performance-related component to remuneration. The nature of the options granted to KMP's serve to align the interest of the KMP's with the interests of shareholders.

There was no key management personnel remuneration in 2006.

Options Granted As Part of Remuneration for the year ended 31 December 2007

Options are issued to directors and executives as part of their remuneration for nil consideration. The options are issued to the directors and executives of Clancy Exploration Limited and its subsidiaries to increase goal congruence between executives, directors and shareholders. No options vested during the year and no options were exercised, lapsed or forfeited during the year. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. For details on the valuation of the options, including models and assumptions used, refer to Note 27 in the Financial Statements. The options granted to directors and executives are set out below. All options are subject to escrow for two years from 11 July 2007.

The options will vest after two years but may be cancelled at the discretion of the Board if the grantee voluntarily terminates his employment with the Company or the Company terminates the employment for reasons of serious misconduct.

KeyManagementPersonnel	OptionSeries	GrantedNo.	Grant Date	Exercise Date	Fair Valueper Optionat GrantDate$	ExercisePrice$	Value ofOptionsGrantedDuring theYear$	RemunerationConsisting ofOptions for theYear%
M Stewart	Incentive	500,000	23 April 2007	30 April 2010	0.0996	0.20	49,818	26.5%
	PS 1	250,000	23 April 2007	30 April 2010	0.0775	0.30	19,363	10.3%
	PS 2	250,000	23 April 2007	30 April 2010	0.0624	0.40	15,611	8.3%
J Macdonald	Incentive	250,000	23 April 2007	30 April 2010	0.0997	0.20	24,930	37.1%
N Archibald	Incentive	200,000	23 April 2007	30 April 2010	0.0996	0.20	19,927	60.4%
M Lester	Incentive	200,000	23 April 2007	30 April 2010	0.0997	0.20	19,944	48.5%
R Caren	Incentive	100,000	23 April 2007	30 April 2010	0.0964	0.20	9,640	11.6%
G Barnes	Incentive	300,000	23 April 2007	30 April 2010	0.0964	0.20	28,921	22.9%
	PS 1	150,000	23 April 2007	30 April 2010	0.0737	0.30	11,053	8.8%
	PS 2	150,000	23 April 2007	30 April 2010	0.0584	0.40	8,761	6.9%
G Doig	Incentive	100,000	23 April 2007	30 April 2010	0.0964	0.20	9,640	18.0%
		2,450,000					217,608	36.8%

No comparatives provided as Clancy was listed on 11 July 2007

Incentive options are exercisable at 20 cents by no later than 30 April 2010.

PS 1 options are exercisable at 30 cents by no later than 30 April 2010.

PS 2 options are exercisable at 40 cents by no later than 30 April 2010.

Contracts with Directors and Key Management Personnel

Mark Stewart.

The key provisions of the contract with Mark Stewart (Managing Director) are as follows:

Contract Duration

Rolling contract

Notice Period for Termination andTermination Payments

Mr Stewart may terminate employment by providing 3 months notice in writing.The Company may terminate Mr Stewart's employment, for reasons other than seriousmisconduct, during the first 12 months of employment by providing 12 months notice orproviding payment in lieu of this notice period.The Company may terminate Mr Stewart's employment, for reasons other than seriousmisconduct, after the first 12 months of employment by providing 6 months notice orproviding payment in lieu of this notice period.The Company may immediately terminate Mr Stewart's employment for reasons ofserious misconduct.

Gordon Barnes

The key provisions of the contract with Gordon Barnes (Exploration Manager) are as follows:

Contract Duration	Rolling contract
Notice Period for Termination and	Either party may terminate employment by providing 3 months notice in writing. Normal
Termination Payments	remuneration continues to be paid over notice period.

12. Auditor Independence and Non-Audit Services

The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditors' independence for the following reasons:

• all material non-audit services are reviewed and approved by the Board of Directors prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
• the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia's Professional Statement F1: Professional Independence.

The following fees for non-audit services were paid/payable to the external auditors during the year ended 31 December 2007:

Tax Advisory Services in relation to initial public offering (Capitalised to Costs of Share Issue)	$22,671
Tax Compliance Services	$1,670

13. Auditors' Independence Declaration

The auditors' independence declaration for the year ended 31 December 2007 has been received and can be found on page 8 of the Directors' Report.

14. Corporate Governance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors support and have adhered to the principles of corporate governance. The company's corporate governance statement is included in the annual report immediately after the Independent Auditors' Report.

15. Share Options

At the date of this report 4,900,000 options to acquire ordinary shares in Clancy Exploration Limited were on issue, as follows:

Number	Expiry Date	Exercise Price	Transferable/Non-Transferable
2,000,000	10 July 2011	20 cents	Non-Transferable Brokers Options
1,900,000	30 April 2010	20 cents	Incentive Options
500,000	30 April 2010	30 cents	PS 1 Options
500,000	30 April 2010	40 cents	PS 2 Options

All options are subject to escrow for two years from 11 July 2007.

No options were exercised during the year or in the period up to the date of this report. Details of options issued to directors, consultants and eligible employees, are disclosed in this Directors' Report and Notes 17, 26 and 27 to the Annual Financial Statement.

16. Directors' Meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows:

Director	Directors'	Directors'	Remuneration	Remuneration	Audit	Audit
	Meetings	Meetings	Committee	Committee	Committee	Committee
	Eligible to	Attended	Meetings	Meetings	Meetings	Meetings
	Attend		Eligible to	Attended	Eligible to	Attended
			Attend		Attend
M Stewart	5	5	-	-	-	-
J Macdonald	5	5	1	1	-	-
N Archibald	5	5	-	-	-	-
M Lester	5	5	1	1	-	-

In accordance with the Constitution, Mr Lester retires as a director at the Annual General Meeting and being eligible, offers himself for re-election.

17. Insurance and Indemnity of Officers

The Company has in respect of any person who is or has been a director or officer of the Company paid a premium in respect of a contract insuring all directors and officers against a liability. The Company maintains insurance policies for the benefit of the relevant director or officer for the term of their appointment and for a period of seven years after retirement or resignation.

The Company has entered into a Deed of Indemnity, Access and Insurance with each of its Directors and the Company Secretary. Under the Deeds of Indemnity, Access and Insurance the Company will indemnify each officer to the extent permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company. The Deeds of Indemnity, Access and Insurance also provide for the right to access Board papers.

18. Risk Management

The Company takes a proactive approach to risk management including monitoring actual performance against budgets and forecast and monitoring investment performance. The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that the consolidated entity's objectives and activities are aligned with the risks and opportunities identified by the Board.

19. Environmental Regulations and Performance

The company is required to carry out the exploration and evaluation of its mining tenements in accordance with various State Government Acts and Regulations.

In regard to environmental considerations, the Company is required to obtain approval from various State regulatory authorities before any exploration requiring ground disturbance, such as line clearing, drilling programs and costeaning is carried out. It is normally a condition of such regulatory approval that any area of ground disturbed during the company's activities is rehabilitated in accordance with various guidelines.

There have been no significant breaches of these guidelines.

This report is made in accordance with a resolution of the directors.

M. R. STEWART Managing Director

Signed at Perth this 31st day of March, 2008

Auditor's Independence Declaration to the Directors of Clancy Exploration Limited

In relation to our audit of the financial report of Clancy Exploration Limited for the financial year ended 31 December 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

T S Hammond Partner Perth 31 March 2008

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007

		Consolidated		Parent
		2007	2006	2007	2006
	Notes	$	$	$	$
Continuing operations
Rendering of services		195,088	-	195,088	-
Net joint venture reimbursed exploration
expenditure	5(d)	11,342	-	11,342	-
Other revenue	4	131,374	-	131,374	-
		337,804	-	337,804	-
Employee benefits expense	5(a)	(407,346)	-	(407,346)	-
Consulting and outsourced services expense		(330,613)	(71,975)	(330,613)	(71,975)
Exploration expenditure	5(d)	(353,475)	-	(353,475)	-
Computer related costs		(21,283)	-	(21,283)	-
Travel expense		(19,587)	(1,435)	(19,587)	(1,435)
Equipment insurance and hire expense		(9,167)	-	(9,167)	-
Depreciation, amortisation and impairment expense	5(b)	(7,055)	-	(467,054)	-
Net reimbursed expenses refunded		-	(35,516)	-	(35,516)
Finance costs	5(c)	(171)	-	(171)	`
Other expenses		(46,760)	(437)	(46,483)	(437)
Total expenses		(1,195,457)	(109,363)	(1,655,179)	(109,363)
Loss before income tax benefit		(857,653)	(109,363)	(1,317,375)	(109,363)
Income tax benefit	6	17,388	-	17,388	-
Loss attributable to members of the parententity		(840,265)	(109,363)	(1,299,987)	(109,363)
Basic loss per share (cents per share)	7	(2.6 cents)	(0.9 cents)
Diluted loss per share (cents per share)	7	(2.6 cents)	(0.9 cents)

BALANCE SHEET AT ENDED 31 DECEMBER 2007

		Consolidated		Parent
		2007	2006	2007	2006
	Notes	$	$	$	$
ASSETS
Current Assets
Cash and cash equivalents	8	3,767,671	1,345	3,767,671	1,345
Trade and other receivables	9	169,321	1,669	169,215	1,669
Available-for-sale investments	10	401,013	-	401,013	-
Total Current Assets		4,338,005	3,014	4,337,899	3,014
Non-current Assets
Other financial assets	11	-	-	1	-
Plant and equipment	12	77,119	-	77,119	-
Intangible assets	13	19,523	-	19,523	-
Total Non-current Assets		96,642	-	96,643	-
TOTAL ASSETS		4,434,647	3,014	4,434,542	3,014
LIABILITIES
Current Liabilities
Trade and other payables	14	433,731	114,549	432,082	114,549
Provisions	15	10,472	-	10,472	-
Total Current Liabilities		444,203	114,549	442,554	114,549
TOTAL LIABILITIES		444,203	114,549	442,554	114,549
NET ASSETS/(LIABILITIES)		3,990,444	(111,535)	3,991,988	(111,535)
EQUITY
Contributed equity	16	4,722,292	1	5,182,291	1
Reserves	17	221,220	-	221,220	-
Accumulated losses	18	(953,068)	(111,536)	(1,411,523)	(111,536)
TOTAL EQUITY/(DEFICIENCY)		3,990,444	(111,535)	3,991,988	(111,535)

STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE YEAR ENDED 31 DECEMBER 2007

	Consolidated		Parent
		2007	2006	2007	2006
	Notes	$	$	$	$
Net fair value gain on available-for-sale investment		57,961	-	57,961	-
Income tax on items taken directly to or transferredfrom equity	6	(17,388)	-	(17,388)	-
Net income recognised directly in equity		40,573	-	40,573	-
Loss for the year		(840,265)	(109,363)	(1,299,987)	(109,363)
Total recognised income/(loss) and expense forthe period attributable to parent		(799,692)	(109,363)	(1,259,414)	(109,363)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007

		Consolidated		Parent
		2007	2006	2007	2006
	Notes	$	$	$	$
CASH FLOWS FROM OPERATINGACTIVITIES
Receipts from customers		1,008,100	-	1,008,100	-
(Payments to)/refunds from suppliers andemployees		(1,654,746)	1,345	(1,654,746)	1,345
Interest received		131,228	-	131,228	-
Interest paid		(171)	-	(171)	-
NET CASH FLOWS (USED IN)/ FROMOPERATING ACTIVITIES	19	(515,589)	1,345	(515,589)	1,345
CASH FLOWS FROM INVESTINGACTIVITIES
Purchase of plant and equipment		(83,146)	-	(83,146)	-
Purchase of intangible assets		(20,550)	-	(20,550)	-
Purchase of investment		(62,500)	-	(62,500)	-
NET CASH FLOWS USED IN INVESTINGACTIVITIES		(166,196)	-	(166,196)	-
CASH FLOWS FROM FINANCINGACTIVITIES
Proceeds from share issue		5,000,000	-	5,000,000	-
Costs of share issue		(725,821)	-	(725,821)	-
Loans to related entity - repayments received/(payments made)		(3,310)	-	(3,310)	-
Proceeds from borrowings - related entity		500,657	-	500,657	-
Loan from related entity - repayments made		(323,415)	-	(323,415)	-
NET CASH FLOWS FROM FINANCINGACTIVITIES		4,448,111	-	4,448,111	-
NET INCREASE/(DECREASE) IN CASH ANDCASH EQUIVALENTS		3,766,326	1,345	3,766,326	1,345
Cash and cash equivalents at beginning of period		1,345	-	1,345	-
CASH AND CASH EQUIVALENTS AT ENDOF PERIOD	8	3,767,671	1,345	3,767,671	1,345

1. CORPORATE INFORMATION

The financial report of Clancy Exploration Limited (the Company) for the year ended 31 December 2007 was authorised for issue in accordance with a resolution of the directors on 31 March 2008.

Clancy Exploration Limited (the parent) is a company limited by shares, incorporated in Australia, and whose shares are publicly traded on the Australian Stock Exchange.

The nature of the operations and principal activities of the consolidated entity are described in the Directors' Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for Clancy Exploration Limited as an individual entity and the consolidated entity consisting of Clancy Exploration Limited and its controlled entity.

	Table of Contents
a)	Basis of preparation
b)	Compliance with IFRS
c)	New accounting standards and interpretations
d)	Basis of consolidation
e)	Business combinations – Note 29
f)	Segment reporting – Note 21
g)	Foreign currency translation
h)	Cash and cash equivalents – Note 8
i)	Trade and other receivables – Note 9
j)	Investments and other financial assets – Note 10 and 11
k)	Interest in a jointly controlled operation – Note 20
l)	Impairment of non-financial assets other than goodwill – Note 13
m)	Plant and Equipment – Note 12
n)	Trade and other payables – Note 14
o)	Provisions and employee benefits – Note 15
p)	Share-based payment transactions – Note 27
q)	Contributed equity – Note 16
r)	Revenue recognition
s)	Income tax and other taxes – Note 6
t)	Earnings per share – Note 7
u)	Exploration Expenditure

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair value.

The financial report is presented in Australian dollars.

(b) Compliance with IFRS

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS).

NOTES TO THE FINANCIAL STATEMENTS

(c) New accounting standards and interpretations

The following Australian Accounting Standards and Interpretations that have recently been issued but are not yet effective have not been adopted by the Group for the annual reporting period ending 31 December 2007. Those that are relevant to the Group are outlined in the table below:

Reference	Title	Summary	Application dateof standard*	Impact on Group financialreport	Applicationdate forGroup*
AASB2007-1	Amendments toAustralianAccounting Standardsarising from AASBInterpretation 11[AASB 2]	Amending standard issuedas a consequence of AASBInterpretation 11 AASB 2 –Group and Treasury ShareTransactions.	1 March 2007	This is consistent with the Group'sexisting accounting policies forshare-based payments, so theamendments are not expected tohave any impact on the Group'sfinancial report.	1 January2008
AASB2007-3	Amendments toAustralianAccounting Standardsarising from AASB 8[AASB 5, AASB,AASB 6, AASB 102,AASB 107, AASB119, AASB 127,AASB 134, AASB136, AASB 1023 &AASB 1038]	Amending standard issuedas a consequence of AASB8 Operating Segments.	1 January 2009	AASB 8 is a disclosure standardso will have no direct impact onthe amounts included in theGroup's financial statements.However the amendments mayhave an impact on the Group'ssegment disclosures as segmentinformation included in internalmanagement reports is moredetailed than is currently reportedunder AASB 114 SegmentReporting.	1 January2009
AASB2007-4	Amendments toAustralianAccounting Standardsarising from ED 151and OtherAmendments[AASB 1, 2, 3, 4, 5, 6,7, 102, 107, 108, 110,112, 114, 116, 117,118, 119, 120, 121,127, 128, 129, 130,131, 132, 133, 134,136, 137, 138, 139,141, 1023 & 1038]	Amendments arising as aresult of the AASB decisionthat, in principle, all optionsthat currently exist underIFRSs should be includedin the Australianequivalents to IFRSs andadditional Australiandisclosures should beeliminated, other than thosenow considered particularlyrelevant in the Australianreporting environment.	1 July 2007	These amendments are expectedto reduce the extent of somedisclosures in the Group'sfinancial report.	1 January2008
AASB2007-6	Amendments toAustralianAccounting Standardsarising fromAASB 123[AASB 1, AASB 101,AASB 107,AASB 111,AASB 116 &AASB 138 andInterpretations 1 &12]	Amending standard issuedas a consequence ofrevisions to AASB 123Borrowing Costs.	1 January 2009	The amendments to AASB 123require that all borrowing costsassociated with a qualifying assetbe capitalised. The Group has noborrowing costs associated withqualifying assets and as such theamendments are not expected tohave any impact on the Group'sfinancial report.	1 January2009
AASB2007-7	Amendments toAustralianAccounting Standards[AASB 1, AASB 2,AASB 4, AASB 5,AASB 107 &AASB 128]	Amending standards forwording errors,discrepancies andinconsistencies.	1 July 2007	The amendments are minor anddo not affect the recognition,measurement or disclosurerequirements of the standards.Therefore the amendments are notexpected to have any impact onthe Group's financial report.	1 January2008

NOTES TO THE FINANCIAL STATEMENTS

Reference	Title	Summary	Application dateof standard*	Impact on Group financialreport	Applicationdate forGroup*
AASB2007-8	Amendments toAustralianAccounting Standardsarising from AASB101	Amending standard issuedas a consequence ofrevisions to AASB 101Presentation of FinancialStatements	1 January 2009	The amendments are expected toonly affect the presentation of theGroup's financial report and willnot have a direct impact on themeasurement and recognition ofamounts under the current AASB101. The Group has notdetermined at this stage whetherto present the new statement ofcomprehensive income as one ortwo statements.	1 January2009
AASB 8	Operating Segments	New standard replacingAASB 114 SegmentReporting, which adopts amanagement approach tosegment reporting.	1 January 2009	Refer to AASB 2007-3 above.	1 January2009
AASB 101(revised)	Presentation ofFinancial Statements	Introduces a statement ofcomprehensive income.Other revisions includeimpacts on the presentationof items in the statement ofchanges in equity, newpresentation requirementsfor restatements orreclassifications of items inthe financial statements,changes in the presentationrequirements for dividendsand changes to the titles ofthe financial statements.	1 January2009	Refer to AASB 2007-8 above.	1 January2009
AASB 123(revised)	Borrowing Costs	The amendments to AASB123 require that allborrowing costs associatedwith a qualifying asset mustbe capitalised.	1 January 2009	Refer to AASB 2007-6 above.	1 January2009
AASBInterpretation11	AASB 2 – Group andTreasury ShareTransactions	Addresses whether certaintypes of share-basedpayment transactions withemployees (or othersuppliers of good andservices) should beaccounted for as equitysettled or as cash-settledtransactions under AASB 2.It also specifies theaccounting in a subsidiary'sfinancial statements forshare-based paymentarrangements involvingequity instruments of theparent.	1 March 2007	Refer to AASB 2007-1 above.	1 January2008

*designates the beginning of the applicable annual reporting period unless otherwise stated

Adoption of new accounting standard

The Group has adopted AASB 7 Financial Instruments: Disclosures and all consequential amendments which become applicable on 1 January 2007. The adoption of this standard has only affected the disclosure in these financial statements. There has been no affect on profit and loss or the financial position of the entity.

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of Clancy Exploration Limited and its subsidiary (as outlined in Notes 24 and 29) as at 31 December each year (the Group).

Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Investments in subsidiaries held by Clancy Exploration Limited are accounted for at cost in the separate financial statements of the parent entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition (see Note 2 (e)).

(e) Business combinations – Note 29

The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the combination. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Where a business combination occurs that involves Group entities under common control, both before and after the business combination, the requirements of AASB 3 Business Combinations do not apply and thus the combination has been accounted for according to the pooling of interest method based on the carrying value of the net assets. Furthermore, no goodwill or fair value treatment is required, given that this transaction is outside the scope of AASB 3. This treatment is also supported by the fact that Group entities, all being related parties, could not transact in an arms' length transaction and therefore determine the fair value of the company acquired.

Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at the fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the Group's share of the identifiable net assets acquired is recognised as goodwill. If the cost of acquisition is less than the Group's share of the net fair value of the identifiable net assets of the subsidiary, the difference is recognised as the gain in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(f) Segment Reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. Management has assessed the reportable business segments under AASB 114 Segment Reporting and have determined that on adoption of AASB 8 Segment Reporting (applicable from 1 January 2009), additional operating segments are not likely to be reported.

A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments. The company operates in a single business segment, in one geographical location. The operations of the consolidated entity consist of gold and copper exploration and development, within Australia.

NOTES TO THE FINANCIAL STATEMENTS

(g) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in Australian dollars, which is Clancy Exploration Limited's functional and presentation currency.

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(h) Cash and cash equivalents – Note 8

Cash and cash equivalents in the balance sheet comprise cash at bank and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above. The consolidated entity does not have any bank overdraft facilities.

(i) Trade and other receivables – Note 9

Trade receivables are generally paid on 30 day settlement terms and are recognised and carried at original invoice amount less an allowance for impairment. Trade receivables are non-interest bearing.

Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment provision would be recognised when legal notice has been sent and a reply not received within 30 days.

(j) Investments and other financial assets – Note 10 and 11

Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit and loss, directly attributable transaction costs.

Recognition and Derecognition

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets with in the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred.

(i) Loans and receivables – Note 9

Loans and receivables including loans to KMP are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried the transaction price minus principal repayments and minus any allowance for impairment or uncollectibility. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired. Loans and receivables are included with receivables in current assets in the balance sheet, except for those with maturities greater than 12 months after balance date, which are classified as non-current. Loans and receivables with maturities greater than 12 months are carried at amortised cost using the effective interest rate method.

(ii) Available-for-sale securities – Note 10

Available-for-sale investments are those non-derivative financial assets, principally equity securities, that are designated as availablefor-sale or are not classified as any of the following categories: financial assets at fair value through profit or loss, held-to-maturity investments or loans and receivables. After initial recognition available-for-sale securities are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

(j) Investments and other financial assets – Note 10 and 11 (Cont'd)

The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments with no active market, fair values are determined using valuation techniques. Such techniques include: using recent arm's length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible and keeping judgmental inputs to a minimum.

(iii) Financial assets carried at cost – Note 11

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.

(k) Interest in a jointly controlled operation – Note 20

The consolidated entity has interests in joint ventures that are jointly controlled operations. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled operation involves use of assets and other resources of the venturers rather than establishment of a separate entity.

All exploration expenditure in relation to jointly controlled operations where the consolidated entity is the manager is currently recovered from the other joint venture partner in its entirety until it has earned an 80% interest. That joint venture partner has also established environmental security bonds.

All exploration expenditure in relation to jointly controlled operations where the other joint venture partner is the manager, is sole funded by that joint venture partner, until the completion of a pre-feasibility study on any one of the tenements. It may not withdraw from the joint venture until at least one year has expired after the grant of the last tenement. At the time of any withdrawal by the joint venture partner the tenements must be in good standing and expenditure commitments met.

(l) Intangibles and Impairment of non-financial assets other than that of goodwill – Note 13

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

The consolidated entity does not have any intangible assets with indefinite lives.

The consolidated entity conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset's recoverable amount is calculated.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of the asset's fair value less costs to sell and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are tested for possible reversal of the impairment when events or changes in circumstances indicate that the impairment may have reversed.

(m) Plant and Equipment – Note 12

Plant and equipment is stated at historical cost less depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

NOTES TO THE FINANCIAL STATEMENTS

(m) Plant and Equipment – Note 12 (Cont'd)

Depreciation is calculated using the straight line and diminishing value methods to allocate their cost over their estimated useful lives. The expected useful lives are detailed in Note 12.

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The directors have determined that items of plant and equipment do not generate independent cash inflows and that the business of the consolidated entity is, in its entirety, a cash-generating unit. The recoverable amount of plant and equipment is thus determined to be its fair value less costs to sell.

An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the income statement as an expense.

(ii) Derecognition and disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement. When revalued assets are sold, it is consolidated entity policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(n) Trade and other payables – Note 14

Trade payables and other payables are carried at the transaction price minus principal repayments. They represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(o) Provisions and employee benefits – Note 15

Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the consolidated entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a risk-free government bond rate relative to the expected life of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled with 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. Liabilities for annual leave expected to be settled within 12 months of the reporting date are recognised in the current provision for the employee benefits. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long Service Leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(p) Share-based payment transactions – Note 27

(i) Equity settled transactions:

The consolidated entity provides benefits to its directors and employees in the form of share-based payments, whereby directors and employees render services in exchange for options to acquire shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions is measured by reference to the fair value to the Company of the equity instruments at the date at which they were granted. The fair value is determined using a binominal tree model, taking into account the terms and conditions upon which the options were granted.

The cost of equity-settled transactions is recognised as an expense, together with a corresponding increase in equity, on a straight-line basis, over the period in which the vesting and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant directors and employees become fully entitled to the options (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the income statement reflects:

• (i) the grant date fair value of the options;
  • (ii) the current best estimate of the number of options that will ultimately vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of vesting conditions being met, based on best available information at balance date; and
• (iii) the extent to which the vesting period has expired.

The charge to the income statement for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(q) Contributed Equity – Note 16

Ordinary shares are classified as equity. Where equity instruments are issued in a business combination, transaction costs arising on the issue of equity instruments are recognised directly in equity.

(r) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Rendering of Services

Where the work performed in relation to a joint venture or other contract outcome can be reliably measured:

• right to receive compensation for the services provided and the stage of completion can be reliably measured. Stage of completion is measured by reference to the labour hours performed to date as a percentage of total estimated labour hours in relation to a joint venture or for each contract. Where it is probable that a loss will arise in relation to a joint venture or from a contract, the excess of total costs over revenue is recognised as an expense immediately.

Where the contract outcome cannot be reliably measured:

• revenue is recognised only to the extent that the costs that have been incurred are recoverable.

Unearned income is recognised in respect of progress billings and advances on exploration contracts in progress, received in advance, or not represented by work done or reimbursable expenditure incurred, under joint venture arrangements. Such income is recognised and brought to account over time as it is earned.

(r) Revenue recognition (Cont'd)

(ii) Interest revenue

Revenue is recognised as interest accrued using the effective interest method. This is a method of calculating the amortised costs of a financial asset and allocating the interest revenue over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

All revenue is stated net of Goods and Services Tax ("GST").

(s) Income tax and other taxes – Note 6

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period's taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets, liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset/liability in a transaction that is not a business combination and that, at the time of transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interest in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred tax income tax asset relating to the deductible temporary difference arises from the initial recognition of the asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Tax consolidation legislation

Clancy Exploration Limited and its wholly-owned Australian controlled entity formed a tax consolidated group on 2 July 2007. However they continue to account for their own current and deferred tax amounts. The consolidated entity has applied the stand alone taxpayer approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.

In addition to its own current and deferred tax amounts, Clancy Exploration Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Members of the tax consolidated group have not entered into a tax funding agreement and as no current tax assets or liabilities or deferred tax assets are recognised in relation to tax losses or unused tax credits, no contributions or distributions are required to be made under UIG 1052 Tax Consolidation Accounting.

NOTES TO THE FINANCIAL STATEMENTS

(s) Income tax and other taxes – Note 6 (Cont'd)

Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• · when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• · receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the taxation authority.

(t) Earnings per share – Note 7

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(u) Exploration Expenditure

Exploration expenditure incurred by the consolidated entity in relation to its own sole-funded projects is recognised in profit or loss as incurred and is classified in the income statement under the expense category "Exploration expenditure".

Exploration expenditure incurred by the consolidated entity, on those joint venture projects it manages, is almost completely recovered from joint venture partners and as such is recognised in profit or loss as incurred. It is classified in the income statement within the income or expense category "Net client reimbursed expenses".

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Equally, the consolidated entity continually employs judgement in the application of its accounting policies.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions. Those which may materially affect the carrying amounts of assets and liabilities reported in future periods are discussed below:

(a) Significant accounting judgements

(i) Classification of and valuation of investments

The consolidated entity has decided to classify investments in listed securities as 'available-for-sale' investments and movements in fair value are recognised directly in equity. The fair value of listed shares has been determined by reference to published price quotation in an active market.

(ii) Impairment of non-financial assets including intangible computer software

The consolidated entity assesses impairment on all assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. These include technology and economic environments. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves value-in-use calculations, which incorporate a number of key estimates and assumptions.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Cont'd)

(iii) Impairment of non-current investments

During the year the parent entity has recognised an impairment loss of $459,999 relating to its investment in its wholly owned subsidiary Geoinformatics Tasmania Pty Ltd ("GET"). This loss was based on an assessment of the value-in-use and fair value less costs to sell. As the assets of GET comprise of interests in exploration licences, the expenditure for which has been expensed as incurred in accordance with the Group's accounting policy on exploration expenditure, the company has determined that neither the value-in-use nor the fair value less costs to sell can be reliably estimated.

(b) Significant accounting estimates and assumptions

(i) Share-based payment transactions

The consolidated entity measures the cost of equity settled transactions with directors and employees by reference to the fair value of the equity instruments at the date at which they are granted. Equity settled transactions comprise only options. Their fair value is determined using a Binomial Tree model, in accordance with the assumptions detailed in Note 27. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

(ii) Estimation of useful lives of assets

The estimation of useful lives of assets has been based on historical experience as well as manufacturers' warranties (for plant and equipment) and software developers' support and maintenance program (operating computer software and intangible computer software). Adjustments to useful lives are made when considered necessary. Depreciation and amortisation charges as well as estimated useful lives are included in Notes 12 and 13.

4.	OTHER REVENUE		Consolidated		Parent
			2007	2006	2007	2006
		Notes	$	$	$	$
	Interest revenue		131,374	-	131,374	-
			131,374	-	131,374	-
5.	EXPENSES
	(a) Employee benefits expense includes:
	Salaries		251,756	-	251,756	-
	Share-based payments expense		50,175	-	50,175	-
	Workers' compensation costs		2,837	-	2,837	-
	Annual leave provision		(10,411)	-	(10,411)	-
	Post employment benefits expense		99,143	-	99,143	-
	Other employee benefits expense		13,845	-	13,845	-
			407,346	-	407,346	-
	(b) Depreciation, amortisation and impairment expenseincluded in income statement
	Impairment of investment in subsidiary	11	-	-	459,999	-
	Depreciation of plant & equipment		6,028	-	6,028	-
	Amortisation of software		1,027	-	1,027	-
			7,055	-	467,054	-
	(c) Finance costs
	Interest expense – other		171	-	171	-
			171	-	171	-
	(d) Exploration Expenditure
	Gross direct exploration expenditure
	-Self funded projects including depreciation		355,176	-	355,176	-
	-Joint venture projects including depreciation		767,804	-	767,804	-
	Total gross exploration expenditure		1,122,980	-	1,122,980	-
	Less: Expenditure reimbursed by joint venture partner		(776,144)	-	(776,144)	-
	Less: Depreciation classified separately in income statement		(4,703)	-	(4,703)	-
	Net disclosure in Income statement		342,133	-	342,133	-

6.	INCOME TAX		Consolidated		Parent
		2007$	2006$	2007$	2006$
(a)	Income tax expense
	The major components of income tax expense are:
	Income Statement
	Current income tax
	Current income tax charge/(benefit)	-	-	-	-
	Adjustments in respect of current income tax of previous
	years	-	-	-	-
	Deferred income tax
	Relating to origination and reversal of temporarydifferences	(17,388)	-	(17,388)	-
	Income tax benefit reported in income statement	(17,388)	-	(17,388)	-
(b)	Amounts charged or credited directly to equity
	Deferred income tax related to items charged or credited
	directly to equity
	Deduction available for capital raising costs	-	-	-	-
	Unrealised gain on available-for-sale financial assets	17,388	-	17,388	-
	Income tax expense reported in equity	17,388	-	17,388	-
(c)	Numerical reconciliation of accounting profit to tax expense
	A reconciliation between tax expense and the accounting profit
	before income tax multiplied by the consolidated entity's applicable
	income tax rate is as follows:
	Accounting loss before income tax	(857,653)	(109,363)	(1,317,375)	(109,363)
	At the consolidated entity's statutory income tax rate of 30% (2006:
	30%)	(257,296)	(32,809)	(395,213)	(32,809)
	Non-deductible entertainment/penalties	1,271	-	1,251	-
	Share based payments	17,462	-	17,462	-
	Impairment of shares in subsidiary entityIncrease / (decrease) in unrecognised deferred tax assets	-355,511	-13,415	138,000355,384	-13,415
	Unrecognised deferred tax asset relating to capital raising costs
	charged to equity	(217,746)	-	(217,746)	-
	Unrecognised deferred tax assets inherited under exit history rule	(15,990)	-	(15,798)	-
	Tax losses not recognised and assumed by the former head entity	99,400	19,394	99,367	19,394
	Tax losses assumed from subsidiary	-	-	(95)	-
		(17,388)	-	(17,388)	-
(d)	Current tax assets and liabilities
	Current tax liability	-	-	-	-
(e)	Recognised deferred tax assets and liabilities
	Deferred income tax at 31 December relates to the following:
	(i)Deferred tax liabilities
	Unrealised gain on available-for-sale financial assets	17,38817,388	--	17,38817,388	--
	(ii) Deferred tax assets
	Accrued expenses	17,388	-	17,388	-
		17,388	-	17,388	-
	Net deferred tax assets
	Amount recognised in income statement	(17,388)	-	(17,388)	-
	Amount recognised in equity	17,388	-	17,388	-
	Net movement	-	-	-	-

(f) Tax losses

The group has Australian revenue tax losses for which no deferred tax asset is recognised in the balance sheet of $555,904 (2006: $Nil) which are available indefinitely for offset against future taxable income subject to meeting the relevant statutory tests.

6. INCOME TAX (Cont'd)

(g) Unrecognised temporary differences

As at 31 December 2007, the group has other temporary differences (excluding tax differences relating to tax losses) for which no deferred tax asset is recognised in the balance sheet of $629,131 (2006: $Nil). None of these unrecognised temporary differences relate to investments in subsidiaries, associates or joint ventures.

(h) Tax consolidation

(i) Members of the tax consolidated group and the tax sharing agreement

Clancy Exploration Limited and its 100% owned Australian resident subsidiary were both subsidiaries in a tax-consolidated group with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new tax-consolidated group was formed on 2 July 2007 with Clancy Exploration Limited as head entity. Members of the new tax-consolidated group have not yet entered into a tax sharing agreement.

(ii) Tax-effect accounting by members of tax consolidated group

The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the stand alone taxpayer approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.

In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Members of the tax consolidated group have not entered into a tax funding agreement, but as no current tax assets or liabilities or deferred tax assets in relation to tax losses or unused tax credits have been recognised, there have been no contributions or distributions required under UIG 1052 Tax Consolidation Accounting.

7. EARNINGS PER SHARE

The following reflects the income used in the basic and diluted earnings per share computations.

(a)	Earnings used in calculating earnings per share	Consolidated
		2007$	2006$
	For basic and diluted earnings per share:
	Net loss for the year attributable to ordinary shareholders of the parent	(840,265)	(109,363)
(b)	Weighted average number of shares	2007No. ofshares	2006No. ofshares
	Weighted average number of ordinary shares for basic and diluted earnings pershare	31,923,575	12,000,000
(c)	Earnings per share
	Basic loss per share	(2.6)	(0.9)
	Diluted loss per share	(2.6)	(0.9)

• (i) Diluted earnings per share are calculated after classifying all options on issue remaining unconverted at 31 December 2007 as potential ordinary shares. As at 31 December 2007, the Company has on issue 4,900,000 options over unissued capital and has incurred a net loss. As the notional exercise prices of these options is greater than the current market price of the shares, they have not been included in the calculations of the diluted earnings per share as they are anti-dilutive for all periods presented.
• (ii) There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

8.	CASH AND CASH EQUIVALENTS		Consolidated		Parent
			2007	2006	2007	2006
		Notes	$	$	$	$
	Cash at bank		15,065	1,345	15,065	1,345
	Short term bank deposits		3,752,606	-	3,752,606	-
			3,767,671	1,345	3,767,671	1,345
	Reconciliation to Cash Flow Statement
	For the purposes of the Cash Flow Statement, cash and cashequivalents comprise the following at 31 December:
	Cash at bank		15,065	1,345	15,065	1,345
	Short term bank deposits		3,752,606	-	3,752,606	-
			3,767,671	1,345	3,767,671	1,345
	(i)Cash at bank is non-interest bearing
	(ii) At balance date, the Company did not have any financingfacilities available
9.	TRADE AND OTHER RECEIVABLES (Current)
	Trade receivables (a)	(i)	1,358	-	1,358	-
	Sundry debtors	(ii)	6,881	-	6,881	-
	Accrued income	(iii)	59,468	-	59,468	-
	GST input tax refundable		67,120	1,669	67,015	1,669
	Prepayments		17,850	-	17,850	-
	Related party receivables: (b)
	Trade receivables		13,334	-	13,334	-
	Amount receivable from associated entity		3,310	-	3,310	-
			169,321	1,669	169,215	1,669

(a) Allowance for impairment loss

(i) Trade receivables are non-interest bearing and are generally paid on 30 day settlement terms. A provision for impairment loss would be recognised when legal notice has been sent and reply not received in 30 days. No debtors were outside terms at 31 December 2007 (31 December 2006 - $Nil) and no allowance for impairment losses have been made (2006: $Nil)

At 31 December, the ageing analysis of trade receivables is as follows:

	Total	0-30 days
2007 Consolidated	1,358	1,358
Parent	1,358	1,358
2006 Consolidated	-	-
Parent	-	-

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.

• (ii) Sundry debtors are non-interest bearing and represent receivables with various maturities.
• (iii) Accrued income comprises joint venture partner reimbursable expenses received from suppliers after month end joint venture billing processes were closed off.

(b) Related party receivables

For terms and conditions of related party receivables refer to Note 24

(c) Fair value and credit risk

Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value.

Given the nature of the receivables as detailed above, the consolidated entity's exposure to credit risk is not considered to be material. The consolidated entity's joint venture partner in relation to its NSW exploration projects is billed and pays for estimated expenditure in advance of the consolidated entity incurring such expenditure. Collateral is not held as security. Nor is it the consolidated entity's policy to transfer (on-sell) receivables to special purpose entities.

10.	AVAILABLE-FOR-SALE INVESTMENTS (Current)		Consolidated		Parent
			2007	2006	2007	2006
	Investments comprise:	Notes	$	$	$	$
	Shares - in listed corporation - at fair value		394,825	-	394,825	-
	Options - in listed corporation - at fair value		6,188	-	6,188	-
			401,013	-	401,013	-

The available-for-sale investment comprises Australian investments in ordinary shares and listed options, and therefore have no fixed maturity date or coupon rate. However, certain of these shares are held in escrow as follows:

• 250,000 shares in escrow for 12 months until 6 November 2008 of a total of 1,161,250 shares

The listed options expire on 30 April 2010.

(a) Listed shares and options

The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an active market.

11.	OTHER FINANCIAL ASSETS	Notes		Consolidated	Parent
	(Non-Current)		2007$	2006$	2007$	2006$
	Shares in controlled entities - net carrying amount	24	-	-	1	-
	Shares in controlled entities
	Cost (Gross carrying amount)		-	-	460,000	-
	Accumulated impairment losses		-	-	(459,999)	-
	Net carrying amount		-	-	1	-
	Reconciliation of carrying amount
	Beginning of financial year		-	-	-	-
	Acquisition of subsidiary at cost		-	-	460,000	-
	Impairment of investment in subsidiary		-	-	(459,999)	-
	Net carrying amount		-	-	1	-

During the year the parent entity has recognised an impairment loss of $459,999 relating to its investment in its wholly owned subsidiary Geoinformatics Tasmania Pty Ltd ("GET"). This loss was based on an assessment of the value-in-use and fair value less costs to sell. As the assets of GET comprise of interests in exploration licences, the expenditure for which has been expensed as incurred in accordance with the Group's accounting policy on exploration expenditure, the company has determined that neither the value-in-use nor the fair value less costs to sell can be reliably estimated.

12.	PLANT AND EQUIPMENT	Notes	Consolidated		Parent
	Year ended 31 December		2007$	2006$	2007$	2006$
	Computer Equipment
	At 1 January, net of accumulated depreciation		-	-	-	-
	Additions		6,584	-	6,584	-
	Depreciation charge for the year		(835)	-	(835)	-
	Net of accumulated depreciation and impairment		5,749	-	5,749	-
	Plant and Equipment
	At 1 January, net of accumulated depreciation		-	-	-	-
	Additions		2,615	-	2,615	-
	Depreciation charge for the year		(490)	-	(490)	-
	Net of accumulated depreciation and impairment		2,125	-	2,125	-
	Motor Vehicles
	At 1 January, net of accumulated amortisation		-	-	-	-
	Additions		73,947	-	73,947	-
	Depreciation charge for the year		(4,703)	-	(4,703)	-
	Net of accumulated amortisation and impairment		69,245	-	69,245	-

NOTES TO THE FINANCIAL STATEMENTS

12.PLANT AND EQUIPMENT (Cont'd)		Consolidated
	2007$	2006$	Parent2007$	2006$
Total Plant and Equipment
At 1 January, net of accumulated depreciation	-	-	-	-
Additions	83,146	-	83,146	-
Depreciation charge for the year	(6,028)	-	(6,028)	-
Net of accumulated depreciation	77,119	-	77,119	-
(i) There was no plant and equipment at 1 January 2007.
At 31 December
Computer equipment at cost	6,584	-	6,584	-
Accumulated depreciation	(835)	-	(835)	-
Net carrying amount	5,749	-	5,749	-
Plant and equipment at cost	2,615	-	2,615	-
Accumulated depreciation	(490)	-	(490)	-
Net carrying amount	2,125	-	2,125	-
Motor vehicles at cost	73,947	-	73,947	-
Accumulated depreciation	(4,703)	-	(4,703)	-
Net carrying amount	69,245	-	69,245	-
Total cost	83,146	-	83,146	-
Accumulated depreciation, amortisation and impairment	(6,028)	-	(6,028)	-
Net carrying amount	77,119	-	77,119	-

(i) No provision has been made for the impairment of plant and equipment as the directors consider the net carrying amount of these assets to be reflective of their fair value, with acquisition thereof occurring in the period since August 2007.

(ii) The useful life of the assets was estimated as follows for 2007:
Sundry equipment:	5 to 7 years
Computer equipment:	4 years
Motor vehicles	5 to 8 years

(iii) No assets have been pledged as security for borrowings.

13. INTANGIBLE ASSETS Consolidated Parent

	2007$	2006$	2007$	2006$
Computer Software
Year ended 31 December
At 1 January, net of accumulated amortisation	-	-	-	-
Additions	20,550	-	20,550	-
Amortisation charge for the year	(1,027)	-	(1,027)	-
Net of accumulated amortisation and impairment	19,523	-	19,523	-
At 31 December
Cost (gross carrying amount)	20,550	-	20,550	-
Accumulated amortisation and impairment	(1,027)	-	(1,027)	-
Net carrying amount	19,523	-	19,523	-

(i) There were no intangible assets at 1 January 2007

(ii) A recoverable amount estimation was applied to computer software - as a cash generating (cost saving) unit - based on a value in use calculation. The resultant recoverable amount was greater than the net carrying amount. Accordingly no impairment of computer software has been recognised

(iii) The useful life of intangible assets was estimated as follows for 2007: Computer software: 2.5 years

NOTES TO THE FINANCIAL STATEMENTS

14.	TRADE AND OTHER PAYABLES (Current)	Notes		Consolidated		Parent
			2007	2006	3007	2006
			$	$	$	$
	Trade payables	(ii) & (v)	236,193	-	236,193	-
	Unearned income	(iii)	80,373	-	80,373	-
	Accrued expenses		89,878	-	89,878	-
	GST payable		25,638	1,791	25,638	1,791
	Amount payable to parent entity	(iv)	-	112,758	-	112,758
	Amount payable to related party	(iv)	1,649	-	-	-
			433,731	114,549	432,082	114,549

Terms and conditions:

• (i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
• (ii) Trade payables are non-interest bearing and are normally settled on 30 day terms.
• (iii) The unearned income is in respect of progress billings and advances, not represented by work done, or reimbursable expenditure incurred, under Gold Fields Australasia Pty Ltd joint venture and alliance restructure agreements.
• (iv) The amounts payable to associate (31 December 2007) and parent (31 December 2006) are to Geoinformatics Exploration Australia Pty Ltd. The loans are unsecured, free of interest and are repayable on demand.
• (v) Included in trade payables is an amount of $17,167 which is owed to an associated entity Geoinformatics Exploration Australia Pty Ltd.

15.	PROVISIONS	Notes	Consolidated		Parent
			2007$	2006$	2007$	2006$
	Employee Entitlements
	At 1 January		-	-	-	-
	Transferred in from related party		7,548	-	7,548	-
	Arising during the year	9, 26(e)	2,924	-	2,924	-
	At 31 December		10,472	-	10,472	-
	Total
	At 1 January		-	-	-	-
	Transferred in from related party		7,548	-	7,548	-
	Arising during the year	9, 26(e)	2,924	-	2,924	-
	At 31 December		10,472	-	10,472	-
	CURRENT
	Employee entitlements		10,472	-	10,472	-
			10,472	-	10,472	-
	(i)There were no employee entitlements at 1 January 2007.
16.	CONTRIBUTED EQUITYOrdinary shares	(a)	4,722,292	1	5,182,291	1
	(a)Ordinary shares
	Issued and fully paid		4,722,292	1	5,182,291	1
	Fully paid ordinary shares carry one vote per share and carry theright to dividends.

16. CONTRIBUTED EQUITY (Cont'd)

Movement in ordinary shares on issue

		Consolidated2007		Consolidated2006
		Number ofshares	$	Number ofshares	$
Consolidated Entity
Beginning of financial year		120,000	1	120,000	1
Add:Division of capital by 100:1	(i)	11,880,000	-	-	-
Conversion of debt to equity	(ii)	3,400,000	290,000	-	-
Shares issued for acquisition of subsidiaryShares issued on acquisition of shares and options	(iii)	4,600,000	1	-	-
in Bass Metals LimitedShares issued during the year under an initial	(iv)	2,805,506	280,551	-	-
public offering	(v)	25,000,000	5,000,000	-	-
Less:Transaction costs on share issue	(vi)	-	(848,261)	-	-
End of financial year		47,805,506	4,722,292	120,000	1

			Parent2007		Parent2006
			Number ofshares	$	Number ofshares	$
Parent Entity
	Beginning of financial year		120,000	1	120,000	1
Add:	Division of capital by 100:1	(i)	11,880,000	-	-	-
	Conversion of debt to equity	(ii)	3,400,000	290,000	-	-
	Shares issued for acquisition of subsidiary	(iii)	4,600,000	460,000	-	-
	Shares issued on acquisition of shares and options
	in Bass Metals Limited	(iv)	2,805,506	280,551	-	-
	Shares issued during the year under an initial
	public offering	(v)	25,000,000	5,000,000	-	-
Less:	Transaction costs on share issue	(vi)	-	(848,261)	-	-
	End of financial year		47,805,506	5,182,291	120,000	1

(i) On 9 March 2007 each share in the capital of the company was divided into 100 shares in its capital.

• (ii) On 7 March 2007 and 8 May 2007 2,600,000 and 800,000 shares were issued respectively to the then parent entity Geoinformatics Exploration Australia Pty Ltd ("GEA") in partial satisfaction of an inter-company loan arising from services provided and expenditure incurred from 1 January 2007 to 30 April 2007.
• (iii) On 8 May 2007, 4,600,000 shares were issued to GEA as consideration for the acquisition of the entire issued share capital of Geoinformatics Exploration Tasmania Pty Ltd ("GET"). The transaction has been accounted for at fair value of $460,000 by the parent entity. At the time of this acquisition both the parent entity and GET were under the common control of GEA and the combination was accounted for using the pooling of interests method. On consolidation, the difference of $459,999 between the consideration paid of $460,000 and the net assets acquired of $1 is taken to equity in the consolidated entity. Refer to note 29 for details of this transaction.
• (iv) On 8 May 2007, 2,643,750 shares were issued to GEA as consideration for the acquisition of 911,250 shares in Bass Metals Limited and separately a further 161,756 shares were issued to GEA as consideration for the acquisition of 250,000 unlisted options and 56,250 listed options, in Bass Metals Limited.
• (v) Pursuant to the prospectus issued 22 May 2007, 25,000,000 ordinary shares were issued on 2 July 07 as a result of an initial public offer of shares which resulted in the Company listing on the Australian Securities Exchange on 11 July 2007.
• (vi) The transaction costs represent the cost of issuing shares pursuant to the prospectus as per previous point (v).

(b) Capital risk management

When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

16. CONTRIBUTED EQUITY (Cont'd)

In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets.

The entity does not have a defined share buy-back plan.

No dividends were paid in 2007 and no dividends are expected to be paid in 2008.

There is no current intention to incur debt funding on behalf of the company as on-going exploration expenditure will be funded via equity or joint ventures with other companies such as those currently in place with Gold Fields Australasia Pty Ltd and Bass Metals Ltd.

The consolidated entity is not subject to any externally imposed capital requirements.

Management reviews management accounts on a monthly basis and reviews actual expenditures against budget on a quarterly basis.

17.		RESERVES		Consolidated		Parent
			2007	2006	2007	2006
		Notes	$	$	$	$
		Available-for-sale investments revaluation reserve	40,573	-	40,573	-
		Share-based payment reserve	180,647	-	180,647	-
			221,220	-	221,220	-
		(a) Movement in reserves
	(i)	Available-for-sale investments revaluation reserve
		Balance at beginning of the financial yearNet unrealised gain/(loss) on available-for-sale	-	-	-	-
		investment before tax	57,961	-	57,961	-
		Tax effect of net gain on available-for-sale investment	(17,388)	-	(17,388)	-
		Balance at the end of the financial year	40,573	-	40,573	-
	(ii)	Share-based payment reserve
		Balance at beginning of the financial yearOn 23 April 2007, 2,600,000 options were granted to directors andemployees, subject to a 2 year escrow period ending 10 July 2009and an expiry date of 30 April 2010. They have been valued	-	-	-	-
		according to the Binomial Tree method and are being expensedproportionately over their 2 year vesting period.On 25 June 2007, 2,000,000 options were granted to thesponsoring broker as a fee in respect of the initial public offering,subject to a 2 year escrow period ending 10 July 2009 and anexpiry date of 10 July 2010. They have been valued according tothe Binomial Tree method and have been included in the	55,240	-	55,240	-
		transaction costs of the share issue.On 2 November 2007, 300,000 options were granted to anemployee subject to an escrow period ending 10 July 2009 and anexpiry date of 30 April 2010. They have been valued according tothe Binomial Tree method and are being expensed proportionately	122,440	-	122,440	-
		over their 2 year vesting period.	2,967	-	2,967	-
		Balance at the end of the financial year	180,647	-	180,647	-

(b) Nature and purpose of reserves

The available-for-sale investments revaluation reserve records increments and decrements in fair value to the extent that they offset one another.

The share-based payments reserve records the value of share options issued to the Company's directors, employees and brokers.

18.	ACCUMULATED LOSSES		Consolidated		Parent
			2007	2006	2007	2006
		Notes	$	$	$	$
	Accumulated losses		(953,068)	(111,536)	(951,524)	(111,536)
	Movements
	Balance at beginning of yearNet loss attributable to members of Clancy Exploration LtdAccumulated losses assumed following the acquisition of		(111,536)(840,265)	(2,173)(109,363)	(111,536)(1,299,987)	(2,173)(109,363)
	Geoinformatics Exploration Tasmania Pty Ltd		(1,267)	-	-	-
	Balance at end of year		(953,068)	(111,536)	(1,411,523)	(111,536)
19.	CASH FLOW STATEMENT RECONCILIATION			Consolidated	Parent
			2007$	2006$	2007$	2006$
	(a)Reconciliation of the net profit/(loss) after tax to netcash flows from operations
	Loss from ordinary activities after income tax		(840,265)	(109,363)	(1,299,987)	(109,363)
	Adjustments for:
	DepreciationAmortisation of intangible assets		6,0281,028	--	6,0281,028	--
	Impairment of non-current investmentsShare options expensedDeferred tax liability on unrealised gain on available-for-sale		-58,207	--	459,99958,207	--
	investment set off against current tax expenseNon-cash expense paid by associated entity via loan account		(17,388)277	--	(17,388)-	--
	Non-cash net expenses paid by parent entity via loan account		-	100,736	-	100,736
	Changes in assets and liabilities(Increase)/decrease in trade and other receivables(Increase)/decrease in prepayments and bonds		(133,260)(17,850)	9,972-	(133,260)(17,850)	9,972-
	(Decrease)/increase in trade and other payables(Decrease)/increase in provisions		430,498(2,864)	--	430,498(2,864)	--
	Net cash flow from/(used in) operating activities		(515,589)	1,345	(515,589)	1,345
	(b) Non-cash financing and investing activities
	Share-based payments – broker's capital raising fees		122,440	-	122,440	-
	Settlement of subsidiary purchase with shares		-	-	460,000	-
	Settlement of investment purchase with sharesSettlement of debt to parent entity with shares		280,551290,000	--	280,551290,000	--

20. INTEREST IN JOINTLY CONTROLLED OPERATIONS

(a) Bass Metals Limited unincorporated joint venture

• (i) Bass Metals Limited ("Bass") and Clancy Exploration Limited have a 75% and 25% interest respectively in each of 12 Tasmanian exploration licences ("tenements") in the Mt Read Volcanic Belt in Western Tasmania.
• (ii) Joint venture property initially consists of these tenements and all mining information in the possession or control of either party relating to these tenements. It is owned by the parties as tenants in common in proportion to their respective interests. Exploration costs are currently incurred by Bass and there are no joint venture assets or liabilities.
• (iii) Bass as the party holding the majority interest is the manager of the joint venture and all joint venture activities.
• (iv) A management committee has been established with representatives voting in accordance with their joint venture interests.
• (v) Bass, as manager, has duties to maintain the tenements in good standing, comply with approved programs and budgets and incur expenditure.

20. INTEREST IN JOINTLY CONTROLLED OPERATIONS (Cont'd)

• (vi) Expenditure is in proportion to joint venture interests. However, Bass has agreed to sole fund the joint venture until the completion of a pre-feasibility study on any one of the tenements. Furthermore, Bass may not withdraw from the joint venture until at least 1 year has expired after the grant of the last tenement which was 27 February 2007. At the time of any withdrawal by Bass the tenements must be in good standing and expenditure commitments met. As at the date of this report, Bass had not withdrawn from the joint venture.
• (vii) The Company has no capital commitments or contingent liabilities in respect of this joint venture.
• (viii) The cost of security deposits in relation to the joint venture tenements has been funded by Bass.

(b) Gold Fields Australasia Pty Ltd unincorporated joint venture

• (i) Clancy Exploration Limited has a 100% interest in 6 tenements, in the eastern Lachlan Fold Belt in New South Wales. These tenements are divided over 3 project areas and are governed by three joint ventures and an Alliance Restructure Agreement with Gold Fields Australasia Pty Ltd ("GFA").
• (ii) GFA has sole-funded the first exploration phase and is currently sole-funding first-pass exploration on a number of projects. GFA can earn 80% by spending up to $5 million over three years on these projects. If GFA has not earned the 80% interest within 3 years after formation of the initial joint ventures, these joint ventures will terminate.
• (iii) Upon GFA earning its 80% interest the parties' joint venture interests will be GFA 80% and Clancy 20%. Expenditure will be in proportion to joint venture interests, except if a party elects to dilute their interest according to the joint venture terms.
• (iv) GFA may terminate the joint ventures on 60 days notice provided it has incurred not less than $1 million in exploration expenditure according to certain formulae set out in the joint venture agreements.
• (v) The Company is the manager of these joint venture projects.
• (vi) The cost of security deposits in relation to the joint venture and also non-joint venture tenements in the Lachlan Fold Belt has been funded by GFA
• (vii) There are no joint venture assets or liabilities.

21. SEGMENT INFORMATION

The consolidated entity operates predominantly in one business segment and in one geographical location. The operations of the consolidated entity consist of gold and copper exploration, within Australia.

2006 $

2007 $

2006 $

2007

22. COMMITMENTS Consolidated Parent

$ Estimated commitments for which no provisions were included in the financial statements are as follows:

(a) Exploration Expenditure Commitments:

(i) Under 17 (2006:14) NSW Government exploration licences Payable - not later than one year 210,581 299,902 210,581 299,902 - later than one year and not later than five years 240,000 579,500 240,000 579,500 450,581 879,402 450,581 879,402

In respect of the expenditure commitments relating to 6 of the 17 NSW Government exploration licences, an amount of $24,182 (2006: 14 NSW exploration licences - $879,402 under a previous alliance agreement subject to extension thereof) is recoverable from Gold Fields Australasia Pty Ltd under alliance and joint venture agreements. At the time of this report, 7 applications for renewal of exploration licences had been made. It is currently not possible to quantify the amount of any commitments that may arise, in the event these applications for renewal are successful.

The Company and its subsidiary Geoinformatics Exploration Tasmania Pty Ltd have a 25% interest in 12 Tasmanian exploration licences under a mining exploration alliance agreement with Bass Metals Ltd ("Bass") entered into on 10 May 2005. Under this agreement, responsibility for all remaining commitments to exploration expenditure, in regard to these exploration licences, has been undertaken by Bass, who is also manager of this joint venture under this agreement.

Refer to Note 20 for details of Jointly Controlled Operations.

All the exploration expenditure commitments are non-binding, in respect of outstanding expenditure commitments, in that the Company has the option to relinquish and lose these licences or its contractual commitments at any stage, at the cost of its cumulative expenditures up to the point of relinquishment.

22. COMMITMENTS (Cont'd)

(b) Operating Lease Commitments

The consolidated entity has no operating leases. Office premises are currently occupied on a month-to-month basis with rent payable monthly in advance.

23. CONTINGENT LIABILITIES

In accordance with normal industry practice the consolidated entity has entered into joint venture operations and farm-in agreements with other parties for the purpose of exploring and developing its mineral interests. If a party to a joint venture defaults and does not contribute its share of joint venture obligations, then the other joint venture partners are liable to meet those obligations. In this event the interest in the tenements held by the defaulting party may be redistributed to the remaining joint venture partners. A contingent liability exists in respect of contributions due to be paid by farm-in partners of the economic entity to some of its joint ventures. However, no material losses are anticipated in respect of any of these contingencies as expenditure commitments, if not recovered from joint venture partners, can be terminated through mining lease relinquishment at any stage.

24. RELATED PARTY DISCLOSURES

(a) Ultimate parent

The ultimate Australian parent entity and the ultimate parent of the consolidated entity is Clancy Exploration Limited.

(b) Subsidiaries

The subsidiary of Clancy Exploration Limited is listed in the following table:

Name	Nature of	Country of	% Equity interest			Investment $
	investment	incorporation	2007	2006	2007	2006
Geoinformatics Exploration Tasmania Pty Ltd	Ordinary shares Australia		100	-	1	-

24. RELATED PARTY DISCLOSURES (Cont'd)

(c) Transactions with related parties

The following table provides the total amount of transactions (GST inclusive where GST applies) entered into with related parties for the relevant financial year (for information regarding outstanding balances at year-end, refer to Note 14):

	Notes	Consolidated		Parent
		2007	2006	2007	2006
		$	$	$	$
Sales of goods and services
Sales of services and reimbursable expenses to former parent		-	17,415	-	17,415
Sales of services and reimbursable expenses to entity with
significant influence over the Group		15,619	-	15,619	-
Expenses paid on behalf of controlled entity		277	-	-	-
Expenses paid on behalf of entity with significant influence over
the Group		3,310	-	3,310	-
Purchase of goods and services
Purchase of services and reimbursable expenses from former
parent		-	127,823	-	127,823
Environmental bond paid on Company's behalf by former parent
prior to recovery from joint venture partner		10,000	-	10,000	-
Share issue expenses paid on Company's behalf by former parent		95,000	-	95,000	-
Purchase of services from entity with significant influence over
the Group		394,507	-	394,507	-
Purchase of services from other related entities		330	-	330	-
Loans from related parties
Loans advanced from former parent entity to part finance initial
public offering costs and working capital requirements	(i)	500,607	-	500,607	-
Loan repayments to former parent entity	(i)	323,365	-	323,365	-
Amounts settled on trade payables and on loan account byconversion of debt to equity:
Former parent entity	(ii) &
	16(ii)	290,000	-	290,000	-
Amounts received settling trade and other receivables
Entity with significant influence over the Group		21,809	-	21,809	-
Amounts paid on trade and other payables
Former parent entity		150,926	-	150,926	-
Entity with significant influence over the Group		161,721	-	161,721	-

(i) The loans from related parties consist of a loan from Geoinformatics Exploration Australia Pty Ltd, the former parent entity. The loan, which was repaid in full during the year, was unsecured and interest free.

(ii) Of the current year loans of $500,607 received from the former parent entity, an amount of $323,365 was repaid, with the balance plus an amount of $112,758 owing at 31 December 2006 settled by the issue of ordinary shares in the Company. This comprised the issue on 7 March 2007 of 2,600,000 shares at 5 cents each amounting to $130,000, and on 8 May 2007, 800,000 shares at 20 cents each amounting to $160,000.

(iii) Related party trade receivables and trade payables are non-interest bearing and are paid on 30 day settlement terms. During the year ended 31 December 2007 a trade payable amount of $175,004 (31 December 2006 $95,067l) owing to the former parent, was converted to an inter-company loan, prior to being settled by way of the share issue per preceding point (ii).

25. EVENTS AFTER BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which have significantly affected or may significantly affect the operations, results or state of affairs of the consolidated entity in subsequent financial years.

26. DIRECTORS AND KEY MANAGEMENT PERSONNEL

(a) Details of Key Management Personnel

The names of the company's directors and executives in office at any time during the financial year are as follows. Directors were in office for the entire period unless otherwise stated.

(i) Directors

M Stewart^	Director, additionally appointed Managing Director and Chief Executive Officer 11 July 2007
A Macdonald	Chairman (Non-Executive) – appointed 10 January 2007
N Archibald^	Director (Non-Executive – Technical)
M Lester	Director (Non-Executive – Financial) – appointed 9 March 2007

^ = Also directors of controlled entity Geoinformatics Exploration Tasmania Pty Ltd

(ii) Executives

R Caren*	Company Secretary - Appointed 20 March 2007
G Doig	Chief Financial Officer – Appointed 11 July 2007
	Company Secretary - Resigned 20 March 2007
G Barnes	Exploration Manager – Appointed 11 July 2007

* = Also company secretary of controlled entity Geoinformatics Exploration Tasmania Pty Ltd

(b) Compensation for Key Management Personnel

	Consolidated		Parent
	2007	2006	2007	2006
	$	$	$	$
Short-term employee benefits	165,592	-	165,592	-
Short-term consulting fees	117,536	-	117,536	-
Post-employment benefits	91,388	-	91,388	-
Other long-term benefits	-	-	-	-
Termination benefits	-	-	-	-
Share-based payments	51,797	-	51,797	-
Total Compensation	426,313	-	426,313	-

Clancy Exploration Limited has applied the option under Corporations Amendments Regulation 2006 to transfer KMP remuneration disclosures required by AASB 124 Related Party Disclosures paragraphs Aus 25.4 to Aus 25.7.2 to the Remuneration Report section of the Directors' report. These transferred disclosures have been audited.

NOTES TO THE FINANCIAL STATEMENTS

26. DIRECTORS AND KEY MANAGEMENT PERSONNEL (Cont'd)

(c) Option holdings of Key Management Personnel (Consolidated)

(i) OPTIONS – 31 DECEMBER 2007

		Held at 1January2007	Granted asRemuneration	OptionsExercised	Expired/Forfeited	Held at 31December2007	Exercisable/Vested at31December2007
Director
M Stewart	Incentive	-	500,000	-	-	500,000	-
	PS 1	-	250,000	-	-	250,000	-
	PS 2	-	250,000	-	-	250,000	-
J Macdonald	Incentive	-	250,000	-	-	250,000	-
N Archibald	Incentive	-	200,000	-	-	200,000	-
M Lester	Incentive	-	200,000	-	-	200,000	-
Executives
R Caren	Incentive	-	100,000	-	-	100,000	-
G Barnes	Incentive	-	300,000	-	-	300,000	-
	PS 1	-	150,000	-	-	150,000	-
	PS 2	-	150,000	-	-	150,000	-
G Doig	Incentive	-	100,000	-	-	100,000	-
		-	2,450,000	-	-	2,450,000	-

Refer to note 27 for a detailed explanation of the valuation of options granted during the year. Refer to the Directors' Report for a description of the share options terms and conditions.

There were no options provided to key management personnel in 2006.

(d) Shareholdings of Key Management Personnel (Consolidated)

The movement during the reporting period in the number of ordinary shares of Clancy Exploration Limited held directly, indirectly or beneficially, by each specified director and each specified executive, including their personally related entities is a follows:

(i) SHARES – 31 DECEMBER 2007

	Held at 1January2007	Granted asRemuneration	On Exerciseof Options	Acquired	Net ChangeOther	Held at 31December2007
Director
M Stewart	-	-	-	301,000	-	301,000
J Macdonald	-	-	-	250,000	-	250,000
N Archibald	-	-	-	25,000	-	25,000
M Lester	-	-	-	50,000	-	50,000
Executives
R Caren	-	-	-	20,000	-	20,000
G Barnes	-	-	-	90,000	-	90,000
G Doig	-	-	-	25,000	-	25,000
	-	-	-	761,000	-	761,000

Refer to remuneration report on the types of share-based payment plans

The ordinary shares acquired by the directors and executives during the year were from on-market trades and/or a Prospectus Offer of shares (at 20 cents per share) to the public. The shares acquired through the Prospectus Offer were subject to the same terms as the other shares issued pursuant to that Prospectus.

There were no key management personnel shareholdings at 31 December 2006.

26. DIRECTORS AND KEY MANAGEMENT PERSONNEL (Cont'd)

(e) Amount Receivable From of Key Management Personnel (Consolidated)

During the year M Stewart took leave in excess of his normal entitlement. The equivalent dollar value of this receivable is $13,334 and this amount has been transferred from Provision for Annual Leave to a separate receivable account. It is interest-free and is expected to be recouped against his leave entitlements arising during the course of his employment over the next year.

(f) Transaction with Related Entity

During the year N Archibald elected to take all his 2007 non-share-based remuneration as post-employment benefits - superannuation. In this regard an amount of $13,080 has or will be paid to Geocrust Pty Ltd ("Geocrust") inclusive of superannuation guarantee contributions. Geocrust is effectively controlled by N Archibald and has a significant shareholding in Geoinformatics Exploration Inc. the Toronto Stock Exchange listed ultimate 100% controlling parent of Geoinformatics Exploration Australia Pty Ltd which in turn has a 47.7% interest in Clancy Exploration Limited.

27. SHARE-BASED PAYMENTS

(a) Recognised share-based payments expenses

The expense recognised for employee and consultant services received during the year is shown in the table below:

	Consolidated		Parent
	20072006		2007	2006
	$	$	$	$
Expense arising from equity-settled share-based payment
transactions - employees	58,207	-	58,207	-

(b) Options granted during the year ended 31 December 2007

Employee Option Scheme and Broker's Options – During the year the Company issued options to directors, employees and brokers as detailed in the table below:

Holder	OptionSeries	GrantedNo.	Grant Date	Vesting Date	Expiry Date	Fair Valueper Optionat Grant	ExercisePrice$
						Date$
	Incentiv			11 July 2009
M Stewart	e	500,000	23 April 2007		30 April 2010	0.0996	0.20
	PS 1	250,000	23 April 2007	11 July 2009	30 April 2010	0.0775	0.30
	PS 2	250,000	23 April 2007	11 July 2009	30 April 2010	0.0624	0.40
J Macdonald	Incentive	250,000	23 April 2007	11 July 2009	30 April 2010	0.0997	0.20
N Archibald	Incentive	200,000	23 April 2007	11 July 2009	30 April 2010	0.0996	0.20
M Lester	Incentive	200,000	23 April 2007	11 July 2009	30 April 2010	0.0997	0.20
R Caren	Incentive	100,000	23 April 2007	11 July 2009	30 April 2010	0.0964	0.20
G Barnes	Incentive	300,000	23 April 2007	11 July 2009	30 April 2010	0.0964	0.20
	PS 1	150,000	23 April 2007	11 July 2009	30 April 2010	0.0737	0.30
	PS 2	150,000	23 April 2007	11 July 2009	30 April 2010	0.0584	0.40
G Doig	Incentive	100,000	23 April 2007	11 July 2009	30 April 2010	0.0964	0.20
D Ward	Incentive	150,000	23 April 2007	11 July 2009	30 April 2010	0.0964	0.20
	Incentive	100,000	2 November 2007	11 July 2009	30 April 2010	0.1287	0.20
	PS 1	100,000	2 November 2007	11 July 2009	30 April 2010	0.0986	0.30
	PS 2	100,000	2 November 2007	11 July 2009	30 April 2010	0.0779	0.40
Martin Place
Securities	Broker	2,000,000	25 June 2007	25 June 2009	10 July 2011	0.0612	0.20
Total		4,900,000

NOTES TO THE FINANCIAL STATEMENTS

27. SHARE-BASED PAYMENTS (Cont'd)

The options have been valued using the Binomial Tree option valuation methodology by the Company and based upon the following assumptions:

• (i) Directors and employees options:
• 1. Options expire 30 April 2010;
• 1. The underlying share price at 23 April 2007, before the company was listed was 20 cents;
• 1. The market trading price of the shares as at 2 November 2007 was 25 cents;
• 1. A continuously compounding risk free rate (Australian Government Bonds) ranging from 6.34% to 6.9%;
• 1. A volatility factor ranging from 71.28% to 73.93%;
• 1. Expected option lives ranging from 2.09 to 2.82 years based on periods from issue date to vesting dates of 1.69 to 2.22 years and remaining post vesting periods of 0.80 to 0.81 years;
• 1. No expected dividend yield; and
• 1. No discounts have been applied in respect of the 2 year escrow period that applies to all the options.
• (ii) Broker's options:
• 1. Options expire 10 July 2011;
• 1. The underlying share price at 25 June 2007, before the company was listed was 20 cents;
• 1. A continuously compounding risk free rate (Australian Government Bonds) of 6.29%;
• 1. A volatility factor of 57.82%;
• 1. Expected option lives 4.04 years. However these options vested on grant date of 25 June 2007 and accordingly they have been capitalised to cost of share issue;
• 1. No expected dividend yield; and
• 1. A discount of 40% has been applied in respect of the 2 year escrow period that applies to these specific options.

(c) Options granted during the year ended 31 December 2006

There were no Employee or Broker Option Schemes in existence during 2006.

(d) Weighted average remaining contractual life

The weighted average remaining contractual life for the share options outstanding as at 31 December 2007 is 2.33 years

(e) Range of exercise price

The range of exercise prices for directors and employees options outstanding at the end of the year was $0.20 to $0.40 (2006: $Nil).

The range of exercise prices for brokers' options outstanding at the end of the year was $0.20 (2006: $Nil).

As the range of exercise is wide, refer to section (b) above for further information in assessing the number and timing of additional shares that may be issued and the cash that may be received upon exercise of those options.

(f) Weighted average fair value

The weighted average fair value of the directors and employees options granted during the year was $0.09 (2006: $Nil), while the weighted average fair value of the brokers options granted during the year was $0.06 (2006: $Nil).

(g) Weighted average share price

The weighted average price per share during the year was $0.21 (2006: $Nil).

28. AUDITORS' REMUNERATION

The auditor of Clancy Exploration Limited is Ernst & Young.

	Consolidated		Parent
	2007$	2006$	2007$	2006$
Amounts received or due and receivable by Ernst &Young for:• an audit or review of the financial report of the entityand any other entity in the consolidated group• other services in relation to the entity and any otherentity in the consolidated group- tax advisory services in relation to initial public	28,000	-	28,000	-
offering (capitalised to costs of share issue)	22,671	-	22,671	-
- tax compliance services	1,670	-	1,670	-
	52,341	-	52,341	-

29. BUSINESS COMBINATION

Acquisition of Geoinformatics Exploration Tasmania Pty Ltd

On 8 May 2007, Clancy Exploration Limited ("Clancy") acquired 100% of the issued ordinary shares of Geoinformatics Exploration Tasmania Pty Ltd ("GET") from its then parent entity Geoinformatics Exploration Australia Pty Ltd ("GEA"). The only property of GET is its 25% joint venture interest with Bass Metals Limited ("Bass"), in each of 12 Tasmanian exploration licences in Mt Read Volcanic Belt in Western Tasmania. All expenditure in relation to this interest has been incurred by Bass.

The total cost of the combination was $460,000 which was settled by an issue of 4,600,000 ordinary shares at 10 cents each in Clancy. Given that both Clancy and GET were under the common control of GEA, both before and after the business combination, the requirements of AASB 3 do not apply and thus the combination has been accounted for in the consolidated entity according to the pooling of interest method based on the carrying value of net assets. The net assets (both identifiable and unidentifiable) of GET are $1. Furthermore, in respect of the consolidated entity, no goodwill or fair value treatment is required, given that this transaction is outside the scope of AASB 3. This treatment is also supported by the fact that the above entities, all being related parties, could not transact in an arms' length transaction and therefore determine the fair value of the company acquired.

The transaction has been accounted for at $460,000, which is the fair value of the consideration given by the parent entity.

From the date of acquisition, GET has incurred a loss of $277. If the combination had taken place at the beginning of the year, the loss would have been $489.

Included in this acquisition is a contingent liability with respect to the joint venture with Bass Metals. Refer to note 23 for further information.

30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The consolidated entity's principal financial instruments comprise cash, short-term deposits and available-for-sale investments.

The main purpose of these financial instruments is to finance the consolidated entity's operations. The consolidated entity has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the entire period under review, the consolidated entity's policy that no trading in financial instruments shall be undertaken.

The main risks arising from the consolidated entity's financial instruments are cash flow interest rate risk and equity price risk. Other minor risks are either summarised below or disclosed at Note 9 in the case of credit risk and Note 16 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks.

(a) Cash Flow Interest Rate Risk

The consolidated entity's exposure to the risks of changes in market interest rates relates primarily to the consolidated entity's shortterm deposits with a floating interest rate. These financial assets with variable rates expose the consolidated entity to cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The consolidated entity does not engage in any hedging or derivative transactions to manage interest rate risk.

30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont'd)

The following tables set out the carrying amount by maturity of the parent entity and consolidated entity's exposure to interest rate risk and the effective weighted average interest rate for each class of these financial instruments. Also included is the effect on profit and equity after tax if interest rates at that date had been 10% higher or lower with all other variables held constant as a sensitivity analysis.

The consolidated entity has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the consolidated entity continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable interest rates.

Consolidated Entity

	Notes	Floating		Non-InterestTotal CarryingInterestBearingAmount			Interest Rate Risk Sensitivity2007
		Rate							-10%		+10%
		$			$	$			$		$
		2007	2006	2007	2006	2007	2006	Profit		Equity Profit	Equity
Financial Assets:
Cash at bank	8	-	-	15,065	1,345	15,065	1,345	-	-	-	-
Short-term deposits	8	3,752,606	-	-	-	3,752,606	-	(25,518)	(25,518)	25,518	25,518
Trade and other receivables	9	-	-	169,321	1,669	169,321	1,669	-	-	-	-
Available-for-sale investments	10	-	-	401,013	-	401,013	-	-	-	-	-
Total		3,752,606	-	585,399	3,014	4,338,005			3,014 (25,518) (25,518) 25,518		25,518
Weighted average interest rate		6.28%	-
Financial Liabilities:
Trade and other payables	14	-	-	433,731	114,549	433,731	114,549	-	-	-	-
Total		-	-	433,731	114,549	433,731	114,549	-	-	-	-
Weighted average interest rate		-	-
Net financial assets (liabilities)		3,752,606	-	151,668	(111,535)		3,904,276 (111,535) (25,518) (25,518) 25,518				25,518

Parent Entity

	Notes	FloatingInterest			Non-InterestBearing	Total CarryingAmount			Interest Rate Risk Sensitivity	2007
		Rate							-10%		+10%
		$			$	$			$		$
		2007	2006	2007	2006	2007	2006	Profit		Equity Profit	Equity
Financial Assets:
Cash at bank	8	-	-	15,065	1,345	15,065	1,345	-	-	-	-
Short-term deposits	8	3,752,606	-	-	-	3,752,606	-	(25,518)	(25,518)	25,518	25,518
Trade and other receivables	9	-	-	169,215	1,669	169,215	1,669	-	-	-	-
Available-for-sale investments	10	-	-	401,013	-	401,013	-	-	-	--	-
Other Financial Assets	11	-	-	1	-	1	-	-			-
Total		3,752,606	-	585,294	3,014	4,337,.900			3,014 (25,518) (25,518) 25,518		25,518
Weighted average interest rate		6.28%	-
Financial Liabilities:
Trade and other payables	14	-	-	432,082	114,549	432,082	114,549	-	-	-	-
Total		-	-	432,082	114,549	432,082	114,549	-	-	-	-
Weighted average interest rate		-	-
Net financial assets (liabilities)		3,752,606	-	153,212	(111,535)		3,905,818 (111,535) (25,518) (25,518) 25,518				25,518

A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short term and long term Australian dollar interest rates. A 10% sensitivity would move short term interest rates at 31 December 2007 from around 6.75% to 7.43% representing a 68 basis points shift. This would represent two to three increases which is reasonably possible in the current environment with the bias coming from the Reserve Bank of Australia and confirmed by market expectations that interest rates in Australia are more likely to move up than down in the coming period.

Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is impacted resulting in a decrease or increase in overall income.

30. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont'd)

(b) Price risk

The consolidated entity is exposed to equity securities price risk. This arises from investments held and classified on the balance sheet as available-for-sale. The investments are traded on the ASX.

The following table sets out the carrying amount of the consolidated and parent entity's exposure to equity securities price risk on available for sale investments. Also included is the effect on profit and equity after tax if these prices at that date had been 25% higher or lower with all other variables held constant as a sensitivity analysis:

	Notes	Carrying Amount			Price Risk Sensitivity2007 $
		$			-25%$	+25%$
		2007	2006	Profit	Equity	Profit	Equity
Financial Assets:Available-for-sale investments	10	401,013	-	-	(100,253)	-	100,253

A sensitivity of 25% has been selected as this is considered reasonable given the current and recent trending and volatilities of both Australian and international stock markets,.

(c) Liquidity risk

The consolidated entity manages liquidity risk by maintaining sufficient cash reserves and marketable securities, and through the continuous monitoring of budgeted and actual cash flows.

Contracted maturities of payables year ended 31 December:

	Consolidated			Parent
	2007		2007	2006
	$	$	$	$
Payable
-less than 6 months	433,730	-	432,082	-
-6 to 12 months	-	114,549	-	114,549
-1 to 5 years	-	-	-	-
-later than 5 years	-	-	-	-
Total	433,730	114,549	432,082	114,549

(d) Commodity Price Risk

The consolidated entity is exposed to commodity price risk. This risk arises from its activities directed at exploration and development mineral commodities. If commodity prices fall, the market for companies exploring for these commodities is affected. The consolidated entity does not hedge its exposures.

(e) Foreign exchange risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. The consolidated entity's foreign transactions are immaterial and it is not exposed to foreign currency risk.

(f) Net fair values

For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form, other than listed investments. The consolidated entity has no financial assets where carrying amount exceeds net fair values at balance date.

The consolidated entity's receivables at balance date are detailed in Note 9 and comprise primarily accrued income receivable from a joint venture partner and GST input tax credits refundable by the ATO. The balance of receivables comprises amounts receivable from related parties and prepayments.

The credit risk on financial assets of the economic entity which have been recognised on the Balance Sheet is generally the carrying amount.

DIRECTORS' DECLARATION

In accordance with a resolution of the directors of Clancy Exploration Limited, I state that:

• 1. In the opinion of the directors:
  • (a) the financial statements, notes and the additional disclosures included in the directors' report designated as audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
    • (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 31 December 2007 and of their performance for the year ended on that date; and
    • (ii) complying with Accounting Standards and Corporations Regulations 2001; and
  • (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
• 1. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 31 December 2007.

On behalf of the Board

M.R. STEWART Managing Director

Perth, WA

Dated this 31st day of March 2008

Independent auditor's report to the members of Clancy Exploration Limited

We have audited the accompanying financial report of Clancy Exploration Limited, which comprises the balance sheet as at 31 December 2007, and the income statement, statement of recognised income and expense and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

The company has disclosed information as required by paragraphs Aus 25.4 to Aus 25.7.2 of Accounting Standard 124 Related Party Disclosures ("remuneration disclosures"), under the heading "Remuneration Report" on pages 3 to 5 of the directors' report, as permitted by Corporations Regulation 2M.6.04.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2(b), the directors also state that the financial report, comprising the consolidated/parent financial statements and notes, complies with International Financial Reporting Standards. The directors are also responsible for the remuneration disclosures contained in the directors' report..

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement and that the remuneration disclosures comply with Accounting Standard AASB 124 Related Party Disclosures.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the directors' report. In addition to our audit of the financial report and the remuneration disclosures, we were engaged to undertake the services disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.

Auditor's Opinion

In our opinion:

• 1. the financial report of Clancy Exploration Limited is in accordance with the Corporations Act 2001, including:
  • (i) giving a true and fair view of the financial position of Clancy Exploration Limited and the consolidated entity at 31 December 2007 and of their performance for the year ended on that date; and
  • (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.
• 1. the consolidated/parent financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(b).
• 1. the remuneration disclosures that are contained on pages 3 to 5 of the directors' report comply with Accounting Standard AASB 124 Related Party Disclosures.

Ernst & Young

T S Hammond Partner Perth 31 March 2008