CLANCY EXPLORATION LIMITED ABN: 65 105 578 756 AND CONTROLLED ENTITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30 JUNE 2016

CORPORATE DIRECTORY

DIRECTORS

Mr. Evan Cranston Non-Executive Chairman

Mr. David Scoggin Non-Executive Director

Mr. Scott Patrizi Non-Executive Director

COMPANY SECRETARY

Suite 23, 513 Hay Street

Western Australia 6008

Telephone: (08) 6143 6720 Facsimile: (08) 9388 8824 Website: www.clancyexploration.com

Subiaco

PRINCIPAL PLACE OF BUSINESS

Mr. Rowan Caren

LAWYERS

Bellanhouse Legal Ground Floor, 11 Ventnor Avenue West Perth Western Australia 6005

AUDITOR

Hall Chadwick WA Audit Pty Ltd 255 Hay Street Subiaco Western Australia 6008

SHARE REGISTRY

Security Transfer Registrars 770 Canning Highway Applecross WA 6153 Australia

Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

ASX CODE: CLY

REGISTERED OFFICE

Suite 23, 513 Hay Street Subiaco Western Australia 6008

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 30 June 2016.

1. Directors

(i) Names, Qualifications and Experience

The names and details of the Company's directors in office at any time during the year to 30 June 2016 and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr. Evan Cranston, BComm, LLB

Non-Executive Chairman – Appointed 7 July 2016 Non-Executive Director - Appointed 23 October 2014

Mr. Cranston is a corporate lawyer with over 10 years' experience specialising in corporate and mining law. Mr. Cranston has broad experience in the areas of capital raisings, initial public offerings, tenement acquisition agreements, mineral rights agreements, joint ventures, mergers and acquisitions and corporate governance. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Western Australia and was admitted as a barrister and solicitor of the Supreme Court of Western Australia.

Mr. Cranston is currently an executive director of Attila Resources Limited (ASX: AYA) and non-executive director of Carbine Resources Limited (ASX: CRB), Primary Gold Limited (ASX: PGO) and Boss Resources Limited (ASX: BOE). Mr. Cranston was a non-executive director of Cradle Resources Limited (ASX: CXX) until 9 May 2016.

Mr. Cranston was Chairman of the Audit Committee from 27 November 2014 until the Committee was ceased in March 2016.

Mr. David Scoggin, BA

Non-Executive Director - Appointed 31 March 2016

Mr. Scoggin is a native of Santa Barbara, California and received his Bachelor of Arts from Princeton University, majoring in international relations and finance. He started his career in Tokyo and Hong Kong working as a proprietary trader for both Credit Agricole Indosuez and ING Barings. In 2000, he relocated to Australia where he started a 12-year period as a portfolio manager/senior trader managing hedge funds for Susquehanna International Group and Evolution Financial Group. He specializes in risk assessment, mergers and acquisition analysis, and has held several corporate advisory roles.

Mr. Scott Patrizi, BComm

Non-Executive Director - Appointed 7 July 2016

Mr. Patrizi is a corporate finance professional having been previously employed with Deloitte Touche Tohmatsu in Perth. Mr. Patrizi holds a Bachelor of Commerce from the University of Western Australia. During his time at Deloitte, Mr. Patrizi worked across a range of industries including mining, oil and gas, healthcare, education and private equity providing merger and acquisition, valuation and due diligence services. Prior to Deloitte, Mr. Patrizi worked for Argonaut Limited, a full service advisory, stockbroking & research and investment house focused on clients in the natural resources sector, where he gained significant equity capital market experience.

Mr. Nathan Featherby, B.Comm

Non-Executive Director – Appointed 23 October 2014, Resigned 7 July 2016

No-Executive Chairman – Appointed 8 April 2016, Resigned 7 July 2016

Mr. Featherby has 10 years of investment banking and natural resource investment experience. He has previously worked as a stockbroker and independent financier in Australia with a specialisation in resources. Mr. Featherby holds a Bachelor of Commerce from Curtin University. He is Executive Chairman of Ochre Management Pty Ltd, a Western Australian merchant bank which focuses on advisory and investments in small to medium capitalisation mining and exploration companies. Mr. Featherby is also executive chairman of Ochre Group Holdings Limited (ASX: OGH) and a director of Silver Mines Limited (ASX: SVL) and Ascot Resources (ASX:AZQ).

Mr. Gordon Barnes, BSc, MSc, MAIG, MSEG, GAICD

Managing Director until resignation on 31 March 2016

Mr. Barnes is an exploration geologist with a background in exploration project management and technical consulting services. He has 27 years of practical experience, ranging from active field based projects through to multi-commodity project generation initiatives in Australia, Asia, North and South America. Mr. Barnes graduated from Royal Melbourne Institute of Technology with a Bachelor of Science in Applied Geology in 1987 and completed a MSc in Ore Deposit Geology at the University of Western Australia in 1996. He is a Member of the Australian Institute of Geoscientists, the Society of Economic Geologists and a Graduate of the Australian Institute of Company Directors. Mr. Barnes continues to provide consultancy services to the Company.

Mr. Barnes was appointed as Managing Director on 1 January 2011 and resigned on 31 March 2016. He has not held a directorship in any other listed entity in the past three years.

1. Directors (continued)

Dr. Michael Etheridge, FTSE, FAICD, FAIG, FGSA

Non-Executive Chairman until resignation on 26 November 2015

Dr. Etheridge is a geologist who has had a varied career in universities, a government research organisation and in industry. He was nonexecutive chairman of ABM Resources Ltd (ASX: ABU) until 8 March 2016. Until November 2013, he was deputy chairman of Zeus Resources Ltd (ASX: ZEU). Dr. Etheridge is a Fellow of the Australian Academy of Technological Sciences and Engineering, the Australian Institute of Company Directors, the Society of Economic Geologists and the Australian Institute of Geoscientists. Dr. Etheridge was appointed as a director of the Company on 11 March 2011 and was Chairman from 25 July 2011 to 26 November 2015.

The Company's Audit Committee ceased on 30 March 2016.

2. Company Secretary

Mr. Rowan Caren, B.Com, CA

Mr. Caren is a Chartered Accountant with over 27 years' commercial experience. He has been directly involved in the minerals exploration industry for over 17 years. In 2004 he created a specialist company secretarial and advisory consultancy, Dabinett Corporate. He has provided financial and corporate services to several listed and unlisted companies involved in the resources sector. He qualified with PricewaterhouseCoopers and worked with 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. Mr. Caren was a member of the Audit Committee from 27 November 2014 until the cessation of the Committee on 30 March 2016.

3. Principal Activities

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

4. Review of financial performance

The net consolidated loss from continuing operations for the year ended 30 June 2016, after income tax, amounted to \$1,296,630 (2015: \$955,446).

During the year ended 30 June 2016, total expenses amounted to \$1,345,157 (2015: \$1,227,945). Unrestricted cash and cash equivalents amounted to \$1,868,760 as at 30 June 2016 (30 June 2015: \$1,231,434). Under the terms of certain joint venture agreements, the Company has an obligation to spend \$Nil (30 June 2015: \$174,645) of the cash balance on the respective joint venture projects, or in the event the joint venture partner does not elect to contribute beyond its minimum contribution, this amount may be refunded.

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

During the year the Company continued to explore its gold, copper and base metals projects in New South Wales, directly and through joint venture partners.

7. Likely Developments and Expected Results

Other than as referred to in this report, 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

There have been no significant changes in the state of affairs during the financial year ending 30 June 2016, other than as follows:

Completion of a rights issue which raised \$2.05m at an issue price of 0.1 cents per share;
Several parties farming into the Company's projects elected to withdraw from the earn-in arrangements during the year;
The Company relocated its corporate offices from Orange in NSW to Perth; and
There were a number of board changes during the year with Gordon Barnes and Michael Etheridge resigning whilst David Scoggin was appointed.

9. Significant Events After Balance Date

Subsequent to 30 June 2016, Mr. Scott Patrizi was appointed to the Board as a Non-Executive Director and Mr. Evan Cranston was appointed Chairman, following the resignation of Mr. Nathan Featherby.

10. Indemnity and Insurance for Group Officers and Auditors

To the extent permitted by law, the Company indemnifies every person who is or has been:

an Officer against any liability to any person (other than the Company or a related entity) incurred while acting in that capacity and in good faith; and
an Officer or auditor of the Company, against costs and expenses incurred by that person in that capacity in successfully defending legal proceedings and ancillary matters.

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 and other Company records.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Hall Chadwick WA Audit Pty Ltd (previously Ernst & Young), as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify either Hall Chadwick WA Audit Pty Ltd or Ernst & Young during, or since the end of, the financial year.

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 Section 300A of the Corporations Act 2001 and its Regulations. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Act. This remuneration report forms a part of the Directors' Report.

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.

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 entity, as well as align interests of directors, executives and shareholders.

In previous years'shares were issued to directors, employees and consultants pursuant to the Company's Employee Share Option and Loan Plan ("Plan"). No shares were issued in the year ended 30 June 2016. The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst providing valuable remuneration.

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

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

If an eligible employee ceases to be an eligible employee of the Company during the period of restriction the Company may buy-back the Plan Shares the subject of the restriction at a price equal to the issue price or the market price at the Board's discretion.

Loans have been advanced to the directors, executives and employees to pay the cash consideration for the Plan Shares. During the term of any such loan, dividends paid in respect of the Plan Shares in relation to which the Company made the loan will be retained by the Company as interest paid by the borrower on the loan. The borrower must repay the loan to the Company on the earlier of 5 years from the date of allotment of the Plan Shares to which the loan relates, or the date the borrower ceases to be employed by the Company. In such an event, the borrower is required to make available to the Company their Plan Shares to settle the loan. This will result in the Company meeting the loss on the loan so that the loan is effectively linked to the value of the Shares.

The board's policy for determining the nature and amount of remuneration for board members and senior executives of the consolidated entity 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.
All executives receive a base salary (which is based on factors such as length of service and experience).
The Managing Director may also receive a cash bonus if certain Key Performance Indicators are met. No cash bonus was paid in 2016 and the Managing Director position is currently vacant.
In prior years, executives have received options to acquire ordinary shares, and one executive director was granted Shares pursuant to the Company's Employee Share Option and Loan Plan. An allocation of shares was made based on factors such as length of service and experience.
The board reviews executive packages annually by reference to the consolidated entity'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 is expensed over the appropriate vesting period. Shares issued under the Employee Share Plan are valued using the Binomial Tree methodology.

Non-Executive 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.

11. Remuneration Report – Audited (continued)

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 have been granted options in previous years. Shares were issued to nonexecutive directors in prior years pursuant to the Company's Employee Share Option and Loan Plan ("Plan") as set out above under "Remuneration Policy". The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst providing valuable remuneration. Loans have been advanced to the non-executive directors to pay the cash consideration for the Plan Shares.

Company performance, shareholder wealth and director and executive remuneration

Shares have been issued to 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 ordinary shares pursuant to the Company's Employee Share Option and Loan Plan. The recipients of Plan Shares are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the Plan Shares granted to them will also increase. Therefore, the Plan Shares provide an incentive to the recipients to remain with the Company and to continue to work to enhance the Company's value.

There is no policy in place which limits exposure to risk in relation to those securities in the Company which constitute an element of directors' remuneration and which are linked to satisfaction of Company performance conditions.

The table below sets out summary information about the consolidated entity's earnings and movements in shareholder wealth for the two years to 30 June 2016, the six months to 30 June 2014 and the two years to 31 December 2013:

Consolidated Entity:

	30-Jun-16	30-Jun-15	30-Jun-14	31-Dec-13	31-Dec-12
Revenue	\$48,527	\$272,499	\$48,334	\$1,305,078	\$977,069
Net loss before tax	(\$1,296,630)	(\$955,446)	(\$723,234)	(\$677,702)	(\$1,931,371)
Net loss after tax	(\$1,296,630)	(\$955,446)	(\$723,234)	(\$677,702)	(\$1,931,371)

Share price at end of year	0.2 cents	1.5 cents	1 cent	2 cents	3 cents
Basic loss per share	(0.2 cents)	(0.5 cents)	(0.4 cents)	(0.3 cents)	(1.1 cents)
Diluted loss per share	(0.2 cents)	(0.5 cents)	(0.4 cents)	(0.3 cents)	(1.1 cents)

Note: No dividends have been declared or paid since the Company was listed.

Key Management Personnel Remuneration Policy

The remuneration structure for key management personnel, as determined by the Board, is based on a number of factors, including length of service, particular experience of the individual concerned and their role within the organisation.

11. Remuneration Report – Audited (continued)

Key Management Personnel Remuneration:

Remuneration for the year ended 30 June 2016

Key Management Person		Short-term benefits		Long Term benefits	Post employment benefits	Long term incentives	Total
	Salary or Fees	Consulting Fees	Non Monetary Benefits	Long Service Leave	Superannuation	Share Based payments
	\$	\$	\$	\$	\$	\$	\$
E Cranston	36,000	-	-	-	-	-	36,000
D Scoggin 1	9,000	-	-	-	-	-	9,000
S Patrizi 2	-	-	-	-	-	-	-
N Featherby 3	36,000	12,000	-	-	-	-	48,000
G Barnes 4,5,6	183,823	-	13,847	3,003	20,322	-	220,995
M Etheridge 7	25,000	-	-	-	2,375	-	27,375
R Caren 8	18,000	-	-	-	-	-	18,000
	307,823	12,000	13,847	3,003	22,697	-	359,370

¹ D Scoggin was appointed on 31 March 2016.

² S Patrizi was appointed on 7 July 2016.

³ N Featherby resigned as a director on 7 July 2016.

⁴ G Barnes resigned 31 March 2016. Consulting fees paid or payable to Mr. Barnes for the period subsequent to his resignation totalled \$11,468. There were no additional termination payments made to Mr Barnes upon resignation.

⁵ Accrued annual leave for the year is presented on an accruals basis. An amount of \$14,174 was paid out upon termination.

⁶ Long-service leave for the year is presented on an accruals basis. An amount of \$21,954 was paid out upon termination.

⁷ M Etheridge resigned as a director of the Company on 25 November 2015. There were no additional termination payments made to Dr Etheridge upon resignation.

⁸ R Caren has been classified as key management personnel from 1 April 2016 and the remuneration disclosed above is the fees paid or payable in relation to the period 1 April 2016 to 30 June 2016.

Remuneration for the year ended 30 June 2015

Key Management Person		Short-term benefits		Long Term benefits	Post employment benefits	Long term incentives	Total
	Salary or Fees	Consulting Fees	Non Monetary Benefits	Long Service Leave	Superannuation	Share Based payments
	\$	\$	\$	\$	\$	\$	\$
G Barnes 1	236,810	-	18,466	2,844	21,732	-	279,852
M Etheridge	60,000	-	-	-	5,700	-	65,700
E Cranston 2	24,000	-	-	-	-	-	24,000
N Featherby 2	24,000	8,000	-	-	-	-	32,000
J Macdonald 3	11,032	-	-	-	-	-	11,032
N Forsyth-Stock 4	13,761	32,113	-	-	1,307	195	47,376
	369,603	40,113	18,466	2,844	28,739	195	459,960

¹ Annual and long-service leave disclosed as remuneration for 2015 is presented on an accruals basis and was not paid out in the period.

² Appointed as a Director on 23 October 2014.

3 J Macdonald resigned as a director on 22 October 2014, therefore his salary payment is for the period ending on the date of his resignation from the board. There were no additional termination payments made to Dr Macdonald upon resignation.

⁴ N Forsyth-Stock resigned as Chief Financial Officer and Executive Director of the Company on 26 November 2014, therefore payments made in respect Ms Forsyth-Stock's services are for part of the financial year only. The director's fees and superannuation payments are for the period ending on the date of her resignation from the board. The consulting fees paid to Ms Forsyth Stock represent the period ending 27 February 2015, of which \$11,113 was paid subsequent to her resignation from the board on 26 November 2014. There were no additional termination payments made to Ms Forsyth-Stock upon resignation.

11. Remuneration Report – Audited (continued)

During the financial year, the following share-based payment arrangements granted as compensation were in existence: Plan Shares

Granted in 2016

Nil

Granted in 2015

Nil

Granted in 2014

Nil

Granted in 2013

Holder	Granted No.	Grant Date	Issue Price cents	Fair Value of Share Based Payments (Total) \$	Fair Value of Share Based Payments Expensed in 2015 \$	Fair Value of Share Based Payments Expensed in 2014 \$
Directors	264,343	16 August 2013	.093	1,471	195	726
Total				1,471	195	726

ASX listing Rule 10.14 approval for the issue of the Plan Shares in 2013 was obtained on 24 May 2013. Details of the Plan are disclosed in the Remuneration Policy of this Remuneration Report. The continuity service period in relation to these shares is twelve months from the date of allotment. There were no performance criteria specified by the Company at the time of allotment. The shares issued to Ms Forsyth-Stock were fully vested prior to her resignation as a director of the Company on 26 November 2014.

No options were issued to directors as part of their remuneration during the course of the year ended 30 June 2016. No options were exercised, or forfeited during the year. There were no compensation options on issue as at 30 June 2016.

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 as follows:

(i) SHARES – 30 June 2016

	Held at 1 July 2015	Acquired	Disposed	Net Change	Other	Held at 30 June 2016
Director
E Cranston	-	-	-	-	-	-
D Scoggin	-	-	-	-	-	-
S Patrizi	-	-	-	-	-	-
G Barnes	3,457,547	-	(1,891,662)	(1,891,662)	-	1,565,885
M Etheridge	4,214,863	23,952,831	(27,374,664)	(3,421,833)	-	793,030
N Featherby	1,000,000	-	-	-	-	1,000,000
Company Secretary
R Caren 1	-	3,317,531	-	3,317,531	473,933	3,791,464
	8,672,410	27,270,362	(29,266,326)	(1,995,964)	473,933	7,150,379

¹ R Caren has been classified as key management personnel from 1 April 2016, at which date he held 473,933 shares in the Company.

11. Remuneration Report – Audited (continued)

(ii) SHARES – 30 June 2015

	Held at 1 July 2014	Acquired		Net Change	Held at 30 June 2015
Director
G Barnes	2,457,547	1,000,000	-	1,000,000	- 3,457,547
M Etheridge	3,214,863	1,000,000	-	1,000,000	- 4,214,863
J Macdonald	1,307,533	-	-	-	- 1,307,533
N Forsyth Stock	611,352	-	-	-	- 611,352
E Cranston	-	-	-	-	- -
N Featherby	1,000,000	-	-	-	- 1,000,000

	8,591,295	2,000,000	-	2,000,000	- 10,591,295

The movement during the reporting period in the number of options over 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 as follows:

(i) OPTIONS – 30 June 2016

	Held at 1 July 2015	Acquired	Net Change	Held at 30 June 2016
Director
E Cranston	-	-	- -	- -
D Scoggin	-	-	- -	- -
S Patrizi	-	-	- -	- -
G Barnes	-	-	- -	- -
M Etheridge	-	7,984,277	- 7,984,277	- 7,984,277
N Featherby	-	-	- -	- -
Company Secretary
R Caren	-	1,105,844	- 1,105,844	- 1,105,844
	-	7,984,277	- 7,984,277	- 9,090,121

There were no options over ordinary issues held during the year ended 30 June 2015.

Details of share-based payments in existence during the year ended 30 June 2016 are disclosed in this Directors' Report and Notes 17, 25 and 26 to the Annual Financial Statements.

Contracts with Directors and Key Management Personnel

There are no contracts in place with directors as at the date of this report.

Employee Share Plan

Pursuant to an employee share plan offer dated 25 October 2012, the Company provided limited recourse loans to eligible employees and consultants to purchase shares under the plan ("Plan Shares"). Pursuant to loan agreements, the loans become repayable once the employee/consultant ceases to be an eligible employee of or consultant to the Company. If the loan is not repaid within one month of the date of this notice, the Company may sell the Plan Shares in accordance with loan agreement for the benefit of the Company.

in relation to the loan. The Company has given the required notices to the employees and consultants who have ceased to be eligible, and is in a position to sell the Plan Shares.

As at 30 June 2016, the following key management personnel held Plan Shares and had limited recourse loans in relation to those shares:

	Plan Shares held at 30 June 2016	Price per share (\$)	Balance of limited recourse loans at 30 June 2016 (\$)
Directors
G Barnes (resigned 31 March 2016)	1,565,885	0.026	40,713
M Etheridge (resigned 26 November 2015)	793,030	0.026	20,619
Company Secretary
R Caren	347,009	0.020	6,940
	2,705,924		68,272

12. Auditor Independence and Non-Audit Services

The Group's current auditors, appointed on 15 June 2016, did not perform any services in addition to its statutory audit services.

During the year, Ernst and Young, the Group's previous auditor, performed certain services in addition to its statutory audit duties. The total non-audit services provided by the previous external auditor amounted to \$5,750 (2015: \$9,800).

The Board of Directors is satisfied that the provision of non-audit services by the previous external auditor did not compromise the auditor independence requirements of the act due to the following reasons:

1) all material non-audit services have been 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;

2) none of the services undermines the general principles relating to auditors' independence as set out in APES 110 Code of Ethics for Professional Accountants, including reviewing and auditing the auditor's own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing economic risks and rewards.

13. Auditors' Independence Declaration

The auditors' independence declaration for the reporting period ended 30 June 2016 has been received and can be found on page 12.

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 available on the website, www.clancyexporation.com .

15. Share Options

At the date of this report 1,388,044,679 (2015: Nil) options to acquire ordinary shares in Clancy Exploration Limited were on issue.

Share-based payments and options issued to directors, consultants and eligible employees, are disclosed in this Directors' Report and Notes 17, 25 and 26 to the Annual Financial Statement.

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.

	Directors' Meetings	Directors'	Audit Committee	Audit Committee
Director	Eligible to Attend	Meetings	Meetings Eligible	Meetings
		Attended	to Attend	Attended
IE Cranston
D Scoggin	3
S Patrizi	-
N Featherby
G Barnes	4
M Etheridge

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2016		Consolidated
		2016	2015
	Notes	\$	\$
Income
Other income	4	48,527	272,499
Total income		48,527	272,499
Employee benefits expense	5(a)	(600,430)	(857,251)
Consulting and outsourced services expense		(248,180)	(233,258)
Self funded exploration expenditure		(156,150)	(135,299)
Net (disbursement)/recovery from joint venture partners	5(b)	(248,426)	344,211
Travel expense		(18,674)	(24,039)
Share based payment expense		-	(195)
Computer related costs		(2,583)	(925)
Occupancy costs		(17,860)	(8,824)
Insurance expense		(25,867)	(25,031)
Marketing expense Depreciation, amortisation and impairment expense	5(c)	(2,057) (10,350)	(1,750) (11,444)
Impairment of exploration asset		-	(250,000)
Other expenses		(14,580)	(24,140)
Total expenses		(1,345,157)	(1,227,945)
Loss from continuing operations before income tax expense		(1,296,630)	(955,446)
Income tax expense		-	-
Loss from continuing operations after income tax Expense		(1,296,630)	(955,446)
Other comprehensive income		(1,296,630)	(955,446)
Other		-	-
Other comprehensive loss net of tax		-	-
Total comprehensive loss attributable to owners of the parent		(1,296,630)	(955,446)
Loss per share
- basic and diluted		(0.2) cents	(0.5) cents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 30 JUNE 2016	Consolidated
		2016	2015
	Notes	\$	\$
ASSETS
Current Assets
Cash and cash equivalents	8	1,868,760	1,231,434
Restricted cash asset	8	130,107	210,000
Trade and other receivables	9	25,920	101,206
Reimbursable exploration expenditure	10	-	19,821
Total Current Assets		2,024,787	1,562,461
Non-current Assets
Plant and equipment	11	21,495	34,758
Intangible assets	12	-	995
Total Non-current Assets		21,495	35,753
TOTAL ASSETS		2,046,282	1,598,214
LIABILITIES
Current Liabilities
Trade and other payables	13	227,938	114,778
Provisions	14	-	59,121
Unearned Revenue	15	-	3,171
Exploration expenditure reimbursed in advance	15	-	174,645
Total Current Liabilities		227,938	351,715
Non-current Liabilities
Provisions	14	-	18,350
Total Non-current Liabilities		-	18,350
TOTAL LIABILITIES		227,938	370,065
NET ASSETS		1,818,344	1,228,149
EQUITY
Contributed equity	16	17,074,543	15,207,200
Reserves	17	1,685,087	1,665,605
Accumulated losses		(16,941,286)	(15,644,656)
TOTAL EQUITY		1,818,344	1,228,149

CONSOLIDATED	Notes	Ordinary Shares	Options Reserve	Accumulated Losses	Total Equity
		\$	\$	\$	\$
At 1 July 2015		15,207,200	1,665,605	(15,644,656)	1,228,149
Total comprehensive income for the
period, net of tax		-	-	(1,296,630)	(1,296,630)
Issue of share capital	16	2,101,287	-	-	2,101,287
Transaction costs on share issues	16	(214,462)	-	-	(214,462)
Transaction costs settled in share based	16	(19,482)	19,482	-	-
payment
At 30 June 2016		17,074,543	1,685,087	(16,941,286)	1,818,344

At 1 July 2014		14,457,200	1,665,605	(14,689,210)	1,433,595
Total comprehensive income for the
period, net of tax		-	-	(955,446)	(955,446)
Issue of share capital	16	-	-	-	-
Transaction costs on share issues	16	-	-	-	-
Proceeds from placement	16	750,000	-	-	750,000
At 30 June 2015		15,207,200	1,665,605	(15,644,656)	1,228,149

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2016		Consolidated
		2016	2015
		\$	\$
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
Reimbursement of exploration expenditure		462,787	2,073,905
Management fee received		(5,630)	177,144
Payments to suppliers and employees		(1,818,470)	(3,519,803)
Receipts of Government grants for drilling expenditure		-	142,404
Interest received		12,900	29,109
NET CASH FLOWS USED IN OPERATING ACTIVITIES	18	(1,348,413)	(1,097,241)
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Purchase of plant and equipment		-	(16,628)
Proceeds on sale of property, plant and equipment	4	18,914	60,455
Refund of prepayment on acquisition of tenements		-	150,000
Release of cash from security deposits	8	80,000	90,000
NET CASH FLOWS FROM INVESTING ACTIVITIES		98,914	283,826
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Proceeds from share issue	16	2,101,287	750,000
Costs of share issue	16	(214,462)	-
Loans to related entity - payments made		-	(243)
NET CASH FLOWS FROM FINANCING ACTIVITIES		1,886,825	749,757
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		637,326	(63,658)
Cash and cash equivalents at beginning of period		1,231,434	1,295,092
CASH AND CASH EQUIVALENTS AT END OF PERIOD	8	1,868,760	1,231,434

1. CORPORATE INFORMATION

The financial statements of Clancy Exploration Limited (the Company or the Group) for the year ended 30 June 2016 were authorised for issue in accordance with a resolution of the directors on 21 September 2016. Clancy Exploration Limited is a for profit entity. Clancy Exploration Limited (the parent) is a company limited by shares, incorporated in Australia, and whose shares are publicly traded on the Australian Securities 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 statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements include separate financial statements for Clancy Exploration Limited as an individual entity and the consolidated entity consisting of Clancy Exploration Limited and its controlled entity.

(a) Basis of preparation

These general purpose financial statements have 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. These financial statements have also been prepared on a historical cost basis, except for available-for-sale investments, which have been measured at fair value. These financial statements are presented in Australian dollars.

(b) Statement of Compliance

These financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law.

(c) New accounting standards and interpretations

Accounting Standards issued but not yet effective

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 30 June 2016. None of the standards issued and not yet effective are expected to have a significant impact to the financial statements. Those that are relevant to the Group are outlined below:

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

AASB No.	Title	Application date of standard	Expected to be initially applied in the financial year ending
AASB 9	Financial Instruments	1 January 2018	30 June 2019
AASB 2010-7	Amendments arising from Accounting Standards arising from AASB 9 (December 2010)	1 January 2018	30 June 2019
AASB 2014-3	Amendments to Australian Accounting Standard – Accounting for Acquisition of Interest in Joint Operations [AASB 1 & AASB 11]	1 January 2016	30 June 2017
AASB 2014-4	Amendments to Australian Accounting Standard - Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 116 and AASB 138)	1 January 2016	30 June 2017
AASB 2014-5	Amendments to Australian Accounting Standard Arising From AASB 15	1 January 2018	30 June 2019
AASB 2014-7	Amendments to Australian Accounting Standard Arising From AASB 9 (December 2014)	1 January 2018	30 June 2019
AASB 2014-9	Amendments to Australian Accounting Standard - Equity Method in Separate Financial Statements	1 January 2016	30 June 2017
AASB 2014-10	Amendments to Australian Accounting Standard - Sale of Contribution of Assets Between Investors and its Associates or Joint Venture	1 January 2016	30 June 2017
AASB 2015-1	Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012–2014 Cycle	1 January 2016	30 June 2017
AASB 2015-2	Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101	1 January 2016	30 June 2017
AASB 2015-5	Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation Exception	1 January 2016	30 June 2017
AASB 2015-8	Amendments to Australian Accounting Standards – Effective Date of AASB 15	1 January 2018	30 June 2019
AASB 2015-9	Amendments to Australian Accounting Standards – Scope and Application Paragraphs	1 January 2016	30 June 2017
AASB 2015-10	Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128.	1 January 2018	30 June 2019
AASB 2016-1	Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]	1 January 2017	30 June 2018
AASB 2016-2	Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107	1 January 2017	30 June 2018
AASB 2016-3	Amendments to Australian Accounting Standards – Clarifications to AASB 15	1 January 2018	30 June 2019
AASB 15	Revenues from Contracts with Customers	1 January 2018	30 June 2019
AASB 16	Leases	1 January 2019	30 June 2020
AASB 1057	Application of Australian Accounting Standards	1 January 2016	30 June 2017

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiary as at 30 June 2016. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

(e) Investment in joint operations

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

The Group can elect to contribute to ongoing exploration costs in proportion to its interests or dilute (a farm-out arrangement). If contributions are made during the reporting period, they are accounted for as exploration expenditure. Once the joint arrangement partner had earned its interest, the Company recovers expenditure equivalent to the other joint arrangement partner's interest.

The Group does not record any expenditure made by the farminee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out arrangements. Any cash consideration received directly from the farminee is credited against costs previously incurred in relation to the whole interest.

When the Group, acting as an operator, receives reimbursement of direct costs recharged to the joint operation, such recharges represent reimbursements of costs that the operator incurred as an agent for the joint operation and therefore have no effect on profit or loss.

In many cases, the Group also incurs certain general overhead expenses in carrying out activities on behalf of the joint operation. As these costs can often not be specifically identified, joint operation agreements allow the operator to recover the general overhead expenses incurred by charging an overhead fee that is based on a fixed percentage of the total costs incurred for the year, often in the form of a management fee. Although the purpose of this recharge is very similar to the reimbursement of direct costs, the Group is not acting as an agent in this case. Therefore, the general overhead expenses and the overhead fee are recognised in profit or loss as an expense and income, respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair value of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.

(g) Segment reporting

Management has assessed that the Group's reportable business segments under the quantitative criteria set out in AASB 8 Segment Reporting and has determined that no additional operating segments disclosures are required.

AASB 8 requires the 'management approach' to the identification, measurement and disclosure of operating segments. The 'management approach' requires that operating segments be identified on the basis of internal reports that are regularly reviewed by the entity's chief operating decision maker, for the purpose of allocating resources and assessing performance. This could also include the identification of operating segments which sell primarily or exclusively to other internal operating segments.

In its adoption of the 'management approach' to segment reporting, the Group has identified that it continues to operate as a gold, copper and base metals explorer and developer, in a single reportable business segment, under one segment manager, in one geographical location being Australia, consistent with the prior year. The information disclosed in the financial statements is the same information utilised internally by the chief operating decision maker. Accordingly, no additional quantitative or qualitative disclosures are required.

(h) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits with an original maturity of not more than 3 months 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 Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. The consolidated entity does not have any bank overdraft facilities.

Where the Company calls cash in advance from its joint venture partners, the cash is recognised as an asset with an offsetting liability for the amount of expenses not yet incurred on the relevant joint venture project at balance date. The liability is then released to the profit and loss as the expenditure is incurred.

Restricted cash represents the cash funds held in term deposit accounts for exploration licenses for a period longer than 3 months but shorter than 12 months. The Department of Trade and Investment, Regional Infrastructure and Services requires the Company to lodge a security deposit in respect of each of its exploration leases granted over tenements held in the Company's name. These funds are held as a Deed of Security Deposit Bond entered into on behalf of the Company by a financial institution. The amount of restricted cash required to be held as a security deposit varies from time to time depending on the requirements of the tenements leased. The deposits must remain in place until the Company determines that the relevant exploration lease should be relinquished.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(i) Trade and other receivables

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.

Collectability 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

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-tomaturity 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 within 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 has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

(i) Loans and receivables

Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at the transaction price minus principal repayments and minus any allowance for impairment or uncollectability. 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 statement of financial position, 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) Financial assets carried at cost

Investments are initially measured at fair value, net of transaction costs. Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Group's financial statements. 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) Plant and Equipment

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 statement of comprehensive income during the financial period in which they are incurred.

Depreciation is calculated using the straight line and diminishing value methods to allocate the cost of the specific assets over their estimated useful lives. The expected useful lives are detailed in Note 11.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 statement of comprehensive income 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.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. 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.

(l) Trade and other payables

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.

(m) Provisions and employee benefits

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 statement of comprehensive income 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 reporting 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 corporate 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. For annual leave, 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(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. 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 corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(n) Share-based payment transactions

(i) Equity settled transactions:

The consolidated entity provides benefits to its directors, employees and consultants in the form of share-based payments, whereby directors and employees render services in exchange for options to acquire shares, rights over shares (equity-settled transactions) and shares issued pursuant to the Company's Employee Share and Loan Plan ("Plan"). The consolidated entity has also issued ordinary shares and unlisted options as consideration to vendors for the acquisition of exploration licences and drilling services.

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 in the case of options and shares issued under the Plan for directors, employees and consultants; and the closing share price on, or just before, either the date of entering into, or executing, an exploration licence purchase agreement in the case of options and shares issued to tenement vendors as consideration for the settlement price. The fair value of the unlisted options and shares issued under the Plan is determined using the Black-Scholes 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 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) or shares issued under the Plan.

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

(i) the grant date fair value of the options and shares issued under the Plan;
(ii) the current best estimate of the number of options and shares issued under the Plan 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 statement of comprehensive income 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 and shares issued under the Plan is reflected as additional share dilution in the computation of diluted earnings per share.

(o) Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(p) 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.

(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").

(q) Income tax and other taxes

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 reporting date.

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

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.

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 reporting date.

Unrecognised deferred income tax assets are reassessed at each reporting 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.

Tax consolidation legislation

Clancy Exploration Limited and its wholly-owned Australian controlled entity formed a tax consolidated group on 1 July 2008. 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 AASB Int 1052 Tax Consolidation Accounting.

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 statement of financial position.

Cash flows are included in the Statement of Cash Flows 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.

(r) Earnings per share

Basic earnings per share is calculated as 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 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.

(s) Exploration Expenditure

Exploration and evaluation costs are accumulated and accounted for separately on an area of interest basis. An area of interest is represented by an exploration project, which may include multiple tenements within a single geographic region.

For each area of interest, the company makes an election regarding its treatment of exploration and evaluation expenditure and whether it will be charged to the income statement as incurred, under the expense category "exploration expenditure," or capitalised as an exploration and evaluation asset.

An exploration and evaluation can only be recognised in relation to an area of interest if the following conditions are satisfied:

a) the rights to tenure of the area of interest are current; and
b) at least one of the following conditions is also met:
(i) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
(ii) exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Capitalised exploration and evaluation expenditures are recorded as an exploration asset at cost less impairment charges. All capitalised exploration and evaluation expenditure are monitored for indicators of impairment. Where an impairment indicator is identified, an assessment is performed for each area of interest to which the exploration and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is charged to the income statement.

At 30 June 2014, the Group elected to capitalise the acquisition costs associated with the acquisition of the North Arunta tenements. These costs were then reimbursed or impaired during the year ended 30 June 2015. Consistent with prior periods, for all other tenements, the Group has elected to expense the exploration and evaluation costs.

Exploration expenditure in relation to the joint operations managed by the consolidated entity is funded by the jointly controlled operation partner. The consolidated entity makes a cash call for expenditure at the beginning of each quarter for these joint operations on the basis of forecast expenditure. The consolidated entity recognises exploration expenditure reimbursed in advance at year end in the event that cash has been received in advance of expenditure. Exploration expenditure in respect of these joint operations is classified in the statement of comprehensive income within the income or expense category "Net joint venture reimbursed expenses".

(t) Financial Liabilities and Equity Instruments Issued by the Consolidated Entity

(i) Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual agreement.

(ii) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

(iii) Financial liabilities Financial liabilities are classified as either financial liabilities 'at fair value through profit and loss' or 'other financial liabilities'.
(iv) Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financially liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

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 not identified any critical accounting policies for which significant judgements, estimates and assumptions are made.

4. OTHER INCOME

		Consolidated
		2016	2015
		\$	\$
Interest received		12,653	29,108
Management fees		12,666	208,776
Miscellaneous income		8,203	-
Profit on sale of fixed assets	(i)	15,005	34,615
		48,527	272,499

(i) Various fixed assets owned by the Company were sold during the year ended 30 June 2016. Details of the sales are provided below:

Original cost of fixed assets	64,084
Accumulated depreciation at date of disposal	60,175
Written down value	3,909
Proceeds on sale	18,914
Profit on sale of fixed assets	15,005

5. OTHER EXPENSES

	Consolidated
	2016	2015
	\$	\$
(a) Employee benefits expense
Directors' Fees	118,000	132,793
Salaries	384,520	658,162
Workers' Compensation Costs	13,476	20,454
Annual Leave Provision	6,386	(34,328)
Long Services Leave Provision	15,751	(17,596)
Post- employment benefits expense	49,715	70,252
Other Employee Benefits Expense	12,582	27,514
	600,430	857,251
(b) Net Recovery from joint venture partners
JV Funded Exploration	708,205	2,031,856
Less: Joint Venture funding	(459,779)	(2,376,067)
Net disclosure in income statement	248,426	(344,211)

(i) The Company recovers a range of expenses classified elsewhere in the Statement of Comprehensive Income from its joint venture partners, in addition to exploration expenditure. Such expenses include a portion of salaries and other exploration related overheads including depreciation, occupancy costs and insurance.

(c) Depreciation, amortisation and impairment included in income statement

Depreciation of plant & equipment	9,355	9,724
Amortisation of software	995	1,720
	10,350	11,444

6. INCOME TAX

		Consolidated
		2016	2015
(a)	Income tax expense
	The major components of income tax expense are:
	Statement of profit or loss and other comprehensive income
	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 temporary differences	-	-
	Income tax expense/(benefit) reported in statement of profit or loss and
	other comprehensive income	-	-
(b)	Amounts charged or credited directly to equity
	Deferred income tax related to items charged or credited directly to equity	-	-
	Unrealised loss on available-for-sale financial assets	-	-
	Income tax benefit reported in equity	-	-
(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	(1,296,630)	(955,446)
	At the consolidated entity's statutory income tax rate of 30% (2015: 30%)	(388,989)	(286,634)
	Non-deductible entertainment/penalties	540	-
	Other non-allowable items	-	-
	Share based payments	-	-
	Fringe benefits tax	77	328
	Capital raising expenditure	(14,679)	-
	Increase in unrecognised deferred tax assets	403,051 -	286,306 -
(d)	Current tax assets and liabilities
	Current tax liability	-	-

(e) Recognised deferred tax assets and liabilities

The Group has not recognised any deferred tax assets or liabilities during the year (2015: Nil)

(f) Tax losses

The group has Australian revenue tax losses for which no deferred tax asset is recognised on the statement of financial position of \$14,911,975 (2015: \$13,504,018) which are available indefinitely for offset against future taxable income subject to continuing to meet the relevant statutory tests.

The group has Australian capital tax losses for which no deferred tax asset is recognised on the statement of financial position of \$60,113 (2015: \$60,113) which are available indefinitely for offset against future taxable capital gains subject to continuing to meet the relevant statutory tests.

6. INCOME TAX (continued)

(g) Unrecognised temporary differences

As at 30 June 2016, the group has other temporary differences (excluding tax differences relating to tax losses) for which no deferred tax asset is recognised in the statement of financial position of \$42,952 (2015: \$264,008). None of these unrecognised temporary differences relate to investments in subsidiaries, associates or joint ventures.

(h) Tax consolidation

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 taxconsolidated group with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new taxconsolidated group was formed on 1 July 2008 with Clancy Exploration Limited as Head Entity. Members of the new tax-consolidated group have not yet entered into a tax sharing agreement.

7. EARNINGS PER SHARE

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

	The following reflects the income used in the basic and diluted earnings per share computations.
		Consolidated
a )	Earnings used in calculating earnings per share	2016	2015
	For basic and diluted earnings per share Loss from continuing operations after tax for the year	(1,296,630)	(955,446)
b)	Weighted average number of shares
	Weighted average number of shares used in calculation of basic earnings per share	563,479,603	209,679,050
	Weighted average number of shares used in calculation of diluted earnings per share	563,479,603	209,679,050
c)	Earnings per share
	Basic loss per share	(0.2 cents)	(0.5 cents)
	Diluted loss per share	(0.2 cents)	(0.5 cents)

8. CASH AND CASH EQUIVALENTS

	Consolidated
	2016	2015
	\$	\$
Cash at bank	43,028	1,231,434
Short term bank deposits	1,825,732	-
	1,868,760	1,231,434

Under the terms of certain joint venture agreements, the Company has an obligation to spend \$Nil (30 June 2015: \$174,645) of the cash balance on the respective joint venture projects, or in the event the joint venture partner does not elect to contribute beyond its minimum contribution, part of this amount may be refunded.

In addition, as at 30 June 2016 the Company has \$130,107 in restricted cash (2015: \$210,000) which is included as a Restricted Cash Asset in the Statement of Financial Position, held at Westpac Banking Corporation which has been provided as set-off security in respect of a bank guarantee facility provided in turn for exploration licence security purposes.

Financing facilities available

Other than the aforementioned bank guarantee facility, at balance date, the Company did not have any financing facilities available.

9. TRADE AND OTHER RECEIVABLES (CURRENT)

	Consolidated
	2016	2015
	\$	\$
Sundry debtors	4,051	49,486
Accrued income	93	2,429
GST input tax refundable	17,852	18,536
Prepayments	3,924	30,755
	25,920	101,206

(a) Fair value and credit risk

Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value. GST input tax refundable is receivable from the Commonwealth of Australia and is therefore viewed as having low credit risk. Accrued income is receivable from Westpac Banking Corporation (and National Australia Bank in prior year) and is therefore viewed as having low credit risk.

10. REIMBURSABLE EXPLORATION EXPENDITURE

	Consolidated
	2016	2015
	\$	\$
Reimbursable exploration expenditure	-	19,821
	-	19,821

11. PLANT AND EQUIPMENT

	Consolidated
	2016	2015
	\$	\$
Original Cost
Computer Equipment
At 1 July	62,019	45,391
Additions	-	16,628
Disposals	(2,100)	-
At 30 June	59,919	62,019

Plant and Equipment
At 1 July	92,591	92,591
Additions	-	-
Disposals	(20,044)	-
At 30 June	72,547	92,591
Motor Vehicles
At 1 July	45,737	163,017
Additions	-	-
Disposals	(39,125)	(117,280)
At 30 June	6,612	45,737

Office Furniture
At 1 July Additions	23,693 -	23,693 -
Disposals	(2,815)	-
At 30 June	20,878	23,693

Leasehold Improvements
At 1 July	19,791	19,791
Additions	-	-
Disposals	-	-
At 30 June	19,791	19,791
Library
At 1 July	1,515	1,515
Additions	-	-
Disposals	-	-
At 30 June	1,515	1,515

Total Plant and Equipment
At 1 July	245,345	345,997
Additions	-	16,628
Disposals	(64,084)	(117,280)
At 30 June	181,261	245,345

Consolidated

NOTES TO ACCOUNTS

11. PLANT AND EQUIPMENT (continued)

	2016	2015
Accumulated Depreciation	\$	\$
Computer Equipment
At 1 July	43,272	41,720
Depreciation charge for period	5,259	1,552
Accumulated depreciation on disposals	(2,100)	-
At 30 June	46,431	43,272

Plant and Equipment
At 1 July	84,363	80,285
Depreciation charge for period Accumulated depreciation on disposals	2,505 (18,004)	4,078 -
At 30 June	68,864	84,363

Motor Vehicles
At 1 July	43,149	133,844
Depreciation charge for period	481	745
Accumulated depreciation on disposals	(39,087)	(91,440)
At 30 June	4,543	43,149

Office Furniture
At 1 July Depreciation charge for period	18,571 1,081	16,936 1,635
Accumulated depreciation on disposals	(984)	-
At 30 June	18,668	18,571

Leasehold Improvements
At 1 July	19,791	18,121
Depreciation charge for period	-	1,670
At 30 June	19,791	19,791

Library At 1 July	1,441	1,397
Depreciation charge for period	28	44
At 30 June	1,469	1,441

Total Accumulated Depreciation
At 1 July	210,587	292,303
Depreciation charge for period	9,354	9,724
Accumulated depreciation on disposals	(60,175)	(91,440)
At 30 June	159,766	210,587

	Consolidated
	2016 \$	2015
		\$
Total Plant and Equipment
Original cost	181,261	245,345
Accumulated depreciation	(159,766)	(210,587)
Net carrying amount	21,495	34,758

11. PLANT AND EQUIPMENT (continued)

(i) The useful life of the assets was estimated as follows:
Sundry equipment: 5 to 15 years
Computer equipment: 4 years
Motor vehicles: 5 to 8 years
Furniture and Fittings: 5 to 15 years
Library: 7 years
Leasehold improvements: Over the remainder of the lease term up to 2 years

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

12. INTANGIBLE ASSETS

	Consolidated
	2016	2015
	\$	\$
Computer Software
Original Cost
At 1 July	51,057	51,057
Additions	-	-
At 30 June	51,057	51,057

Accumulated Depreciation
At 1 July	50,062	48,342
Amortisation charge for the period	995	1,720
Impairment	-	-
At 30 June	51,057	50,062

At 30 June
Gross book value	51,057	51,057
Accumulated amortisation and impairment	(51,057)	(50,062)
Net carrying amount	-	995

(i) The useful life of intangible assets was estimated as follows:

Computer software: 2.5 years

TRADE AND OTHER PAYABLES (Current) Notes		Consolidated
		2016	2015
		\$	\$
Trade payables	(i) – (ii)	180,951	80,724
Accrued expenses		42,953	32,651
GST Payable		4,034	1,403
		227,938	114,778

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.

14. PROVISIONS Consolidated

	2016 \$	2015 \$
CURRENT
Employee entitlements
Accumulated annual leave	-	28,910
Accumulated long service leave	-	30,211
Balance as at end of period	-	59,121

NON CURRENT
Employee entitlements
Accumulated annual leave	-	-
Accumulated long service leave	-	18,350
Balance as at end of period	-	18,350

During the year, annual leave and long service leave was taken by various employees of the Company, thereby reducing the balance of the respective provisions. Upon termination of the Company's last remaining employees, the balances of annual leave and long service leave were paid out.

15. UNEARNED REVENUE AND EXPLORATION EXPENDITURE FUNDED IN ADVANCE

		Consolidated
		2016	2015
		\$	\$
Unearned revenue	(i)	-	3,171
Exploration expenditure funded	(ii)	-	32,241
Government grant	(iii)	-	142,404
		-	177,816

(i) As at 30 June 2015, the Company had unearned revenue in respect of its management fees derived from its joint ventures with Kaizen Discovery Inc. ("Kaizen").
(ii) As at 30 June 2015, the Company had made a cash call for expenditure under its joint venture agreements with Kaizen.
(iii) During the year ended 30 June 2015, the Company received a grant from the NSW Department of Trade and Investment as part of the New Frontiers Cooperative Drilling project. This was a reimbursement for exploration drilling expenses incurred in respect of the Fairholme project, which currently forms part of the joint venture agreement with Kaizen.

		Consolidated
		2016 \$	2015 \$
Ordinary shares	(a)	17,074,543	15,207,200

(a) Ordinary shares

16.	ISSUED CAPITAL		Consolidated
			2016 \$	2015 \$
	Ordinary shares	(a)	17,074,543	15,207,200
	(a) Ordinary shares
	Issued and fully paid ordinary shares carry one vote per share and carry the right to dividends.
			Consolidated
		2016		2015
		No. of shares	\$	No. of shares	\$
	Movement in ordinary shares on issue
As at 1 July		256,254,392	15,207,200	206,254,392	14,457,200
Add:	Shares issued pursuant to placement at \$0.001 per share	38,438,159	38,439	-	-
	Shares issued pursuant to rights issue at \$0.001 per share	2,062,847,857	2,062,848	-	-
	Shares issued pursuant to placement at (i)	-	-	50,000,000	750,000
Less:	\$0.015 per share Transaction costs on share issues	-	(214,462)	-	-
Less:	Transaction costs settled in share based payment	-	(19,482)	-	-
	As at 30 June	2,357,540,408	17,074,543	256,254,392	15,207,200
	subscribed for 50,000,000 Clancy shares at 1.5 cents (\$0.015) each to raise \$750,000. The share placement was completed on 5 June 2015.
	(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 appropriate returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures an appropriate cost of capital available for the entity. 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 the year ended 30 June 2016 and no dividends are expected to be paid in the 2016/17 financial year.
	The consolidated entity is not subject to any externally imposed capital requirements.
	Management reviews management accounts on a monthly basis and actual expenditures against budget on a monthly basis.
					35

(b) Capital Risk Management

17. RESERVES

	Consolidated
	2016	2015
	\$	\$
Share-based payment reserve	1,685,087	1,665,605
	1,685,087	1,665,605
(a) Movement in reserves
Share-based reserve
Balance at beginning of the financial year	1,665,605	1,665,605
Transaction costs settled in share based payment	19,482	-
Balance at end of financial year	1,685,087	1,665,605

((b) Nature and purpose of reserves

The share-based payments reserve records the value of share options issued to the Company's directors, employees, consultants and brokers as well as the vendors of drilling services and tenements. It also includes an apportionment for the value of free attaching options from proceeds of a rights issue.

(c) Movement in shares under option

	Note	Exercise	On issue at	Issued	Exercised	On issue at
		price	1 July 2015			30 June 2016
Options expiring on 9 May 2019	(i)	\$0.004	-	12,812,720	-	12,812,720
Options expiring on 9 May 2019	(ii)	\$0.004	-	687,616,007	-	687,616,007
Options expiring on 9 May 2019	(iii)	\$0.004	-	687,615,952	-	687,615,952
			-	1,388,044,679	-	1,388,044,679

All option granted have been valued according to the Binomial Tree model other than the free option granted (see (i) and (ii) below). All options vested fully on the grant date.

(i) Free options issued pursuant to a placement in April 2016. Options were issued in May 2016 following shareholder approval.

(ii) Free options issued pursuant to a renouncable rights issue in May 2016.

(iii) Issued to sub-underwriters of the rights issue in May 2016.

18. STATEMENT OF CASH FLOWS RECONCILIATION

	Consolidated
	2016 \$	2015 \$
(a) Reconciliation of the net loss after tax to net cash flows
Loss from ordinary activities after income tax	(1,296,630)	(955,446)
Adjustments for:
Depreciation	9,354	9,724
Amortisation of intangible assets	995	1,720
Impairment of exploration assets	-	250,000
Profit on disposal of property, plant and equipment	(15,005)	(34,615)
Non-cash expenses paid on behalf of controlled entity via loan	-	243
account
Equity settled share based payments	-	195
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables	45,682	(35,262)
Decrease in prepayments	26,830	46,614
Decrease in trade and other payables	(42,168)	(113,454)
Decrease in provisions	(77,471)	(266,960)
Net cash flow used in operating activities	(1,348,413)	(1,097,241)

	2016 \$	2015 \$
(b) Bank guarantee facility
Bank guarantee facility	130,000	210,000
Amount utilised	(130,000)	(160,000)
	-	50,000

The bank guarantee facility has been provided by a financial institution for exploration licence security and corporate credit card purposes. Term deposits of \$130,107 (2015: \$210,000) have been provided as set-off security for these facilities.

19. INTEREST IN JOINTLY CONTROLLED OPERATIONS

As at 30 June 2016, the Group had the following significant interest in a joint venture:

(i) In January 2016 the Company entered into a farm-in agreement with Alkane Resources Limited ("Alkane") on the Orange East project.
(ii) Under the terms of the agreement, Alkane has the right to earn 60% of the Orange East project by spending \$500,000 on exploration over three years.
(iii) Alkane can earn a further 20% interest (80% total) by spending an additional \$500,000 on exploration over the subsequent two years. Alkane will manage the exploration program.
(iv) After the farm-in phase is completed, Clancy will have the right to contribute its 20% share of costs or dilute according to standard industry provisions.
(v) If Clancy's interest dilutes to 5%, it will convert to a 2% Net Smelter Return Royalty.

20. SEGMENT INFORMATION

The consolidated entity operates predominantly in one reportable business segment, managed by one segment manager and in one geographical location. The operations of the consolidated entity consist of gold, copper and base metals exploration, within Australia.

The information disclosed in the financial statements is the same information utilised in internal reporting by the chief operating decision maker. Accordingly, no additional quantitative or qualitative disclosures are required.

21. COMMITMENTS

		Consolidated
	2016 \$	2015 \$
Estimated commitments for which no provisions were included in the financial statements are as follows:
(a) Exploration Expenditure Commitments:
(i) Under 8 (2015: 12) NSW Government and Nil (2015:

3) Tasmanian Government exploration licenses
Payable
- not later than one year	580,550	281,107
- later than one year and not later than five years	-	237,603
	580,550	518,710

The expenditure commitments as at 30 June 2016 include \$27,000 (2015: \$169,216) commitments that will be met by one of the Company's joint venture partners (Alkane) as a result of the minimum expenditure commitment under the joint venture agreements with those parties.

Of the 8 exploration licences held by the Company, 2 are pending renewal.

Included in overall commitments calculations are estimates of the Company's expected commitments in respect of its sole-funded exploration licences.

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

Refer to Note 19 for details of Jointly Controlled Operations.

(b) Operating Lease Commitments

In October 2014 the consolidated entity extended the lease for office and core shed premises in Orange, NSW for 24 months. On 31 May 2014 it entered into a 60-month operating lease for a photocopier-printer. Its operating lease commitments at 30 June 2016 are as follows:

	Consolidated
	2016	2015
	\$	\$
Payable
- not later than one year	23,238	84,072
- later than one year and not later than five years	4,692	27,750
	27,930	111,822

22. 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 exploration licence relinquishment at any stage.

23. 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:

	Nature of investment	Country of incorporation		% Equity interest		Investment \$
Name			2016	2015	2016	2015
Geoinformatics Exploration Tasmania Pty Ltd	Ordinary shares	Australia	100	100	1	1
					1	1

(c) Transactions with related parties

The following table provides the total amount of transactions (GST exclusive where GST applies) entered into with related parties for the relevant financial year. The transactions have all been undertaken on an arms' length basis.

	Consolidated
	2016 \$	2015 \$
Purchase of goods and services
Director fees billed by Konkera Corporate, a company controlled by a director, Evan Cranston	36,000	24,000
Bookkeeping and administrative fees billed by Konkera Corporate	6,000	-
Office rent paid to entities controlled by Kingslane Pty Ltd, a related party of Evan Cranston	3,000	-
Fees for company secretarial services billed by Dabinett Corporate Pty Ltd from 1 April 2016, a
company controlled by Company Secretary, Rowan Caren	18,000	-
Director fees billed by Plage Mala Limited, a company controlled by a former director, Nathan
Featherby	36,000	32,449
Corporate advisory fees billed by Ochre Management Pty Limited, a company controlled by a
former director, Nathan Featherby	12,000	-
Director travel expenses billed by Plage Mala Limited	3,840	-
Geological consulting fees billed by Far Ranges Pty Limited, a company controlled by a former
director, Gordon Barnes, after he ceased to be a director	11,468	-
Director fees billed by C2Skye Management Ltd, a company controlled by a former director J.
Macdonald	-	11,032
Director travel expenses billed by C2Skye Management Ltd	-	2,437
Director travel expenses billed by Tectonex Geoconsultants Pty Ltd, a company controlled by
the chairman M. Etheridge	17,305	6,873
Accounting and financial consultancy services paid to Forsyth & Associates Pty Ltd, a company
associated with a former director and chief financial officer, N. Forsyth-Stock	-	32,113
Director travel and other expenses paid to Forsyth & Associates Pty Ltd	-	290

23. RELATED PARTY DISCLOSURES – Continued

	Consolidated
	2016	2015
Amounts owed in respect of related party transactions included in the trade creditors	\$	\$
and accruals balance at 30 June 2016 and 30 June 2015 are as follows:
Director fees billed by Konkera Corporate, a company controlled by a director, Evan
Cranston	3,000	-
Bookkeeping and administrative fees billed by Konkera Corporate	6,000	-
Office rent paid to entities controlled by Kingslane Pty Ltd, a related party of Evan
Cranston	3,000	-
Fees for company secretarial services billed by Dabinett Corporate Pty Ltd, a company
controlled by Company Secretary, Rowan Caren	6,500	-
Director fees billed by Plage Mala Limited, a company controlled by a former director,
Nathan Featherby	3,000	-
Director travel expenses billed by Plage Mala Limited	2,450	-
Corporate advisory fees billed by Ochre Management Pty Limited, a company
controlled by a former director, Nathan Featherby	12,000	-
Geological consulting fees billed by Far Ranges Pty Limited, a company controlled by a
former director, Gordon Barnes, after he ceased to be a director	3,263	-

	Consolidated
	2016 \$	2015 \$
Superannuation guarantee contributions paid
Amounts paid to Tectonex Geoconsultants Pty Ltd as trustee for Etheridge
Superannuation Fund, a trustee company controlled by a former director M. Etheridge
who is also a beneficiary of the superannuation fund	2,375	5,700
Amounts paid to Far Range Pty Ltd as trustee for Far Range Superannuation Fund a
trustee company controlled by a former director G. Barnes who is also a beneficiary of
the superannuation fund	20,322	21,732
Amounts paid to Matrix Superannuation Master Trust, a superannuation fund in which
a former director and chief financial officer, N. Forsyth-Stock is a beneficiary	-	1,307

24. SUBSEQUENT EVENTS

Subsequent to 30 June 2016, Mr. Scott Patrizi was appointed to the Board as a Non-Executive Director and Mr. Evan Cranston was appointed Chairman, following the resignation of Mr. Nathan Featherby.

25. DIRECTORS AND KEY MANAGEMENT PERSONNEL

(a) Details of Key Management Personnel

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

E Cranston	Director (Non-Executive)
D Scoggin	Director (Non-Executive)	Appointed 31 March 2016
G Barnes	Managing Director	Resigned 31 March 2016
M Etheridge	Chairman (Non-Executive)	Resigned 26 November 2015
N Featherby	Director (Non-Executive)	Resigned 7 July 2016
R Caren	Company Secretary

(b) Compensation for Key Management Personnel

	Consolidated
	2016	2015
	\$	\$
Short-term employee benefits	307,823	369,603
Short-term consulting fees	12,000	40,113
Post-employment benefits	22,697	28,739
Other long-term benefits	3,003	2,844
Share-based payments	-	195
Non-monetary benefits	13,847	18,466
Total Compensation	359,370	459,960

(c) Employee Share Plan

Pursuant to an employee share plan offer dated 25 October 2012, the Company provided limited recourse loans to eligible employees or consultants to purchase shares under the plan ("Plan Shares"). Pursuant to loan agreements, the loans become repayable once the employee/consultant ceases to be an eligible employee of or consultant to the Company. If the loan is not repaid within one month of the date of this notice, the Company may sell the Plan Shares in accordance with loan agreement for the benefit of the Company.

The sale proceeds will be deemed to have satisfied the outstanding loan amount in relation to those Plan Shares in full, and the eligible employee or consultant will have no further liability to the Company in respect of the loan and the Company will have no further recourse in relation to the loan. As the only recourse for the loans is against the underlying Plan Shares, based on the criteria for asset recognition, the loans have not been included as a receivable in the financial statements.

As at 30 June 2016, key management personnel held 2,705,924 Plan Shares (2015: 3,498,954) and had limited recourse loans in relation to those shares totaling \$68,272 (2015: \$84,476).

26. SHARE-BASED PAYMENT EXPENSE

(a) Recognised share-based payments expenses

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

	Consolidated
	2016	2015
	\$	\$
Expense recognised for directors' services received
Expense arising from equity-settled share-based payment transactions – directors	-	195
	-	195
Equity payment recognised for sub-underwriting of rights issue Equity-settled share-based payment transactions –
options issued a s part o f a fee for sub-underwriting of rights issue recognised in Contributed Equity	19,482	-
	19,482	-

(b) Weighted average remaining contractual life

The weighted average remaining contractual life of the options on issue is 2.86 years (2015: not applicable).

(c) Range of exercise price

The exercise price of the options on issue is \$0.004 (2015: not applicable).

(d) Weighted average fair value

The fair value of the options issued to the sub-underwriters of the rights issue was \$0.000028 per option. No options were granted to directors and employees during the year.

(e) Weighted average share price

The weighted average price per share during the year was \$0.01 (2015: \$0.01).

27. AUDITORS' REMUNERATION

The auditor of Clancy Exploration Limited was Ernst & Young until Hall Chadwick WA Audit Pty Ltd was appointed on 15 June 2016. These disclosures relate to Ernst & Young as no remuneration was paid to Hall Chadwick WA Audit during the financial year, however, \$12,500 has been accrued in the financial statements for audit fees for Hall Chadwick WA Audit for the year ended 30 June 2016.

	Consolidated
	2016	2015
	\$	\$
Amounts received or due and receivable by Ernst & Young for:
- a n audit o r review o f the financial statements o f the entity and its controlled entity	37,195	34,259
other services i n relation to the entity and its controlled - entity	5,750	9,800
	42,945	44,059

28. INFORMATION RELATING TO CLANCY EXPLORATION LIMITED ('the Parent Entity")

	2016	2015
	\$	\$
ASSETS
Current Assets	2,028,487	1,562,459
Non-current Assets	21,495	35,753
TOTAL ASSETS	2,049,982	1,598,212

LIABILITIES
Current Liabilities	227,938	351,713
Non-current Liabilities	-	18,350
TOTAL LIABILITIES	227,938	370,063
NET ASSETS	1,822,044	1,228,149

EQUITY
Issued capital	17,534,543	15,667,200
Reserves	1,685,087	1,665,605
Accumulated losses	(17,397,586)	(16,104,656)
TOTAL EQUITY	1,822,044	1,228,149

Loss of the parent entity	(1,293,309)	(958,584)

Total comprehensive loss of the parent entity	(1,293,309)	(958,584)

Contingent liabilities of the parent entity: Nil

Commitments for the acquisition of property, plant and equipment by the parent entity: Nil

	2,016 \$	2,015 \$
Share-based payment reserve	1,685,087	1,665,605
	1,685,087	1,665,605

29. FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES

The consolidated entity's principal financial instruments comprise cash and short-term deposits.

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.

For all financial instruments of the Company, the carrying value approximates the fair value.

The main risk arising from the consolidated entity's financial instruments is cash flow interest rate risk. Other minor risks are either summarised below or disclosed at Note 9 in the case of credit risk and Note 17 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 short-term 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. 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. The sensitivity to the movement in interest rates for the likely range of outcomes is immaterial.

29. FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

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.

(b) Liquidity risk

The consolidated entity manages liquidity risk by maintaining sufficient cash reserves and through the continuous monitoring of budgeted and actual cash flows. Further, the consolidated entity only invests surplus cash with major financial institutions.

Contracted maturities of payables:

		Consolidated
	2016	2015 \$
	\$
Payable
- less than 6 months	227,938	114,778
- 6 to 12 months	-	-
- 1 to 5 years	-	-
- later than 5 years
Total	227,938	114,778

(c) Commodity price risk

The consolidated entity has no direct commodity exposures.

(d) Carrying values of financial instruments not recognised at fair value

Due to their short term nature, the carrying value of financial assets and financial liabilities, not recognised at fair value, recorded in the financial statements approximates their respective fair values, determined in accordance with accounting policies disclosed in Note 2 of the financial statements.

AI assistant

RAREX LIMITED — Annual Report 2016

65681_rns_2016-09-20_96c13515-fef7-45f6-b82e-c9003ff4f8ee.pdf

CLANCY EXPLORATION LIMITED ABN: 65 105 578 756 AND CONTROLLED ENTITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

CORPORATE DIRECTORY

DIRECTORS

COMPANY SECRETARY

LAWYERS

AUDITOR

SHARE REGISTRY

REGISTERED OFFICE

1. Directors

(i) Names, Qualifications and Experience

Mr. Evan Cranston, BComm, LLB

Non-Executive Chairman – Appointed 7 July 2016 Non-Executive Director - Appointed 23 October 2014

Mr. David Scoggin, BA

Non-Executive Director - Appointed 31 March 2016

Mr. Scott Patrizi, BComm

Non-Executive Director - Appointed 7 July 2016

Mr. Nathan Featherby, B.Comm

Non-Executive Director – Appointed 23 October 2014, Resigned 7 July 2016

No-Executive Chairman – Appointed 8 April 2016, Resigned 7 July 2016

Mr. Gordon Barnes, BSc, MSc, MAIG, MSEG, GAICD

Managing Director until resignation on 31 March 2016

1. Directors (continued)

Dr. Michael Etheridge, FTSE, FAICD, FAIG, FGSA

Non-Executive Chairman until resignation on 26 November 2015

2. Company Secretary

Mr. Rowan Caren, B.Com, CA

3. Principal Activities

4. Review of financial performance

5. Dividends

6. Review of Operations

7. Likely Developments and Expected Results

8. Significant Changes in the State of Affairs

9. Significant Events After Balance Date

10. Indemnity and Insurance for Group Officers and Auditors

11. Remuneration Report – Audited

Remuneration Policy

Non-Executive Directors

11. Remuneration Report – Audited (continued)

Company performance, shareholder wealth and director and executive remuneration

Consolidated Entity:

Key Management Personnel Remuneration Policy

11. Remuneration Report – Audited (continued)

Key Management Personnel Remuneration:

Remuneration for the year ended 30 June 2016

Remuneration for the year ended 30 June 2015

11. Remuneration Report – Audited (continued)

Granted in 2016

Granted in 2015

Granted in 2014

Granted in 2013

(i) SHARES – 30 June 2016

11. Remuneration Report – Audited (continued)

(ii) SHARES – 30 June 2015

(i) OPTIONS – 30 June 2016

Contracts with Directors and Key Management Personnel

Employee Share Plan

12. Auditor Independence and Non-Audit Services

13. Auditors' Independence Declaration

14. Corporate Governance

15. Share Options

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

1. CORPORATE INFORMATION

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

(b) Statement of Compliance

(c) New accounting standards and interpretations

Accounting Standards issued but not yet effective

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Basis of consolidation

(e) Investment in joint operations

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) Business combinations

RAREX LIMITED Annual Report 2016