RAREX LIMITED — Annual Report 2017

Sep 28, 2017

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

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

30 JUNE 2017

CORPORATE DIRECTORY

DIRECTORS

Mr. David Lenigas Non‐Executive Chairman

Mr. Evan Cranston Non‐Executive Director

Mr. David Scoggin Non‐Executive Director

Mr. Scott Patrizi Non‐Executive Director

LAWYERS

Bellanhouse Legal Level 19, Alluvion, 58 Mounts Bay Rd Perth Western Australia 6000

AUDITOR

Walker Wayland WA Audit Pty Ltd (formerly called Hall Chadwick WA Audit Pty Ltd) Level 2, 129 Melville Parade Como Western Australia 6252

COMPANY SECRETARY

Mr. Rowan Caren

PRINCIPAL PLACE OF BUSINESS

Suite 23, 513 Hay Street Subiaco Western Australia 6008

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

REGISTERED OFFICE

Suite 23, 513 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

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 2017.

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 2017 and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr. David Lenigas, BAppSc (Mining Engineering)

Non‐Executive Chairman ‐ Appointed 15 June 2017

Mr. Lenigas is an experienced mining engineer with significant natural resources and corporate experience, having served as executive chairman, chairman, and non‐executive director of many public listed companies in London, Canada, Johannesburg, and Australia.

In recent years, Mr. Lenigas was the Executive Chairman of London listed lithium investment company Rare Earth Minerals Plc (now called Cadence Minerals Plc (AIM: KDNC)). He is currently a non‐executive director of Canadian listed Australian company Macarthur Minerals Limited (TSX‐V: MMS), whose major shareholder is Cadence Minerals Plc.

Mr. Lenigas is currently the Executive Chairman of Artemis Resources Limited (ASX: ARV), Doriemis Plc (ISDX: DOR) LGC Capital Ltd (TSX‐V: QBA), and AfriAg Plc (ISDX: AFRI) and a non‐executive director of Auroch Minerals Limited (ASX: AUO) and Southern Hemisphere Mining Limited (ASX: SUH). Mr Lenigas was also the previous Executive Chairman of London listed UK Oil & Gas Investments Plc, the company that discovered the oil at London's Gatwick Airport and the Executive Chairman of the Pan‐African conglomerate Lonrho Plc.

Mr. Evan Cranston, BComm, LLB

Non‐Executive Director ‐ Appointed 23 October 2014 (Non‐Executive Chairman – 7 July 2016 to 15 June 2017)

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 New Century Resources Limited (ASX: NCZ) 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. 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).

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 20 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.

3. Principal Activities

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

4. Review of financial performance

The net consolidated loss from continuing operations for the year ended 30 June 2017, after income tax, amounted to \$998,614 (2016: \$1,296,630).

During the year ended 30 June 2017, total expenses amounted to \$1,019,355 (2016: \$1,345,157). Unrestricted cash and cash equivalents amounted to \$1,463,081 as at 30 June 2017 (30 June 2016: \$1,868,760).

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 a joint venture partner and acquired the Leogang Cobalt‐Nickel Sulphide Project in Austria.

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 2017, other than as follows:

• Mr. Scott Patrizi was appointed as Non‐Executive Director and Mr. Nathan Featherby resigned as Non‐Executive Chairman;
• The Company undertook a placement of 350,000,000 shares (and a 1 for 1 free attaching option) at an issue price of \$0.001 per share, to raise \$350,000 before costs;
• The Company acquired the Leogang Cobalt‐Nickel Sulphide Project in Austria; and
• Mr. David Lenigas was appointed as Non‐Executive Chairman replacing existing Chairman Mr. Evan Cranston who remained with the Company as a Non‐Executive Director.

9. Significant Events After Balance Date

Subsequent to 30 June 2017:

• The Company completed the sale of 10% of the Leogang Cobalt‐Nickel Sulphide Project to Cadence Minerals Plc (Cadence) for 73,750,000 Cadence ordinary shares. Following completion of the initial 10% acquisition, Clancy has granted Cadence an exclusive option period of 6 months to acquire a further 10% interest in the project. To exercise this option Cadence must pay Clancy \$1,000,000 in cash, Cadence shares or a combination thereof at the election of Cadence; and
• On 10 July 2017, the Company was made aware that a number of licences in relation to the Leogang Cobalt‐Nickel Sulphide Project potentially had preceding priority claimants that predated Clancy's applications by a number of weeks. After an investigation, it was determined that Clancy has priority rights, under Austrian law, over 172 of our 200 granted licences and next‐in‐line rights over the balance.

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, Walker Wayland WA Pty Ltd (formerly called Hall Chadwick WA Audit Pty Ltd), 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 Walker Wayland WA Pty Ltd 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 the current and 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 2017. 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 were 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.

During the year ended 30 June 2017, a total of 140,000,000 options were issued to a director and consultant of the Company. These were not issued pursuant to the Plan.

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 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.

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 in prior years. Options have been issued to directors to encourage the alignment of personal and shareholder interests in the current year.

Executive and non‐executive directors, other key management personnel and other senior employees have been granted ordinary shares and options. The recipients of shares and options are responsible for growing the Company and increasing shareholder value. If they achieve this goal the value of the shares and options granted to them will also increase. Therefore, the shares and options 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 three years to 30 June 2017, the six months to 30 June 2014 and the year to 31 December 2013:

Consolidated Entity:
	30‐Jun‐17	30‐Jun‐16	30‐Jun‐15	30‐Jun‐14	31‐Dec‐13
Revenue	\$20,741	\$48,527	\$272,499	\$48,334	\$1,305,078
Net loss before tax	(\$998,614)	(\$1,296,630)	(\$955,446)	(\$723,234)	(\$677,702)
Net loss after tax	(\$998,614)	(\$1,296,630)	(\$955,446)	(\$723,234)	(\$677,702)
Share price at end of year	0.2 cents	0.2 cents	1.5 cents	1 cent	2 cents
Basic loss per share	(0.04 cents)	(0.2 cents)	(0.5 cents)	(0.4 cents)	(0.3 cents)
Diluted loss per share	(0.04 cents)	(0.2 cents)	(0.5 cents)	(0.4 cents)	(0.3 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 2017

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
	\$	\$	\$	\$	\$	\$	\$
D Lenigas1	2,500	‐	‐	‐	‐	290,000	292,500
E Cranston	36,000	‐	‐	‐	‐	‐	36,000
D Scoggin	36,000	‐	‐	‐	‐	‐	36,000
S Patrizi2	35,356	‐	‐	‐	‐	‐	35,356
3 N Featherby	‐	‐	‐	‐	‐	‐	‐
R Caren	78,000	‐	‐	‐	‐	116,000	194,000
	187,856	‐	‐	‐	‐	406,000	593,856

¹ D Lenigas was appointed on 15 June 2017.

² S Patrizi was appointed on 7 July 2016.

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

Remuneration for the year ended 30 June 2016

Key Management Person		Short‐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
N Featherby 2	36,000	12,000	‐	‐	‐	‐	48,000
G Barnes 3,4,5	183,823	‐	13,847	3,003	20,322	‐	220,995
M Etheridge 6	25,000	‐	‐	‐	2,375	‐	27,375
R Caren 7	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 N Featherby resigned as a director on 7 July 2016.

³ 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.

⁴ Accrued annual leave for the year is presented on an accruals basis. An amount of \$14,174 was paid out upon termination.

⁵ Long‐service leave for the year is presented on an accruals basis. An amount of \$21,954 was paid out upon termination.

⁶ 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.

⁷ 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.

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 2017

Nil

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.

Options issued to directors and key management personnel as part of their remuneration during the course of the year ended 30 June 2017 were as shown below (2016: Nil). No options were exercised, or forfeited during the year.

	Option series	Grant date	No. of options	Fair value per option	Total fair value of options issued
Director D Lenigas	Exercise price \$0.04 expiring 31/5/2020				12/06/2017 100,000,000 \$ 0.0029 \$ 290,000.00
Company Secretary R Caren	Exercise price \$0.04 expiring 31/5/2020				12/06/2017 40,000,000 \$ 0.0029 \$ 116,000.00
			140,000,000		\$ 406,000.00

In addition to the above options, during the year 350,000,000 free attaching options were issued as part of a placement of 350,000,000 shares at a price of \$0.001 per share. Mr Evan Cranston participated in the placement and received 100,000,000 options, however, these options are not considered part of Mr Cranston's remuneration. The remaining 250,000,000 options were issued to unrelated parties.

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:

11. Remuneration Report – Audited (continued)

(i) SHARES – 30 June 2017

	Held at 1 July 2016	Acquired	Disposed	Net Change	Other	Held at 30 June 2017 or date of resignation
Director
D Lenigas						‐ ‐ ‐ ‐ ‐ ‐
E Cranston	‐ 100,000,000			‐ 100,000,000		‐ 100,000,000
D Scoggin	‐	`				‐ ‐ ‐ ‐
S Patrizi						‐ ‐ ‐ ‐ ‐ ‐
N Featherby	1,000,000					‐ ‐ ‐ ‐ 1,000,000
Company Secretary
R Caren	3,791,464	‐ ‐ ‐				3,791,464
	4,791,464 100,000,000			‐ 100,000,000		‐ 104,791,464

(ii) SHARES – 30 June 2016

	Held at 1 July 2015	Acquired	Disposed	Net Change	Other	Held at 30 June 2016 or date of resignation
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.

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:

(iii) OPTIONS – 30 June 2017

	Held at 1 July 2016	Acquired	Disposed	Net Change	Other	Held at 30 June 2017
Director
D Lenigas	‐ 100,000,000		‐ 100,000,000			‐ 100,000,000
E Cranston	‐ 100,000,000		‐ 100,000,000			‐ 100,000,000
D Scoggin						‐ ‐ ‐ ‐ ‐ ‐
S Patrizi						‐ ‐ ‐ ‐ ‐ ‐
Company Secretary
R Caren	1,105,844 40,000,000		‐ 40,000,000			‐ 41,105,844
	1,105,844 240,000,000		‐ 240,000,000			‐ 241,105,844

11. Remuneration Report – Audited (continued)

(iv) OPTIONS – 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						‐ ‐ ‐ ‐ ‐ ‐
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

Details of share‐based payments in existence during the year ended 30 June 2017 are disclosed in this Directors' Report and Notes 14, 23 and 24 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.

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. 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 2017, the following key management personnel held Plan Shares and had limited recourse loans in relation to those shares:

	Plan Shares held at 30 June 2017	Price per share (\$)	Balance of limited recourse loans at 30 June 2017 (\$)
Company Secretary R Caren	347,009	0.020	6,940
	347,009		6,940

[END OF REMUNERATION REPORT]

12. Auditor Independence and Non‐Audit Services

The Group's current auditors, Walker Wayland WA Audit Pty Ltd, 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. The total non‐audit services provided by the previous external auditor amounted to \$6,750 (2016: \$5,750).

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 2017 has been received and can be found on page 13.

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 1,878,044,679 (2016: 1,388,044,679) 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 14, 23 and 24 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.

16. Directors' Meetings

The number of meetings of directors (including meetings of committees of directors) held during the year ended 30 June 2017 and the number of meetings attended by each director was as follows:

Director	Directors' Meetings Eligible to Attend	Directors' Meetings Attended
D Lenigas	-	-
E Cranston	2	2
D Scoggin	2	2
S Patrizi	2	2

17. Risk Management

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

18. Environmental Regulations and Performance

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

In regard to environmental considerations, the Company is required to obtain approval from various State regulatory authorities before any exploration requiring ground disturbance, such as line clearing, drilling programs and costeaning is carried out. It is normally a condition of such regulatory approval that any area of ground disturbed during the Company's activities is rehabilitated in accordance with various guidelines. There have been no significant breaches of these guidelines.

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

S Patrizi Non‐Executive Director Dated this 28th September 2017

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2017		Consolidated
		2017	2016
	Notes	\$	\$
Income
Other income	4	20,741	48,527
Total income		20,741	48,527
Employee benefits expense	5(a)	(109,856)	(600,430)
Consulting and outsourced services expense		(296,425)	(248,180)
Net disbursement from joint venture partners	5(b)	‐	(248,426)
Travel expense		(4,097)	(18,674)
Share based payment expense	23	(406,000)	‐
Computer related costs		(2,701)	(2,583)
Occupancy costs		(67,658)	(17,860)
Insurance expense		(6,460)	(25,867)
Marketing expense		(25,355)	(2,057)
Depreciation, amortisation and impairment expense	5(c)	(5,119)	(10,350)
Exploration expenses		(75,212)	(156,150)
Other expenses		(20,472)	(14,580)
Total expenses		(1,019,355)	(1,345,157)
Loss from continuing operations before income tax expense		(998,614)	(1,296,630)
Income tax expense		‐	‐
Loss from continuing operations after income tax		(998,614)	(1,296,630)
Expense
Other comprehensive income		(998,614)	(1,296,630)
Other		‐	‐
Other comprehensive loss net of tax		‐	‐
Total comprehensive loss attributable to owners of the parent		(998,614)	(1,296,630)
Loss per share ‐ basic and diluted		(0.04) cents	(0.2) cents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 30 JUNE 2017		Consolidated
		2017	2016
	Notes	\$	\$
ASSETS
Current Assets
Cash and cash equivalents	8	1,463,081	1,868,760
Restricted cash asset	8	132,153	130,107
Trade and other receivables	9	23,362	25,920
Total Current Assets		1,618,596	2,024,787
Non‐current Assets
Plant and equipment	10	8,302	21,495
Intangible assets	11	‐	‐
Total Non‐current Assets		8,302	21,495
TOTAL ASSETS		1,626,898	2,046,282
LIABILITIES
Current Liabilities
Trade and other payables	12	50,072	227,938
Total Current Liabilities		50,072	227,938
TOTAL LIABILITIES		50,072	227,938
NET ASSETS		1,576,826	1,818,344
EQUITY
Contributed equity	13	17,425,639	17,074,543
Reserves	14	2,091,087	1,685,087
Accumulated losses		(17,939,900)	(16,941,286)
TOTAL EQUITY		1,576,826	1,818,344

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

CONSOLIDATED	Notes	Ordinary Shares	Options Reserve	Accumulated Losses	Total Equity
		\$	\$	\$	\$
At 1 July 2016		17,074,543	1,685,087	(16,941,286)	1,818,344
Total comprehensive income for the
period, net of tax		‐	‐	(998,614)	(998,614)
Issue of share capital	13	370,000	‐	‐	370,000
Transaction costs on share issues	13	(18,904)	‐	‐	(18,904)
Share based payment expense	23	‐	406,000	‐	406,000
At 30 June 2017		17,425,639	2,091,087	(17,939,900)	1,576,826
At 1 July 2015 Total comprehensive income for the		15,207,200	1,665,605	(15,644,656)	1,228,149
period, net of tax		‐	‐	(1,296,630)	(1,296,630)
Issue of share capital	13	2,101,287	‐	‐	2,101,287
Transaction costs on share issues	13	(214,462)	‐	‐	(214,462)
Transaction costs settled in share based paym	13	(19,482)	19,482	‐	‐
At 30 June 2016		17,074,543	1,685,087	(16,941,286)	1,818,344

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

FOR THE YEAR ENDED 30 JUNE 2017		Consolidated
		2017	2016
		\$	\$
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
Reimbursement of exploration expenditure		‐	462,787
Management fee received		‐	(5,630)
Payments to suppliers and employees		(763,297)	(1,818,470)
Interest received		21,714	12,900
NET CASH FLOWS USED IN OPERATING ACTIVITIES	15	(741,583)	(1,348,413)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment	4	4,808	18,914
Release of cash from security deposits	8	‐	80,000
NET CASH FLOWS FROM INVESTING ACTIVITIES		4,808	98,914
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue	13	350,000	2,101,287
Costs of share issue	13	(18,904)	(214,462)
NET CASH FLOWS FROM FINANCING ACTIVITIES		331,096	1,886,825
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(405,679)	637,326
Cash and cash equivalents at beginning of period		1,868,760	1,231,434
CASH AND CASH EQUIVALENTS AT END OF PERIOD	8	1,463,081	1,868,760

1. CORPORATE INFORMATION

The financial statements of Clancy Exploration Limited (the Company or the Group) for the year ended 30 June 2017 were authorised for issue in accordance with a resolution of the directors on 28th September 2017. 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 2017. 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:

AASB 9 Financial Instruments

AASB 9, published in July 2014, replaces the existing guidance in AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from AASB 139.

AASB 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The consolidated entity does not expect a material impact on its consolidated financial statements resulting from the application of AASB 9.

AASB 15 Revenue from Contracts with Customers

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue and AASB 111 Construction Contracts.

AASB 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

The consolidated entity does not expect a material impact on its consolidated financial statements resulting from the application of AASB 15.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

AASB 16 Leases

AASB 16 Leases amends the accounting for leases. Lessees will be required to bring all leases on Balance Sheet as the distinction between operating and financing leases has been eliminated. Lessor accounting remains largely unchanged.

AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019, with early adoption permitted if adopted in conjunction with AASB 15 for the same accounting period.

The consolidated entity does not expect a material impact on its consolidated financial statements resulting from the application of AASB 16.

(d) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiary as at 30 June 2017. 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‐to‐ maturity investments, or available‐for‐sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re‐evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

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

Recognition and Derecognition

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets 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 10.

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.

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
		2017	2016
		\$	\$
Interest received		24,007	12,653
Management fees		‐	12,666
Miscellaneous income		‐	8,203
(Loss)/profit on sale of fixed assets	(i)	(3,266)	15,005
		20,741	48,527

(i) Various fixed assets owned by the Company were sold during the year ended 30 June 2017. Details of the sales are provided below:

	2017 \$	2016 \$
Original cost of fixed assets	171,972	64,084
Accumulated depreciation and impairment at date of disposal	(163,898)	(60,175)
Written down value	8,074	3,909
Proceeds on sale	4,808	18,914
(Loss)/profit on sale of fixed assets	(3,266)	15,005

5. OTHER EXPENSES

	Consolidated
	2017	2016
	\$	\$
(a) Employee benefits expense
Directors' Fees	109,856	118,000
Salaries	‐	384,520
Workers' Compensation Costs	‐	13,476
Annual Leave Provision	‐	6,386
Long Services Leave Provision	‐	15,751
Post‐ employment benefits expense	‐	49,715
Other Employee Benefits Expense	‐	12,582
	109,856	600,430
(b) Net Recovery from joint venture partners
JV Funded Exploration	‐	708,205
Less: Joint Venture funding	‐	(459,779)
Net disclosure in income statement	‐	248,426

(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	5,119	9,355
Amortisation of software	‐	995
	5,119	10,350

6. INCOME TAX

		Consolidated
		2017	2016
(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
	Accounting loss before income tax	(998,614)	(1,296,630)
	At the consolidated entity's statutory income tax rate of 30% (2016: 30%)	(299,584)	(388,989)
	Non‐deductible entertainment/penalties	729	540
	Other non‐allowable items	‐	‐
	Share based payments	121,800	‐
	Fringe benefits tax	627	77
	Capital raising expenditure	(15,363)	(14,679)
	Increase in unrecognised deferred tax assets	191,791 ‐	403,051 ‐
(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 (2016: 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 \$15,602,076 (2016: \$14,911,975) 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 \$310,113 (2016: \$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 2017, 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 \$43,237 (2016: \$42,952). 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 tax‐ consolidated group with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new tax‐ consolidated group was formed on 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.

		Consolidated
a)	Earnings used in calculating earnings per share	2017	2016
	For basic and diluted earnings per share Loss from continuing operations after tax for the year	(998,614)	(1,296,630)
b)	Weighted average number of shares
	Weighted average number of shares used in calculation of basic earnings per share	2,604,325,796	563,479,603
	Weighted average number of shares used in calculation of diluted earnings per share	2,604,325,796	209,679,050
c)	Earnings per share
	Basic loss per share	(0.04 cents)	(0.2 cents)
	Diluted loss per share	(0.04 cents)	(0.2 cents)

8. CASH AND CASH EQUIVALENTS

	Consolidated
	2017	2016
	\$	\$
Cash at bank	1,263,081	43,028
Short term bank deposits	200,000	1,825,732
	1,463,081	1,868,760

As at 30 June 2017 the Company has \$132,153 in restricted cash (2016: \$130,107) 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
	2017	2016
	\$	\$
Sundry debtors	‐	4,051
Accrued income	339	93
GST input tax refundable	10,751	17,852
Prepayments	12,272	3,924
	23,362	25,920

(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. PLANT AND EQUIPMENT

	Consolidated
	2017	2016
	\$	\$
Original Cost
Computer Equipment
At 1 July	59,919	62,019
Additions	‐	‐
Disposals	(43,291)	(2,100)
At 30 June	16,628	59,919
Plant and Equipment
At 1 July	72,547	92,591
Additions	‐	‐
Disposals	(28,829)	(20,044)
At 30 June	43,718	72,547
Motor Vehicles
At 1 July	6,612	45,737
Additions	‐	‐
Disposals	(6,612)	(39,125)
At 30 June	‐	6,612
Office Furniture
At 1 July	20,878	23,693
Additions	‐	‐
Disposals At 30 June	(20,878) ‐	(2,815) 20,878
Leasehold Improvements
At 1 July	19,791	19,791
Additions	‐	‐
Disposals	(19,791)	‐
At 30 June	‐	19,791
Library
At 1 July	1,515	1,515
Additions	‐	‐
Disposals	(1,515)	‐
At 30 June	‐	1,515
Total Plant and Equipment
At 1 July	181,261	245,345
Additions	‐	‐
Disposals	(120,916)	(64,084)
At 30 June	60,345	181,261

PLANT AND EQUIPMENT (continued)		Consolidated
	2017	2016
Accumulated Depreciation	\$	\$
Computer Equipment
At 1 July	46,431	43,272
Depreciation charge for period	4,157	5,259
Accumulated depreciation on disposals	(42,263)	(2,100)
At 30 June	8,325	46,431
Plant and Equipment
At 1 July	68,864	84,363
Depreciation charge for period		962 2,505
Accumulated depreciation on disposals	(26,108)	(18,004)
At 30 June	43,718	68,864
Motor Vehicles
At 1 July	4,543	43,149
Depreciation charge for period		‐ 481
Accumulated depreciation on disposals	(4,543)	(39,087)
At 30 June		‐ 4,543
Office Furniture
At 1 July	18,668	18,571
Depreciation charge for period		‐ 1,081
Accumulated depreciation on disposals	(18,668)	(984)
At 30 June		‐ 18,668
Leasehold Improvements
At 1 July	19,791	19,791
Depreciation charge for period		‐ ‐
Accumulated depreciation on disposals	(19,791)	‐
At 30 June		‐ 19,791
Library
At 1 July	1,469	1,441
Depreciation charge for period		‐ 28
Accumulated depreciation on disposals	(1,469)	‐
At 30 June		‐ 1,469
Total Accumulated Depreciation
At 1 July	159,766	210,587
Depreciation charge for period	5,119	9,354
Accumulated depreciation on disposals	(112,842)	(60,175)
At 30 June	52,043	159,766
		Consolidated
	2017	2016
	\$	\$
Total Plant and Equipment
Original cost	60,345	181,261

Accumulated depreciation (52,043) (159,766) Net carrying amount 8,302 21,495

10. 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.

11. INTANGIBLE ASSETS

	Consolidated
	2017	2016
	\$	\$
Computer Software
Original Cost
At 1 July	51,057	51,057
Additions	‐	‐
Software written off	(51,057)	‐
At 30 June	‐	51,057
Accumulated Depreciation
At 1 July	51,057	50,062
Amortisation charge for the period	‐	995
Impairment	‐	‐
Reversal of write off of software	(51,057)	‐
At 30 June	‐	51,057
At 30 June
Gross book value	‐	51,057
Accumulated amortisation and impairment	‐	(51,057)
Net carrying amount	‐	‐

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

Computer software: 2.5 years

12. TRADE AND OTHER PAYABLES (Current) Notes

TRADE AND OTHER PAYABLES (Current)	Notes	Consolidated
		2017	2016
		\$	\$
Trade payables	(i) – (ii)	6,834	180,951
Accrued expenses		43,238	42,953
GST Payable		‐	4,034
		50,072	227,938

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.

13. ISSUED CAPITAL

13.	ISSUED CAPITAL	Consolidated
			2017 \$	2016 \$
	Ordinary shares	(a)	17,425,639	15,207,200

(a) Ordinary shares

Issued and fully paid ordinary shares carry one vote per share and carry the right to dividends.

			Consolidated
		2017		2016
		No. of shares	\$	No. of shares	\$
	Movement in ordinary shares on issue
As at 1 July		2,357,540,408	17,074,543	256,254,392	15,207,200
Add:	Shares issued pursuant to placement at \$0.001 per share	350,000,000	350,000	‐	‐
	Shares issued as payment for consulting services at \$0.003 per share	6,666,667	20,000	‐	‐
	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
Less:	Transaction costs on share issues	‐	(18,904)	‐	(214,462)
Less:	Transaction costs settled in share based payment	‐	‐	‐	(19,482)
As at 30 June		2,714,207,075	17,425,639	2,357,540,408	17,074,543

(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 2017 and no dividends are expected to be paid in the 2017/18 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.

14. RESERVES

	Consolidated
	2017 \$	2016 \$
Share‐based payment reserve	2,091,087	1,685,087
	2,091,087	1,685,087
(a) Movement in reserves
Share‐based reserve
Balance at beginning of the financial year	1,685,087	1,665,605
Transaction costs settled in share based payment	406,000	19,482
Balance at end of financial year	2,091,087	1,685,087

(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 options

	Note	Exercise price	On issue at 1 July 2016	Issued	Exercised	On issue at 30 June 2017
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
Options expiring on 9 May 2019	(iv)	\$0.004	‐	350,000,000	‐	350,000,000
Options expiring on 31 May 2020	(v)	\$0.004	‐	140,000,000	‐	140,000,000
			1,388,044,679	490,000,000	‐	1,878,044,679

All option granted have been valued according to the Binomial Tree model other than the free option granted (see (i), (ii) and (iv) 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.
• (iv) Free options issued pursuant to a placement in December 2016.
• (v) Issued to consultant and director in June 2017.

15. STATEMENT OF CASH FLOWS RECONCILIATION

	Consolidated
	2017 \$	2016 \$
(a) Reconciliation of the net loss after tax to net cash flows from operations
Loss from ordinary activities after income tax	(998,614)	(1,296,630)
Adjustments for:
Depreciation	5,119	9,354
Amortisation of intangible assets	‐	995
Impairment of exploration assets	‐	‐
(Profit)/loss on disposal of property, plant and equipment	3,266	(15,005)
Non‐cash payments to suppliers and employees	20,000	‐
Equity settled share based payments	406,000	‐
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables	8,859	45,682
Decrease in prepayments	(8,348)	26,830
Decrease in trade and other payables	(177,865)	(42,168)
Decrease in provisions	‐	(77,471)
Net cash flow used in operating activities	(741,583)	(1,348,413)

	Consolidated
	2017 \$	2016 \$
(b) Bank guarantee facility
Bank guarantee facility	130,000	130,000
Amount utilised	(130,000)	(130,000)
	‐	‐

The bank guarantee facility has been provided by a financial institution for exploration licence security and corporate credit card purposes. Term deposits of \$132,153 (2016: \$130,107) have been provided as set‐off security for these facilities.

16. INTEREST IN JOINTLY CONTROLLED OPERATIONS

As at 30 June 2017, the Group had the following significant interest in a joint venture:

• (i) In January2016 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.

17. SEGMENT INFORMATION

During the year, the consolidated entity operated 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. No exploration expenditure was incurred in relation to the Leogang Cobalt‐Nickel Sulphide Project in Austria prior to 30 June 2017.

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.

18. COMMITMENTS

	Consolidated
	2017	2016
	\$	\$
Estimated commitments for which no provisions were
included in the financial statements are as follows:
(a) Exploration Expenditure Commitments:

(i) Under 8 (2016: 8) NSW Government exploration
licenses
Payable
‐ not later than one year	559,550	580,550
‐ later than one year and not later than five years	1,609,540	‐
	2,169,090	580,550

The expenditure commitments as at 30 June 2017 include \$27,000 (2016: \$27,000) 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 16 for details of Jointly Controlled Operations.

(b) Operating Lease Commitments

On 31 May 2014, the Company entered into a 60‐month operating lease for a photocopier‐printer. Its operating lease commitments at 30 June 2017 are as follows:

	Consolidated
	2017	2016
	\$	\$
Payable
‐ not later than one year	2,448	23,238
‐ later than one year and not later than five years	2,244	4,692
	4,692	27,930

19 CONTINGENT LIABILITIES

• 1. 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.
• 1. During the year the Company acquired the Leogang Cobalt‐Nickel Sulphide Project in Austria. In the event that Clancy elects to mine the Leogang Project a further \$300,000 "finder's fee" will be payable, in a mix of cash and shares.

20. 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			2017	2016	2017	2016
Geoinformatics Exploration Tasmania Pty Ltd	Ordinary shares	Australia	100	100	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
	2017	2016
	\$	\$
Purchase of goods and services
Director fees billed by Konkera Corporate, a company controlled by a director, Evan Cranston	36,000	36,000
Bookkeeping and administrative fees billed by Konkera Corporate	72,000	6,000
Office rent paid to entities controlled by Kingslane Pty Ltd, a related party of Evan Cranston	42,000	3,000
Fees for company secretarial services billed by Dabinett Corporate Pty Ltd, a company
controlled by Company Secretary, Rowan Caren	78,000	18,000
Director fees billed by the Agneii Family Trust, a trust controlled by a director, Scott Patrizi	35,356	‐
Director fees billed by Plage Mala Limited, a company controlled by a former director, Nathan
Featherby	‐	36,000
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

20. RELATED PARTY DISCLOSURES – Continued

	Consolidated
	2017	2016
Amounts owed in respect of related party transactions included in the trade creditors	\$	\$
and accruals balance at 30 June 2017 and 30 June 2016 are as follows:
Director fees billed by David Lenigas	2,500	‐
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	6,000	3,000
Fees for company secretarial services billed by Dabinett Corporate Pty Ltd, a company
controlled by Company Secretary, Rowan Caren	6,500	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

21. SUBSEQUENT EVENTS

Subsequent to 30 June 2017:

• The Company completed the sale of 10% of the Leogang Cobalt‐Nickel Sulphide Project to Cadence Minerals Plc (Cadence) for 73,750,000 Cadence ordinary shares. Following completion of the initial 10% acquisition, Clancy has granted Cadence an exclusive option period of 6 months to acquire a further 10% interest in the project. To exercise this option Cadence must pay Clancy \$1,000,000 in cash, Cadence shares or a combination thereof at the election of Cadence; and
• On 10 July 2017, the Company was made aware that a number of licences in relation to the Leogang Cobalt‐Nickel Sulphide Project potentially had preceding priority claimants that predated Clancy's applications by a number of weeks. After an investigation, it was determined that Clancy has priority rights, under Austrian law, over 172 of our 200 granted licences and next‐in‐line rights over the balance.

22. 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.

D Lenigas	Chairman (Non‐Executive)	Appointed 15 June 2017
E Cranston	Director (Non‐Executive)
D Scoggin	Director (Non‐Executive)
S Patrizi	Director (Non‐Executive)	Appointed 7 July 2016
N Featherby	Director (Non‐Executive)	Resigned 7 July 2016
R Caren	Company Secretary

(b) Compensation for Key Management Personnel

	2017	2016
	\$	\$
Short‐term employee benefits	187,856 369,603
Short‐term consulting fees	‐ 40,113
Post‐employment benefits	‐ 28,739
Other long‐term benefits	‐ 2,844
Share‐based payments	406,000 195
Non‐monetary benefits	‐ 18,466
Total Compensation	593,856 459,960

(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 2017, key management personnel held 347,009 Plan Shares (2016: 2,705,924) and had limited recourse loans in relation to those shares totaling \$6,940 (2016: \$68,272).

23. 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
	2017	2016
	\$	\$
Recognised in the Statement of Profit or Loss and Other
Comprehensive Income
Expense recognised for directors' services received
Expense arising from equity‐settled share‐based payment transactions – directors	290,000	‐
	290,000	‐
Equity payment recognised for consulting fees
Equity‐settled share‐based payment transactions –
options issued for services provided towards project acquisition and partial divestment	116,000	‐
	116,000	‐
Total recognised in the Statement of Profit or Loss and Other Comprehensive Income	406,000	‐
Recognised in Contributed Equity
Equity payment recognised for sub‐underwriting of rights issue
Equity‐settled share‐based payment transactions –
options issued as part of a fee for sub‐underwriting of	‐ 19,482
rights issue recognised in Contributed Equity
Total recognised in Contributed Equity	‐ 19,482

(b) Weighted average remaining contractual life

The weighted average remaining contractual life of the options on issue is 1.94 years (2016: 2.86 years).

(c) Range of exercise price

The exercise price of the options on issue is \$0.004 (2016: \$0.004).

(d) Weighted average fair value

The fair value of the options issued to the consultant and director was \$0.0029 per option.

(e) Weighted average share price

The weighted average price per share during the year was \$0.0104 (2016: \$0.01).

24. AUDITORS' REMUNERATION

The auditor of Clancy Exploration Limited was Walker Wayland WA Pty Ltd (formerly called Hall Chadwick WA Audit Pty Ltd), however there were some non‐audit services provided by the previous auditor, Ernst & Young

	Consolidated
	2017	2016
	\$	\$
Amounts received or due and receivable by Walker Wayland WA Audit Pty Ltd (formerly Hall Chadwick WA Audit Pty Ltd) for: ‐ an audit or review of the financial statements of the entity
and its controlled entity	17,500	‐
other services in relation to the entity and its controlled ‐ entity	‐	‐
	17,500	‐
Amounts received or due and receivable by Ernst & Young for: ‐ an audit or review of the financial statements of the entity and its controlled entity	‐	37,195
other services in relation to the entity and its controlled ‐ entity	6,750	5,750
	6,750	42,945
	24,250	42,945

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

	2017	2016
	\$	\$
ASSETS
Current Assets	1,618,491	2,028,487
Non‐current Assets	8,406	21,495
TOTAL ASSETS	1,626,897	2,049,982
LIABILITIES
Current Liabilities	50,071	227,938
Non‐current Liabilities	‐	‐
TOTAL LIABILITIES	50,071	227,938
NET ASSETS	1,576,826	1,822,044
EQUITY
Issued capital	17,885,639	17,534,543
Reserves	2,091,087	1,685,087
Accumulated losses	(18,399,900)	(17,397,586)
TOTAL EQUITY	1,576,826	1,822,044
Loss of the parent entity	(1,002,316)	(1,293,309)
Total comprehensive loss of the parent entity	(1,002,316)	(1,293,309)
Contingent liabilities of the parent entity: Nil

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

	2017 \$	2016 \$
Share‐based payment reserve	2,091,087	1,685,087
	2,091,087	1,685,087

26. 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 13 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks.

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

(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.

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
	2017	2016
	\$	\$
Payable
‐ less than 6 months	50,072 114,778
‐ 6 to 12 months	‐	‐
‐ 1 to 5 years	‐	‐
‐ later than 5 years
Total	50,072 114,778

(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.

The directors of Clancy Exploration Limited declare that:

• 1. In the opinion of the directors:
• (a) the attached financial statements and the notes thereto of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including:
  • (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2017 and of their performance for the year ended on that date; and
  • (ii) complying with Accounting Standards;
• (b) the attached financial statements and the notes thereto of the Company and of the consolidated entity are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board; and
• (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
• 1. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2017.

Signed in accordance with a resolution of directors made pursuant to Section 295(5) of the Corporations Act 2001.

On behalf of the Board

S Patrizi Non‐Executive Director Dated this 28th September 2017

Key Audit Matter	How our Audit Addressed the Key Audit Matter
Uncertainty Regarding Material Going Concern
The company has reported a Net loss of \$998,614 for the year ended 30 June 2017 $(2016: $1,296,630)$ . Material uncertainty regarding qoing concern has been designated a key audit matter; due to the high level of judgement required in evaluating the company's assessment of going concern.	Audit procedures include the following: obtaining and reviewing managements cash flow $\bullet$ forecast to asses whether current cash levels can sustain operations for a period of at least 12 months from the date of the directors signing the financial statements; assessing the company's current results against managements forecast for consistency, and our understanding of the business.
Share Based Payments
Refer to note 14 and note 22 of the Financial Report.
The company has issued 140,000,000 options excercisable at \$0.004 to a director as consideration for remuneration and consulting fees. These options were valued at \$0.0029 per option using the Black Scholes model. These options have been deemed as Share Based Payments under AASB 2.	Audit procedures include the following: obtaining and reviewing managements valuation $\bullet$ model including the reasonableness of all inputs into the model reviewing the company's share price movements to assess volatility
Share payments based has been designated a key audit matter; due to the level of judgement required in high