CLANCY EXPLORATION LIMITED ACN 105 578 756

II.

For the issue of up to 25,000,000 shares at an issue arte of twenty cents each to raise a total of tro to \$5,000,000.

Clancy of the Overflow by A.B. "Banjo" Paterson

Maria Alban

Martin Place Securities Pty Kol
ABN 30 094 927 947

AFSL 247 404 Underwriter to the extent of the Minimum Subscription being the issue of
17,500,000 shares at an issue price of twenty cents each to raise \$3,500,000.

him down the shorthand years

Contract Commenced Contract Commence

a de la companya de la companya de la companya de la companya de la companya de la companya de la companya de

Albanya Mangola (Mangola Mangola

This is an important document and should be read in its entirety. The mineral properties described in this Prospectus
are at the exploration and evaluation stage and accordingly investment in the New Shares offered by this

I had and her has a collection and it has for

want of here Rundery, sent to adex I met

CORPORATE DIRECTORY

Directors

Dr James Macdonald Non-Executive Chairman

Mr Mark Stewart Managing Director

Dr Nick Archibald Non-Executive Director (Technical)

Mr Mark Lester Non-Executive Director (Finance)

Company Secretary

Mr Rowan Caren

Principal Place of Business

57 Havelock Street West Perth WA 6005

Telephone: +61 8 9481 8241 Facsimile: +61 8 9226 1299 www.clancyexploration.com

Share Registry

Computershare Investor Services Pty Ltd

Level 2, Reserve Bank Building 45 St Georges Terrace Perth WA 6000

Telephone: +61 8 9323 2000 Facsimile: +61 8 9323 2033

Proposed ASX Trading Symbol: CLY

Solicitor to the Offer and Solicitor Reporting on Tenements

Clayton Utz Level 27, QV1 250 St Georges Terrace Perth WA 6000

Underwriter

Martin Place Securities Pty Ltd Level 3, 14 Martín Place Sydney NSW 2001

Telephone: +61 2 9222 9111 Facsimile: +61 2 8224 9699

Auditor

Ernst & Young Chartered Accountants and Business Advisors 11 Mounts Bay Road Perth WA 6000

Independent Geologists

SRK Consulting 1064 Hay Street West Perth WA 6005

Investigating Accountant

PKF Corporate Advisory Services (WA) Pty Ltd Level 7, BGC Centre 28 The Esplanade Perth WA 6000

Clancy Exploration Limited's ("Clancy") portfolio of prospective exploration opportunities has exposure to copper, gold, nickel and base metals.

Lachlan Fold Belt Copper-Gold Projects, NSW

12 NSW projects 100% owned by Clancy
Substantial portfolio of copper-gold porphyry Targets in the Lachlan Fold Belt, NSW.
※ Application of the Geoinformatics Process, in conjunction with Gold Fields Australasia Pty Urnited ("Gold Fields") over the last three years to areas in the Lachlan Fold Belt, has generated a Target Bank of highly ranked Targets.
I Three joint ventures with Gold Fields in the Lachlan Fold Belt, managed by Clancy and under which Gold Fields may contribute up to \$5m of expenditure in the ground over three years to earn an 80% interest. The contract of the contract of

Mount Read Voicanic Belt Projects. Tasmania

a Strategic alliance with Bass Metals Limited ("Bass Metals").
4 A portfolio of tenements consisting of 12 exploration licences in the Mount Read Volcanic Belt in Tasmania, jointly held with Bass Metals. The manuscript
Base metals Targets generated by application of the Geoinformation (1999) Process in the Mount Read Volcanic Belt. (1999) 1999
Seven Tasmanian projects, 25% owned by Clancy, 75% owned by Bass Metals
8 Bass Metals committed to expending \$1.2m in 2007 on Targets identified by the Geomformatics Process. The manufacturer
Clancy entitled to performance shares in Bass Metals based on exploration success

Projected Brothoffulle

a Total protected exploration expenditure of up to \$7m (\$6m if only the Minimum Subscription is raised) over two years (including expenditure budgeted by Gold Fields and Bass Metals).

Tedime Street

Access to leading edge targeting applications, technology and substantial technical resources as part of its ongoing relationship with Geoinformatics Exploration Inc. ("Geoinformatics").
第 Experienced and committed executive management with Mark Stewart, ex Anglo American plc and Vice President Corporate Development with Geoinformatics, as Managing Director
3 Strong technical and corporate skills on the Board Including Dr James Macdonald, former BHP Billiton Global Geoscience Leader, as non-executive Chairman, Dr Nick Archibald, Executive Vice Chairman and CEO of Geoinformatics, as a non-executive director and Mr Mark Lester as non-executive director with specialist skills in corporate finance and accounting.
8 Clancy will be the isted arm of Geoinformatics in Australasia. The control of the

Investment Risks International Property Constants and Property Risks

all The business of the Company involves mining exploration and investment in mining tenements and accordingly, investments in the New Shares offered by this Prospectus should be considered speculative. The key risk factors associated with an investment in the Company are described in Section 9 of this Prospectus. The Company

IMPORTANT NOTICE

This Prospectus is dated 22 May 2007 and was lodged with ASIC on that date. No Shares will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

Neither ASIC nor ASX take any responsibility for the content of this Prospectus or the merits of the investment to which this Prospectus relates.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus.

It is important that you read this Prospectus carefully, in its entirety and seek professional advice where necessary before deciding to invest in the Company. In particular, in considering the prospects for the Company, you should consider the risk factors that could affect the performance of the Company. The Offer does not take into account your investment objectives, financial situation and particular needs. Accordingly, you should carefully consider the risk factors in light of your personal circumstances and seek professional advice from your accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest. The Shares which are the subject of this Prospectus should be considered speculative.

No person is authorised to provide any information or make any representation in connection with the Offer contained in this Prospectus which is not contained in this Prospectus.

Web Site – Electronic Prospectus

A copy of this Prospectus may be downloaded from the Company's website at www.clancyexploration.com. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access this Prospectus from within Australia. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company by telephone on (08) 9481 8241 during normal business hours.

Exposure Period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by ASIC and market participants prior to the acceptance of Applications and the raising of funds. Potential investors should be aware that this examination may result in the identification of deficiencies in the Prospectus and, in those circumstances, any Application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act. Applications for Shares under this Prospectus will not be processed until after expiry of the Exposure Period. No preference will be conferred on persons who lodge Applications prior to the expiry of the Exposure Period. If the Exposure Period is extended by ASIC, Applications will not be processed until after expiry of the extended Exposure Period.

Glossary

Certain terms and abbreviations used in this Prospectus have defined meanings which are set out in the Glossary at the end of this Prospectus.

LOCATION OF CLANCY PROJECTS IN AUSTRALIA

CAPITAL STRUCTURE

A ACCOUNT A SERVICE AND A SERVICE OF A SERVICE OF A SERVICE OF A SERVICE OF A SERVICE OF A SERVICE OF A SERVICE		THE AMERICAN CONTROL CONTROL
22.805.506 Geomormatics	A7796	22805506	56.6%
bic lov this Offen	25.000.000 52.3%		4.49 ₀
Total Shares on issue at completion of the Offer	217 SON 501 100%	40.3

Incentive Options	-800 000
Series 1 Performance Options	400.000
Series 2 Performance Options	400.000
iker Performance Options	2.000.000
tal Options on issue at completion of the Offer

INDICATIVE TIMETABLE

lgement of Prospectus 22 May 2007
29 May 2007
27 June 2007
Ament of New Shares 2 July 2007

NOTES

1. Investors are encouraged to submit their Applications as early as possible. The Company reserves the right to close the Offer earlier or later than as indicated above without prior notice to investors.
1. These dates are indicative only. The date the New Shares are expected to be issued and/or commence trading on the Official List of ASX may vary with any change in the Closing Date.

CAPITALSTIRUGIONE INDICATIVE INTERASE

	Chairman's Letter	2
1	Details of the Offer	3
2	Directors and Officers	7
3	Company and Project Overview	10
4	Independent Technical Assessment	27
5	Solicitors' Report	102
6	Investigating Accountant's Report	127
7	Financial Information	130
8	Corporate Governance	139
9	Risk Factors	140
10	Additional Information	144
11	Directors' Statements And Consents	154
	Glossary	155

CHAIRMAN'S LETTER

Dear Investor.

On behalf of the Directors, it is my pleasure to invite you to subscribe under this Prospectus to become a shareholder in Clancy Exploration Limited.

The Directors of Clancy are well experienced in the global mining and exploration industry and have strong and diverse technical and commercial backgrounds, including corporate and project management, exploration and mine geology, metallurgy and corporate governance.

Clancy is a wholly owned subsidiary of Geoinformatics Exploration Australia Pty Ltd ("GXL Australia"), which is ultimately a wholly owned subsidiary of Geoinformatics, a company listed on the Toronto Stock Exchange Venture Exchange (TSX-V: GXL). At its core, Geoinformatics consists of a skilled and talented team of geoscientists that is pioneering an innovative risk-managed approach to exploration and targeting. This includes the application of Monte Carlo simulations to large three dimensional databases to generate targets with the highest probability of success. Geoinformatics has a number of strategic alliances around the world including a significant alliance with Kennecoft Exploration Company (part of the Rio Tinto group of companies) stretching from Mexico to Alaska.

It is intended that Clancy will become the listed Australasian arm of Geoinformatics and Clancy will hold the core Australian assets of the Geoinformatics group. These assets have been built up over the last three years by Geoinformatics and, in the case of the Lachlan Fold Belt, in conjunction with Gold Fields. Geoinformatics will retain a significant shareholding in Clancy after listing.

Clancy has identified 52 "A Class" Targets, a significant number of which are currently held under 12 exploration licences and four exploration licence applications by Clancy. Having formed an alliance with Geoinformatics/Clancy in 2004, Gold Fields remains committed to developing the Clancy projects and Targets via three joint ventures. Gold Fields is entitled to earn an 80% interest if it spends \$5 million over three years. Gold Fields' projected expenditure on these Targets for the first two years is \$2.78 million.

Clancy has recently acquired Geoinformatics Exploration Tasmania Pty Ltd ("GXL Tasmania"), from GXL Australia. The assets of GXL Tasmania consist of 12 exploration licences held jointly with Bass Metals in the Mount Read Volcanic Belt in Tasmania, which are also over Targets generated by application of the Geoinformatics Process. GXL Tasmania currently holds a 25% interest in the tenements with Bass Metals holding a 75% interest. Clancy will be free carried on these tenements by Bass Metals until completion of a pre-feasibility study. Bass Metals anticipates expenditure on the GXL Tasmania tenements in 2007 to be in the order of \$1.2 million.

Clancy has acquired 911,250 shares in Bass Metals ("Bass Metals Shares") and 306,250 options to acquire Bass Metals Shares ("Bass Metals Options") as part of the acquisition of GXL Tasmania and in addition acquired the right to receive up to five million Bass Metals Shares based on discovery performance both on the Targets held under the Bass Metals joint venture and the tenements held by Bass Metals under an agreed area of mutual interest which includes the Hellyer and Que River project tenements.

This Prospectus offers a total of up to 25,000,000 Shares at an issue price of 20 cents per Share to raise up to \$5 million. The minimum subscription is \$3.5 million.

The funds raised by this Prospectus will be used to aggressively explore and drill the Lachlan Fold Belt copper/gold porphyry targets. Additionally, Clancy will utilise its technical strength via its Target Banks and its ongoing relationship with the Geoinformatics group to develop further opportunities and projects in Australasia. Up to \$7 million is expected to be spent over the next two years by Clancy and its partners on Clancy projects which provides a significantly leveraged position to Clancy's exploration potential for its shareholders.

I look forward to welcoming you as a shareholder of Clancy Exploration Limited.

James Macdonald Non-Executive Chairman

DETAILS OF THE OFFER $\mathbf{1}$

$1.1$ The Offer

This Prospectus invites investors to apply for a total of up to 25 million Shares at a price of \$0.20 per Share to raise up to \$5 million, before costs of the Offer. All New Shares offered under this Prospectus will rank equally with existing Shares. Details of the rights attaching to the Shares are set out in Section 10.1 of this Prospectus.

All application monies are payable in full on application.

$1.2$ Key Dates

Lodgement of Prospectus with ASIC	22 May 2007
Chiening Date	29 May 2007
Closing Date (5,00pm WST)	27 June 2007
Expected date of allotment of New Shares	2 July 2007
Expected date of quotation of New Shares on ASX	6 July 2007

The above dates are indicative only and may vary. The Company reserves the right to change the key dates of the Offer, including the Closing Date, without prior notice. Investors are therefore encouraged to submit their Applications as soon as possible.

1.3 Capital Structure

The capital structure at completion of the Offer if the Maximum Subscription is raised will be as set out in Table 1:

Table 1: Capital Structure - Maximum Subscription

	RIGHTS STATES IN A DESIGNA
Shares on issue as at the date of the Prospectus	22.805.506	47.796
New Shares to be issued pursuant to the Prospectus	25,000,000
Total Shares on issue at completion of the Offer	$\frac{100\%}{100\%}$

The capital structure at completion of the Offer if the Minimum Subscription is raised will be as set out in Table 2:

Table 2: Capital Structure - Minimum Subscription

Shares on issue as at the date of the Prospectus	22,805,506
New Shares to be issued pursuant to the Prospectus	43.4%
Total Shares on issue at completion of the Offer

Table 3: Options

	SHIKKEESIMMÄÄDINEESIS
Options on issue as at the date of the Prospectus
Theentive Options	1.800.000
Series 1 Performance Ciptions	400 000
Series 2 Performance Options	400 000
Broker Performance Options	2.000.000
Total Options on issue at completion of the Offer	4,600,000

Details of the terms of the options are set out in Section 10.2 of this Prospectus.

Escrow $1.4$

The Shares and Options on issue as at the date of this Prospectus may be subject to the restricted securities provisions of the ASX Listing Rules. Accordingly, a proportion of the existing Shares and Options may be required to be held in escrow for a period of up to 24 months and may not be able to be sold, mortgaged, pledged, assigned, transferred or otherwise disposed of during that period.

The Company expects that most, if not all, of the 22,805,506 Shares and the 2,600,000 Options on issue as at the date of this Prospectus and the 2,000,000 Broker Performance Options will be subject to escrow restrictions.

$1.5$ Expenditure Plans and Use of Funds

The budget expenditure figures for the Company for the first two years following listing on ASX are set out below:

	Maximum analysed allow respect E JARUTEERIKU			Mini ittia Senstritton reiser CEMBRIDGE
	Texas.	Marina	Yosta Hillingham	a ang pang
Costs of the Issue	633.000	Mil	539.000	Μï
Lachian Fold Belt Project exploration.
-Fairnoime.	447,000	399.000	324,000	256,000
$-Mval$	114 000	157,000	76.000	81,000
-Goobang	75,000	164.000	60,000	116.000
-Cumumburama	115,000	161.000	58.000	59.000
-Billabong Creek	64.000	104.000	59,000	69,000
-llabunda	77.000	96,000	58,000	64,000
-Cundumbul	258,000	267 000	138,000	234,000
-Orange East	187.000	311,000	190.000	135,000
-Spring Creek	75.000	71,000	57.000	40,000
-Project Generation	157,000	163000	93,000	95.000
Unallocated working capital	Ū.	195.000	$\Omega$	11.000
Administration	281.000	429.000	297,000	391.000
ilotal I	\$2,483,000	\$2,517,000	\$1,949,000	\$1,551,000

Accordingly, in the first two years after listing on ASX a minimum of \$2,427,000 (\$1,672,000 in the event of the Minimum Subscription) out of the funds to be raised by the Offer will be spent on exploration programs on the Company's granted tenements, namely Fairholme, Goobang, Illabunda, Cundumbul, Orange East and Spring Creek. Details of the intended exploration programs are set out in Section 4 of this Prospectus.

$1.6$ Minimum Subscription

The minimum amount to be raised under this Offer is \$3,500,000, before costs of the Offer.

No New Shares will be issued pursuant to this Prospectus until the Minimum Subscription has been achieved. Should the Minimum Subscription not be reached within four months after the date of this Prospectus, all application monies will be dealt with in accordance with the Corporations Act.

The Company believes the Minimum Subscription is sufficient working capital to achieve its objectives as set out in this Prospectus.

$1.7$ Maximum Subscription

The Company will accept a Maximum Subscription of 25,000,000 Shares to raise up to \$5 million.

1.8 Dividend Policy

CLANCY EXPLORATION LIMITED

The Company anticipates that significant expenditure will be incurred in the evaluation and development of the Company's projects. These activities are expected to dominate the two year period following the issue of this Prospectus. Accordingly, the Company does not expect to declare any dividends during that period.

Subject to the Company achieving sustained profitability, the Directors will consider paying dividends, subject to available cash flow and capital requirements.

1.9 How to Apply For New Shares

An Application for New Shares can only be made on the Application Form contained at the back of this Prospectus. The Application Form must be completed in accordance with the instructions set out on the Application Form.

Applications must be for a minimum of 10,000 New Shares (being minimum application monies of \$2,000), and thereafter in multiples of 1,000 New Shares (equivalent to \$200).

The completed Application Form must be accompanied by a cheque in Australian dollars, for the full amount of your application monies. Cheques must be made payable to "Clancy Exploration Limited - Application Account" and should be crossed" Not Negotiable".

Application Forms must not be circulated to prospective investors unless accompanied by a copy of this Prospectus.

Completed Application Forms and accompanying cheques must be received by no later than 5.00 pm (WST) on the Closing Date by the Share Registry:

A TELEVISION NE
Clancy Exploration Limited	Clancy Exploration Limited
d-Computershare investor Services Prv Ltd.	c/- Computershare Investor Services Pty Ltd.
Level 2, 45 St Georges Terrace	GPC Box D182
Perth MA 6000	Penn WA 6840

The Company reserves the right to extend the Offer or close the Offer early without notice. Applicants are therefore urged to lodge their Application Form as soon as possible.

An original, completed and lodged Application Form, together with a cheque for the application monies, constitutes a binding and irrevocable offer to subscribe for the number of New Shares specified in the Application Form. The Application Form does not need to be signed to be a valid application. An Application will be deemed to have been accepted by the Company upon allotment of the New Shares.

If the Application Form is not completed correctly, or if the accompanying payment of the application monies is for the wrong amount, it may still be treated as valid. The Directors' decision as to whether to treat the Application as valid and how to construe, amend or complete the Application Form is final. However, an Applicant will not be treated as having applied for more New Shares than is indicated by the amount of the cheque for the application monies.

No brokerage or stamp duty is payable by Applicants in respect of Applications for New Shares under this Prospectus.

1.10 Allocation and Allotment of New Shares

The Company reserves the right to reject any Application or to allocate to any Applicant fewer New Shares than the number applied for. The Company also reserves the right to reject or aggregate multiple applications in determining final allocations.

In the event an Application is not accepted or accepted in part only, the relevant portion of the application monies will be returned to Applicants, without interest.

The Company reserves the right not to proceed with the Offer or any part of it at any time before the allocation of the New Shares to Applicants. If the Offer or any part of it is cancelled, all application monies, or the relevant application monies will be refunded.

The Company also reserves the right to close the Offer or any part of it early, or extend the Offer or any part of it, or accept late Application Forms either generally or in particular cases.

The allotment of New Shares to Applicants will occur as soon as practicable after Application Forms and application monies have been received for the Minimum Subscription of Shares being offered, following which statements of shareholding will be dispatched. It is the responsibility of Applicants to determine their allocation prior to trading in the New Shares. Applicants who sell New Shares before they receive their statement of shareholding will do so at their own risk.

1.11 Application Money Held in Trust

All application monies will be deposited into a separate bank account of the Company and held in trust for Applicants until the New Shares are issued or application monies returned. Any interest that accrues will be retained by the Company and will not be paid to Applicants.

1.12 ASX Listing

The Company will apply to ASX within seven days after the date of this Prospectus for admission to the Official List and for Official Ouotation of the Shares, other than those existing Shares that the ASX is likely to treat as restricted securities as defined in ASX Listing Rules.

If the New Shares are not admitted to official quotation within three months after the date of this Prospectus, none of the New Shares offered by this Prospectus will be allotted or issued. In that circumstance, all Applications will be dealt with in accordance with the Corporations Act.

The fact that ASX may admit the Company to the Official List is not to be taken in any way as an indication of the merits of the Company or the New Shares offered by this Prospectus. ASX, its officers and employees, take no responsibility for the contents of this Prospectus.

1.13 CHESS

The Company will apply to participate in the Clearing House Electronic Sub-register System ("CHESS") operated by ASX Settlement and Transfer Corporation Pty Ltd ("ASTC"), a wholly owned subsidiary of ASX, in accordance with the ASX Listing Rules and the ASTC Settlement Rules.

Under CHESS, the Company will not issue certificates to Shareholders. Instead, the Company will provide Shareholders with a holding statement which sets out the number of Shares allotted to that Shareholder under this Prospectus. If an investor is broker sponsored, ASTC will send a CHESS statement.

1.14 Risk Factors

The business of the Company involves mining exploration and investment in mining tenements and accordingly, investments in the New Shares offered by this Prospectus should be considered speculative. In particular investors are directed to Section 9 of this Prospectus which sets out the risks associated with making an investment in the Company. The key risks associated with an investment in the Company include;

Exploration Risk minerals exploration is inherently risky. There can be no certainty that Targets generated by application of the Geoinformatics Process will translate into exploration success.
Risk associated with the Geoinformatics Process The Company's Target Banks have been generated by application of the Geoinformatics Process over the Lachlan Fold Belt and Mount Read Volcanic Belt. There can be no certainty that Geoinformatics will be able or willing to provide future access to the Geoinformatics Process, which may force the Company to reduce its reliance on this technical advantage for its future pipeline of projects.

1.15 Underwriting

The first \$3.5 million of this Offer is conditionally underwritten by Martin Place Securities Pty Ltd. The terms and conditions of this underwriting are set out in Section 10.5 of this Prospectus.

Albudian City Album District in City

DIRECTORS AND OFFICERS $\overline{2}$

$2.1$ The Board Of Directors

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

Non-Executive Chairman

Dr Macdonald is a geoscientist. During the past two years he has operated a Brisbane-based consultancy business which has provided professional geoscientific services to exploration and mining companies.

Dr Macdonald has over 30 years experience in the global exploration and mining industries. He was Chief Geologist for AGIP Resources focused on exploration for epithermal gold deposits in Canada and Europe in the late 1980's. Dr Macdonald managed Andean gold exploration for Homestake Mining Company from 1994 to 1998, during which time the exploration team was responsible for the discovery of the Jeronimo deposit, the downdip extension of the Agua de la Falda mine in Chile.

In 1998, Dr Macdonald joined Billiton International Metals as Chief Geoscientist, based in the Netherlands and worked globally on exploration strategy and providing technical expertise to teams exploring for a range of deposit types including porphyry copper, sediment-hosted copper, lateritic nickel and iron oxide-copper-gold. Following the merger with BHP in 2001, he relocated to Brisbane, Australia, in a similar capacity as Global Geoscience Leader, with a focus on strategy and copper exploration (porphyry and sediment-hosted), amongst other minerals.

In 2006, Dr Macdonald became a non-executive director of Mantle Diamonds Limited.

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

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

Managing Director

Mr Stewart brings a strong combination of resources industry experience and commercial skills gained over the past 15 years in the mining sector. Mr Stewart spent 10 years working with the new business/exploration and acquisitions division of Anglo American plc, initially based in Johannesburg with involvement across Africa and Europe, then in Asia based out of Singapore and finally based in Perth from 1999 to 2002 as Regional Manager for Asia and Australia.

Mr Stewart is a lawyer by profession and is admitted as a barrister and solicitor in Western Australia and is an admitted attorney in South Africa. He holds a Journalism degree from Rhodes University where he majored in Journalism and Law and a Bachelor of Laws from the University of Cape Town. He also holds post graduate diplomas in both Company Law and Tax from the University of the Witwatersrand in Johannesburg.

Mr Stewart has valuable experience in the junior exploration sector having joined Clancy's major shareholder, Geoinformatics, in September 2003 where as a Vice President he was responsible for corporate and business development with particular emphasis on the merchant banking and commercial aspects of that company's activities. He also has extensive public company experience having been a director of Uranex NL from 18 July 2005 until 28 February 2006 and of Goldstream Mining NL from 31 August 2004 until 28 February 2006. He was also a director of Indo Mines Limited from 8 September 2003 until 12 December 2006.

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

Non-Executive Director (Technical)

Dr Archibald is recognised as one of Australia's leading structural geology consultants, and has extensive experience in applying geological expertise to solve problems in exploration and mining.

Dr Archibald was a joint founder and remains Executive Vice Chairman and CEO of Clancy's major shareholder, TSX-listed Geoinformatics Exploration Inc. He devised the strategic business model and in the 1990s devoted considerable time to developing strategic collaborations with CSIRO's Divisions of Exploration and Mining and Mathematical and Information Sciences. These collaborations have led to the development of exciting new computer applications in the exploration and mining industries.

Dr Archibald remains, however, actively involved in the core business of Geoinformatics, namely conducting mineral targeting using three dimensional computer visualisation, analysis and modeling.

Dr Archibald is an Honours Graduate in Geology from James Cook University of North Queensland. He completed his PhD at the University of Western Australia, where his thesis investigated the structuralmetamorphic evolution of a portion of a greenstone terrain in the Eastern Goldfields of Western Australia.

Dr Archibald is also a director of Sanatana Diamonds Inc. which is listed on the TSX Venture Exchange (TSX-V: STA) and the London Alternate Investment Market.

Mr Mark Lester BCom. CA

Non-Executive Director (Financial)

Mr Lester graduated from the University of Western Australia in 1977 with a Bachelor of Commerce and joined a major international accounting firm where he worked for six years. During that time he was involved in the audit of corporations in Australia and the USA encompassing industries such as finance, manufacturing, retailing, oil and gas, construction and transportation.

In 1982, Mr Lester left public accounting to work in commerce gaining experience in the financial services and manufacturing sectors. In 1988 he returned to public practice. Currently he is a partner in a Chartered Accounting practice based in Subiaco, Western Australia. Mr Lester is also a Registered Auditor and a director of a Registered Tax Agent and is involved in advising a wide range of clients including public companies, large private groups, not for profit organisations and trustee entities.

Mr Lester was company secretary of Melbourne-based biotech company Meditech Research Limited for six years until its recent acquisition by Alchemia Limited. During that period of time Mr Lester acted as chief financial officer and was responsible for all ASIC and ASX compliance matters.

DIRECTORY NO DISCUSS

2.2 Company Officers

Mr Gordon Barnes BSc. MSc. MAIG. MSEG

Exploration Manager

Mr Barnes is an exploration geologist with a background in exploration project management and technical consulting services. He has 20 years of practical experience, ranging from active field based projects through to multi-commodity project generation initiatives in Australia, Asia, North and South America. He worked as an Exploration Geologist with Freeport-McMoRan Copper & Gold Inc at the Karonie gold project in the Eastern Goldfields. Following Freeport's merger with the Normandy-Poseidon Group in 1989, Gordon became a Project then Senior Geologist with Normandy Exploration, working on projects in the Murchison (Au), Southern Cross (Au, Ni), Eastern Goldfields (Au), Pilbara (Au, Cu) and Kimberley (Ni, Co, Zn) regions of Western Australia.

Mr Barnes started consulting to the industry in 1996 and co-founded the Insight Geoscience Group the following year. Insight Geoscience participated in several client-sponsored project generative initiatives in Asia (Au, Cu), Australia (Zn, Cu, Pb) and North America (Zn). He has also worked on a variety of advanced database projects for multi-national clients.

Mr Barnes joined Clancy's parent company, Geoinformatics Exploration Inc., in April 2004 and is responsible for the management of exploration projects in the Australasian region.

Mr Barnes graduated from Royal Melbourne Institute of Technology with a Bacholor of Science in Applied Geology in 1987 and completed an MSc in Ore Deposit Geology at the University of Western Australia in 1996. He is a Member of the Australian Institute of Geoscientists and the Society of Economic Geologists.

Mr Rowan Caren BCom, CA

Company Secretary

Mr Caren has more than 15 years commercial experience as a Chartered Accountant, having qualified with PricewaterhouseCoopers in 1992. He has been involved in the minerals exploration industry for over ten years and in 2004 created a specialist company secretarial and advisory consultancy, Dabinett Corporate Pty Ltd. He has provided financial and corporate services to several listed and unlisted companies involved in the resources sector.

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.

SHEPIRGIONS (IVESTORICAL

3 COMPANY AND PROJECT OVERVIEW

$3.1$ Background

Clancy was incorporated on 17 July 2003 as a proprietary company limited by shares. On 6 March 2007 it changed type to become a public company limited by shares.

Clancy is part of the Australasian arm of Geoinformatics and will hold the core Australian assets of the Geoinformatics group. Geoinformatics is a global exploration company listed on the Toronto Stock Exchange Venture Exchange. Geoinformatics will (through its subsidiary GXL Australia) retain a significant shareholding in Clancy following completion of the Offer.

3.2 Objectives

Clancy was formed with the objective of pursuing opportunities in exploration and mining gold and copper within Australia. The main purpose of the Offer is to finance the gold and copper exploration activities and to meet the corporate and administrative costs of Clancy, including the costs associated with the Offer.

Clancy has 12 exploration licences and four exploration licence applications divided amongst 12 100% owned projects in NSW, exploration on nine of which will be funded out of the proceeds of the Offer. Exploration on the remaining three projects will be funded through three joint ventures with Gold Fields which will be managed by Clancy. Clancy also has a strategic alliance with Bass Metals relating to a portfolio of Tasmanian tenements which are to be funded and managed by Bass Metals.

$3.3$ The Geoinformatics Process and Clancy's Target Bank

Innovation in Data Analysis / Expert Geoscientists $(a)$

Mining companies have substantially neglected "greenfields" exploration in Australia in the last 15 years resulting in an alarming decline in the discovery rate of world-class mineral deposits. There have been relatively few significant greenfields discoveries in Australia during this period. Two important factors are coupled with the decline in the discovery rate. First, consolidation of mid to large size mining companies has reduced the corporate exploration footprint to the near mine or "brownfields" environment, as this is where it is easiest to add reserves. A consequence of this has been the dismantling of greenfields exploration teams with an attendant reduction in project generation and conceptual targeting. Second, there has been an explosion in the amount of geoscience data released by state and federal government initiatives designed to stimulate greenfields exploration, hopefully leading to new discoveries. Despite this, few discoveries have actually been made."Data overload" and how to handle it has become a real problem for many companies, particularly in the junior exploration sector. The data overload is compounded by the enormous amount of legacy company data that usually requires manipulation and compilation prior to the commencement of exploration.

Clancy is uniquely positioned to take advantage of and utilise publicly available geoscience data through its relationship with its major shareholder, GXL Australia. Project generation and conceptual targeting, combined with the enormous amount of available government and legacy geoscientific data, requires a talented team of expert geoscientists and technical support staff. GXL Australia provides this team with more than 20 expert geoscientists specialising in geology and deposit studies, geophysics, geochemistry, 3D modeling, GIS, expert systems and automation, database management and programming.

(b) The Geoinformatics Process

Geoinformatics is actively exploring in North America and has an extensive portfolio of joint ventures, direct property interests and potential royalty streams relating to a wide range of minerals projects in Australia, New Zealand and North America.

Geoinformatics has developed a rigorous and innovative data manipulation and targeting methodology, the Geoinformatics Process. The Geoinformatics Process incorporates risk and uncertainty into the target models, the output of which quantifies the probability of potential mineral discoveries. It utilizes a petroleum systems approach that divides the mineralizing system into what are believed to be its essential components which are then modeled and their probabilities estimated.

$(c)$ Clancy's Target Bank

Clancy holds a Target Bank of highly prospective Targets which were generated by the Geoinformatics Process. The Target Bank will provide an immediate focus for exploration by Clancy.

Clancy and GXL Australia have agreements in place that acknowledge Clancy's proprietary rights in the Target Bank and which also provide a commercial basis for Clancy to access the technical expertise of the Geoinformatics group and the Geoinformatics Process. Accordingly, Clancy is well positioned for growth through further data analysis and the development by Geoinformatics of future targeting innovations. The Directors believe that in the coming years a premium will be placed on companies able to do this.

$(d)$ Advantages of Targeting Methodology

The major advantages of probabilistic targeting over other methods are:

uncertainty and risk are incorporated into the targeting procedure;
a wide range of scores are generated for a small number of input layers making only a few key layers necessary;
reduction to a few key input layers demands rigorous geological assessment of the deposit/exploration model and critical evaluation of the input datasets, which improves the integrity and fidelity of targeting;
it employs a multiplicative scoring method in contrast to additive methods used by most other targeting methods, thus reducing the number of false positives; and
it provides an effective method of ranking targets and, if employed consistently, allows for comparison of targets across projects.

The methodology's targeting results have been reviewed by an independent expert and found to be technically sound. Targets generated by the Geoinformatics Process were validated against known deposits and occurrences, The independent expert has confirmed that Clancy's results were exceptional in their ability to predict the location of known mineralisation and intrusions, which provides confidence in this probabilistic modelling approach.

$(e)$ Pipeline of Quality Targets

Clancy has already identified a significant number of highly prospective exploration Targets in the Lachlan Fold Belt in NSW and the Mount Read Volcanic Belt in Tasmania. These Targets represent a large bank of quality locations for Clancy's future exploration activities. In addition to the existing Target Bank which Clancy owns and can commercialise through exploration, Clancy has the potential to further access the Geoinformatics Process, which in turn has the potential to deliver additional highly-ranked targets for exploration.

The advantage of any further application of the Geoinformatics Process is that the methodology has been found to be particularly useful for targeting in 'areas of cover' where it can be applied to rapidly determine the tenement-scale prospectivity through careful interpretation of detailed geophysical datasets. The results of this analysis may establish an additional perspective and focus on targets that are "explorable".

Clancy believes that the next big discovery is likely to be under cover and therefore it will be harder to make. Clancy, with the Target Banks already held by it together with its relationship with Geoinformatics, is well positioned to make such a discovery.

3.4 Lachlan Fold Belt Copper-Gold Projects, NSW

$(a)$ Background

GXL Australia initiated work in the Lachlan Fold Belt in 2002, applying the Geoinformatics Process over a vast amount of regional public domain geoscience data that was made available as a result of the Discovery 2000 and other initiatives by the NSW Government and Geoscience Australia. Initial targeting generated Targets at a scale of 1:1,000,000 for porphyry, orogenic gold and VHMS systems. Clancy as part of Geoinformatics, has explored for Ordovician porphyry gold-copper deposits in the Lachlan Fold Belt in NSW, Australia since 2003.

Following the initial targeting, tenement acquisition commenced in May 2003 and was followed by fieldwork and the establishment of a field office in Orange, NSW in July 2004. Over the next year work focused on acquiring, processing, interpreting and integrating higher resolution data, sufficient for targeting at scales of 1:100,000 to 1:250,000.

This work included open-file data assessment and compilation, re-processing and interpretation of regional magnetic, gravity and radiometric datasets, integration of recently published detailed geology, lithogeochemistry and geochronology and detailed deposit case studies. Landholder negotiations, rock chip sampling, mapping and prospect definition continued throughout this period. This work significantly improved Clancy's knowledge and understanding of the fundamental geological controls for porphyry copper-gold systems in the Lachlan Fold Belt.

Probabilistic targeting for Ordovician porphyry copper-gold systems utilizing the higher resolution datasets commenced in May 2005 and was completed in October of that year. The current tenement portfolio consists of 12 exploration licences and 4 exploration licence applications covering 1,643 km² of Ordovician magmatic arc. Significantly, the targeting indicates that the geological environment within each tenement is prospective for porphyry copper-gold deposits.

Clancy's tenement portfolio in NSW is divided amongst 12 project areas. All projects are 100% owned by Clancy but only nine will be funded by proceeds of the Offer. The three remaining projects are governed by joint ventures between Clancy and Gold Fields as described below.

East Lachlan Alliance with Gold Fields

Clancy and Gold Fields formed the East Lachlan Alliance in June 2004 ("East Lachlan Alliance") to identify areas of high prospectivity for the discovery of precious and other metal deposits in a defined area of the eastern Lachlan Fold Belt. Under the terms of the East Lachlan Alliance, Gold Fields committed to fund the first exploration phase, giving it the right to select and then manage high quality targets as separate projects. At the completion of the first phase, Gold Fields contributed further funds to commence first-pass exploration on a number of projects.

The East Lachlan Alliance has been amended to carve out three joint venture projects which have been defined by Gold Fields and Clancy as Gobondery, Cowal East and Wellington North. Gold Fields can earn 80% by spending up to \$5 million over three years on these projects. Clancy is the manager of the joint venture projects. The East Lachlan Alliance has been amended by the parties to provide for the residual terms after the joint venture carve outs and the terms of the Gold Fields"Back in Right" as defined under that Agreement.

Porphyry copper-gold mineralisation in the Macquarie Arc

Porphyry copper-gold mineralisation in the Lachlan Fold Belt is associated with the Macquarie Arc which is a volcanic arc that formed along the east margin of Australia between 480 and 438 million years ago. After formation, the Macquarie Arc was dismembered resulting in the four volcanic belts existing today. Two of the belts, the Junee-Narromine Volcanic Belt and the Molong Volcanic Belt, host economic porphyry copper-gold mineralisation. Two major mines are currently in production in these belts: the Cadia mine in the Molong Volcanic Belt and the Northparkes mine in the Junee-Narromine Volcanic Belt. There are several other early- or pre-resource porphyry projects under evaluation by other parties including Copper Hill and Charlies-Galloway in the Molong Volcanic Belt and Silverstone, Imola, The Dam, Estoril and Marsden in the Junee-Narromine Volcanic Belt.

A number of satellite deposits are mined at Northparkes and Cadia. The porphyry deposits at Cadia, which include the high-grade gold-rich Ridgeway deposit, are world-class, with a combined endowment of $>34$ million ounces of gold and >4 million tonnes of copper. Furthermore, Ridgeway is Australia's most profitable gold mine, with negative production cash costs at current commodity prices. The other major deposit in the region is the Cowal mine in the Junee-Narromine Volcanic Belt. Cowal has an endowment of >4.5 million ounces of gold.

(b) Clancy Projects (non-joint venture)

Clancy has nine projects in the Macquarie Arc that will be funded out of the proceeds of the Offer. Six are in the Junee-Narromine Volcanic Belt: Fairholme, Myall, Goobang, Currumburrama, Billabong Creek and Illabunda; and three are in the Molong Volcaric Belt: Cundumbul, Orange East and Spring Creek.

Gold Fields, under the terms of the amended East Lachlan Alliance retains a claw-back right over these projects. The terms of this claw-back right are detailed in the Solicitor's Report in Section 5.

Figure 2 - Clancy and Clancy JV projects in the Macquarie Arc, NSW

Fairholme EL6552 - Junee-Narromine Volcanic Belt

Fairholme consists of a single exploration licence. EL6552 that is located 20km north of the Cowal gold mine. There is no outcrop within the Fairholme licence. The surface geology consists of Quaternary and Tertiary clay and sand up to 100m thick. Ordovician basement comprises a mixed sequence of basaltic to andesitic volcanic, volcaniclastic and sedimentary rocks that have been intruded by high-K calc-alkaline to shoshonitic intrusive rocks of monzodiorite to granodiorite composition. Enhanced magnetic data suggest the presence of deep intrusive centres beneath Boundary and Dungarvan. The igneous rocks from Fairholme are similar to those from Northparkes, with the latter being intimately associated with economic gold-copper mineralisation.

Previous exploration at Fairholme was focused on three prospects: Boundary, Gateway and Dungarvan, all of which are within EL6552. Clancy identified one highly-ranked target covering the prospects. Previous drilling at these prospects has defined significant widths of copper and gold mineralisation. Vesicular lava and volcaniclastic units host the bulk of the mineralisation at Boundary and Dungarvan, with ragged patches and veins hosting mineralisation at depth. The best intersection was 48m @ 0.60g/t Au, 0.16% Cu. Previous aircore drilling elsewhere in the tenement has identified several basement copper-gold anomalies that have never been followed up.

Clancy has completed 3D modeling of the geology at Boundary. The host rock had previously been described as intrusive latite, however the Clancy work suggests that the main host rock is an epiclastic unit. This interpretation is significant because it implies that the intrusion associated with the Boundary mineralisation and alteration has not been intersected by the previous drilling.

Inversion modeling on ground magnetic data defined a magnetic body, the top of which is 50-70m below surface, extending down to ~450m depth over an inferred strike length of ~850m. The inversion suggests that the magnetic body transgresses stratigraphy and corresponds with zones of elevated disseminated magnetite in the more porous units in drill core, particularly the vesicular andesitic lava. This strongly suggests that magnetite is hydrothermal in origin. It is therefore possible that the source of the hydrothermal mineralisation could be an intrusive that is deeper than 450m vertical.

Figure 4 - Fairholme EL6552, Boundary prospect. Oblique 3D view looking west-southwest showing andesitic stratigraphy (green), Boundary Shear Zone (blue), magnetic inversion model (pink) and drilling (yellow).

Relatively little drilling has been completed at the Dungarvan and Gateway prospects. Significant alteration and low-grade copper-gold mineralisation has been defined at both prospects. Dungarvan is similar to Boundary, however Gateway is quite different. The geology at Gateway is dominated by sheared metasedimentary rocks, with only minor lava and rare intrusive rocks. The metasedimentary sequence is dominated by sericite-rich argillite and phyllite with minor laminated bands of carbonate-quartz-sulphide. Gateway is also zinc-rich. These features are more consistent with a Silurian VHMS system. If this is the case, Gateway is genetically unrelated to Boundary and Dungarvan. Further work is required to evaluate this.

Clancy intends to conduct further modeling work at Boundary to assist with drill targeting, and 3D modeling of the Gateway and Dungarvan prospects will also be undertaken. A trial IP survey is proposed to determine if it can"see" through the overburden and direct detect sulphide halos associated with porphyry mineralisation. If successful, a 3D IP survey covering all three prospects will assist with drill targeting. Assuming a positive outcome from this work, deep diamond drilling will be required. Boundary will be the initial focus, followed by Dungarvan, with Gateway being a lower priority. Follow-up drilling on the untested aircore anomalies will also be undertaken.

Fairholme kilghlights

One highly-ranked Target covering three prospects
B Confirmed Ordovician porphyry copper-gold system
Widespread hydrothermal alteration and low-grade copper-gold mineralisation 圈
-48m @ 0.60o/t Au, 0.16% Cu
-9m @ 0.65g/t Au, 0.25% Cu
II Depth potential at Boundary causative intrusion still to be found
VHMS potential at Gateway
Untested copper-gold anomalies

Myall ELA3042 - Junee-Narromine Volcanic Belt

Myall consists of a single exploration licence application. ELA3042 that is located 50km west of Dubbo and 25km southwest of Narromine. The licence is situated within the Narromine Igneous Complex, one of the many arc fragments that constitute the Junee-Narromine Volcanic Belt. The complex is obscured by deep (often >100m) poorly consolidated Mesozoic sedimentary rocks and unconsolidated Quaternary and Tertiary sediments. The magnetic signature of the complex is similar to that of the Northparkes Igneous Complex, which is situated 52km to the south. Outcrop is sparse to non-existent.

The Ordovician basement geology consists of basaltic and andesitic volcanic and volcaniclastic rocks that have been intruded by large plutons with compositions varying from gabbro or monzogabbro through to quartz-diorite. A later intrusive suite of monzonite, granodiorite and dacite porphyry intrude the plutons. The igneous rocks at Myall have a calc-alkaline to alkaline affinity and are similar to igneous rocks in the Cowal and Northparkes Igneous Complexes.

A substantial amount of drilling was completed by previous explorers, most of which was on three prospects: Kingswood, Monaro and Sandman. Clancy identified two highly-ranked Targets, one of which covers the three prospects and the other is located immediately to the north. Significantly, the two highly-ranked Targets and all three prospects are within Myall ELA3042.

Clancy is currently compiling the extensive previous exploration data. Preliminary data compilation shows that all three prospects are associated with widespread basement copper anomalies (>500ppm copper) that flank, and partially overlap, a prominent magnetic anomaly. The zone of elevated copper comprises a northwesttrending chain of discrete anomalies that extends over a strike length of 13.5km with a maximum width of 3km at +500ppm copper. Large areas within discrete anomalies are +1000ppm copper, typified by Kingswood where the $+1000$ ppm copper zone extends over $2.5 \times 1.5$ km. The size and magnitude of the copper dispersion halos are significant and are on a par with those from the Northparkes mining centre.

Figure 5 - Myall ELA3042 Bouguer gravity showing copper anomalies >500ppm, drill hole intercepts >0.1g/t Au and the relationship between the gravity low and annular magnetic anomaly.

Highlights from the previous drilling at Kingswood include a 37.5m drilled width of sheeted quartzmagnetite veining with associated chalcopyrite and bornite with peak values of 1.7g/t Au, 0.5% Cu. Large widths of copper-gold mineralisation have been intersected by previous drilling; e.g. 107m @ 0.11g/t Au and 0.43% Cu, including 18m @ 0.29g/t Au and 0.93% Cu.

The Narromine Igneous Complex has a similar gravity and magnetic response as the well mineralised Northparkes Igneous Complex. Both complexes are characterised by prominent circular to ovoid gravity lows with coincident annular magnetic anomalies. At Northparkes the main deposits are situated on the margin of magnetic highs within the annular low. There are numerous similar targets within the annular low at Myall, most of which remain untested.

Figure 6 - Comparison of the gravity and magnetic responses in: A - Bouguer gravity image from the Northparkes Igneous Complex; and B – Bouguer gravity image from the Narromine Igneous Complex. Both figures are the same scale

The drill intercepts combined with the presence of extensive porphyry-style alteration and veining, the fractionated intrusive suite, the bornite and chalcopyrite abundance and the large geochemical dispersion halos, suggests that a substantial porphyry system may exist at Myall. Furthermore, the scale and geometry of these features at Myall is comparable to Northparkes, an observation that is reinforced by the geophysical similarity between the two areas.

There is a substantial amount of previous geological, geochemical, drilling and geophysical data covering Myall. The immediate priority of Clancy will be to compile and validate these data. This will enable Clancy to run 3D inversions on magnetic data for 3D geological modeling and targeting. Clancy intends to have as much of this work completed as possible during the application phase, which will enable fieldwork to commence as soon as the title is granted. Fieldwork will consist of a 3D IP survey to generate targets for follow-up diamond drilling. Aircore drilling to follow-up the numerous other untested drill targets within ELA3042 is also planned.

Myall Highlights

We highly-ranked Targets, one covering three advanced prospects
Confirmed Ordovician porphyry copper-gold system
Widespread geochemical dispersion halos, extensive hydrothermal alteration and significant drill widths of copper-gold mineralisation
107m @ 0.11g/t Au, 0.43% Cu, including
-18m @ 0.29g/t Au 0.93% Cu
B Geophysical and geochemical resemblance to Northparkes
Large parts of Target areas untested
Numerous defined copper-gold anomalies that require follow-up

Goobang EL6537 - Junee-Narromine Volcanic Belt

Goobang is a single exploration licence. EL6537 that is located approximately 20km south of the Northparkes copper-gold mine. Outcrop is minimal with surface geology dominated by Quaternary and Tertiary clay, alluvium and gravel up to 75m thick. The basement geology is dominated by the Early Ordovician Nelungaloo Volcanics which form a distinctive teardrop shaped dome that is evident in the magnetic data. The dome is the core of the northeast-trending Forbes Anticline and forms a structural high with younger carbonate units flanking the dome to the south and west. Several intrusive complexes have been interpreted within the core of the Forbes Anticline, some of which have been confirmed by mapping and by previous exploration drilling. Previous sampling of these intrusions suggests they have a medium- to high-K calc-alkaline affinity, which is consistent with the dominantly calc-alkaline Early Ordovician magmatic event noted elsewhere in the Macquarie Arc.

Relatively little work has been completed at Goobang, which is surprising given its location. Clancy generated several Targets in the area, including one highly-ranked target which are secured by EL6537. The highestranked Target is in the north of the tenement where intrusive complexes in the core of the Forbes Anticline were predicted beneath Quaternary cover units. Clancy drilled 55 broad-spaced reconnaissance aircore holes (3,284m) on a nominal 500m spacing, covering approximately 60% of the target area to obtain basement geochemical data.

Ordovician basement is within 75m of the surface and the main basement rock type is magnetite-hematiteepidote ± K-feldspar altered volcaniclastic sandstone. One hole intersected a fractionated, brecciated and epidotealtered monzonite, that bottomed in a magnetite-hematite-epidote altered volcaniclastic sandstone with fine epidote-quartz veins with a pink (hematite or K-feldspar) selvage. Minor amounts of fine grained disseminated pyrite and lesser chalcopyrite were also noted. The contact between the monzonite and volcaniclastic is faulted, suggesting that there is some fault displaced potential. Another hole intersected volcaniclastic sandstone, with $~1\%$ sericite, $~1\%$ pyrite and minor quartz veins, some of which contained molybdenite. These results are very encouraging given that the predicted Ordovician intrusive has been confirmed in the best part of the target area, and it is associated with sulphide, veining and favourable alteration.

The results show elevated basement copper anomalism in several holes. Two zones are emerging: one around the fractionated monzonite, where seven adjacent holes have copper ranging from 326 to 496ppm. This zone is open to the northwest and covers an area of approximately $2 \times 1.3$ km. It also has the highest gold value returned so far of 0.11g/t. Another anomalous zone is situated in the southeast of the drilled grid, and is open in that direction, where three adjacent holes have maximum copper of 324, 448 and 542ppm. Most anomalous holes are situated within magnetic lows on the flanks of magnetic highs. Assessment of the multielement data in conjunction with spectral measurements on the aircore chips is required to place these results into context. Further aircore drilling is required to close off the anomalies and a 3D IP survey is recommended before follow up RC and/or diamond drilling.

Figure 7 - Goobang EL6537 showing residual reduced to pole aeromagnetic image and aircore drilling completed by Clancy and the anomalous copper zones defined to date. Holes with >400ppm copper and >0.1 g/t gold are labeled.

Goobang Highlights

One highly-ranked Target confirmed by Clancy aircore drilling
Encouraging alteration in country rocks
Fractionated, brecciated and altered monzonite identified
Sulphide and quartz veins identified
Two open copper-gold aircore anomalies

Early-stage projects in the Junee-Narromine Volcanic Belt - Currumburrama ELA2916, Billabong Creek ELA3007 and Illabunda EL6535

Clancy has three other projects in the Junee-Narromine Volcanic Belt that will be funded out of the proceeds of the Offer: Currumburrama, Billabong Creek and Illabunda. In contrast to Fairholme, Myall and Goobang, these projects are early-stage and have had very little, if any, work completed on them in the past. This presents Clancy with an exciting opportunity, because all three projects have highly-ranked Targets in areas of moderate to deep cover.

Currumburrama is located 40km east of West Wyalong and 7.5km north of the Silverstone-Imola porphyry copper-gold project. Drilling at the latter has identified a fractionated and highly altered alkaline monzodiorite to monzonite intrusive complex with significant mineralisation; e.g. 96m @ 0.7g/t Au and 74m @ 0.15% Cu. Clancy is targeting this style of mineralisation at Currumburrama, in an area with hardly any previous drilling. There is no outcrop at Currumburrama.

Billabong Creek is located 40km east of Wagga Wagga and is situated within a thickened section of the arc alongside the regionally extensive Gilmore Fault. Outcrop is confined to scattered small exposures on low hills with most of the area covered by Quaternary alluvium and clay. Clancy believes that the arc thickening is due to Ordovician intrusive activity, similar to the Gidginbung - Temora area to the northwest. Previous exploration identified copper mineralisation in monzonite with rock-chip sampling returning up to 2% copper in weathered monzonite. Scout drilling in the south of the licence by a previous explorer intersected 2m @ 0.15% Cu, 0.04g/t Au and 80ppm Mo in monzonite. The small amount of work completed to date has confirmed the targeting premise and suggests Billabong Creek remains prospective for porphyry copper-gold mineralisation.

Illabunda is located 45km north of Nyngan, where the Macquarie Arc extends at depth beneath the Mesozoic Great Australian Basin. The basin is prohibitively deep in most areas, however depth to basement modeling completed by Clancy has identified several basement highs where the Macquarie Arc is predicted to be within 200m of the surface. The targeting identified which of the basement highs are prospective for porphyry-style mineralisation and Illabunda is one of these. There has been no previous work at Illabunda.

Proposed work on the early-stage projects will include reconnaissance aircore drilling at Currumburrama and Billabong Creek, with magnetic and IP surveys also planned at the latter. The strategy at Illabunda will be to drill two or three scout RC holes over the target to validate the basement depth. If the basement rocks offer sufficient encouragement, follow-up RC drilling will also be undertaken.

Currumburrama, Billabong Creek and Illabunda Highlights Current

Several highly-ranked Targets in covered areas
Little or no previous exploration
Monzonite with copper mineralisation at Billabong Creek 酶

Molong Volcanic Belt projects – Cundumbul, Orange East and Spring Creek

Clancy has three projects in the Molong Volcanic Belt that will be funded out of the proceeds of the Offer. Cundumbul, Orange East and Spring Creek. Cundumbul and Orange East have reasonably good outcrop, but have been subjected to surprisingly little modern exploration, especially drilling. In contrast, Spring Creek has no outcrop and has never been explored. All three projects contain highly-ranked targets.

Cundumbul EL6661 and ELA3026

Cundumbul consists of one exploration licence and one exploration licence application covering 22km strike length of the Molong Volcanic Belt between Molong and Wellington. The project is situated 22km north of the Copper Hill porphyry copper-gold project. The dominant arc units in this area are the Fairbridge Volcanics and Oakdale Formation, both of which contain andesitic and shoshonitic lavas with high-level intrusives.

Clancy identified two Targets in the project area, one highly-ranked in the north and another lower-ranked Target in the south. Mapping, rock-chip sampling and lithogeochemical sampling by Clancy and previous explorers has confirmed the presence of intrusive complexes at the Mehruda, Owens and Bakers Swamp prospects within the northern target, and at the Finches Flat, Lyons and Bellevue prospects within the southern Target. All prospects have some copper and/or gold associated with them, and most are associated with monzonite or monzonite porphyry. At Bellevue, weakly porphyritic quartz monzodiorite to granodiorite dykes and intermediate feldspar-porphyry dykes are the main intrusive phases.

Clancy plans to focus on the highly-ranked northern Target, where relatively little work has been completed in the past. Detailed mapping, soil and rock-chip sampling and lithogeochemical and petrological studies are planned, followed by RC and/or diamond drilling of defined targets.

ΣJ

Orange East EL6181

The Orange East project consists of a single exploration licence EL6181, on the eastern outskirts of the City of Orange. The main arc units within EL6181 are the Upper Blayney Volcanics, Byng Volcanics and Oakdale Formation. The Upper Blayney Volcanics consist of shoshonitic lavas and coarse lava breccias. The Byng Volcanics consist of basaltic flows and basalt to basaltic andesite, volcaniclastic sandstone, and mass flows. Ultramafic cumulates preferentially intrude the Byng Volcanics. In this section of the arc the Oakdale Formation consists of mafic to intermediate lava, cherty and volcaniclastic siltstone and sandstone.

Clancy identified one highly-ranked Target which covers a large (6km x 2km) Late Ordovician monzonite complex in the central part of the tenement near the Suma Park Reservoir. The complex has compositions ranging from syenite to monzonite, through to monzodiorite and monzogabbro. Modeling completed by Clancy suggests the monzonite complex is at least twice the size of its exposed portion, and the available lithogeochemistry confirm that it is shoshonitic. The multiphase composition of the complex is also encouraging as it suggests that it was associated with a long lived and fractionating magmatic system. At a quarry within the complex east of Orange, pink monzonite is bleached by narrow sheeted quartz veins with some accompanying pyrite. This style of alteration is reminiscent of the host monzonite at the Cadia gold-copper mine.

Only a minor amount of drilling has been completed within EL6181, which is surprising given the favourable Ordovician intrusive rocks exposed in outcrop. Previous explorers drilled shallow aircore holes across the Godolphin Fault north of Carangera, and shallow RC holes into the monzonite complex east of Suma Park Reservoir. The deepest hole from this work was 57m with most hole depths less than 10m, and this very shallow depth extent may not have effectively tested the area. The best result from these drilling programs was 6m @ 1.02% Cu from the aircore drilling.

Recent work by another explorer at the McPhillamy's prospect about 15km south of EL6181, identified significant gold mineralisation from surface in Silurian rocks with intercepts such as 123m at 1.96gpt Au from surface, including higher-grade intervals of 28m at 3.83g/t Au and 10m at 4.93g/t Au. The mineralisation at McPhillamy's is structurally controlled gold, possibly a sheared Volcanic Hosted Massive Sulphide ("VHMS") system within the Silurian Anson Formation. The Anson Formation consists of pyritic volcanic and volcaniclastic rocks adjacent to the Godolphin Fault. The Godolphin Fault extends north of McPhillamy's and bisects the southern part of the Orange East tenement, where the Anson Formation is also present in a thrust wedge between the Lucknow and Godolphin Faults. The structural settings are similar, suggesting that there may be some potential for this style of mineralisation within EL6181.

Proposed work will include detailed prospect-scale mapping to quantify alteration intensity and vein and fracture densities over the monzonite complex, and auger soil sampling for Silurian gold mineralisation in the south. Follow up diamond and/or RC drilling of defined targets is also planned.

Figure 8 - Location of Clancy tenements and projects in the Molong Volcanic Belt with examples of the porphyry-style rocks exposed in outcrop at the Wellington North JV, Cundumbul and Orange East projects.

Spring Creek EL6536

The Spring Creek project consists of a single exploration licence EL6536, which is located 45km northeast of Dubbo. The licence covers about 10km of strike length on the northern end of the Molong Volcanic Belt where it extends beneath the Mesozoic Great Australian Basin. There is no outcrop within the tenement and there has been no previous mineral exploration in the area. Clancy identified one highly-ranked target associated with a predicted basement high. The basement high is inferred to bring arc-related stratigraphy to within 150m of surface. Clancy proposes to drill 2 or 3 RC holes to validate depth to basement, and if the results are sufficiently encouraging, follow up drilling will be undertaken.

Molong Volcanic Belt Projects Highlights

Numerous highly-ranked Targets with little previous exploration
Confirmed intrusive complexes with associated copper and gold mineralisation at Cundumbul
1 Large fractionated monzonite complex at Orange East with Cadia-style alteration
Potential for Silurian structurally-controlled gold mineralisation at Orange East

$(c)$ Clancy - Gold Fields Joint Venture Projects

Clancy and Gold Fields have formed joint ventures on three project areas: Wellington North in the Molong Volcanic Belt, and Cowal East and Gobondery in the Junee-Narromine Volcanic Belt. These projects are managed by Clancy and are currently being funded by Gold Fields which can earn an 80% interest.

The Targets on the joint venture projects were generated using the same methodology as for the other Clancy projects.

At Wellington North potassic-altered andesites and epiclastics, and hornblende-quartz monzodiorites of Ordovician age have been identified within a large basement magnetic complex. Minor copper and anomalous gold mineralisation, is associated with this complex and previous exploration did not define the lateral or depth extents to this system. At Cowal East significant gold and copper anomalism has been identified by previous broad-spaced aircore drilling, which is associated with basement Ordovician intrusive and volcanic rocks. The broad spacing and significant gaps in the previous drill coverage require additional reconnaissance exploration prior to definition of deeper RC and diamond drill targets. Drilling completed by Clancy at Gobondery has demonstrated a significant copper anomaly associated with Ordovician intrusive and volcanic rocks which remains open to the east. Refer to Section 3.3 of the Independent Technical Assessment for further details on the Gold Fields Joint Venture projects.

Figure 9 - Clancy Exploration Limited project pipeline in NSW.

3.5 Mount Read Volcanic Belt Projects, Tasmania

$(a)$ Background

The Mount Read Volcanic Belt projects were initiated in 2004 with the release by Mineral Resources Tasmania of a 3D geodynamic model of Tasmania to encourage mineral exploration. Geoinformatics completed a targeting exercise in late 2003 leading to submission of tenement applications in 2004. In 2005 an alliance was formed with Resource Finance & Investments Ltd ("RFI"), whereby Geoinfomatics received RFI shares for entering into joint ventures on its tenements and Geoinformatics provided RFI with target generation expertise. RFI listed on the ASX in August 2005 and changed its name to Bass Metals Limited shortly thereafter. Bass Metals will retain a 75% interest in the Tasmanian tenements by sole funding exploration to pre-feasibility status. The Tasmanian tenements are held jointly by Bass Metals and GXL Tasmania. GXL Tasmania is wholly owned by Clancy.

GXL Australia subsequently completed probabilistic targeting work on behalf of the joint venture with Bass Metals for VHMS systems, intrusive-related systems and orogenic gold systems in northwest Tasmania. The targeting has generated numerous highly-ranked Targets on the tenement portfolio which are currently being explored by Bass Metals and which will advance Clancy's interest in the Mount Read Volcanic Belt projects.

(b) Mount Read Volcanic Belt Project Overview

The Mount Read Volcanic Belt tenement portfolio consists of 12 exploration licences covering a total area of 732 km² in seven project areas: North Rosebery, Leven River-Loyetea, Lynchford, Highclere, Waratah, Oonah and Whyte River Projects (as detailed in the Independent Technical Assessment).

The Cambrian Mount ReadVolcanic Belt is a 200 x 20km north-northeast trending belt of calc-alkaline volcanic and volcaniclastic rocks. Dolerite, quartz-feldspar porphyry and large Devonian granite batholiths intrude the Mount Read Volcanics. Several major regional faults including the Henty, Great Lyell and Rosebery Faults, control the geometry of the belt.

57.

The Mount Read Volcanic Belt is prolifically mineralised, hosting several significant VHMS base metal deposits including Mt Lyell, Rosebery, Que River and Hellyer, intrusive-related tin deposits including, Renison and Mt Bischoff, the recently discovered Avebury intrusive-related nickel sulphide deposit, and the Henty gold deposit. Clancy has targeted all of these deposit styles in its tenement portfolio which are currently being explored by Bass Metals. Clancy's continuing relationship with Bass Metals has the potential to provide a pipeline of new opportunities and projects for both companies. For a full description of the Mount Read Volcanic Belt projects refer to the Independent Technical Assessment in Section 4.

Figure 10 - Location of Clancy / Bass JV tenements and other Bass tenements in northwest Tasmania and inset the location within Tasmania

$3.6$ Investments in Bass Metals Securities

$(a)$ Share and Option Holdings in Bass Metals

Clancy holds 911,250 fully paid ordinary shares in ASX-listed Bass Metals (ASX Code "BSM"). 300,000 Bass Metals Shares are subject to a voluntary restriction agreement which prevents their transfer until 24 October 2007.

Clancy also holds 250,000 unlisted options to each acquire one Bass Metals Share at any time up to 31 December 2007 by paying an exercise price of 25 cents ("Bass Metals Unlisted Options"). The Bass Metals Unlisted Options are not quoted and there is no active market for them. Bass Metals Shares issued upon exercise of the Bass Metals Unlisted Options will be subject to a restriction preventing any transfer for a period of 12 months from the date of exercise.

Additionally Clancy holds 56,250 listed options to each acquire one Bass Metals Share at any time up to 30 April 2010 by paving an exercise price of 40 cents ("Bass Metals Listed Options"). These options are quoted on ASX (ASX Code: BSMOA).

(b) Summary

Clancy recently acquired the Bass Metals Shares and the Bass Metals Options from GXL Australia in return for Shares in Clancy. GXL Australia acquired 900,000 of the Bass Metals Shares and the Bass Metals Unlisted Options pursuant to the strategic alliance agreement with Bass Metals over the Mount Read Volcanic Belt in Tasmania, located over Targets generated by GXL Australia and targeting work carried out on the Bass Metals Hellyer and Que River tenements.

Bass Metals is focused on base metals exploration in Tasmania. It has recently commenced a trial mining program at its Que River Development. It has also identified several high grade copper and base metals targets in close proximity to the mined-out Hellyer base metal deposit.

Set out below is the latest available closing price of Bass Metals Shares and Bass Metals Listed Options as at the date of this Prospectus and the highest and lowest closing sales prices on ASX during the three months immediately preceding the date of this Prospectus and the respective dates of those sales.

				Shares (BSM) Date Options (BSMOA) Date
	Last Closing Sale Price (1999) 2000	\$0.42	18 May 2007	SO 17 18 May 2007
Highest Closing Sale Price		\$0.42	18 May 2007	SO 175 8 May 2007
Lowest Closing Sale Price		\$0.275	10 Amii 2007 -	26 April 2007 ା

Historical performance of the share price of listed companies should not be considered to be indicative of future sales prices. The Bass Metals Shares and Bass Metals Options are subject to many of the same risks to which Clancy is subject. There can be no guarantee that the value of the Bass Metals Shares and Bass Metals Options will not decrease or in fact they may become worthless.

INDEPENDENT TECHNICAL ASSESSMENT $\boldsymbol{4}$

Independent Technical Assessment

16 May 2007 The Directors Clancy Exploration Limited c/o Geoinformatics Exploration 57 Havelock Street West Perth WA 6005 Australia

Dear Directors

SRK Consulting ("SRK") has been commissioned by Clancy Exploration Limited ("Clancy") to provide an Independent Technical Assessment on mineral exploration tenements located in the Lachlan Fold Belt of New South Wales and in the Mount Read Volcanic Belt of northwest Tasmania. Clancy is ultimately a wholly owned subsidiary of Geoinformatics Exploration Inc ("Geoinformatics") that has been listed on the Toronto Stock Exchange Venture Exchange since February 2005. This Independent Technical Assessment is to be included in a Prospectus to be lodged with the Australian Securities and Investments Commission ("ASIC") on or about 31 May, 2007. The Prospectus will offer 25,000,000 Shares at an issue price of \$0.20 per Share (the "Prospectus"), to raise \$5,000,000 with a minimum subscription of \$3.5 million.

Reporting Standard

This Report has been prepared to the standard of, and is considered by SRK to be, a Technical Assessment Report under the guidelines of the VALMIN Code. The VALMIN Code is the code adopted by the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG), and the standard is binding upon all AusIMM and AIG members. This Report is not a Valuation Report and does not express an opinion as to the value of mineral assets or tenements involved, nor to the 'fairness and reasonableness' of any transactions between Clancy and any other parties.

SRK Independence

Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK. SRK has no prior association with Clancy in regard to the mineral tenements that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence. SRK's fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

Information basis of this report

SRK has derived the technical information which forms the basis of its assessment on information provided by Clancy. SRK has supplemented this information where necessary with information from its own extensive regional geological database. However, where discrepancies arise and no alternative comments are provided, data and interpretations provided by Clancy prevail in this Report. The past exploration history for these tenements has been derived from previous explorers reports, as provided by Clancy and the government exploration database systems of New South Wales. SRK has not conducted its own independent searches.

SRK and Authors

SRK is an international mining industry consulting company that has been providing services and high-level technical and financial advice to the mining industry since 1975. SRK has fully staffed independent offices in all major mining centres of the world. This report was compiled by Ms Deborah Lord and Dr Louis A. Bucci, both Senior Consultant Geologists with SRK Australasia, and review by Dr Paul F. Hodkiewicz and Mr Peter Gleeson, both Principal Geologists of SRK Australasia.

ΣJ

Ms Deborah Lord has 17 years international exploration experience that ranges from conceptual targeting to advanced stage exploration management in a variety of geological terranes. Her recent experience has focussed on developing concepts of risk and value in mineral exploration and the application of these principles in due diligence, valuation and independent technical reporting. Deborah's background is in the development of exploration models, integration of multi-disciplinary datasets and target generation.

Dr Louis Bucci has over eight years international commercial and academic experience, with an emphasis on investigating mineralised hydrothermal systems. His recent experience has been in the areas of geological due diligence, fatal flaw and project analysis, as well as targeting at the regional and terrane scale. Louis has extensive experience in the provision of Independent Technical Assessments (ITA) and Competent Persons Reports (CPR) for Initial Public Offerings (IPO) and other documents on the Australian Stock Exchange (ASX), Hong Kong Stock Exchange (HKSE) and Alternative Investment Market (AIM).

Dr Paul Hodkiewicz has over fifteen years of experience in mining and exploration geology, and has worked on a variety of commodities and deposit styles. Paul has completed numerous ITA's and CPR's for Initial Public Offerings (IPO) and other documents on the Australian Stock Exchange (ASX) and the Toronto Stock Exchange (TSX).

Mr Peter Gleeson has over twenty years international experience in both exploration and production geology roles. His expertise involves the use of mining / geological modelling software packages to produce three dimensional geological models and interpretation to facilitate exploration and the evaluation of mineral deposits. Peter's background in resource estimation, project evaluations and three dimensional modelling studies is complemented by experience in mine feasibility, mine planning and expansion studies, as well as audits. Peter was previously employed by Geoinformatics and was involved in exploration targeting studies of northwest Tasmania and around Bullfinch in Western Australia. While Peter has carried out peer review on these projects for SRK, he has no beneficial interest in the Commissioning Entity or outcome of this Technical Assessment.

Drs Bucci and Hodkiewicz, Ms Lord and Mr Gleeson are considered competent persons with regards to the evaluation of Cu-Au exploration projects. Ms Lord is considered a specialist in the evaluation of exploration risk.

Warranties and Indemnities

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

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

which results from SRK's reliance on information provided by Clancy or to Clancy not providing material information, or:
which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

Consents

SRK consents to this Report being included, in full, in the Clancy Prospectus, in the form and context in which the technical assessment is provided, and not for any other purpose, and that such consent has not be withdrawn before lodgement of the Prospectus with the ASIC.

SRK provides this consent on the basis that the technical assessments expressed in the Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report and the Cover Letter.

Yours faithfully SRK Consulting

Deborah Lord BSc (Hons), MAIG, MGSA, MSEG Senior Consultant (Geology)

	Disclaimer
1	Summary
1.1	Note on Tenement Status and Material Contracts
2	East Lachlan Alliance
2.1	Geological and Metallogenic Setting of the Lachlan Fold Belt
$2.2^{\circ}$	Porphyry Cu-Au Deposits - Alkaline and Calc-Alkaline Systems
	2.2.1 The Generalised Porphyry Model
	2.2.2 Key Characteristics of Alkaline & Calc-Alkaline Porphyry Systems
$2.3 -$	East Lachlan Exploration Targeting and Ground Selection Criteria
	2.3.1 Probability based targeting
	2.3.2 Porphyry model components
	2.3.3 Targeting results and ground selection
2.4	East Lachlan Exploration Tenements Introduction and Background 2.4.1 -
	2.4.2 Access
	2.4.3 Total Statutory Commitments
3.	East Lachlan Project Descriptions
	3.1 Geological Setting
	3.1.1 Molong Volcanic Belt Geology
	3.1.2 Junee-Narromine Volcanic Belt Geology
3.2	Clancy Project Descriptions
	3.2.1 Fairholme
	3.2.2 Myall
	3.2.3 Goobang
	3.2.4 Cundumbul
	3.2.5 Orange East
	Spring Creek 3.2.6
	Illabunda 3.2.7
	3.2.8 Currumburrama
	3.2.9 Billabong Creek
3.3 ₁	Joint Venture Project Descriptions 3.3.1 Wellington North JV
	3.3.2 Cowal East JV
	3.3 Gobondery JV
3.4	Budget Summary for East Lachlan Project Areas
3.5	Clancy's Exploration Strategy for Porphyry Cu-Au Deposits in the East Lachlan Project
4	Northwest Tasmania Joint Venture
4.1	Geological and Metallogenic Setting of northwest Tasmania
	4.2 Volcanic Hosted Massive Sulphide (VHMS) deposits
	4.2.1 The generalised VHMS model
	4.2.2 Key characteristics of VHMS, intrusion-related tin and nickel skarn systems
4.3	Northwest Tasmania Exploration Targeting and Ground Selection Criteria
	Probability based targeting 4.3.1
	VHMS (and other) model components 4.3.2
	Targeting results and ground selection 4.3.3
4.4	Northwest Tasmania Exploration Tenements (Bass JV) Bass JV Tenement Details
	4.4.1 Northwest Tasmania Project Descriptions
5. 5.1.	Joint Venture Project Descriptions
	5.1.1 North Rosebery Project
	5.1.2 Leven River - Loyetea Project
	5.1.3 Lynchford Project
	5.1.4 Waratah Project
	5.1.5 Highclere Project
	5.1.6 Oonah Project
	5.1.7 Whyte River Project
5.2	Clancy's Exploration Strategy for VHMS Deposits in northwest Tasmania
6	Conclusions
7	References ………………………………………………………………………………………………
8	Glossary

List of Tables

Table 1: Significant Gold and Copper Mines / Projects in the Macquarie Arc
Table 2: Some key features of Alkalic and calc-alkaline porphyry systems
Table 3: Clancy tenement schedule and expenditure commitments in the Lachlan Fold Belt
Table 4: Exploration budget summary 100% Clancy Projects for minimum subscription of \$3.5M
Table 5: Exploration budget summary 100% Clancy Projects for maximum subscription of \$5.0M
Table 6: Exploration budget summary Gold Fields JV projects
Table 7: Major VHMS and Intrusion related deposits in northwest Tasmania
Table 8: Summary of the characteristic features of various styles of mineralisation present in and potentially
applicable to northwest Tasmania (after Core et al, 2006)
Table 9: Clancy - Bass JV tenement schedule in northwest Tasmania.

List of Figures

Figure 1: Location of Clancy tenements in the Ordovician Macquarie Arc, NSW
Figure 2: East Lachlan interpreted Ordovician geology and structure showing the volcanic belts of the Macquarie Arc
and the adjacent continental turbidite terranes. (Figure from Barnes and Ward, 2007)
Figure 3: Schematic model of alkalic (A), and high-K calc-alkalic (B) porphyry Au-Cu deposits. 40
Figure 4: Generalised spatial relationship of alteration assemblages associated with porphyry deposits. 41
Figure 5: Geology of the Molong Volcanic Belt showing the location of Clancy Projects. The Wellington North JV
Project is highlighted in the blue box.
Figure 6: Geology of the central and northern parts of the Junee-Narromine Volcanic Belt showing the location of
Clancy Projects. JV Projects are highlighted with surrounding blue boxes.
Figure 7: Fairholme Igneous Complex interpreted geology and RTP magnetics
Figure 8: Schematic section looking west illustrating the relationships between mineralisation, structure and the
plume of hydrothermal magnetite at Boundary.
Figure 9: Myall ELA3042 summary of previous drilling results and RTP magnetics
Figure 10: Goobang EL6537 interpreted geology, RTP magnetics and targets.
Figure 11: Cundumbul tenements, Ordovician geology, targets and aeromagnetic imagery
Figure 12: Orange East EL6181 tenement, Ordovician geology, target and aeromagnetic imagery 63
Figure 13: Spring Creek EL6536 A-Class target LFB054.
Figure 14: Illabunda EL6535 interpreted arc location, RTP magnetics and target
Figure 15: Currumburrama ELA2916 interpreted geology, RTP magnetics and target
Figure 17: Wellington North tenements, Ordovician geology and aeromagnetic imagery
Figure 18: Wellington North A-Class targets LFB052, LFB053 and LFB119
Figure 19: Ordovician geology within the Koobah and Wyrra tenements
Figure 20: Gobondery interpreted geology, mineral occurrences, RTP magnetics and targets
Figure 21: Location of Clancy and Bass tenements in the Mount Read Volcanic Belt in northwestern Tasmania
showing geology, structure and major mines
Figure 22: Schematic diagram of a VHMS deposit (after Lydon 1984)

Disclaimer

The opinions expressed in this report have been based on the information supplied to Steffen Robertson & Kirsten (Australasia) Pty Ltd ("SRK") by Clancy Exploration Limited ("Clancy"). The opinions in this report are provided in response to a specific request from Clancy to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them.

$\mathbf{1}$ Summary

Clancy Exploration Limited ("Clancy") is ultimately a wholly owned subsidiary of Geoinformatics Exploration Inc ("Geoinformatics") that has been listed on the Toronto Stock Exchange since February 2005. In assembling the current portfolio Clancy in conjunction with Geoinformatics, has utilised innovative targeting and ground selection criteria to generate exploration targets, a methodology that has attracted a number of partners, both from junior and major exploration houses. This strategy of forming alliances with various industry partners offers Clancy exposure to a large portfolio of exploration tenements located in two key mineralised provinces in Australia.

Clancy has a substantial ground position via a strategic alliance with Gold Fields Australasia Pty Ltd ("Gold Fields") in the Lachlan Fold Belt (LFB) of New South Wales. Clancy is also participating in joint venture (JV) projects with Bass Metals Limited ("Bass") in northwest Tasmania.

The Lachlan Fold Belt portfolio currently contains 12 Exploration Licences (ELs), and four Exploration Licence Applications (ELAs) totalling 1643 km² of Ordovician magmatic arc rocks prospective for porphyry Cu-Au deposits. Of this some 1158 km² comprising six ELs and four ELAs represent 100% Clancy tenements, with Gold Fields earning an 80% interest by spending a total of \$5M on three project areas which constitute the remainder of the leases.

The tenement package in Tasmania in JV with Bass comprises twelve ELs totalling 732 km² which was assembled via a series of targeting sessions focussing on the Volcanic Hosted Massive Sulphide (VHMS) systems, intrusionrelated tin systems and nickel skarn systems. In addition, Clancy currently has a shareholding in Bass of 911,250 shares and 306,250 options with the potential for this shareholding to increase if a significant (>500,000 oz Au equivalent) discovery is made. The Bass shareholding and bonus share systems includes the above mentioned JV tenements as well as Bass 100% owned leases and JV arrangements that Bass has entered into with Adamus Resources and Pioneer Nickel in Tasmania.

Clancy intends to list on the Australian Stock Exchange ("ASX") upon a successful capital raising. The purpose of this Report is to provide an Independent Technical Assessment for inclusion in a Prospectus to raise up to \$5,000,000 with funds directed primarily towards assessment of the 100% Clancy owned leases of the Lachlan Fold Belt. This Report focuses on these 100% lease areas, but considerable discussion of joint venture leases is also included to provide the investor with an understanding of the breadth of exploration exposure Clancy has through a diverse range of geological settings.

The mineral tenements secured by and held in JV with Clancy are considered to be"exploration projects", which are inherently of a speculative nature. Nevertheless, Clancy has and will acquire the mineral tenements on the basis of sound geological concepts and technical merit. Each is considered to be prospective to varying degrees for copper, gold, base metals and nickel. In SRK's opinion further exploration is justified at the budgetary levels proposed by Clancy.

Clancy has proposed exploration programs and budgets that are in accordance with the perceived prospectivity and in balance with the funds to be raised. Note that this document generally reports the exploration budgets with regard to a maximum \$5,000,000 listing. In the event of the minimum subscription, the exploration budgets will be decreased commensurately. SRK has been provided with both sets of budget figures which are included within this Report. In SRK's opinion, Clancy's budgets are reasonable and sufficient to meet the anticipated combined minimum annual statutory expenditure requirements on the 100% Clancy-owned Lachlan Fold Belt tenements. All work programs and budgets are subject to initial results and budgets may be diverted to more prospective projects as warranted. The principals of Clancy are technically qualified to manage the proposed exploration programs and plan further work depending on the results of the first phases of exploration in each area.

$1.1$ Note on Tenement Status and Material Contracts

The current ownership status and legal standing of the tenements within each project area is dealt with in the Independent Solicitor's Report on mining tenements within this Prospectus. SRK has not independently verified ownership and the current standing of the tenements and is not qualified to make legal representations in this regard. Instead we have relied on information provided by Clancy. SRK has prepared this Report on the understanding that all Clancy's tenements are currently in good standing and that there is no cause to doubt the eventual granting of any tenement applications. SRK has not attempted to establish the legal status of tenements within each project area with respect to Native Title or potential environmental and access restrictions.

As well as a number of Joint Venture agreements and / or strategic alliances, a minor component of Clancy's current assets comprise shareholdings in other companies. Again, SRK is not qualified to make legal representations in this regard. For more detailed information relating to the agreements with Gold Fields and Bass, the reader is referred to the Material Contracts section of this Prospectus.

$\overline{2}$ East Lachlan Alliance

$2.1$ Geological and Metallogenic Setting of the Lachlan Fold Belt

The Lachlan Fold Belt portfolio in partnership with Gold Fields comprises 12 Exploration Licences (ELs), and four Exploration Licence Application (ELAs) totalling 1643 km² of Ordovician magmatic are rocks which are prospective for porphyry gold-copper deposits (Figure 1 and Table 3).

The Lachlan Fold Belt is a Paleozoic (490-340 Ma) turbidite-dominated province that forms part of the composite Paleozoic Tasman Orogen along the eastern margin of Australia (Gray and Foster, 2004). The majority of the exposed portion of the Lachlan Fold Belt is located in NSW and central and western Victoria, but it can also be traced on regional geophysical datasets under younger sedimentary basins north into Queensland and as far south as Tasmania. The Lachlan Fold Belt can be divided into three structural domains referred to as the West Lachlan (western Victoria), Central Lachlan (central Victoria and NSW) and East Lachlan (central NSW). Each structural domain has a distinct metallogenic association, the most significant being the Ordovician (490-443 Ma) to Devonian (418-362 Ma) turbidite-hosted orogenic lode gold mineralisation in Victoria (West Lachlan), and the Ordovician porphyry gold-copper mineralisation (East Lachlan). The focus of Clancy's exploration is the Ordovician porphyry gold-copper mineralisation.

The East Lachlan is a composite terrane with Ordovician turbidites and arc volcanics tectonically interleaved in broad north-south belts separated by Silurian (443-418 Ma) and Devonian rift basins (Figure 2). The entire sequence is intruded by Silurian, Devonian and Carboniferous (362-291 Ma) granite, with the fold belt obscured by deep Mesozoic sedimentary basins in the north.

Porphyry gold-copper mineralisation in the East Lachlan is associated with the Macquarie Arc (Glen et al, 1998) which is interpreted to have been formed during west-directed subduction along the east margin of Australia during the Ordovician. Macquarie Arc rocks are coeval with a suite of quartz-rich turbidites located south and west of the Arc (Girilambone, Wagga and Adaminaby Groups, Figure 2). However, these turbidites are exotic to the arc, and are interpreted to have a continental provenance, having occupied a back-arc position west and south of the Macquarie Arc in the late Ordovician (Barnes and Ward, 2007). Arc to back-arc collision in the Early Silurian resulted in the southern turbidite sequence being transposed northwards, imbricated and underthrust along the outboard margin of the arc. Subsequent slab roll-back initiated extension and rifting of the arc, with exhumation of the imbricated turbidites. Dismemberment of the arc during this period resulted in four separate Ordovician volcanic belts, which from west to east, are the Junee-Narromine (JNVB), Kiandra (KVB), Molong (MVB) and Rockley-Gulgong Volcanic Belts (RGVB; Figure 2).

Although the four Ordovician volcanic belts that constitute the Macquarie Arc are separated by up to 100km wide belts of younger rocks (Silurian and Devonian rift basin sequences), they share a similar stratigraphic and temporal evolution. Each volcanic belt displays a general progression from high-potassium calc-alkaline to shoshonitic magmatism and a gradual evolution from mafic to felsic shoshonitic magmatism with time (Barnes and Ward, 2007).

Figure 1: Location of Clancy tenements in the Ordovician Macquarie Arc, NSW.

Clancy tenements (black), Macquarie Arc (green), JV projects (blue), significant deposits (red cross) and prospects (circle). Inset - the location within the 15 1:250,000 sheets that comprise the East Lachlan Alliance Area. Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Figure 2: East Lachlan interpreted Ordovician geology and structure showing the volcanic belts of the Macquarie Arc and the adjacent continental turbidite terranes. (Figure from Barnes and Ward, 2007).

Interpretation of seismic reflection profiles by Glen et al, (2002) indicate that the Ordovician arc derived rocks extend beneath the Silurian and Devonian rift basins. The JNVB is interpreted to be the thickest arc core, with the MVB, RGVB and KVB representing progressively thinner arc segments rifted towards the present-day east during Silurian and Devonian extension. This is supported by a prominent long wave length Bouguer gravity anomaly beneath the JNVB, consistent with a thick sequence of relatively dense Ordovician lava. The gravity gradient associated with the MVB is less pronounced in the longer wave lengths, whilst there is hardly any gravity anomaly at all in the RGVB and KVB. This supports the seismic interpretation and provides focus for exploration, as generally the thickest portions of the arc are most prospective.

The East Lachlan has two mines currently in production (Northparkes and Cadia) and a number of prospects that are currently subject to active exploration. A number of satellite deposits are mined at Northparkes and Cadia (Table 1). The porphyry deposits at Cadia, which includes the high-grade gold-rich Ridgeway deposit, are world class, with a combined endowment of >34 Moz Au and >4 Mt Cu (see source references in Table 1). Ridgeway is Australia's most profitable gold mine, with negative cash costs at current prices for Au and Cu (Holliday, 2004).

Cooke et al. (2004) describe the characteristics of Cadia and Northparkes systems. The copper and gold mineralisation is associated with quartz monzonite porphyry complexes that intrude into the volcanic centres. The intrusive complexes consist of pipes, dykes and stocks. Hydrothermal alteration within and around the intrusions resulted in a complex sequence of potassic, calc-potassic, sodic, propylitic and late-stage, typically fault- and fracture-controlled, phyllic assemblages. Hematite dusting is a common alteration product, giving the intrusions and the altered host successions a distinctive pink to brown colour. Several deposits have bornite-rich cores, chalcopyrite-dominant annuli and pyritic haloes. Gold is well correlated with bornite in most of the deposits, and with chalcopyrite at Cadia.

Detailed descriptions of the East Lachlan Ordovician porphyry copper-gold systems are given by the following authors: Smith et al, (2004), Cooke et al, (2004), Nie et al, (2000), Holliday et al, (2002), Holliday (2004), Lickfold (2003) and Wilson et al, (2003). A summary of the key features of the Cadia Hill, Ridgeway and Northparkes deposits as described by these authors is presented in Table 2.

Porphyry Cu-Au Deposits - Alkaline and Calc-Alkaline Systems $2.2$

2.2.1 The Generalised Porphyry Model

Porphyry deposits are products related to subduction-accretion processes located on plate boundaries where tectonic environments range from intra-oceanic to continental arcs (Sillitoe 1997). The majority of mineable porphyry copper-gold-molybdenum deposits are Cainozoic (0 to 65 Ma) to Mesozoic (245 to 65 Ma) in age, displaying tectonism associated with the development of the "Pacific Ring of Fire". Significant Paleozoic deposits also exist e.g. within the Macquarie Arc, NSW.

Subduction of oceanic slabs at a plate boundary generates hot, hydrous, relatively oxidised, sulphur-rich mafic magmas in the metasomatised mantle wedge. The density contrast enable magmas to buoyantly rise to the base of the overlying crust where they accumulate. Crystallisation releases heat causing partial melting of crustal rocks. Mixing of crustal and mantle-derived magmas vields evolved volatile-rich, (metal-bearing) hybrid magmas, which are of sufficiently low density to rise through the crust. Magma ascent is controlled by buoyancy forces and permeability within the crust, and major trans-lithospheric, arc parallel and cross-arc structures create vertical conduits up which magmas will ascend. One school of thinking is that porphyry related intrusions are syn-tectonic and typically form late in a given magmatic cycle, e.g. major porphyry deposits of the Andes (Richards 2003) and the Lachlan Fold Belt (Glen et al., 2003).

				EU MARIE EU (STOLE)	Recepts		RECORDED			Cadovinor
Abmentation (Abmentation)	E	EXTRONO	ww www	Œ Ki	w e de la post	œw KX	KVUIII a yay	wm KI	20 888	Senator	OLUASIAR LOTSI
Cadia Hill (CA)	Þ4	Porph - A	1.36	125	428	315	20.44	2685	26 08	3125	Newcrest. 1
Ridgeway (RI)	M	Potph - A	0.89		2.81	274	492	523	8.62	901	Newcrest
Cadia + Ridgeway			225	230	7.09	589	25.36	3208	34.69	4027
Peak HII (PH)	M	$Ep$ $\rightarrow$ $S$	0.26				047	12	073	32	Alkane
Wyoming (WM)	P	Orod					O.SO		050		Alkane
Northparkes (NP)	M	Porph - A	0 ₃₂	320			2.16	1476	2.47	1796	Rio Titito, 2
Cowal (CO)	M	Orog			2.49		158		4.08
Gidambung (GI)	ł	$E_D = H_S$	0.46				0.67		1.13		Goldminco
Copper Hill (CH)	P	Porph - CA					0.17	53	0.17	-53	Golden Cross
Cargo (CG)	p	Porph CA					0.15		0.15		Golden Cross
Junction Reefs (JR)			0.25				0.25		0.50
Totals			3.53		958	589	31.30	4749	44.41	5888
Pre-resource projects							Significant Drill intercepts
Buryan (BU)	P	Porph			>0.3% Cu in BOH aircore, 196m @ 0.16gA Au, 0.26% Cu						Newcrest
Gooleys (GO)	Ρ	Porph					160m @ 0.47g/t Au: 0.28% Cu				Newcrest
Kingswood (KI)	P	ven			>0.3% Cuin BOH aircore 9m @ 3.2o/LAu						Newcrest
Marsden (MA)	P	Porph					123m @ 0.63a/t Au, 0.7% Cu				Newcrest
Warrengong (WA)	P	Porph - CA					291m @ 0.2g/t Au, 0.17% Cu				Newcrest
Cullingarai (CU)	P	Porph					50m @ 0 76qA Au, 0 53% Cu				Gordminco
Estoril (ES)	₽	Porph					101m @ 0.26g/t Au, 0.16% Cu				Goldminco
Imola (IM)	P	Porph			96m @ 0 7a/t Au: 118m @ 0.2a/t Au						Goldminco
Mandaman (MH)	Р	Porphi					142m @ 0 9g/t Au, 0 3% Cu				Goldminco
Silverstone (SI)	P	Porphi					74m @ 0.15% Cd				Goldminco
The Dam (DA)	P	Porphi			167m @ 1g/t Au, 0.7% Cu, 15m @ 3.5g/t Au, 1.2% Cu						Goldminco
Charlies (CS)	P	Orog			1n @ 3.35a/t Au, 0.65% Zn, 1n @ 9.6a/tAu, 0.2% Zn						Alkane
Galloway (GA)	P.	Porph			12m @ 0.67o/t Au, 1m @ 9.9o/t Au, 0.56% Cu (both in RC)						Alkane
Notes:
1. Resource and reserve includes Cadia East and Cadia Ociariy. 2. Includes E26, E22, E27 & E48. Reserve excludes resource. Endowment = production + resource + reserve. Production, resource and
reserve figures are current to December 2004. Significant intercepts are from diamond drilling unless otherwise stated.
Abbreviations: M= mine, P = prospect f = mactive, Porph = perphyry. Epi = epithermal, Orog = orogenic: A = alkaline.		$CA = calc\text{-}alkalire; HS = hich\text{-}subification.$
Sources' company websites, stock exchange releases and Smith et al. (2004)

Table 1: Significant Gold and Copper Mines / Projects in the Macquarie Arc

Magmatic fractionation, recharge and volatile exsolution leads to the development of ore-forming magmatichydrothermal systems, where incompatible elements are strongly partitioned into a volatile aqueous phase during crystallisation. Hydrostatic pressure exceeds the combined lithostatic load and tensile strength of the surrounding rock mass, which results in brittle failure and the generation of stockwork (to sheeted), disseminated and breccia-hosted Cu-Au-(Mo) mineralisation (Figure 3). Characteristic zonation out from the causative intrusion is common, and supergene blankets may be preserved depending on the level of erosion (Figure 4).

2.2.2 Key Characteristics of Alkaline & Calc-Alkaline Porphyry Systems

There are two major magmatic suites recognised, which follow alkaline and calc-alkaline affinities. Each intrusion type is associated with specific mineralisation styles and relative endowments of gold, copper and molybdenum. The calc-alkaline suite of intrusions is more closely associated with Cu-Mo (Au) mineralisation, and alkaline intrusions dominated by Cu-Au (Mo) mineralisation. Clancy is focussing on both mineralisation styles found within the Lachlan Fold Belt.

Wilson et al, (2002) documented the key features of alkaline and calc-alkaline porphyry systems, which Clancy has incorporated into the layers developed for probabilistic modelling. In particular, Table 2 lists some of the characteristics which are included as key criteria in Clancy's on-going exploration and targeting for alkaline and calc-alkaline porphyry Cu-Au systems in the LFB.

RACE EXPERIMENTATION	Kasara Lamang Barat ng Kabupatèn Bandaran Sulawest Ka	WELL-ALSE LEED IN INTERNATIONAL
Tectonic Setting	* Submarine to subaerial island arcs (e.g. Cadia: Mt. Poley), to post-collsional continental arcs e.g. Mt Millican.	* Continental back-arc basin le q. Bingham Canyon, Bajo de la Alumbrera) to collsion (e.g. Grasberg, OK Ted).
Magmatism	Mineralisation is associated with oxidised Hype (magnetite series) subvolcanic intrusions of alkalic or high-K calc-alkalic character Depth of emplacement <1 to 4km Rock types include porphyritic monzodionte, monzonite, quartz monzonite to svenite stocks (multiple intrusions common)
Structure	muneralisation	* Syn- and post-mineralisation breccias occur in many systems with some being important hosts for
Alteration#	Complex alteration patterns including zones of: Potassic biotite, magnetite, orthoclase, quartz, anhydrite, carbonate, apatite, bornite, chalcopyrite, gold Calc-Potassic actinolite, epidote, orthoclase, biotite, magnetite, quartz, carbonate, apatite, bornite, chalcopyrite, gold Calc-Silicate garnet, pyroxene, wollastonite, magnetite, quartz, carbonate, epidote, chlorite, chalcopyrite, pyrile
Modified from	Propylitic chlorite, epidote, actinolite, calcite, pyrite, hematite, rutile, prehnite
Wilson et al. (2002) #See Figure 4	No high sulphidation epithermal deposits known. associated with alkaline systems. * No advanced argillic (dav) altered lithocap	* Phylic alteration assemblages (quartz-sericite-pyrite) are more widespread in high-K calc alkaline systems.

Table 2: Some key features of Alkalic and calc-alkaline porphyry systems

Figure 3: Schematic model of alkalic (A), and high-K calc-alkalic (B) porphyry Au-Cu deposits.

A: The alkalic deposits are associated with potassic and propylitic alteration assemblages, with faultcontrolled phyllic alteration. Both deep and shallow sodic assemblages may be present.

B: The high-K calc-alkaline systems have a more widespread phyllic alteration, and may also have high-level advanced argillic alteration zones, in addition to well-developed potassic and propylitic assemblages. (Modified from Wilson et al, 2002).

Figure 4: Generalised spatial relationship of alteration assemblages associated with porphyry deposits.

A: Alkaline and; B: High-K calc-alkaline. Modified from Wilson et al. (2002).

$2.3$ East Lachlan Exploration Targeting and Ground Selection Criteria

Through its parent company Geoinformatics, Clancy has utilised the Geoinformatics Process, an innovative approach to exploration targeting and ground selection in the Lachlan Fold Belt (Barnes et al, 2006). Using rigorous ranking methods, Clancy applied sophisticated spatial analysis to develop exploration targets. A critical step in Clancy's approach involved validating targets generated in this manner against known deposits and occurrences. Clancy's results were notable in their ability to predict the location of known mineralisation and intrusions which provided them confidence in their approach.

Using knowledge of the regional geology combined with detailed a understanding of the porphyry models described in Section 2.2, Clancy used available digital geological and geophysical data to build derivative layers that capture the key processes driving mineralisation. These derivative layers were then used to guide exploration targeting using a probability based approach.

Probabilistic targeting uses a model driven or process based approach to targeting for mineral deposits, rather than the more traditional empirical approach using 'weights of evidence' (WOE). SRK has been active in the development of probabilistic methods for assessing and managing exploration risk, progress and value (Lord et al, 2001). It is a method now routinely applied by the oil industry that divides the petroleum system into source, pathway, focus and trap. In the porphyry environment, Clancy has termed these components; source, pathway, focus, trap and cupola.

By assigning probabilities to the various individual components of the model being present in any given area, as well as an uncertainty, each feature can be modelled spatially. Individual components are multiplied together incorporating uncertainty using Monte Carlo (MOCA) simulations to test how one area compares to another.

Geoinformatics found that there was no software available that allowed spatial analysis of probability based data and so considerable effort was spent developing their own in-house software to undertake this analysis. This technical innovation forms significant intellectual property developed by Geoinformatics that could be applied elsewhere, and particularly in areas of greenfields exploration, where there are no known deposits.

2.3.1 Probability based targeting

While the detailed development and application of the Geoinformatics Process are proprietary, SRK has reviewed documentation of the method (Barnes et al, 2006) and has attended technical presentations by Clancy. SRK is confident Clancy's approach is sound. In particular, Clancy have spent considerable effort validating targets against known deposits or occurrences.

The targeting method used by Clancy includes;

Estimation of the probability that the feature exists in any particular area, and an estimation of uncertainty, usually relating to the data quality and confidence in interpretation. For example, a magnetic anomaly might reflect the presence of an intrusion which will have a higher probability if supported by geological mapping. In this example, the uncertainty might relate to the quality of data used to make this interpretation.
Estimation of probability and uncertainty that the feature has the desired effect (i.e. mineralising). For example, if a structure or fault is present, is there evidence to support it carrying mineralised fluids (such as geochemical anomalies), or specific orientations favourable for mineralisation.
An area of influence of the feature and slope. Some features such as intrusions also influence the surrounding host rocks, and a slope is assigned to control the edges of the area of influence.

All input layers were modelled using these methods, and results from each component output as probability grids with a 1000m grid cell size. Probabilities were colour coded to reflect favourable higher probability, and lower probability areas.

The major advantages of Clancy's approach include the following:

Targeting is model based and process driven, rather than based on empirical data.
The method incorporates examination of risk and uncertainty.
Targeting is done through the use of regional datasets, often uniform over large areas with an objective and consistent approach.
The targeting process requires detailed review of mineralisation models and careful consideration and iteration in developing derived layers.
Ranking relies on multiplicative scores, eliminating areas that lack any key features (compared with additive methods) and therefore limiting false positive anomalies.
This innovative approach can also be applied in areas of no known mineralisation /'greenfields' situation.
The method is particularly appropriate to rank targets against each other.

2.3.2 Porphyry model components

In developing targeting models appropriate to the East Lachlan Fold Belt, Clancy developed a number of output layers or derivative maps, interpreted to be reflecting the following model parameters;

Source (S). Clancy define potential source areas as 'regions where there was melting in the lower crust to generate arc magmas', evidenced by the presence of Ordovician igneous rocks and favourable in areas of thickened arc (Barnes et al, 2006). Lithogeochemical data and presence of latite or trachyte volcanic rocks in geological data was used to provide evidence of fractionation, to estimate the probability and uncertainty that the feature has the desired (i.e. mineralising) effect.

Pathway (P). Clancy define major pathways as those structures that penetrate deep into the lower crust with the potential to provide conduits for magma ascent. As the East Lachlan has also been subject to more recent extension and compression, it is difficult to infer exactly which structures were active specifically during Ordovician arc magmatism. To identify major structures Clancy processed gravity data to define the edges of uplifted blocks.

The Northparkes deposit was deemed a unique case, as it occurs in an area of low gravity response within a broad regional high (Barnes et al, 2006). To accommodate this scenario and ensure that Clancy's targeting would include the Northparkes style mineralisation, a targeting model was created (and validated) that ignored this pathway component all together (see Section 2.3.3).

Focus (F). Clancy define shallower structures as interpreted from magnetic data as being responsible for the "focus" component of the porphyry model. Structural studies were carried out over areas of Ordovician arc using magnetic data processed to provide enhanced images for interpretation. Faults identified were assigned a uniform probability of existence.

Identifying structures active during the Ordovician and therefore' effective' for mineralisation proved problematic. Clancy carried out a study of the orientations of veins and trends at known deposits to identify a number of key orientations.

Trap (T). Clancy define traps as areas showing evidence of near surface intrusions and areas where magma failed to vent to surface. Most areas of known intrusive rocks were noted to have some kind of magnetic signature by either a distinct contrast with surrounding rocks, or by a discrete shape (Barnes et al. 2006). On this basis, Clancy developed data processing steps to identify intrusions based on either geological survey mapping and / or magnetic data. Identification of intrusion (trap) presence was given a higher probability if sourced from mapping and magnetic data than if an intrusion was evident in only one or the other of these data sets, and correspondingly the uncertainty increased.

Cupola (C). Clancy also incorporated a cupola layer by searching for radially symmetric features in the magnetic data in proximity to interpreted deep intrusions.

2.3.3 Targeting results and ground selection

Clancy used the probability grids generated for the layers described above (i.e. source (S), pathway (P), focus (F), trap (T) and cupola (C)) to generate targeting maps by multiplying together the various elements. Three different models were applied reflecting different styles of porphyry mineralisation known in the Lachlan Fold Belt as follows:

Model $1$ Intrusions with alkaline geochemistry were targeted to model a Cadia-Ridgeway style mineralisation.
Model 2 Intrusions with alkaline geochemistry were targeted similar to Model 1, but removing the pathway constraint to model the Northparkes scenario.
Model 3 Ordovician age intrusions of calc-alkaline geochemistry were targeted to mimic a Cargo, Copper Hill, and Narromine scenario.

Standard histogram equalization was applied to the resulting probability grids to produce coloured targeting maps imaged as 'hot' or' cold'. Targeting maps were generated for each of the models and targets were carefully validated against known deposits or prospects. Based on these three models, targets were generated and polygons were defined over the Alliance area and classified as highest priority ('A-Class' targets) to lower priority ('D-Class' targets).

Clancy concentrated further work on the 52 targets considered A priority targets, the top ten of which included Northparkes, Cowal, Cadia, Copper Hill and Marsden. Considerable effort was spent rationalising and auditing the targets against known mineralisation / prospects and public domain geological maps. Results showed a close correlation between targets generated and known mineralisation, which provided Clancy and SRK with great confidence in their approach.

Using this approach Clancy undertook a review of tenement holdings to establish their current portfolio of leases and exploration areas. Additional targets will be tested as either tenements become available or additional geoscientific databases are acquired.

$2.4$ East Lachlan Exploration Tenements

2.4.1 Introduction and Background

Geoinformatics initiated work in the Lachlan Fold Belt in 2002, running the Geoinformatics Process over the vast amount of regional public domain data available as a result of the Discovery 2000 and other initiatives by the NSW government (Geological Survey of New South Wales (GSNSW)) and Geoscience Australia. Targets were generated at a scale of 1:1,000,000 for porphyry, orogenic and VHMS systems.

In May 2003, Geoinformatics applied for eight exploration licences (ELs) covering the identified targets and Clancy was incorporated shortly thereafter as the holding company for the ELs. Additional EL applications were lodged in 2004 and tenement scale exploration data acquisition commenced, followed by fieldwork and the establishment of a field office in Orange, NSW. Over the next year work focused on acquiring, processing, interpreting and integrating high resolution data, sufficient for targeting at scales of between 1:100,000 and 1:250,000. This work included open-file data assessment and compilation, re-processing and interpretation of regional magnetic, gravity and radiometric datasets, integration of recently published detailed geology, lithochemistry, geochronology and detailed deposit case studies. Landholder negotiations, rock chip sampling, mapping and prospect definition work continued throughout this period on the most prospective ELs.

Second generation targeting for Ordovician porphyry Cu-Au systems, utilising the higher resolution datasets was completed in October 2005. The results were used to validate the tenement portfolio as it stood at that time, resulting in some relinquishments and application for several new tenements. The current tenement portfolio consists of 12 ELs and four ELAs covering 1643 km² of Ordovician magmatic arc rocks prospective for porphyry Cu-Au deposits (Table 3; Figure 1).

Clancy and Gold Fields formed the "East Lachlan Alliance" in June 2004 to identify areas of high prospectivity for the discovery of precious and base metal deposits in the alliance area. Gold Fields committed to spend \$1M (AUD) on the alliance over a period of 30 months, giving it the right to select and then manage high quality targets as separate projects. The original \$1M was spent and Gold Fields subsequently contributed a further \$500,000 to commence first-pass exploration on a number of projects. Three JV projects have now been defined. These are: Gobondery, Cowal East and Wellington North. Gold Fields can earn 80% by spending up to \$5M over three years on these projects. Clancy will remain manager but will not be required to contribute expenditure to these IV leases.

The balance of the tenement portfolio will be 100% Clancy owned and operated, with Gold Fields retaining a claw-back agreement if a gold-equivalent discovery of 2,000,000 oz is made. Gold Fields can elect to back-in by payment of twice Clancy's exploration expenditure and sole funding to \$10,000,000 of expenditure or to Bankable Feasibility Study, whichever is earlier, to earn a 60% interest. The proposed listing of Clancy with associated capital raising of \$5,000,000 is intended to primarily fund exploration on these 100% Clancy leases.

All tenements are owned or under application by Clancy Exploration Limited, with any mineral rights subject to the terms of the East Lachlan Alliance.

2.4.2 Access

Access to all Clancy tenements is via major roads which service the townships of Nyngan, Dubbo, Parkes, West Wyalong, Orange, Bathurst and Wagga Wagga (Figure 1). Projects within the Junee-Narromine Volcanic Belt are accessible by the Mitchell Highway (Illabunda: ~55km north of Nyngan), the Newell Highway (Myall: 50km west of Dubbo, Gobondery: ~65km northwest of Parkes; Goobang: ~15km west of Parkes), and the mid-Western highway (Cowal East: ~25km northeast, and Currumburrama 40km east of West Wyalong and Fairholme: 12km northeast of Burcher). From these major roads, tenements are accessed by gazetted and wellmaintained sealed and unsealed roads through pastoral properties.

Projects within the Molong Volcanic Belt are accessible by the Mitchell Highway (Wellington North: ~30km east of Dubbo; Cundumbul: ~25km south of Wellington, and; Orange East: ~5km east of Orange), and then by gazetted and well-maintained sealed and unsealed roads through pastoral properties.

Generally the leases cover areas of broad-acre cropping and open grazing paddocks, with unsealed tracks and property fence lines providing good access to most of the tenement areas.

2.4.3 Total Statutory Commitments

Clancy currently hold 12 ELs and four ELAs. The annual expenditure commitment related to the 100% Clancy tenements (once all granted) is \$425,500. A tenement by tenement breakdown of these expenditure commitments is presented in Table 3.

Cundumbul	Granted	EL6661	141.4	15/11/2006	14/11/2008	\$44.500
akers Swamp	Applied	ELA3026	87	22/02/2007		\$21,500
Orange East	Renewed	EL6181	83.2	19/01/2004	18/01/2008	\$59,000
illabunda	Granted	F16535	1500	16/03/2006	15/03/2008	\$45,500
spring Creek	Granted	EL6536	52.4	16/03/2006	15/03/2008	\$29,000
Goobang	Granted	E16537	106.4	16/03/2006	15/03/2008	\$38,500
Farnolme	Granted	EL6552	54.5	03/04/2006	02/04/2008	\$29,500
игипригата	Applied	ELA2916	1824	06/11/2006		\$52,000
llabono Creek	Applied	ELA3007	1350	06/02/2007		\$44,000
Myall	Auplied	ELA3042	2437	05/03/2007		\$62,000
otal of 100% Clancy Leases			1157.7	Clancy commitment		\$425,500
		Gold file ds Eaming
Lease Mando	EWWWWW	Hasse Room	ATALINA uzze	Granted/ . Agoled	Enveloperent	CAIRDEAR
Duke	Renewed	EL6178	1130	19/01/2004	18/02/2008	\$69.000
Hillcroft	Renewed	EL6328	40.6	25/10/2004	24/10/2006	\$44,000
Yanndury	Granted	EL6662	90.0	15/11/2006	14/11/2008	\$35,500
Koopah	Granted	EL6553	28.6	03/04/2006	02/04/2008	\$25,000
Wurra	Granted	EL6554	34.2	03/04/2006	02/04/2008	\$26,000
Gobondery	Granted	EL6534	1789	16/03/2006	15/03/2008	\$50,500

1643 Total commitment

Teritori

human

Table 3: Clancy tenement schedule and expenditure commitments in the Lachlan Fold Belt

382808

Question Co

Bakers Swar Orange Eas Illabunda Spring Cree Goobang Fairholme Cumimbura Billapono Cre Myal Subtotal of 100

Dealse Nan

Subtotal of Gold Fields / Clancy JV Leases

Total of 100% and JV Leases

Clancy 100%

TERS IS

The expenditure commitment is annual. Blue highlight denotes Exploration Licence Applications.

4853

3 East Lachlan Project Descriptions

$3.1$ Geological Setting

Martin I

Olveceshire

Cundumbul

Repear

Wellington
North JV

Cowal East JV

Gobondery JV

Clancy's current projects are all located in the Junee-Narromine and Molong Volcanic Belts. The geological settings of these volcanic belts are presented below, followed by project-specific geology, exploration history and Clancy's proposed exploration program for each.

3.1.1 Molong Volcanic Belt Geology

The Molong Volcanic Belt (MVB) extends for approximately 270km from Boorowa in the south, to northeast of Dubbo (Figure 5). It hosts the world-class Cadia-Ridgeway porphyry Cu-Au system which is situated about 21km SSW of Orange in the central part of the MVB. Other significant porphyry deposits in the MVB include Cargo and Copper Hill, which are both sub-economic, although the latter is currently being aggressively explored by Golden Cross Resources.

The main stratigraphic group in the MVB is the Cabonne Group, which is a Late Ordovician to Early Silurian succession of intermediate to mafic volcanic rocks, volcaniclastic rocks, sandstone, siltstone, mudstone, shale and chert (Morgan et al, 1999; Pogson and Watkins, 1998).

Creamfient

\$250,000

\$675,500

Arian Mila

Clancy has four projects in the northern section of the MVB, which from north to south, are the Spring Creek, Wellington North JV, Cundumbul and Orange East projects (Figure 5). The oldest rocks in the MVB are the Early Ordovician Mitchell Formation and Hensleigh Siltstone which are exposed in the footwall of the Neurea Thrust along the west flank of the Cundumbul Project area. The Middle Ordovician Fairbridge Volcanics form the western half of the MVB north of Orange, with the sequence younging towards the west. This volcanic succession is high-K calc-alkaline and hosts the Cu-Au mineralised Copper Hill intrusive complex north of Molong. The Fairbridge Volcanics are overlain by the Late Ordovician (Eastonian) Reedy Creek Limestone, which is in turn overlain by the Late Ordovician (Bolindian) Cheesemans Creek Formation. This formation hosts the Charlies, Mt Keenan and Galloway porphyry prospects located north of Orange that are currently being explored by Newmont in joint venture with Alkane. The Cheesemans Creek Formation comprises shoshonitic volcanic rocks that have close affinities to (and is potentially a correlative of) the Forest Reef Volcanics which host the highly mineralised Cadia Intrusive Complex, some 20km to the south.

The most significant formation by volume in the northern section of the MVB is the Oakdale Formation, which forms the eastern half of the arc between Orange and Wellington and is the only arc unit north of Wellington. The Oakdale Formation is highly heterogeneous comprising distal arc-related turbidities, proximal volcaniclastic assemblages, andesitic to latitic lavas and high-level monzonite to monzodiorite complexes. The chemistry of the magmatic rocks range from medium-K to high-K calc-alkaline, through to more evolved shoshonitic units. The age of the Oakdale Formation spans the Middle to Latest Ordovician.

East and southeast of Orange the Late Ordovician Blayney and Byng Volcanics are the dominant arc units. The Blavney Volcanics consist of a lower unit of basalt and coarse volcanic breccias that have a medium- to high-K calc-alkaline affinity, which grade up section into an upper unit of more plagioclase-rich, shoshonitic lava. The Byng Volcanics are dominated by mafic basalt and volcaniclastic rocks in north-northwest trending fault-bounded slices, grading into olivine-rich cumulates. The most evolved units of the Byng Volcanics are basaltic andesite. The ByngVolcanics are comagmatic with the upper sections of the BlayneyVolcanics (Barnes and Ward, 2007).

Figure 5: Geology of the Molong Volcanic Belt showing the location of Clancy Projects. The Wellington North JV Project is highlighted in the blue box.

The red line running through Wellington North JV is the Mesozoic basin boundary. Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

3.1.2 Junee-Narromine Volcanic Belt Geology

The Junee-Narromine Volcanic Belt (INVB) extends from 100km south of Gundagai to Narromine in the north, a distance of some 420km (Figure 6). The most significant porphyry Cu-Au system in the [NVB is Northparkes, where a number of satellite deposits are currently in production. Other significant deposits in the belt include the orogenic gold systems at Cowal and Wyoming, and high-sulphidation epithermal gold systems at Gidginbung and Peak Hill (Figure 6). In contrast to the MVB, the JNVB is deeply weathered and very poorly exposed. South of the Mesozoic basin margin, substantial sections of the JNVB are concealed by 0 to more than 100m of Quaternary cover, with several hundreds of metres of cover developed north of the basin margin.

Due to the lack of exposure the stratigraphy of the [NVB is poorly understood and most of its constituent units have not been assigned to formal stratigraphic groups as presented in Figure 6. The exception is the relatively well studied Northparkes Igneous Complex, the key units of which are the Wombin and Goonumbla Volcanics. These units show a progression up-section from high-K calc-alkaline (Goonumbla Volcanics) to shoshonitic magmatism (Wombin Volcanics), a hiatus in magmatism separating the two.

The INVB has been significantly more dismembered by post-Ordovician deformation than the MVB. The INVB consists of at least 10 separate arc fragments, whereas the MVB is essentially intact along most of its length. However, seismic interpretation by Glen et al. (2002) suggests that the [NVB is the arc core, representing the thickest part of the arc, with the MVB and other belts representing progressively thinner arc segments that were rifted east during the Silurian and Devonian. Within the JNVB the stratigraphic units in the different arc fragments have some similarities. Outlying arc fragments of the Raggatt Volcanics near Trundle and Tullamore are similar to the Goonumbla Volcanics at Northparkes. The Raggatt Volcanics consists of andesitic and trachyandesitic volcanics, limestone and monzonite that are comparable to the Wombin Volcanics, and highly altered intrusives and volcanics are exposed in a road cutting 6km SSE of Tullamore (Sherwin 1996). Similarly, the Ordovician arc rocks southeast of West Wyalong (Gidginbung, Temora and Junawarra Volcanics) contain evolved latite and trachyandesite and high-level monzonitic intrusions and are of probable Bolindian age; ie equivalent age to Goonumbla and Wombin volcanics. These rocks have intensive silicification and pyrophyllite alteration around the old Gidginbung mine, and the intrusive rocks nearby include quartz monzonite and granodiorite stocks and dykes (Warren et al, 1995). The prospective Fairholme, Cowal and Currumburrama Igneous Complexes do not outcrop, but lithochemistry from samples of drill core from all three complexes confirm the presence of shoshonitic intrusive and volcanic rocks (Barnes and Ward, 2007).

Clancy has eight projects in the [NVB, which from north to south are Illabunda, Myall, Gobondery JV, Goobang, Fairholme, Cowal East JV, Currumburrama and Billabong Creek (Figure 6). Only the Gobondery JV Project has significant outcrop of the Ordovician arc, with the rest dominated by Quaternary cover. At Illabunda an unknown thickness of Mesozoic sandstone / siltstone underlies the Quaternary; but depth to magnetic basement modelling suggests the Ordovician is within 200m of the surface. The dominant arc unit in most project areas is undivided arc volcanics, and Ordovician intrusives are known to exist at Gobondery JV, Goobang, Fairholme, Cowal East JV and Currumburrama. Ordovician intrusives are inferred from magnetic signatures at Illabunda and Billabong Creek.

Figure 6: Geology of the central and northern parts of the Junee-Narromine Volcanic Belt showing the location of Clancy Projects. JV Projects are highlighted with surrounding blue boxes.

The bold red line is the margin of the Mesozoic basins. Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

ting a

$3.2$ Clancy Project Descriptions

Clancy has a 100% interest in nine project areas: Fairholme, Myall, Goobang, Cundumbul, Billabong Creek and Illabunda in the JNVB; and Spring Creek, Cundumbul and Orange East in the MVB. As mentioned previously Gold Fields retains a back-in right on these projects in the event of a significant discovery.

3.2.1 Fairholme

The Fairholme project consists of a single licence EL6552 located about 20km north of the Cowal mine, which covers an area of 55km² and carries a total annual expenditure commitment of \$29,500 (Table 3).

Geology and Previous Exploration

The Ordovician geology of the Fairholme tenement is characterised by rocks belonging to the Fairholme Igneous Complex, which are covered by 15 to more than 100m of Quaternary cover. Up to 100m of saprolitic clay is developed over the Ordovician sequence of basaltic to andesitic volcanic, volcaniclastic and sedimentary rocks. These are intruded by high-K calc-alkaline to shoshonitic intrusive rocks.

Initial interpretation of the aeromagnetic and gravity imagery by Clancy defined a large 45 x 15km northtrending volcanic-intrusive complex termed the Fairholme Igneous Complex (FIC). Subsequent investigations based on re-processed magnetic data, suggests that much of the northwest section of the Complex is likely to be post-Ordovician. An eastern domain of structurally interleaved Ordovician, Silurian and Devonian units is separated from the northern and southern sections of the complex by a major north-northwest trending fault (Figure 7). This fault is terminated by the Booberoi Fault, a major east-dipping thrust fault related to the crustalscale Gilmore Fault, about 20km south of the licence.

Newcrest completed an extensive exploration program over the Fairholme Igneous Complex between 1993 and 2005 drilling >300 aircore holes, 29 RC holes and 17 diamond holes. The drilling focused on three prospects: Boundary, Gateway and Dungarvan, all of which are within EL6552. Re-processing of Newcrest ground magnetic data by Clancy shows that Boundary and Dungarvan prospects are associated with prominent magnetic highs, whereas Gateway is situated within a magnetic low. Clancy infer the size of the magnetic bodies beneath Boundary and Dungarvan are $\sim 1.5 \times 0.4$ m and $\sim 2 \times 0.6$ km respectively. Anomalous drill intercepts were returned from all prospects including;

Boundary Mineralisation hosted by intermediate volcanics, volcaniclastics and intrusives, the best intercept on the prospect returned 48m @ 0.60ppm Au, 0.16% Cu from 219m depth in diamond hole DR039 with other holes also showing significant mineralisation.
Dungarvan Mineralisation is hosted in a multi-phase mafic to ultramafic cumulate intrusive complex which has undergone greenschist facies grade regional metamorphism, with a best intercept of 14m @ 0.25ppm Au, 0.15% Cu from 382m depth in diamond hole DR042.
Gateway Mineralisation is currently interpreted as a sheared VHMS system that may be Silurian in age. A best intercept of 27m @ 0.69ppm Au and 0.06% Cu was found in aircore drilling.

Figure 7: Fairholme Igneous Complex interpreted geology and RTP magnetics

A – interpreted pre-Tertiary geology showing Fairholme prospects and Cowal gold mine; B – RTP magnetic image. Location grid ticks have a 10km spacing with coordinates being in a GDA94 Zone 55 projection. (Figure from Barnes and Ward, 2007).

Clancy Targets

Clancy's probabilistic targeting defined a highly ranked A-Class target (LFB026) over the Fairholme area and was at the time unaware of the prospects outlined by Newcrest, providing validation of the targeting method. After compiling previous exploration results, Clancy re-logged seven diamond holes at Boundary and completed 3D modelling of the geology and similar exercises are underway for the Gateway and Dungarvan prospects.

At the Boundary prospect Clancy's re-logging suggests that the dominant intrusive phase previously described as latite, while compositionally correct, is more likely to be an epiclastic unit (Barnes and Ward, 2007). This interpretation is significant because it implies that the causative intrusive of the Boundary mineralisation has yet to be intersected in drilling. However, if present, the intrusion is likely to be deeper than 450m vertical beyond the limit of current drilling. Inversion modelling of ground magnetic data defined a magnetic body that transgresses stratigraphy and is inferred by Clancy to be hydrothermal in origin. Clancy's interpretation also identified a major northwest trending structure termed the Boundary Shear Zone which is a potential conduit for fluids migrating up and along fault and laterally into the more porous flat-lying units which host the bulk of the mineralisation defined to date. The coincidence of structural intersections, hydrothermal magnetite, weak Cu-Au mineralisation and the presence of vein-style mineralisation at depth are shown schematically in Figure 8 which demonstrates the target zone at Boundary. Additional modelling is required to refine deeper drilling targets.

Figure 8: Schematic section looking west illustrating the relationships between mineralisation, structure and the plume of hydrothermal magnetite at Boundary.

The Au-Cu mineralisation transitions from vesicle-fill in porous units in the upper section to veinstyle at depth. The causative intrusion has not been intersected and is inferred to exist at depth beneath the existing drilling. (Figure from Barnes and Ward, 2007).

At Dungarvan, intermediate to mafic volcanic and volcaniclastic rocks are intruded by diorite and more mafic intrusive rocks which have undergone pervasive propylitic alteration. Newcrest considered the alteration and mineralisation at Dungarvan similar to that at Boundary, despite the more mafic composition of the intrusives. The extensive alteration and mineralisation zones at both prospects are only weakly developed (Hav 2002).

In contrast, the geology at Gateway is dominated by sheared metasedimentary rocks, with only few volcanic or intrusive rocks. Two distinct mineralisation assemblages were noted, a Zn-Pb-As±Au sulphide assemblage and a Cu±Au assemblage. Clancy initially inferred that Gateway could represent the distal parts of a hydrothermal system centered on Boundary, but more recent interpretation of magnetic data suggests Gateway is located on a major north-northwest trending fault that dismembers the Fairholme Igneous Complex and brings Ordovician units into contact with Silurian and Devonian units. This raises the possibility that Gateway is actually Silurian and therefore genetically unrelated to Boundary and Dungarvan. VHMS-style mineralisation is also more consistent with a Silurian age as there are several Silurian VHMS deposits in the Lachlan Fold Belt (e.g. Woodlawn, Lewis Ponds, Galwadgere), but there are no known significant Ordovician VHMS systems.

Proposed Exploration Program and Budget

The lack of exposure within the Fairholme tenement requires more drilling to effectively explore. Further modelling work is required to refine specific targets for deep diamond drilling based on geophysical and geochemical studies and to better understand the stratigraphy and alteration systematics at all prospects.

These studies are well advanced at Boundary, but similar exercises are needed at Dungarvan and Gateway with re-logging of previous drilling and spectral studies of alteration which will likely result in new interpretations and possible vectors to mineralisation.

In addition, a trial IP survey is proposed to determine the effectiveness to direct detect sulphide halos associated with porphyry mineralisation. If successful, it is proposed to run a 3D IP survey covering all three prospects to assist with drillhole siting. Assuming a positive outcome from the above work, deep diamond drilling will be required with Boundary being the initial focus, followed by Dungarvan, and Gateway being a lower priority.

A proposed exploration budget of \$447,000 for Year 1 and \$399,000 for Year 2 has been outlined Clancy to carry out the above work program. This budget well exceeds the annual expenditure commitment of \$29,500.

Project Potential and SRK Comment

The Fairholme project represents an advanced exploration project where previous aircore, RC and diamond drilling has intersected porphyry style mineralisation with anomalous Cu, Au results. The Boundary and Dungarvan prospects provide scope to undertake additional geological interpretation supplemented by geophysical studies which will define deeper targets for diamond drill testing. The Gateway prospect has an alteration style similar to Silurian VHMS mineralisation, and provides an opportunity to target this type of mineralisation.

The exploration program proposed by Clancy is of sound technical merit and is appropriately funded for this stage of exploration.

3.2.2 Myall

The Myall project comprises a single EL application, ELA3042 covering an area of 244km² (Table 3) located 50km west of Dubbo and 25km SW of Narromine. Once granted the project will attract an annual expenditure commitment of \$62.000.

Geology and Previous Exploration

Myall is situated within the Narromine Igneous Complex, a major regional northwest-trending composite magnetic feature within the INVB (Figure 6). The magnetic signature of the complex is similar to that of the Northparkes Igneous Complex, which is situated about 50 km to the south (Figure 9). At Myall, outcrop is sparse being obscured by deep Mesozoic, Quaternary and Tertiary sediments (often >100m in thickness). Both complexes are characterised by prominent circular to ovoid gravity lows with a long axis +15km with coincident annular magnetic anomalies of approximately 9km x 3.5km dimension. At Northparkes the main deposits are situated on the margin of magnetic highs within the annular low. There are several similar conceptual targets within the annular low at Myall, most of which remain untested.

The JNVB changes orientation from north-trending to northwest trending north of Northparkes. In this flexure the Narromine Igneous Complex is bounded by faults on all sides, with broadly parallel flanking structures controlling the bend in the arc. Within the complex, northeast- and north-northwest trending faults terminate against the flanking structures. The Ordovician basement geology consists of basaltic and andesitic volcanic and volcaniclastic rocks that are intruded by large plutons with compositions varying from gabbro or monzogabbro through to quartz-diorite.

The area has been extensively explored since in the late 1970's, with the most significant work completed by Geopeko, Samedan Oil, Goldfields, Resolute and Newcrest. These companies have generated a vast amount of useful exploration data that Clancy is currently compiling. A significant amount of drilling was undertaken by Goldfields in JV with Resolute in the late 1990s focused on the Kingswood and Monaro prospects. In 2001, Newcrest replaced Resolute in the joint venture and drilled infill aircore and follow-up diamond holes at Kingswood and Monaro and also defined the Sandman prospect. Additional holes were drilled, including some with Barrick prior to the licence being relinquished by Newcrest in February 2007. In total more than 26,000m of aircore and 8,500m of diamond core were drilled on the prospects.

Preliminary data compilation has revealed that all three prospects are associated with widespread basement copper anomalies (>500ppm Cu) that flank and partially overlap, an annular magnetic low (Figure 9). The elevated copper comprises a northwest trending chain of discrete anomalies that extends over a strike length of 13.5km with a maximum width of +3km at >500ppm Cu. Within this anomalous zone, the Kingswood prospect for example forms a discrete 2.5 x 1.5km anomaly at +1000ppm Cu. The size and magnitude of these dispersion halos are very significant and are on a par with those from Northparkes (Barnes and Ward, 2007).

Results from the previous drilling at Kingswood indicate Cu-Au mineralisation is present, with highlights shown in Figure 9C. A best intersection from previous explorers reported $107m \& 0.11g/f$ Au and $0.43\%$ Cu in hole ACDNM090, including 18m @ 0.29g/t Au and 0.93% Cu. Another intercept included a 37.5m drilled thickness of sheeted quartz-magnetite veining associated with chalcopyrite and bornite with peak values of 1.7g/t Au, 0.5% Cu, hosted by a more felsic intrusive phase within pink monzodiorite. Lithogeochemical sampling of drill core indicates that the intrusives at Myall generally have a calc-alkaline affinity, similar to some of the intrusive rocks in the Cowal Igneous Complex. A few samples were noted to have an alkaline affinity, similar to the igneous rocks of the Northparkes Igneous Complex (Barnes and Ward, 2007).

Figure 9: Myall ELA3042 summary of previous drilling results and RTP magnetics

A - Previous drilling locations with the collar position coded by with maximum basement Cu (legend shown in C): B - RTP 0-200m residual magnetic image. Note the Cu anomalism flanks and partially overlaps the annular magnetic low. General target locations are shown in red. The +500ppm Cu contour is shown in black and the yellow box is enlarged in C; C - summary of drilling highlights from Kingswood showing part of the annular magnetic low (grey). Location grid ticks in A and B are 5km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

♦

Clancy Targets

Clancy defined two A-Class targets within the Myall tenement, both targets LFB004 and LFB132 being calcalkaline style.

LFB004 is a large target that extends beyond the boundary of ELA3042, however the best parts of the target cover the Kingswood, Monaro and Sandman prospects (Figure 9B). Significantly, there are other parts of target LFB004 within ELA3042 that rank as highly as these prospects that have been poorly tested by previous exploration.

Target LFB132 is much smaller and is wholly within (Figure 9B). Only a minor amount of drilling has been completed over LFB132 and interpretation of aeromagnetic data by Clancy suggests that that western half of this target may be prohibitively deep.

Proposed Exploration Program and Budget

Initial investigations by Clancy indicates a substantial amount of previous exploration work, which includes geological, geochemical, drilling and geophysical data that will require extensive compilation and validation. Newcrest only recently relinquished their tenement over the same area and their work in with Barrick between 2004 and 2007 has yet to be reported to the NSW Department of Primary Industries. Additionally, all historic drilling data requires validation, inclusion of magnetic susceptibility and sulphur isotopic data, petrological descriptions, as well as prospect scale geophysical data (aeromagnetic and IP data).

Once collated, Clancy propose to re-log available diamond drill core, with the collection of spectral data and check assaying. This data will then be used to develop three dimensional geological models for the Kingswood prospect. In conjunction with these detailed studies, Clancy plan to further analyse magnetic data (3D inversions) and use this to assist with targeting at Kingswood to define follow-up diamond drill targets. Additional aircore drilling will also be undertaken over any areas of Clancy targets that remain untested.

A proposed exploration budget of \$114,000 for Year 1 and \$157,000 for Year 2 has been outlined Clancy to carry out the above work program. This budget more than covers the expenditure commitment of \$62,000.

Project Potential and SRK Comment

The Myall project again represents an advanced exploration play where previous aircore and diamond drilling has intersected broad areas of anomalous Au and Cu mineralisation combined with extensive porphyry-style alteration and veining. The presence of a fractionated intrusive suite, with bornite and chalcopyrite and the character of aeromagnetic and gravity responses over Myall has drawn comparisons to the Northparkes area, some 50km to the south.

Three dimensional modelling of drilling data at Kingswood should provide additional insight into controls on mineralisation and allow Clancy to target higher-grade zones within the mineralised system and areas which remain open or require additional drilling. Additional areas not previously drill tested may provide opportunity to define new exploration targets.

The exploration program proposed by Clancy is of sound technical merit and is appropriately funded for this stage of exploration.

3.2.3 Goobang

Clancy is the registered holder of the Goobang (EL6537) tenement, which covers 106km² and carries a total annual expenditure commitment of \$38,500 (Table 3).

Geology and Previous Exploration

The Goobang tenement is located in the southern part of the Northparkes Igneous Complex, approximately 20km south of the Northparkes mine. There is very little outcrop in the area but the volcanic stratigraphy is well understood with extensive exploration and development drilling in and around the Northparkes deposits.

Most of the lease covers Early Ordovician Nelungaloo Volcanics, which form a distinctive teardrop shape dome evident in the magnetic data (Figure 10). The dome is the core of the north-northeast trending Forbes Anticline and forms a structural high with younger carbonate units of the Billabong Creek Limestone and Gunningbland Formation flanking the dome to the south and west. The Billabong Creek Limestone represents a hiatus in volcanism between the Middle to Late Ordovician Goonumbla Volcanics and the older Nelungaloo Volcanics (Barnes and Ward, 2007). Several intrusive complexes have been interpreted within the core of the Forbes Anticline, some of which have been confirmed by mapping and by previous exploration drilling. Previous sampling of these intrusions suggests they have medium- to high-K calc-alkaline affinity, which is consistent with the dominantly calc-alkaline Early Ordovician magmatic event noted elsewhere in the Macquarie Arc. The Parkes Thrust is the structural boundary of the arc in the eastern part of the tenement.

Relatively little previous exploration has been completed at Goobang, which is surprising given its location in the Northparkes Igneous Complex. Most work focused on the Goonumbla Volcanics to the north and east of EL6537. The limited rock chip, soil and stream sediment sampling was likely to be ineffectual as there is very little outcrop within Goobang and there is a veneer of clay and gravels over much of the tenement. Clancy suggest that these gravels were sampled by previous explorers and contain trace amounts of gold which contaminate soil and stream sediment samples, generating false anomalism (Barnes and Ward, 2007). The only drilling within the tenement was a RAB program at the Warregal Prospect in the southwest corner by Delta Gold in joint venture with Tri Origin, and two lines of RAB in the centre of the tenement were drilled by Geopeko (Barnes and Ward, 2007).

Clancy Targets

Two A-class targets were defined by Clancy within the Goobang lease, LFB111 and LFB112 (Figure 10). A single C-class target was also outlined, LFB113.

LFB111 is the highest ranked target within Goobang and is located in the southwest of the tenement. The Warregal prospect mentioned above lies immediately south of LFB111 where Delta / Tri Origin drilled 31 widespaced RAB holes which obtained negative results.

LFB112 is in the north of the tenement and covers the intrusive complexes in the core of the Forbes Anticline. The only previous work over the target area was two reconnaissance RAB traverses along roads by Geopeko, which returned negative results. However this was deemed insufficient by Clancy who completed 55 broadspaced reconnaissance aircore holes (3,284m) on a nominal 500m offset pattern in August 2006. Approximately 60% of the target area within EL6537 was tested with this program.

Clancy found that Quaternary cover ranges from 25m to more than 50m thick overlying altered Ordovician volcaniclastic sandstone and fractionated monzonite. The program confirmed that the predicted Ordovician intrusive is present in the best part of the target area, and it is associated with sulphide, veining and favorable alteration. Geochemical results from the drilling show elevated basement Cu anomalism (> 300ppm Cu) in several holes with two zones evident. The northwest zone corresponds to an area surrounding fractionated monzonite in hole GGAC002. Seven adjacent ~500m-spaced holes have Cu ranging from 326 to 496ppm Cu over an area of $2 \times 1.3$ km and the anomaly is open to the northwest. The southeast anomaly covers three adjacent ~500m-spaced holes with maximum Cu of 324, 448 and 542ppm Cu, which remains open to the east. Further aircore drilling is required to close off the anomalies and a 3D IP survey is recommended before follow up RC and/or DDH drilling.

Figure 10: Goobang EL6537 interpreted geology, RTP magnetics and targets.

A – interpreted pre-Tertiary geology showing the location of Goobang in relation to Northparkes; B - magnetic image of the 200 - 1000m RTP residual. Note the distinctive teardrop shape of the Forbes anticline. Location grid ticks are 10km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Proposed Exploration Program and Budget

The proposed budget for Goobang covers the continuation of first-pass aircore drilling to close off the two anomalous zones within Target LFB112, followed by 3D IP surveys to defined RC and/or DDH drilling targets.

A proposed exploration budget of \$75,000 for Year 1 and \$164,000 for Year 2 has been outlined by Clancy to carry out the above work program. This budget adequately covers the expenditure commitment of \$38,500.

Project Potential and SRK Comment

The Goobang project is an early stage exploration project with limited previous work, particularly given it's location within the Northparkes Igneous Complex. Clancy's initial reconnaissance drilling has indicated the presence of altered Ordovician volcaniclastic and intrusive rocks with low-level anomalies of Cu and Au. Additional RAB drill testing is required to fully define the anomalies prior to additional RC or diamond drill follow-up.

The exploration program proposed by Clancy is of sound technical merit and is appropriately funded for this stage of exploration.

BΞ

NDER HONOGENE EN NORDEREN

3.2.4 Cundumbul

The Cundumbul Project consists of one EL being Cundumbul EL6661 and one ELA (Bakers Swamp ELA3026) (Table 3). Recent tenements relinquished by other parties have enabled Clancy to lodge the overriding EL6661, which covers both the original licences being EL6180 and EL6443 and the relinquished ground in between. Clancy has set in process the surrender of EL6180 and EL6443 in favour of the overriding EL6661 so that the project area is consolidated. The Bakers Swamp ELA was made to cover a small gap in tenement coverage. A total annual expenditure commitment of \$66,000 will be associated with this tenement package upon surrender of the two leases mentioned above and granting of Bakers Swamp.

Geology and Previous Exploration

This section of the MVB is well exposed, with the geology at Cundumbul being characterised by north-striking fault-bounded slices of Ordovician, Silurian and Devonian rock units (Figure 11). The bounding structures are mainly E-dipping thrusts of regional extent. One of these thrusts, the Neurea Fault, juxtaposes Silurian sedimentary. Devonian volcanic, and Late Ordovician volcanosedimentary rocks in the hangingwall, into contact with the Early Ordovician Mitchell Formation, and the Hensleigh Siltstone in the footwall. This partitions the Ordovician arc into two sections. The Early Ordovician Mitchell Formation, Hensleigh Siltstone, and the Middle Ordovician Fairbridge Volcanics occur to the west. The Middle to Late Ordovician Oakdale Formation occurs to the east, covering two thirds of the project area (Barnes and Ward, 2007).

The Hensleigh Siltstone consists of laminated graptolitic siltstone, minor volcaniclastic sandstone and limestone. The Mitchell Formation contains a succession of latitic conglomerate, sandstone, siltstone and minor monzodiorite, and it conformably underlies the Hensleigh Siltstone. The Fairbridge Volcanics consist of basaltic andesite, andesitic and shoshonitic lavas and high-level intrusives, volcaniclastic breccia, sandstone, conglomerate and minor siltstone. The Oakdale Formation in this area is characterised by andesite, latite lava, high-level intrusives, volcaniclastic breccia, conglomerate, sandstone and siltstone.

Figure 11: Cundumbul tenements, Ordovician geology, targets and aeromagnetic imagery.

A - Ordovician geology: Oakdale Formation east of the Neurea Fault, Hensleigh Siltstone, Mitchell Formation and Fairbridge Volcanics west of the Neurea Fault; B - RTP magnetic image showing possible intrusive centres (yellow ellipses) within target LFB050. Major bounding thrusts (triangle symbols) and interpreted faults (fine black lines) are also shown. Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Utilising aeromagnetic data distinct units of the Oakdale Formation and Fairbridge Volcanics can be traced through the area. Despite the absence of intrusives on the published geological survey maps, the presence of intrusive complexes are confirmed by mapping, rock-chip sampling and lithochemical sampling by Clancy and previous workers at the Mehruda, Owens, Bakers Swamp, Finches Flat, Lyons and Bellevue prospects (Figure 11). All of these prospects have some copper and/or gold associated with them, and most are associated with monzonite or monzonite porphyry. At Bellevue, weakly porphyritic quartz monzodiorite to granodiorite dykes and intermediate feldspar-porphyry dykes are the main intrusive phases.

Previous explorers include CRAE, MIM, Newcrest, North Ltd and LFB Resources, with the latter doing the most work in the project area. LFB Resources completed a regional rock chip sampling program (>300 samples) in conjunction with geological mapping documenting evidence of porphyry-related processes including porphyritic intrusives, extensive stockwork veining and brecciation, silica, carbonate (siderite) and epidote alteration, copper secondaries (malachite) and boxwork textures (Barnes and Ward, 2007). A single rock chip sample returning 40g/t Au was returned from the Lyons prospect. This was followed by soil sampling over a restricted area and limited drilling mostly at Bellevue. Soil results were subdued, and results from the drilling were also low level. Clancy compared the tenor of the soil anomaly over Lyons to that at Copper Hill (about 20km to the south-southwest), which is currently being drilled to resource status by Golden Cross Resources. The soil anomaly at Copper Hill was in the 1000's of ppm Cu whereas at Lyons the 'anomaly' is an order of magnitude lower (most samples in the 100's of ppm Cu). At Copper Hill, the mineralisation is basically exposed hence the strong soil anomaly. The veins and rock textures at Lyons are possibly indicative of a high level system, and the apparent lack of a prominent soil anomaly may be due to the intrusion/s not breaching the roof rocks.

In order to evaluate this proposition, Clancy completed detailed mapping in the Lyons area and relogging of drilling from Bellevue. This work suggested that the prospects are most likely to be distal to a porphyry system with the source intrusion estimated to be 200-300 m below the current levels tested by drilling, being in excess of 400 m from surface. The mapping report highlighted the failure of rock chip anomalies to be confirmed by follow up soil sampling and drilling, attributing this to either a dilution of the soils by the erosion of Tertiary basalt, or the soil profile being poorly developed and too immature for the effective dispersion of Au and Cu (Barnes and Ward, 2007).

Clancy Targets

Two Clancy targets were defined in the Cundumbul area; one A-Class in the north and one B-Class in the south. These shifted the focus away from the Bellevue-Lyons areas in the southeast, where much of the previous exploration was focused, to the western and northern parts, where relatively little previous exploration has been completed.

The A-class target LFB050 extends from west of the Neurea Fault, across the thrust wedge of Silurian and Devonian rocks, to the Narragal Fault in the east (Figure 11). Deep magnetic residual features indicate the presence of a deep unexposed batholith beneath the Fairbridge Volcanics in the Bakers Swamp area, possibly driving a porphyry system. This is supported by monzonite porphyries mapped by MIM at Bakers Swamp. Limestone (Wahringa Limestone Member) in this area is encouraging as it suggests that the volcanic environment was near-surface, and therefore favorable for the preservation of high-level porphyritic intrusive rocks. The target takes in the interpreted intrusive centres outlined in vellow in Figure 11.

Proposed Exploration Program and Budget

The initial focus for exploration at Cundumbul will involve detailed mapping (in particular within target LFB050), and soil and rock-chip sampling and associated lithogeochemistry / petrology in order to characterise the alteration systematics of the area. Contingent on these results, drilling is proposed on defined targets.

A proposed exploration budget of \$258,000 for Year 1 and \$267,000 for Year 2 has been outlined Clancy to carry out the above work program. This budget will adequately cover the expenditure commitment associated with these leases.

Project Potential and SRK Comment

Previous exploration within the Cundumbul Project area has returned anomalous assay results from drilling, soil and rock chip samples which may not have been adequately followed up. Preliminary interpretation by Clancy suggests that the core of the mineralised system may be deep (potentially >400m depth from surface) within the Lyons - Bellevue areas. Clancy targeting has also identified the western and northern parts of the project area as being prospective. Limited previous exploration in these regions requires that detailed mapping and reconnaissance exploration / sampling take place prior to any drill programs at Cundumbul.

It is SRK's opinion that the controls on alteration and associated Cu-Au mineralisation / anomalism at Cundumbul are currently poorly defined, and warrant further work. Potential exists for a deep source to the surface anomalism, based on the magnetic data, and the exploration program and budget is based on sound technical merit, and is suitable at this stage of exploration within the Project area.

3.2.5 Orange East

Clancy is the registered holder of the Orange East (EL6181) tenement, which carries a total annual expenditure commitment of \$59,000 (Table 3). The lease is in close proximity to the City of Orange where land is held by numerous smaller properties than through most of the Lachlan Fold Belt. As a result it is anticipated that land access negotiations will be time consuming. In addition, the main target area is in close proximity to Suma Park Reservoir, which is the main water supply to the City of Orange.

Geology and Previous Exploration

The local geology is dominated by northwest-striking, fault-bounded slices of Ordovician volcanic and sedimentary rocks, bounded by east-dipping thrusts: the block is bounded by the Lucknow fault in the west, and the Godolphin fault in the east. The main arc units within EL6181 are the Late Ordovician Upper Blayney Volcanics and Byng Volcanics, with the Oakdale Formation being confined to narrow fault slices in the southeast of the tenement. Minor ultramafic cumulates and lavas occur in the southern part of the tenement.

A large (6km x 2km) Late Ordovician monzonite complex intrudes the Upper Blayney and Byng Volcanics in the central part of tenement near the Suma Park Reservoir. The monzonite is well exposed in a quarry about 1km north of Wellwood (Figure 12) with compositions ranging from syenite to monzonite. Large sections of the exposed complex are bleached by narrow (generally <1cm wide) sheeted quartz veins with some accompanying pyrite in a style of alteration similar to the host monzonite at Cadia Hill.

Previous exploration focused around the old Carangera mine (produced 784 tonnes of copper in the late 1800's) in the southeast of the tenement, where a cluster of vein Cu occurrences are related to the Godolphin fault. However, these are not associated with a large intrusive complex. The Wellwood Au occurrence worked in the 1920's and 1930's sits astride the Lucknow Fault within slivers of ultramafic rocks similar to the structurally controlled Au mineralisation at Lucknow.

Figure 12: Orange East EL6181 tenement, Ordovician geology, target and aeromagnetic imagery.

A-Ordovician geology and the Silurian Anson Formation; B-RTP magnetic image showing the major intrusive centre and target (yellow ellipse), major bounding thrusts (triangle symbols) and interpreted faults (fine black lines). Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

More recently, limited exploration has been conducted by Renison, CRAE, Michelago and North Ltd. North completed aircore drilling across the Godolphin Fault north of Carangera, and shallow RC drilling into the monzonite complex east of Suma Park Reservoir, returning a best result of 6m @ 1.02% Cu. However, the majority of North's drilling was very shallow (<10m depth) in extent and may have been ineffective in drill testing this area.

South of the lease, recent work by Alkane at the McPhillamy's prospect (about 15km south-southeast) has identified significant gold mineralisation from surface in Silurian rocks with intercepts such as 123m at 1.96gpt Au from surface, including higher-grade intervals of 28m at 3.83g/t Au and 10m at 4.93g/t Au (MiningNews. net 2006). Gold mineralisation is described as being structurally controlled gold, representing a sheared VHMS system within the Silurian Anson Formation. Similar structural settings exist in the southern part of the Orange East project area.

Clancy Target

One A-class target (LFB044; Figure 12) identified using probabilistic modelling at Orange East, is spatially associated with a high magnetic response from interpreted intrusive rocks. Modelling completed by Clancy suggests the monzonite complex is at least twice the size of the exposed monzonite, and lithochemistry sampling confirms that it is shoshonitic (Barnes and Ward, 2007). The multiphase composition of the complex is encouraging, as it suggests a long-lived, fractionated magmatic system. A downside of this target is its proximity to the town of Orange and the Suma Park Reservoir.

Proposed Exploration Program and Budget

Clancy propose to evaluate the Orange East tenement for both Ordovician porphyry Cu-Au deposits and the potential for structurally controlled Au mineralisation. A work program involving detailed prospect mapping to document alteration and vein / fracture density over the main target area has been recommended. Auger soil sampling in the southern part of the lease is also planned to evaluate the gold potential. These will be followed by diamond and / or RC drilling of defined targets contingent upon land access issues.

Clancy has proposed to spend \$187,000 in Year 1 and \$311,000 in Year 2 to explore the Orange East tenement. This budget adequately covers the expenditure commitment of \$59,000 in Year 1, and it is anticipated that lessprospective parts of the tenement will be relinquished in Year 2.

Project Potential and SRK Comment

The Orange East tenement is at an early stage of exploration, and requires finalisation of ground access prior to any further work. SRK agrees with Clancy in that reconnaissance mapping and auger soil sampling should be conducted, prior to drill-testing of deeper targets. Although demonstrably mineralised, the occurrences in the south of the tenement are lowly ranked with respect to potentially hosting the Ordovician porphyry Cu-Au systems targeted by Clancy. The main target area LFB044 offers a greater opportunity for this style of mineralisation but discrete drill targets are required. The southern lease area may have potential for structurally hosted gold mineralisation along or adjacent to the Godolphin fault. The exploration program and budget presented to SRK will be sufficient to assess these possibilities once access is arranged.

3.2.6 Spring Creek

The Spring Creek licence covers about 10km of strike length on the northern end of the MVB covering an area of 52 km² with an associated annual commitment of \$29,000.

Geology and Previous Exploration

There is no outcrop of Ordovician volcanic rock, which is covered by up 200m of Triassic sedimentary units of the Great Australian Basin. Based on interpretation of aeromagnetic data, the dominant arc-related stratigraphic unit is the Late Ordovician Oakdale Formation which extends north from Wellington beneath the basin fill. At the Wellington North JV project (refer Section 3.3.1) the Oakdale Formation consists of andesite, latite lava, volcaniclastic breccia, conglomerate, sandstone and siltstone, and is intruded by mafic to intermediate rocks. However, little is known about the Ordovician basement at Spring Creek and there has been no previous exploration.

Clancy Target

There is one A-Class target (LFB054) within the Spring Creek project (Figure 13). Although this is completely obscured by Mesozoic Basin, depth to basement modelling suggests the Ordovician Arc is within 150m of the present day surface. The deeper magnetic residuals suggest the presence of an ovoid deep batholith adjacent to a northwest-trending interpreted structure that could be driving a hydrothermal system. High frequency magnetic features immediately north of the deep batholith suggest the presence of near surface intrusives (cupolas). There has been no previous drilling in the area and reverse circulation drilling will be required to drill through the Mesozoic sandstone and siltstone in order the reach Ordovician basement.

Figure 13: Spring Creek EL6536 A-Class target LFB054.

A-Target LFB054 (bold blue) over RTP magnetic image, also showing major interpreted faults (grey). B – target showing possible intrusion signatures: deep batholith (pink) and cupolas (dark pink). Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Proposed Exploration Program and Budget

Clancy initially propose to validate the depth to Ordovician basement with RC drilling. If sufficiently encouraging results are received, follow up RC drilling will be undertaken in Year 2. To carry out this program Clancy propose to expend \$75,000 in Year 1 with a contingency of \$71,000 in Year 2 for exploration of Spring Creek. These amounts exceed the annual commitment of \$29,000 on the tenement.

Project Potential and SRK Comment

The Spring Creek project represents a highly conceptual exploration target which has had no previous exploration. The presence of potentially favourable Ordovician intrusions beneath the Mesozoic Basin sequence is of interest, although it is yet to be determined how deep this cover might be. Clancy has put forward a reasonable exploration budget to test this concept.

3.2.7 Illabunda

Clancy is the registered holder of the Illabunda (EL6535) tenement located 45km north of Nyngan, with an annual expenditure commitment of \$45,500 (Table 3). Access by road / tracks to the tenement is good, but can be severely curtailed during heavy rain and may flood as it is located on the margin of the Macquarie Marshes and related drainage networks.

Geology and Previous Exploration

The Illabunda project is located where the northern section of the Junee-Narromine Volcanic Belt extends beneath the Cretaceous to Jurassic sandstone and siltstone of the Great Australian Basin (Figure 6) with extensive Quaternary cover related to the Macquarie Marshes. Several fragments of Ordovician arc are interpreted from magnetic and gravity imaging (Figure 14).

The cross section on the GSNSW Nyngan geology sheet indicates that the depth to Ordovician basement is about 400m below surface some 25km south of EL6535. Modelling by Clancy indicates that basement is within 200m of surface in the area around EL6535 (Barnes and Ward, 2007). Water bore drilling over similar magnetic highs 20-40km along strike from Illabunda intersected basement within 200m of surface, although some holes had basement depths >300m.

No previous exploration is reported within EL6535. Exploration by BHP drilled a single hole into a coincident gravity and magnetic anomaly about 15km SSW of EL6535 (the Gerar prospect) during the 1980's looking for an Olympic Dam style target (Figure 14). This hole reached 192m, ending in a chlorite-pyroxene-biotite dioritic to gabbroic composition rock, containing 3% magnetite/ilmenite and traces of chalcopyrite (Barnes and Ward, 2007).

Clancy Target

Clancy identified one A-Class targets LFB015 within the Illabunda project. The target is not exposed and it is likely that Quaternary cover sequences will prove difficult to drill due to their unconsolidated nature. A substantial thickness of Cretaceous to Jurassic sediments is also expected.

Proposed Exploration Program and Budget

As is the case for the Spring Creek tenement, drilling is the only available exploration technique for testing LFB015. Clancy's strategy is to complete several reverse circulation drill holes to a depth of around 200m in year one to validate the depth to Ordovician basement modelling. Assuming that the depth to Ordovician basement is validated, and that the basement rocks offer sufficient encouragement, follow up RC drilling is also planned for year two.

To complete this program, Clancy has put forward a budget of \$77,000 for Year 1 and \$96,000 for Year 2. This budget is adequate to test the thickness of cover sequences and initial target testing. This expenditure is above the annual expenditure commitment of \$45,500 for the lease.

Figure 14: Illabunda EL6535 interpreted arc location, RTP magnetics and target.

A - Interpreted Macquarie Arc fragments in green showing NW-SE oriented drainage network (pale blue), unsealed roads and tracks (grey dashes and dots) and homesteads (grey squares); B - RTP 200-1000m magnetic residual image showing target LFB015 (blue) and the Gerar prospect that was drilled by BHP in the 1980's (yellow circle). Location grid ticks are 10km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Project Potential and SRK Comment

Ordovician dioritic basement in the nearby Gerar prospect contains traces of mineralisation within 200m of surface. This is encouraging, as it suggests that basement intrusive complexes exist at a depth that can be tested with RC drilling. However, like Spring Creek, the Illabunda project represents a highly conceptual exploration target which has had no previous exploration. It is yet to be determined how deep the cover sequences are, but Clancy has put forward a fairly modest exploration budget to test these concepts.

3.2.8 Currumburrama

The Currumburrama project comprises a single tenement application (ELA2916) over an area of 182km² with an associated annual expenditure commitment of \$52,000 once granted (Table 3).

Geology and Previous Exploration

Limited Ordovician outcrop occurs within Currumburrama, the surface geology dominated by Quaternary alluvium clay and gravel. The presence of Ordovician basement is inferred from magnetic and gravity data, which define a large north-trending Ordovician arc fragment (~40 x 12km), named the Currumburrama Igneous Complex. This complex is interpreted to be comprised of sedimentary and volcaniclastic rocks. Volcanic and intrusive units are interpreted within the central and eastern sections of the complex. The complex is fault bounded and internally segmented by a number of faults. Two major intrusive centres are interpreted (Figure 15): one south of Currumburrama and a smaller elongate complex in the central part of the tenement (Barnes et al, 2006).

Limited previous exploration through this complex has confirmed the presence of Ordovician volcanic, intrusive and sedimentary rocks. Exposure of Ordovician sediments of the Jingerangle Formation is restricted to the southern lease area. Mapping of gravel pits and other outcrops by Geopeko identified several narrow siliceous pyritic breccia zones, but these were not geochemically anomalous (Barnes and Ward, 2007). Geopeko also undertook reconnaissance RAB/RC/diamond drilling of magnetic targets within the complex, seven holes located within ELA2916. This work located basement geology of predominantly andesitic, trachyandesitic and some trachytic volcaniclastic rocks. Several holes intersected monzonite and syenite dykes, but no major intrusive complexes were identified and the assay results were low level.

Subsequent to this Goldminco identified the Silverstone and Imola prospects just south of Currumburrama, testing magnetic highs with reconnaissance aircore drilling. Follow-up drilling at these prospects outlined intensely altered volcanics and breccias intruded by fractionated and veined shoshonitic monzodiorite and monzonite stocks. Clancy report mineralisation at Imola is hosted by intrusive breccia with a best intercept of 96m @ 0.7 g/t Au, while Silverstone is hosted by hematite-biotite-magnetite-K-feldspar altered intrusive and volcanic rocks with a best intercept of 74m @ 0.15% Cu (Barnes and Ward, 2007).

Other previous explorers of Currumburrama include BHP, Newcrest, CRAE and Resolute but in all only four reconnaissance holes were drilled. More recently, Auriongold held the tenement and flew a high resolution aeromagnetic survey prior to Goldminco inheriting the lease. It appears Goldminco's focus remained on the Silverstone - Imola prospects and Clancy concludes that the Currumburrama tenement effectively remains untested for Ordovician porphyry Cu-Au systems (Barnes and Ward, 2007).

Clancy Target

A single A-Class Target LFB022 constitutes the primary focus for Clancy within Currumburrama. This interpreted igneous complex is associated with an elongate magnetic low with flanking magnetic highs. No significant drilling by previous explorers is reported.

Proposed Exploration Program and Budget

Clancy intends to initially complete aircore drilling on target LFB022 during year 1. If the Auriongold high resolution aeromagnetic data can be sourced this could assist with drill targeting. Any Ordovician basement anomalies would then be followed up in Year 2 with deeper reverse circulation / diamond drilling. Spectral logging of drill chips / core will be completed to assist with documenting alteration systematics. Limited previous drilling reports difficult drilling conditions with high groundwater flows anticipated.

Figure 15: Currumburrama ELA2916 interpreted geology, RTP magnetics and target.

A - interpreted pre-Tertiary geology of the Currumburrama Igneous Complex showing location of ELA2916 and adjacent EL5792 held by Goldminco which hosts the Silverstone - Imola porphyry system (black dots); B - RTP 200-1000m magnetic residual image showing target LFB022 (blue). Location grid ticks are 5km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

A proposed exploration budget of \$115,000 for Year 1 and \$162,000 for Year 2 has been outlined Clancy to carry out the above work program. This budget covers the expenditure commitment associated with these leases and is appropriate for testing the target outlined.

Project Potential and SRK Comment

The Currumburrama Igneous Complex defined by Clancy comprises two major intrusive centres – one located within Clancy's lease area and the other occurring about 5km to the south and hosting Goldminco's Silverstone - Imola prospects where significant alteration and Cu and Au drill intersections are reported. Whilst the target is conceptual in nature and also likely to be beneath significant cover perhaps >100m thick, the fact that similar rocks are known to be mineralised nearby provides encouragement for Clancy to test their target.

3.2.9 Billabong Creek

Billbong Creek is a recent EL application (ELA3007) covering 135km² situated in the southern part of the INV Belt 40km east of Wagga Wagga. Once granted, the tenement will attract a total annual expenditure commitment of \$44,000 (Table 3).

Geology and Previous Exploration

Billabong Creek is situated on the Gilmore Fault, a major regional northwest-trending composite structure marking the southern boundary of the Macquarie Arc. Outcrop is sparse, confined to small exposures on the tops and flanks of low hills.

Ordovician basement is interpreted from aeromagnetic data as volcanic units with northwest strike parallel to the Gilmore Fault (Figure 16). The Ordovician rocks within the tenement have been assigned to the Junawarra Volcanics, comprising andesitic tuffs, intermediate lavas and associated volcaniclastic sedimentary rocks and volcanic breccia. Clancy liken the lithology and magnetic expression of the Junawarra Volcanics to the Gidginbung Volcanics, which host porphyry and epithermal mineralisation 75km northwest along strike (Barnes and Ward, 2007).

The region has been explored by numerous companies since in the 1970's, with the most significant work completed by Jododex Australia and Geopeko in the 1980's, North Ltd, Cyprus Gold and Gold Mines of Australia in the 1990's and Golden Cross in the 2000's. However, only limited ground work was completed over Clancy's target area. Geopeko outlined two prospects; the Cooba historical copper workings and Billabong Creek hosting anomalous base metals results, both located in the north of the current tenement area.

Further south, Jododex Australia identified a monzonite on the banks of the Murrumbidgee River, which returned two rock chip assays of 1.22% and 2.00% Cu. North subsequently drilled four shallow RC holes near the monzonite located within the Riverdale prospect, returning a best intercept of [email protected]\%$ Cu, 0.04g/t Au, 80ppm Mo (Barnes and Ward, 2007). No follow-up work was undertaken by North or any other explorers.

Clancy Targets

Clancy defined a single A-Class target LFB031 within the Billabong Creek lease. No drilling is apparent within Clancy's target, but previous explorers have outlined areas of interest particularly to the south at the Rivervale prospect.

Proposed Exploration Program and Budget

Clancy intend to continue compilation of previous geochemical and drill sampling combined with reconnaissance field work and mapping over the Cooba, Billabong Creek and Riverdale prospects. Additional magnetic and radiometric data will be processed, possibly supplemented by detailed helimagnetic surveying to better define structural targets. Three dimensional IP surveying may be undertaken depending on overburden characteristics, all leading toward target definition for RC drilling commencing in Year 2.

Clancy has allocated \$64,000 for Year 1 and \$104,000 for Year 2 largely associated with geophysical surveying and subsequent drill testing. This adequately covers the anticipated annual expenditure commitment of \$44,000.

Project Potential and SRK Comment

Results from previous explorers provide some encouragement with identified anomalous Cu, Au, Mo trends within the Billabong Creek area. Further data compilation is required and refined structural interpretation should assist with targeting.

Figure 16: Billabong Creek ELA3007 interpreted arc location, RTP magnetics and target.

A-interpreted Ordovician arc location (green) and composite structures related to the Gilmore Fault (grey); B - RTP magnetic image showing target LFB031 (blue) and Gilmore Fault structures (white). Location grid ticks are 10km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

3.3 Joint Venture Project Descriptions

3.3.1 Wellington North JV

The Wellington North JV Project is located in the Molong Volcanic Belt and incorporates the Duke (EL6178), Hillcroft (EL6328) and Yarindury (EL6662) tenements covering 244 km². The three licences form two blocks and cover about 40km strike length of the Belt, immediately north of Wellington (Figure 17). All tenements are granted and Clancy Exploration Limited is the registered holder. A total annual expenditure commitment of \$148,500 is associated with this tenement package (Table 3) and Gold Fields have agreed to spend \$2M to earn an 80% interest.

Geology and Previous Exploration

The local geology of the Wellington North Project is dominated by undifferentiated Ordovician volcanic rocks of the Oakdale formation, which in this area consists of andesite, latite lava, volcaniclastic breccia, conglomerate, sandstone and siltstone. Isolated Ordovician limestone outcrop is also present. This sequence is intruded by mafic to intermediate rocks. The area is characterised by up to 25m of Quaternary cover, but often the cover is much shallower, as Ordovician subcrop is common.

Although individual units of the Oakdale Formation are not divided on the Dubbo 1:250,000 or 1:100,000 geological sheets, distinct units can be traced with some confidence from magnetic data sets. Epidote-altered andesitic lava and hematite-rich volcaniclastic rocks are exposed in a north-northwest trending ridge in the southwest part of EL6178. These units have a characteristic high-magnetic response and can be traced under younger cover (stippled unit in Figure 17). In contrast, volcanic units that lack lava and hematite-rich volcaniclastic rocks have a much lower magnetic signature. Intrusive rocks (typically diorite to monzodiorite) are exposed at Comobella, Rose Hill and Kaiser, as well as at several intervening localities. The intrusives generally produce radially symmetric positive magnetic anomalies, and hence can be identified in magnetic data sets, especially where they intrude units with a lower intensity magnetic response.

There are numerous copper and gold mineral occurrences within the Oakdale Formation south of the Mesozoic Basin. The most significant are Kaiser, Comobella, Bodangora and Rose Hill, but only the latter is within Clancy tenure (EL6178, Figure 17). Kaiser, Comobella and Rose Hill are considered to be porphyry systems associated with Ordovician monzonite to monzodiorite complexes, with Bodangora interpreted as a high-level lowsulphidation epithermal vein system. Historically, small-scale copper mining has been undertaken at Kaiser and Rose Hill (1870 to late 1880s) and a more substantial gold mining operation was established at Bodangora / Mitchells Creek between 1876 and 1917 (GSNSW Metmin Database, 2004). More recent exploration within the Wellington North project area has been completed by CRAE and Newcrest at Duke, and MIM and North Ltd at Hillcroft and Yarindury. Significant results from the previous exploration are discussed in the context of the defined targets in the following section.

Figure 17: Wellington North tenements, Ordovician geology and aeromagnetic imagery.

A: Oakdale Formation (green), showing the interpreted volcanic (stipple) and volcaniclastic (nonstipple) units, dioritic intrusives (red) and limestone (blue);

B: Reduced to Pole (RTP) magnetic image. The red line in both figures is the exposed limit of the MVB. Mineral occurrences are also shown as picks. (Figure from Barnes and Ward, 2007).

Clancy Targets

Four A-class targets have been identified for immediate investigation in the Wellington North Project area.

Target LFB052 is located on the intersection of a north-northeast trending and a northwest trending interpreted fault (Figure 18), with the Rose Hill copper occurrence located on the southern edge of the target. Detailed mapping completed by Clancy around Rose Hill identified monzonitic plutonic rocks that locally contain primary sulphide mineralisation. Pyrite and chalcopyrite mineralisation is accompanied by strong magnetite alteration, K-feldspar alteration, and chlorite alteration after hydrothermal biotite. The monzonitic plutonic rocks are generally equigranular and lack porphyritic phases at surface. This may indicate that the magmatic system was active at a relatively deep crustal level for porphyry-type mineralisation. Whilst this is generally considered less favourable than shallower levels, it does not rule out the possibility of proximal porphyry-type mineralisation.

The major north-northeast trending fault that cuts the target has vertical displacement with uplift on the northwest side. The fault has juxtaposed deeper crustal levels on the northwest side with shallower crustal levels to the southeast. It is clearly post-mineralisation as it terminates the alteration associated with the Rose Hill monzonite. The geometry of this structure and its influence on a possible porphyry system requires further investigation.

Targets LFB053 and LFB119 are associated with a large basement magnetic complex which has been further defined by a high-resolution aeromagnetic survey flown by MIM (Figure 18). The magnetic complex incorporates the Comobella intrusive complex, with the Kaiser system on its southern margin. Within Hillcroft (EL6328), previous drilling through the Mesozoic Basin by MIM intersected high-K, calc-alkaline volcanic and intrusive rocks of monzonite to monzodiorite composition at basement depths of 50m and 76m respectively. Further north within Yarindury (EL6662), drilling by North Ltd and MIM intersected shoshonitic volcanic and volcaniclastic rocks with abundant clasts of hornblende-quartz monzodiorite of similar composition. Petrology suggests that the intrusive complexes are high-level (porphyritic texture), hydrous (presence of hornblende) and potassic (presence of extensive K-feldspar, syenite veins and biotite). Native copper and trace amounts of oxide after sulphide have also been noted in drill logs. The best intercepts from this work were; 8m @ 0.24g/t Au and 623ppm Cu from 106m (Hole 5318P33) and 16m @ 0.18g/t Au, including 2m @ 0.98g/t Au from 142m (Hole YAR002P; Figure 18).

The final A-class target LFB051 is in the southern section of the Duke tenement (EL6178) and covers the Dunbell mineral occurrence in the exposed portion of the arc in the west and extends to the east beneath shallow cover. The deep magnetic residuals over this area indicate the potential presence of a deep unexposed batholith, which may be driving a porphyry system (Figure 18). Detailed mapping completed by Clancy in the Dunbell area identified a $100 \times 200$ m alteration zone (illite/sericite) that locally features secondary copper mineralisation. The mapping suggests that the alteration zone may represent the distal to intermediate part of a porphyry-type hydrothermal system. Within such a framework, the illite/sericite alteration zone represents an outer phyllic assemblage that merges into distal propylitic assemblages. This target has not been drill tested.

Clancy commenced auger soil sampling across the exposed portion of the arc in the Dunbell area in the western section of the target, with 341 samples collected at $200 \times 50$ m spacing. Some areas were not sampled due to crop planting; however these areas will be revisited. Preliminary review of the copper data shows that there are some coherent patterns, albeit at relatively low values. The highest value was 548ppm Cu in the eastern part of the soil grid.

Figure 18: Wellington North A-Class targets LFB052, LFB053 and LFB119

A - RTP magnetic image with targets (blue), major faults (grey) and MIM magnetic survey boundary (stitch line). B - Enlargement of the area shown in Figure 18A showing MIM magnetic data and anomalies associated with likely basement intrusive complexes (yellow). Coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Clancy undertook aircore drilling in the eastern section of the target, however the cover was significantly shallower than anticipated (<5m), so auger soil sampling will be employed instead. A total of 15 aircore holes (143m and 40 samples) were completed before drilling was suspended with assay results pending.

Proposed Exploration Program and Budget

Clancy propose exploration on all of the above targets to assess the potential of Wellington North. Geophysical modelling and IP surveying are planned to evaluate LFB052, north of the old Rose Hill Cu mine prior to RC or DDH drilling in the vicinity of anomalous holes drilled by Newcrest that had maximum intercepts of >500ppm Cu.

Results from previous exploration reviewed by Clancy suggest that the large basement magnetic complex described above has been partially drill tested by previous explorers, particularly in the south. Petrology on the Ordovician basement rocks suggests that the alteration associated with the complex is propylitic to potassic, associated with Au and Cu mineralisation. The northern part of target LFB119, beneath the Mesozoic Basin requires additional drill testing, as does the northern portion of LFB053.

Continued exploration over Target LFB051 around the Dunbell and Petleys Cu occurrences will infill gaps and extend coverage of the soil sampling program with follow-up RC drilling if warranted.

A proposed work program and exploration budget of \$387,000 for Year 1 and \$559,000 for Year 2 has been outlined by the JV. This ongoing exploration on the Wellington North JV project will be funded by Gold Fields with an agreement to spend \$2M to earn an 80% interest. Clancy will remain manager.

Project Potential and SRK Comment

The Wellington North JV project has previously undergone preliminary exploration by past explorers, with results suggesting the presence of potassic altered andesites and epiclastics, and hornblende-quartz monzodiorites of probable Ordovician age. Minor Cu, and anomalous Au mineralisation, is spatially associated with these altered rocks. Probabilistic modelling by Clancy has defined four A-class targets in the Wellington North Project area, with detailed reconnaissance mapping and investigation of existing drilling and soil sampling confirming the presence of porphyry-style alteration within the highly prospective Macquarie Arc rocks.

The exploration program proposed by Clancy aims to further define the alteration systematics within the Wellington North Project area, and drill test the most prospective parts of this system based on their understanding of porphyry systems as presented in Section 2.2.

In summary, it is SRK's opinion that the Wellington North project displays porphyry-style alteration and associated Cu-Au mineralisation / anomalism, within rocks targeted by Clancy as being prospective for Ordovician porphyry Cu-Au mineralisation. Previous exploration did not define the lateral or depth extents to this mineralised system, and this should be accomplished in part by the initial exploration program proposed by Clancy and funded by the IV partner Gold Fields. The proposed exploration program is appropriate at this stage of exploration, and is based on sound technical merit.

3.3.2 Cowal East JV

The Cowal East JV Project incorporates the Koobah (EL6553) and Wyrra (EL6554) tenements covering 63km². Clancy is the registered holder of these tenements, which carries a total annual expenditure commitment of \$51,000 (Table 3). Gold Fields have agreed to spend \$1M to earn an 80% interest.

Geology and Previous Exploration

The Koobah (EL6553) and Wyrra (EL6554) tenements are dominated by volcanic and volcaniclastic rocks of the Cowal Igneous Complex (CIC), including dacitic and rhyodacitic variants. The CIC is a prominent magnetic anomaly that consists of a large $45 \times 15$ km complex of highly variable magnetic gradients, flanked by magnetically quiet post-Ordovician units (Figure 19B). The complex is fault-bounded on all sides with major north-trending faults related to the Booberoi and Gilmore Faults on the western side, and the regionally extensive Marsden Fault on the east. The latter is the boundary between the Ordovician arc and the Devonian rift basin of the Tullamore Syncline.

The main deposit in the Cowal Igneous Complex is the Cowal gold mine, currently being mined by Barrick with a gold endowment of >4Moz (Table 1). The mineralisation at Cowal is not porphyry-style, although porphyry-style host rocks are present. It is described as a low sulphidation carbonate-base metal gold system that is transitional between the porphyry and epithermal environments (Bywater et al, 2004). The gold is intimately associated with base metal mineralisation (Cu, Zn and Pb) at Cowal and it significantly post-dates the porphyry host rocks, which are approximately 467-453 Ma, versus the gold mineralising event at ~440 Ma (Barnes and Ward, 2006).

Aside from Cowal, there are numerous other Cu and Cu-Au prospects in the CIC, some of which do exhibit porphyry-style characteristics. The E-series prospects (E for Endeavour) were discovered by Geopeko / North Ltd in the 1970s and 1980s including E41 and E46 (Cowal-style); E35, E39, E43 and Marsden (porphyry-style) (Figure 10a). Marsden is currently being evaluated by Newcrest (intercepts such as 123m @ 0.63g/t Au, 0.7% Cu have been returned, see Table 2) and is located between the Koobah and Wyrra ELs situated on a NWtrending fault (Figure 19). Cowal also sits on a similarly oriented structure.

The most relevant previous exploration in the Cowal East project area was conducted by LFB Resources in joint venture with Newcrest between 1999 and 2002. Significant results from previous exploration on the Koobah and Wyrra EL's are discussed in the context of the defined targets in the following section.

Figure 19: Ordovician geology within the Koobah and Wyrra tenements

A-interpreted pre-Tertiary geology showing key prospects, squares = Cowal-style mineralisation, $circles = pophyry-style mineralisation.; B - RTP magnetics. Note that some intrusions are magnetic$ and others are not. Location grid ticks are 10km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Clancy Targets

Clancy A-Class targets LFB124 and LFB125 cover the Koobah and Wyrra tenements, respectively. Target LFB124 effectively covers the total extents of the Koobah tenement. However, LFB125 also covers areas adjacent to EL6554, and as such, these targets are not shown in any of the figures for intellectual property and strategic reasons.

The Koobah target within the EL6553 lies in the central east of the CIC. There is no outcrop within the licence area and the surface geology is dominated by Quaternary sediments, which drilling by previous explorers has shown to be between 60 and 95m deep. Seventeen broadly-spaced aircore holes were completed over magnetic targets within the area now covered by EL6553 with basement Ordovician lithology dominated by an intrusive suite of diorite to monzodiorite with feldspar-dacite and monzodiorite-porphyry. Significant hydrothermal alteration was identified including; skarn assemblages within volcaniclastic rocks on the margins of diorite and intense sericite-dolomite, chlorite-quartz and albite-epidote alteration in dacite and diorite. The most significant drilling result was from hole ACJM06: 4m @ 0.26g/t Au, 20ppm Cu from 128m depth. Hole ACJM06 was not followed up and there is insufficient drilling to define coherent anomalies with large sections of the tenement remaining untested. However, several anomalous Au, Cu and Zn assays show an association with magnetic highs, or in one case, a prominent magnetic low. Such anomalies require additional drill testing.

The Wyrra target within EL6554 covers the southeast edge of the CIC. Again there is no outcrop with surface geology dominated by Quaternary sediments, which are $65 - 130$ m deep. Previous aircore drilling returned a number of anomalous Au-Cu intercepts (including ACMW040: 4m @ 2.16g/t Au, 43ppm Cu from 90m depth), most interpreted by Newcrest to represent secondary enrichment in saprolite or oxidised bedrock (Hay 2002b). Ordovician basement intrusive rocks identified include diorite, quartz-diorite, quartz-monzodiorite, and Ordovician volcanic rocks were mostly dacitic to andesitic volcanic and volcaniclastic rocks. Hydrothermal alteration was noted in many holes and a significant basement Au-Cu-Zn anomaly (>200ppb Au, >500ppm Cu and >750ppm Zn) in the southeast of the tenement remains open to the south and east.

Proposed Exploration Program and Budget

The JV intends to complete follow-up aircore and RC / Diamond drilling of both the Koobah and Wyrra tenements. Drilling conditions are anticipated to be difficult, with deep cover sequences, free running sands and high, saline ground water flows in many areas. An orientation IP survey will be trialled to determine if this assists in drill targeting.

A proposed work program and exploration budget of \$483,000 for Year 1 and \$666,000 for Year 2 has been outlined by the JV. This ongoing exploration on the Cowal East JV project will be funded by Gold Fields with an agreement to spend \$1M to earn an 80% interest. Clancy will remain manager.

Project Potential and SRK Comment

The Cowal East project has been subjected to reconnaissance exploration by previous explorers, with drill results demonstrating the presence of significant Au-Cu anomalism associated with basement Ordovician intrusive and volcanic rocks. The broad spacing of some of these anomalous holes and significant gaps in previous drill coverage require additional reconnaissance exploration prior to definition of deeper RC and diamond drill targets.

In summary, it is SRK's opinion that the Cowal East Project displays porphyry-style alteration and associated Cu-Au mineralisation / anomalism, within discrete areas outlined by Clancy's targeting technique as being prospective for Ordovician porphyry Cu-Au mineralisation. The proposed exploration program is appropriate at this stage of exploration, and is based on sound technical merit.

3.3.3 Gobondery JV

Clancy is the registered holder of the Gobondery (EL6534) tenement, which covers 179km² and attracts a total annual expenditure commitment of \$50,500 (Table 3).

Geology and Previous Exploration

The Gobondery tenement covers an inlier of Ordovician that has been rifted west off the Northparkes Igneous Complex. Exposure of Ordovician rocks is generally poor, comprising scattered outcrop and subcrop in the central part of the tenement. Quaternary, Devonian and Silurian sediments cover the Ordovician units to the north and south (Figure 20). The Ordovician belt at Gobondery is narrow (1-2km wide) and is flanked to the west by the Devonian Gobondery Granite, and to the east by Silurian volcanics and the Devonian rift basin sediments of the Tullamore Syncline. The Ordovician arc extends to the east at depth beneath the Tullamore Syncline.

The main Ordovician arc unit within Gobondery is the Raggatt Volcanics, which consist of shoshonitic andesitic lavas and volcaniclastic rocks that have been tentatively correlated with the Wombin and Goonumbla Volcanics at Northparkes (Barnes and Ward, 2007). Fieldwork by Clancy has identified a large (>300m diameter) exposure of hornblende monzodiorite within the Raggatt Volcanics at Forest View (Figure 20). The intrusive has fracturecontrolled K-feldspar-epidote-magnetite alteration flanked by more pervasive epidote alteration. Sampling of a quartz-bornite-chalcopyrite vein by Clancy returned assays of 1.14% Cu and 0.17g/t Au. Aircore and RC drilling completed by Clancy north of this area indicated the Ordovician basement consists of epidote- and hematite-altered volcanic and intrusive rocks. The intrusive rocks have diorite, monzodiorite, monzonite and syenite compositions. Alteration includes disseminated hematite, K-feldspar, epidote and minor chlorite and magnetite. Disseminated pyrite and chalcopyrite and quartz-pyrite veins were also observed in the drilling.

The Devonian Gobondery Granite in the west of the tenement has an associated magnetite skarn occurrence in the central part of the tenement within Devonian sedimentary rocks (the Gobondery Fe mine that was mined in the 1940's). One possibility considered by Clancy was that the Gobondery Granite could be the source of the K-feldspar, epidote and magnetite alteration observed in the Ordovician rocks. However, the drilling demonstrated that Ordovician volcanics adjacent to the Gobondery Granite are unaltered, and the granite contact is faulted. Therefore Clancy infer the alteration in the Ordovician rocks is unlikely to be Devonian in age (Barnes and Ward, 2007).

Previous exploration for porphyry Cu-Au deposits by Shell in the 1980's and North Ltd in the 1990's included mapping, stream sediment sampling, rock chip sampling, auger drilling, RAB drilling and a single RC hole. The focus of this work was in the central part of the current lease around the Forest View prospect. Broad-spaced RAB drilling completed by Shell identified an 800m long coincident Cu, Pb and Zn anomaly but subsequent infill RAB drilling could not repeat the earlier results. Other prospects worked on by Shell include the veinstyle Allandale and Ben Hur Cu prospects in the north, with the latter prospect located immediately west of the tenement (Figure 13). The only other significant prospect in the area is the Devonian Mount Leadley epithermal Au prospect to the northeast of EL6534. This prospect is currently being evaluated by Big Sky Holdings Pty Ltd.

North Ltd also completed stream sediment sampling, mapping, rock-chip sampling and auger soil sampling in the Forest View area. This mapping identified a silica-sericite breccia and an adjacent andesite with weak malachite and chalcopyrite mineralisation. The breccia returned a maximum assay of 0.24% Cu, which was followed-up by a single RC hole that failed to locate any significant mineralisation. No other significant work was undertaken prior to Clancy acquiring the ground.

Figure 20: Gobondery interpreted geology, mineral occurrences, RTP magnetics and targets.

A-interpreted pre-Tertiary geology showing mineral occurrences mentioned in the text (black circles); B - RTP magnetic image showing the general location of A-Class targets and mineral occurrences. Location grid ticks are 10km and coordinates are GDA94 Zone 55. (Figure from Barnes and Ward, 2007).

Clancy Targets

Three A-Class targets fall within the Gobondery EL (Figure 20) numbered LFB007, 008 and 062. The most highly-ranked, northern target LFB007 corresponds to an area of no outcrop and no previous exploration. This was selected for immediate follow-up and in late 2006 Clancy drilled 49 aircore holes (973m) using a nominal 500m offset grid. Cover sequences ranged from 0 to 45m depth and in some areas aircore drilling failed to penetrate the Devonian rocks and so 13 RC (573m) holes were also completed.

Ordovician basement comprised volcaniclastic conglomerate, andesitic lava, highly fractionated intrusive rocks and laminated fine grained sedimentary rocks. Significant magnetite-epidote alteration was intersected in three holes and sulphides were intersected in six holes. The drilling has defined an elevated zone of Cu >300ppm of at least 2km x 1km dimension (open to the east), with peak values of 588ppm and 662ppm Cu. The anomalous zone coincides with a NW-oriented break in the magnetic fabric. There were no significant Au assays. Future work will aim to define the eastern contact with further drilling, additional interpretation of magnetic data and IP surveying.

Target LFB062 covers the central part of the tenement in the Forest View area, which was previously worked on by Shell and North Ltd. A quartz-bornite-chalcopyrite vein that assayed 1.14% Cu and 0.17g/t Au is located on the north margin of the target and Clancy completed one aircore hole adjacent to this vein with no significant results. The central part of the target requires field investigation so that the previous results can be put into context.

The southern most target, LFB008 is under deeper cover and is the lowest ranked of the three targets. The Devonian and possibly Silurian sediments beneath the Quaternary will require RC drilling. It is proposed to drill 2 or 3 scout holes to validate depth to basement, and to confirm that the Ordovician arc is present. If this work is sufficiently encouraging further drilling will be undertaken.

Proposed Exploration Program and Budget

Clancy intends continued exploration of these targets involving additional magnetic modelling, mapping over LFB062 and review of previous exploration, with possible IP surveying prior to additional reconnaissance aircore drilling. The eastern extent of LFB007 remains open with respect to anomalous Cu values and may require RC and / or diamond drill testing.

A proposed work program and exploration budget of \$240,000 for Year 1 and \$244,000 for Year 2 has been outlined by the JV. This ongoing exploration on the Gobondery JV project will be funded by Gold Fields with an agreement to spend \$2M to earn an 80% interest. Clancy will remain manager.

Project Potential and SRK Comment

The Gobondery Project has been subjected to reconnaissance exploration by previous explorers, with initial exploration by Clancy focusing on target LFB007. Clancy's drill results demonstrated a significant Cu anomaly associated with Ordovician intrusive and volcanic rocks which remains open to the east. This will require additional definition by deeper RC / diamond drill testing. Additional targets in the area LFB062 and LFB008 have been subject to previous exploration but additional work is required to fully evaluate this work.

In summary, it is SRK's opinion that the Gobondery project displays porphyry-style alteration and associated Cu anomalism, which requires further investigation and drill testing. The proposed exploration program is appropriate at this stage of exploration, and is based on sound technical merit.

3.4 Budget Summary for East Lachlan Project Areas

Clancy provided SRK with the following proposed exploration expenditure budget figures for Year 1 and Year 2 breakdown relating to 100% Clancy Projects for the minimum subscription of \$3.5M (Table 4) and maximum subscription of \$5.0M (Table 5) scenarios.

Exploration expenditure on Clancy JV Projects (Table 6) within the Lachlan Fold Belt is also included to provide an indication of the funding level offered by Goldfields.

	EXXXXXXIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII	aiki	VELIKIN	ANG PARTICIPAL PROPERTY	Storfaus	53562222 ne sa shekara	ETRO BERTH	ma
						1223	waasam
Year 1	Farhome FL6552	84.184	14,374	17593	122,500	11.937	73,200	323.788
	Myall ELA3042	35.955	3.768			5.475	31,200	76.398
	Goobang EL6537	30.388	4.251	4813	13.750	1.245	6,000	60 446
	Currumburrama ELA2916	13,562	4,763	3.267	35,000	1.335	600	58.527
	Billabong Creek ELA3007	16.302	2,745			4.355	36.012	59.414
	Habunda EL6535	21.729	4,705	850	24,000	2,770	3.600	57,654
	Cundumbul	55.170	9.752	6,200		5.675	61,200	137,996
	Orange East EL6181	57.988	16.047	55 144	52.125	1.800	6.600	189,704
	Spring Creek FL6536	12.239	2,245	700	24,000	900	17,400	57.484
	Project generation	66.443	6.585			2250	18,000	93.278
	Year 1 total	393,959	69,236	88,566	271,375	31.142	253,812	1.114.690
Year2	Farholme EL6552	86,565	15,962	28,125	108,500	7,704	8.750	255,606
	Myall ELA3042	31.509	4,759	4.375	35,000	4.688	700.	81,030
	Goobang EL6537	45.645	7688	4813	13750	2830	41.350	116076
	Currimourrama ELA2916	11.925	4,166	5.250	36,000	933	350	58 624
	Billabong Creek ELA3007	21.124	5,387	9844	28,125	4576	350	69,405
	Habunda EL6535	15518	3,100	350	24,000	4.207	16.750	63.925
	Cundumbul	51,884	11.945	18.083	118,000	8.264	25,850	234,027
	Orange East EL6181	38.317	8,493	11,667	60,000	366	15,850	134.693
	Sping Creek EL6536	10,663	2.407	700	24,000	700.	1.050	39520
	Project generation	72,830	10.396			999	10,500	94,724
	Year 2 total	385,979	74,303	83,206	447.375	35,267	121.500	1,147,630
	Grand total							2,262,320

Table 4: Exploration budget summary 100% Clancy Projects for minimum subscription of \$3.5M.

Table 5: Exploration budget summary 100% Clancy Projects for maximum subscription of \$5.0M.

	20000000	85.	Vernis	Kunang	Mahlan	EWATER mwa angunggung Alasahikaan	SROOM entalista vinsi	total.
Year 1	Farholme EL6552	101,799	17.411	31.593	206,500	15,183	74.400	446.886
	Myall ELA3042	45,781	4.427			5.925	57,750	113,883
	Goobang E16537	27.321	4,165	9.625	27,500	1710	4,500	74822
	Currumburrama ELA2916	22.575	7,203	6,860	73,500	2.886	1,500	114,523
	Billabong Creek ELA3007	19,790	2.965			4520	26.912	64 187
	Illabunda EL6535	26,605	5,136	1,025	36,000	3,340	4.500	76 606
	Cundumbul	60.406	11.612	6,200		7039	173 160	258.417
	Orange East EL6181	56.436	15,389	55 144	52.125	1,935	6.000	187.028
	Spring Creek EL6536	15,843	2.677	1,050	36,000	1,380	18,000	74,949
	Project generation.	114,051	8,780			4,800	30.000	157,631
	Year 1 total	490,607	79,164	111,497	431,625	48.718	436,722	1,568,934
Year ₂	Fairholme EL6552	98.633	19.003	37.167	217,000	11.759	15,000	398.561
	Myall ELA3042	54,604	8.378	11,667	70,000	6.319	6,000	156,968
	Goobano EL6537	37.638	7334	11,813	61.750	4.055	41,250	163,840
	Curiumburama ELA2916	25.832	8.750	12,110	109,500	3.703	1,500	161,394
	Billaborio Creek ELA3007	24.483	5,733	9.844	28,125	4699	31.500	104.384
	llabunda LL6535	19.962	3.962	700	48,000	5,032	18,750	96 406
	Cundumbul	52,361	12.601	18083	118,000	9948	56,000	266,993
	Orange East EL6181	51.081	13,266	29,167	200,000	548	17.250	211,312
	Spang Creek EL6536	14,175	3,269	1.400	48,000	1.435	2,250	70,529
	Project deneration	115,736	13.861			3.132	30,000	162,729
	Year 2 total	494,504	96,157	131,950	900,375	50,630	219,500	1,893,116
	Grand total							3 462 058

	Projekt –	EVALUATION DE	WARROOT	$\mathcal{B}^{\text{Higgs}}_{\text{Weyl}}$	erning	ennen merica WA WA	Communication SUNGARI	Chinemichi 88	ewww
Year ₁	Wellington North	107.375	30.468	41,300	21,600	24,580	149,964	11,259	386.545
	Gobondery	71.282	22,188	15,050	24,000	14,266	86,700	7,005	240,491
	Cowal East	119273	39,998	21.641	245,000	28,370	15.064	14,080	483.426
	Sub-total	297.930	92,654	77,991	290,600	67.216	251,728	32,344	1,110,462
	CMF@ 12.5%	37.241	11,582			8.402		4.043	61.268
	CMF@5%			3.900.	14,530		12.586		31016
	TOTAL								1,202,746
Year2	Wellnoton North	83 323	26.634	48.250	366.000	14.900	4.000	16.293	559.400
	Gobondery	45,489	13.366	27.250	140,000	8,586	2,000	7,101	243.792
	Cowal East	116.475	38.939	79.353	344,000	11,253	56.381	19.392	665.793
	Sub-total	245 287	78939	154,853	850.000	34,738	62.381	42.786	1,468,985
	CMF@ 12.5%	30,661	9,867			4.342		5,348	50.219
	CMF @ 5%			7,743	42,500		3.119		53.362
	TOTAL								1,572,566
	GRAND TOTAL								2,775,312

Table 6: Exploration budget summary Gold Fields JV projects

Notes: CMF = Clancy Management Fee charged at 12.5% for staff related costs and 5% for drilling, assays and geophysics. Sustain dev = sustainable development charge which is an explicit requirement for Gold Fields budgeting purposes to cover environment, health and safety.

$3.5 -$ Clancy's Exploration Strategy for Porphyry Cu-Au Deposits in the East Lachlan Project

Clancy's principal exploration targets in the Lachlan Fold Belt of New South Wales are large-tonnage Ordovician-aged porphyry Cu-Au deposits. The geological setting of the Lachlan Fold Belt is amenable to exploration of such systems, as is demonstrated by the 34Moz Au and 4027kt Cu Cadia-Ridgeway, and the 2.5Moz Au and 1796kt Cu Northparkes, deposits (Table 1). Clancy's primary exploration targeting strategy is based on a detailed knowledge of porphyry Cu-Au systems as presented in Section 2.2, and the application of this to their understanding of the geological and structural architecture of the Ordovician Macquarie Arc in the Lachlan Fold Belt.

Clancy has developed an innovative approach to targeting and ground selection by using thorough ranking methods as applied to sophisticated spatial probabilistic analysis (Section 2.3). As part of this process, validation of generated targets was undertaken against known deposits and occurrences. SRK can confirm that Clancy's results were exceptional in their ability to predict the location of known mineralisation and intrusions, which provides confidence in this probabilistic modelling approach. Key geologic criteria have been incorporated by Clancy in their targeting, and will continue to be implemented during on going exploration. These criteria include:

1. Definition of the prospective Ordovician Macquarie Arc volcano-sedimentary stratigraphy and intrusive phases.
1. A maximum depth to these prospective basement rocks of 150m through overlying Mesozoic basinal sequences.
1. Identification of potential structural conduits and traps which may have facilitated the ascent of fractionated intrusive rocks through the crust.
1. Recognition of intrusive rocks with lithochemical characteristics akin to known mineralised intrusives in the district, and globally.
1. Definition of structures spatially associated with potentially mineralising intrusions, as a means of identifying the"plumbing architecture" of the porphyry system.
1. Identification of porphyry-style alteration and anomalous Cu-Au geochemistry through detailed mapping and sampling. This data is then used to vector in to the interpreted core of the porphyry system, as determined from the characteristic alteration zones which are typically associated with these systems.

Given the depth of Mesozoic cover over some of the Clancy Project areas, the most effective method to rapidly determine the tenement-scale prospectivity is through careful interpretation of detailed magnetic datasets. Clancy has already completed this exercise over tenements with Mesozoic cover, and will begin direct AC/RC drill testing of targets, in Year 1. The general approach by Clancy in these areas of cover, is to drill on a 500m offset grid, as a means of sampling the prospective Ordovician basement sequence for characteristic porphyryrelated alteration minerals and pathfinder elements (e.g. Cu and Au). This data will then be used in the context of point 4 above.

In areas of outcrop, Clancy will continue detailed geological mapping and sampling to assess the lithological, structural and alteration setting of their Projects at the tenement scale. Of particular focus will be identification of fractionated intrusive rocks, and their spatial relationship to structures, documented alteration, and Cu-Au anomalism in the area. When quality targets are defined and prioritised, RC drilling will be used to assess the potential of the targets. The exploration programs proposed by Clancy for porphyry Cu-Au mineralisation have been developed based on the exploration strategy outlined above, their understanding of porphyry Cu-Au systems (Section 2.2), and the targeting process detailed in Section 2.3.

Northwest Tasmania Joint Venture $\overline{\mathbf{4}}$

4.1 Geological and Metallogenic Setting of northwest Tasmania

The northwest Tasmania joint venture project with Bass Metals Limited includes twelve Exploration Licences (ELs) covering a total area of 732 km² of the Mount Read Volcanic Belt (Figure 21). The JV includes the North Rosebery, Leven River - Loyetea, Lynchford, Highclere, Waratah, Oonah and Whyte River Projects as detailed within Section 5. Bass is entitled to retain its 75% interest in the tenements by sole funding Clancy to prefeasibility study stage.

The Cambrian aged Mount Read Volcanic Belt (MRV) forms a 200 x 20km north-northeast trending belt of dominantly calc-alkaline volcanics and volcaniclastics (Corbett 1992). The volcanics were erupted along the western margin of a Precambrian block, now referred to as the Tyennan Block of central Tasmania and comprised a lower eastern zone of massive lava-rich sequences and a western zone dominated by volcano-sedimentary and volcaniclastic units and breccias. Stratigraphic and facies relationships are complex but considerable mapping has been undertaken by numerous organisations in attempts to define prospective horizons favourable for mineralisation.

Following previous workers, Clancy (Core et al, 2006) subdivided the lower portion of the MRV into the Central Volcanic Complex, the eastern quartz-porphyritic sequence and the western volcano-sedimentary sequence all of which are unconformably overlain by the felsic units of the Tyndall Group. As well as complex stratigraphic relations, these units are disrupted by several major faults including the prominent Henty, Great Lyell and Rosebery Faults and intruded by dolerites, quartz-feldspar porphyries and several large, Devonian aged granitoids.

The MRV is well mineralised hosting several significant base metal deposits including Mt Lyell, Rosebery, Renison, Mt Bischoff, Que River and Hellyer in addition to the Henty gold deposit (Table 7). The felsic Central Volcanic Complex hosts VHMS mineralisation at Mt Lyell, Hercules and Rosebery while Que and Hellyer are located within the Mt Charter Group of the Western volcano-sedimentary sequence. Recognising that the Mount Read Volcanic Belt is one of the most highly and variably mineralised rock units in the world (Corbett 1992), targeting by Clancy has also incorporated models for intrusion-associated tin (for example Renison, Mt Bischoff) and nickel deposits (for example Avebury) as well as for orogenic gold deposits. Note that despite there being no known examples of orogenic old deposits in Tasmania, the presence of placer and lode gold deposits as well as potentially favourable Precambrian stratigraphy indicate the right model elements are present.

Figure 21: Location of Clancy and Bass tenements in the Mount Read Volcanic Belt in northwestern Tasmania showing geology, structure and major mines.

Inset shows location of the area within Tasmania. Coordinates are AGD66 Zone 55. Map supplied by Clancy.

SXTSTARSSMINING	Mason Strongwe	Nota: Encounter Keille Grennand ASSERTE AND ACTIVE MODELLINE OF A
Mt tyell	VIIMS	311 Mt @ 1.0% Cu. 0.3 o/t Au
Rosebery	VHMS	32 Mt @ 14% Zn, 4% Pb, 148 g/t Ag, 2.3 g/t Au, 0.6% Cu
Hellyer	VIIMS	16.9 Mt @ 14% Zn, 7% Pb, 167 g/t Ag, 2.5 g/t Au, 0.4% Cu
Renison	Intriusion	25 1 Mi @ 1 4% Sn
Hercules	VHMS.	3.3 M @ 17% Zn 6% Pb, 171 oft Aq, 2.8 oft Au
Oue River	MARAS	3.3 Mt @ 13% Zn, 7% Pb, 195 gA Ag, 3.3 g/t Au, 0.7% Cu
Mr Bechott	Intrusion	10 5 M 0 2 1 % Sn
Avebuty	Intriusion	$41$ M $\alpha$ 15% N
Henty	Mesothermal / VHMS?	a milion minces contained.

Table 7: Major VHMS and Intrusion related deposits in northwest Tasmania

4.2 Volcanic Hosted Massive Sulphide (VHMS) deposits

4.2.1 The generalised VHMS model

Volcanic-Hosted Massive Sulphide (VHMS) deposits occur throughout the world and throughout geological time in virtually every tectonic domain that has submarine volcanic rocks as an important constituent. In Australia, the Cambro-Ordivician period hosts the majority of VHMS deposits, concentrated in the Mount Read Volcanics of Tasmania and the Mount Windsor Volcanics of Queensland (Large 1992). VHMS deposits are major sources of copper and zinc and contain significant quantities of gold, silver, lead, selenium, cadmium, bismuth and tin, as well as minor amounts of other metals (Lydon 1984).

VHMS deposits consist of significant accumulations of sulphide minerals (more than 60%), which occur in lens-like or tabular bodies parallel to the volcanic stratigraphy or bedding. Generally, the major VHMS-bearing districts are characterised by calc-alkaline volcanic rocks with a thick (1-3km) basal pile of rhyolitic volcanics with overlying polymodal volcanics - typically rhyolite, dacite, andesite, basalt and sediments. Mineralisation is frequently localised at the upper rhyolite contact or within the lower part of the polymodal sequence (Large 1992). They are usually underlain by a footwall stockwork of vein and stringer sulphide mineralisation and hydrothermal alteration (Figure 22). The deposits consist of ubiquitous iron sulphide (pyrite, pyrrhotite) with chalcopyrite, sphalerite and galena as the principal economic minerals. Barite and cherty silica are common gangue accessory minerals.

In extensional oceanic ridge settings, seawater flows through fractures in the oceanic crust and is heated by the nearby magma source, producing a seawater convection cell that reacts with neighbouring rocks to leach out metals. The dissolved metals are transported back up to the ocean floor where they vent and mix with cold seawater. The sudden decrease in temperature causes the minerals to precipitate and they may be incorporated into sediments deposited along the ocean ridge system.

There is a diverse range of styles of deposits reflecting the proximity of formation to the hydrothermal vent, chemistry of the ore fluid, nature of the volcanic pile and nature of the sea-water environment (Large 1992). Clancy (Core et al, 2006) identify three major types of VHMS deposits in northwest Tasmania; proximal disseminated Cu-Au deposits (e.g. Mt Lyell), distal stratiform massive Pb-Zn deposits (e.g. Hellyer Rosebery) and distal Au vein deposits (e.g. Henty).

VHMS deposits tend to occur in districts. Several dozen deposits might be clustered in an area of a few tens of square kilometres. Deposits within a specific district tend to have similar metal ratios and a fairly narrow range in composition. In any given district, deposits will tend to range in size from less than 1 Mt to several tens of millions of tonnes, with most deposits at the small end of the range and only a few large deposits.

Figure 22: Schematic diagram of a VHMS deposit (after Lydon 1984).

4.2.2 Key characteristics of VHMS, intrusion-related tin and nickel skarn systems

Clancy have researched the various mineralisation styles present through the highly productive Mount Read Volcanic belt as well as documenting mineralisation models that could also apply, in order to generate sets of geological criteria to apply to exploration targeting. In order to effectively target all project areas, Clancy catagorised three distinct styles of VHMS mineralisation in northwest Tasmania, as well as other mineralisation models to encompass the diverse range of possible deposits. Following their terminology (Core et al. 2006) these included;

1. Distal stratiform massive Pb-Zn deposits (e.g Hellyer, Que River, Rosebery)
$2.$ Distal Au vein deposits (for example Henty)
$3.$ Proximal disseminated Cu-Au deposits (e.g. My Lyell)
$4.$ Skarn related Sn and Ni deposits (e.g Renison and Avebury)
1. Orogenic gold deposits

Characteristic features of each deposit model styles were developed by Clancy and are summarised in Table 8.

Targeting concentrated on the most productive VHMS style mineralisation, but additional targets were generated relating to other potential mineralisation models where these were applicable.

	Dickellstrationn Ph.Ze zww	M Cimi	Provinci diseminated Cu Au deposits milli	Davenian Lituatur West CIII
$\frac{1}{2}$	VHMS eq Hellyer Rosebery Que $\bullet$ Polymetallic Zn-Pb-Aq-Ba-Au River	and disseminated stockwork zones e g Henry, Mt Charter Au-basemetal-addiaria vein ä	Cu-Au-Rot MHV and associated BELINDENS ä	Nu skaim deposits (Avebury) Carbonate replacement Sn (Renson) Pb Zn (Odran Sylvester ó,	lasmania but placer deposits and Orogenic Au not known in Pre-Cambrian stratigiraphy r.
Department and shape	National massive supplies and well as a pearl strategies of the Lens and blanket Zhandh massive developed stimaer zone littelijer sulphide, subordinate stringer zone (Roseben)		posibly overlain by Pb-Zn VHMS · Pipe and stringer deposits	Massive to disseminated podles Disseminated Pyrinotite- pentiandite in altered eblacing carbonate seriorities Į.	Structurally controlled Au in duariz carbonate vens é
Geological Citienia	volcanidastics, share or carbonate Proximity to volcanic centres with · Favourable strattgraphic position provinal Currich ores and distal Close proximity to syn-valuanic $\bullet$ Host rocks typically ron-rich Ore same age as host rock exhall te sulturiole bearing between volcanic units Pb-Zhiores atterior ä ö	position between volcanic units Close proximity to syn-volcanic Host rocks typically ron-rich Directories Ore same age as host rock Alcohable strationally volcanidastics shale or exhaltes su carbonate THE REAL i. ö	voiciniclastics shale or carbonate Close proximity to syn-volcanic Ore sightly younger than host Ore hot restricted to particular Hostrocks typically ron-inch exhalites, sulphule bearing Magnetite senes granites strattgraphic position dittaults rock i, i. ó ć.	Fracture system to carry fluids Within 3km of fertile grante from intrusion to host unit Presence of carbonate of ultrainafic IDISION ċ, ö J,	Structurally complex lithologica Near maior structure on 2 nd o Antidinal hinges a dorder fault contrast ä, ÷,
Alteration and mineralisation features	intermediate zone, Ba-Au rich $\bullet$ Distal polymerally and Zhanch FW quartz-sericite-pyrite HW Strong series and area Cu nch core, Zn Po Ag sericite albite quarta construct č o es D	intermediate zone, Ba-Aulrich Barite pyrite sphalente quanz Zn Po-Ag Cu-itoticate veining ě ä	Alteration zoning with potasic core and propylinic aureole Ciu Auriton hearer volcanio centres b	· Moderately high temperature Calculte alternation alteration 5	Disseminated purte proximal and Distal chiorite-carbonate-ovrite Carbonate alteration near ord Rroximal potassic and Fe žone ds ö
George Signature	· Disseminated ovide has dood iP Non-magnetic ore systems · Well defined EM response $\bullet$ 11 lumidam density contrast Festbolise	· Geophysical mapping to define Disseminated sulphides in veins stratigized that rocking dive iP response series granies ä	Geophysical mapping to outline Disseminated sulphides give IP magneticaseries grantes response ×	· Geomysical mapping to outline Devonian granites as magnetic · IP response from disseminated EM response from massive replacement lodes and graw tows Sulto hides i,	IP response if sulphide present e Highland b.
Geochemistry Sufface	· Gosan elements Au Se Te As So Strong in situ Philin soils, wider e califfication s 5 N	Gosan elements Au Selfe As scovered Mt Sa Bruill Ho Sn Ba tions of Charter é ö	· Dispersion of Cultarial Au in soils	Dispersion of Philin Sin Wiland Cu in So ä	Dispersion of Au and As in soils ×

Table 8: Summary of the characteristic features of various styles of mineralisation present in and potentially applicable to northwest Tasmania (after Core et al, 2006)

4.3 Northwest Tasmania Exploration Targeting and Ground Selection Criteria

4.3.1 Probability based targeting

As outlined in Section 2.3, Clancy's innovative approach to targeting and ground selection in the East Lachlan Fold Belt was similarly applied in targeting mineralisation in northwest Tasmania. Using knowledge of the regional geology combined with detailed a understanding of the VHMS and other mineralisation models described in Section 4.3.2, Clancy used available digital geological and geophysical data to build derivative layers that capture the key processes driving mineralisation. These derivative layers were then used to guide exploration targeting utilising a probability based, model driven approach.

Following the oil industry methodology, which divides the petroleum system into source, pathway, focus and trap, in the VHMS environment Clancy added a host rock component making the system; host, source, pathway, focus, and trap. Probabilities and uncertainties were then assigned to the various individual components of the models for each area. These components were multiplied together to generate targets by comparing areas and uncertainty was incorporated using Monte Carlo (MOCA) simulations using in-house software. Significantly, Clancy's targeting also incorporated a three dimensional geological model-based approach, whereas most regional exploration targeting is still restricted to a two dimensional, map-based approach.

To reflect the diversity of deposit styles five basic models were examined including;

VHMS (Hellyer Rosebery style) Possible host horizons intersected by belt parallel feeder zones (pathway) with cross cutting faults (focus).
VHMS (Mt Lyell style) Same as above, but with Cambrian intrusions included as source of metal and fluids.
Nickel skarn Ultramafic units with cross-cutting faults metamorphosed by nearby Cambrian or Devonian felsic intrusions.
Carbonate replacement deposits Carbonate units with cross-cutting faults metamorphosed by nearby Cambrian or Devonian felsic intrusions.
Orogenic Au Zones of structural and lithological complexity within Precambrian units (restricted to the Whyte River area).

4.3.2 VHMS (and other) model components

In developing targeting models appropriate to northwest Tasmania and to encompass the wide range of mineralisation styles outlined above, Clancy developed a number of output layers or derivative maps as follows;

Host (H). Whilst there is a clear host rock association with several VHMS deposits in northwest Tasmania, such as at Hellyer, Que River, Rosebery, Mt Lyell and Hercules within the upper part of the Central Volcanic Complex, Clancy recognise that this unit may not be the exclusive host of VHMS style mineralisation. Also in many cases the stratigraphic succession on project areas is not well enough understood to constrain targeting. Therefore for purposes of VHMS targeting all of the Mount Read Volcanics were selected, apart from at the Lynchford Project, where the andesite marker horizon was considered the preferred host. Again, the geology of these areas was modelled in three dimensions, not just a two-dimensional approach.

For the nickel and carbonate replacement style deposits models Clancy favoured ultramafic or carbonate host rock units in close proximity to granitoid intrusions. Whilst for the orogenic gold model areas of Precambrian stratigraphy (only present in the Whyte River project) and areas of lithological contrasts were targeted as being preferred structural sites for mineralisation.

Source (S). While the Hellyer – Rosebery style deposits were formed in a'sea floor' environment, Mt Lyell is characterised by disseminated mineralisation that requires pervasive high-temperature (up to 500°C) alteration of the host rocks during formation. In this latter case, Cambrian aged porphyries and granitoids are inferred to be the causative intrusions and heat / fluid source. Areas in close proximity to such intrusions are rated with higher probabilities in the VHMS (Mt Lyell style) model.

For the nickel and carbonate replacement style deposits models Clancy notes an association of these deposits with intrusion of Devonian aged granitoids to provide the heat, metal and fluid source to form the deposit. Therefore areas in close proximity to Devonian granites are ranked more highly.

Pathway (P). Clancy define major fluid pathways as those structures that penetrate deep into the lower crust with the potential to provide conduits for mineralising fluids. However the major challenge for targeting purposes was to define the major structures that were active at the time of mineralisation. In the case of the VHMS models structures active during the Cambrian were targeted and were interpreted as faults that parallel the general trend of the Mount Read Volcanics (Core et al, 2006). In the case of the Leven River - Loyetea Project areas however, the general trend of stratigraphy was not clear and major pathway structures were therefore assumed to be approximately east-west at Erriba - Wilmott and north-northeast at Loyetea.

For the nickel and carbonate replacement style deposit models, Clancy targeted structures active during the Devonian. Not only was it difficult to determine the age of movement, but Clancy also found that structural interpretations over several project areas were not sufficiently detailed to target specific fault orientations. As a result in the case of the North Rosebery, Leven River - Loyetea and Highclere all faults were considered potential pathways.

The pathway for orogenic gold mineralisation is considered to be areas of structural complexity, particularly where small cross faults and splays intersect major belt parallel structures. As mentioned above the Whyte River project is the only area targeted for orogenic gold.

Focus (F). Clancy define major structures in a similar fashion to "pathway" structures as being responsible for the "focus" component of the VHMS model and recognise that fluid focus is an important factor in the development of a VHMS deposit. Major northwesterly trending faults and the intersection of these faults with north-northeast and northeast structures represent interpreted high permeability zones and are ranked highly by their method.

Similarly the formation of nickel and carbonate replacement style deposits requires flow of large fluid volumes through relatively small rock volumes. Particular faults surrounding known intrusions in the relevant project areas were selected and assigned higher probabilities as representing focus sites for these deposit models. Likewise cross faults present within the Whyte River project were targeted as focus features for orogenic gold targeting.

Trap (T). Finally, Clancy define traps as areas showing any evidence that metal deposition occurred somewhere in the mineralised system, rather than being evenly dispersed into the country rock. The recognition of geological / geochemical / geophysical anomalies that could be interpreted to reflect such metal concentrations form the basis of evaluating "trap sites". Exploration data where available was the primary source of this information, for example drilling data, surface geochemistry or project geophysical data. However, Clancy found that this dataset was not very continuous over any of the project areas and therefore decided against formulating a trap layer (Core et al, 2006).

4.3.3 Targeting results and ground selection

As for the porphyry models Clancy used the probability grids generated for the layers described above (i.e. host (H), source (S), pathway (P) and focus (F)) to generate targeting maps for VHMS and other deposit model styles in northwest Tasmania. Five different models were considered reflecting different styles of known mineralisation in the Mount Read Volcanic belt.

Targets generated by this process were there graded into four levels for ranking, and targeting maps were generated for each of these five models. Targets generated using a different number of input components were also normalised to allow comparison of different models styles. Targets were also screened for depth to the target and those inferred to be at greater than 900m depth were eliminated from consideration. Numerous targets of each style were generated by Clancy's various targeting exercises and recommended for follow-up ground work. Selected individual targets will be further discussed on a project by project basis in the sections below with the aim of allowing the reader to gain an appreciation of the scale and extent of targets within the northwest Tasmania tenement areas.

Ωŋ

4.4 Northwest Tasmania Exploration Tenements (Bass JV)

Geoinformatics Exploration Inc (Geoinformatics) through its wholly owned subsidiary Clancy is in Joint Venture with Bass to explore for a range of mineralisation styles, primarily VHMS deposits in the Mount Read Volcanic belt of northwest Tasmania.

The project was initiated in 2004, with the release by Mineral Resources Tasmania of an extensive threedimensional geographic information system for Tasmania to encourage mineral exploration. Utilising this data Geoinformatics constructed predictive mineralisation models using the general approach described above in the first of several stages of exploration targeting. The first targeting exercise served to define broad areas of higher prospectivity in order to direct tenement acquisition.

Key tenements were acquired by Geoinformatics and these nine ELs were vended into the float of Resource Finance & Investments Limited (RFI) on the Australian Stock Exchange in August 2005. An alliance was formed whereby Geoinformatics provided RFI with geospatial data management and target generation expertise, whilst RFI undertook field evaluation of the tenement group. After listing, RFI changed its name to Bass Metals and additional tenement applications have subsequently been made, as detailed below.

A series of targeting sessions have since been carried out by Geoinformatics for Bass aimed at defining specific geological settings for more detailed field investigation and ultimately drill testing.

4.4.1 Bass JV Tenement Details

Clancy currently has a Joint Venture (JV) agreement over twelve EL's with Bass in northwest Tasmania covering a total area of 732km². Under the terms of the agreement Bass agreed to acquire a 75% interest in the tenements. In order for Bass to retain a 75% interest in the leases they will sole fund Clancy to pre-feasibility stage. The tenements which form this JV are listed in Table 9. At this stage, since all prospects are at early exploration stage Clancy is not required to contribute annual exploration expenditure. Bass has committed to spend \$1.2 million on the IV tenements during 2007.

Clancy also has a shareholding in Bass which currently comprises 911,250 shares and 306,250 options with the potential for this shareholding to increase by an additional maximum of five million shares if a significant (>500,000 oz Au equivalent) discovery is made. The Bass shareholding and bonus share systems includes the abovementioned JV tenements as well as Bass 100% owned leases and JV arrangements that Bass has entered into with Adamus Resources and Pioneer Nickel in Tasmania, despite Clancy having no equity interest in these leases. Details of geology and targets on Bass 100% owned leases and JV leases with Adamus and Pioneer are not discussed further in this report.

LADIC 7. CRIICY	Dass J V tehement st			ні ногинуєм тампаніа.
Erles de batson	Undergraphy	RANDA	Uzase Nomber	e ve (Kii)	STANDON PRODUCTION AND ARTICLES ENGRASI	EUX CONSTRUCTION	Contractor Communication
	Huskisson River.	Granted	EL03/2005	74	10/08/2005	10/08/2010	Bass 75% Clancy 25%
North Rosebery	Lake Rosebery	Granted	£L54/2004	56	10/08/2005	10/08/2010	Bass 75% $C$ lancy $25%$
	The Pinnacles	Granted	EL16/2006	26	30/01/2007	30/01/2012	Bass 75% Clancy 25%
	Erriba (Wilmott)	Granted	EL51/2004	75.	08/08/2005	08/08/2010	Bass 75% Clancy 25%
Leven River	Loyetea	Granted	EL52/2004	186	08/08/2005	08/08/2010	Bass 75% Clancy 25%
Loyetea	Leven River	Granted	1153/2004	81	08/08/2005	08/08/2010	Bass 75% Clancy 25%
	Grasstree Ridge	Granted	EL38/2005	13	14/06/2006	14/06/2011	Bass 75% Clancy 25%
Lynchford	Lynchford	Granted	EL02/2005	38	08/08/2005	08/08/2010	Bass 75% Clancy $25\%$
Highclere	Highciere	Granted	EL04/2005	38	08/08/2005	08/08/2010	Bass 75% Clancy 25%
Waratah	Waratah	Granted	EL64/2004	104	08/08/2005	08/08/2010	Bass 75% Clancy 25%
Oonah Project	Montana Flats	Granted	EL63/2004	74.	08/08/2005	08/08/2010	Bass 75% Clancy $25%$
Whyte River	Paradise River	Granted	EL36/2005	17	27/02/2007	27/02/2012	Bass 75% Clancy 25%
Total area of JV leases				132

$D_{\rm{max}}$ $\overline{\rm{TV}}$ from one on the order of all order in outletted of Terms and a $TLM = 0.021$

5 Northwest Tasmania Project Descriptions

5.1 Joint Venture Project Descriptions

5.1.1 North Rosebery Project

The North Rosebery Project comprises three leases (Figure 21) including the Lake Rosebery / North Rosebery (EL54/2004) lease immediately north of the Rosebery mine (about 3km south of the lease boundary), currently operated by Zinifex Limited. The Huskisson River (EL03/2005) lease is situated to the west with the adjacent Pinnacles lease (EL16/2006).

Geology and Targets

The North Rosebery Project area was targeted largely due to the presence of rocks that offer the same stratigraphic positions as host VHMS mineralisation at Hellyer - Rosebery and Henty. The Lake Rosebery and the Pinnacles leases were acquired as they contain rocks that cover the Hellyer-Rosebery and Henty stratigraphic positions, part of which lies directly along strike from the mineralisation at Rosebery (Core et al, 2006). The main Mount Read Volcanic units are the Central Volcanic Complex and the Western volcano-sedimentary sequence which is overlain by the Tyndall Group. The unit hosting mineralisation at Rosebery occurs between the former two units with occasional interspersed andesite units. Major faults in this region include the Rosebery, Marionoak and Mt Black Faults.

The Huskisson River lease was principally targeted for potential carbonate replacement and nickel mineralisation models based on the presence of the Heemskirk and Meredith granites. The Meredith granite intrudes the Huskisson syncline and offers a potential'source' for mineralisation within the Gordon carbonate units and / or Cambrian ultramafics present within the lease area. The Heemskirk granite is also noted to intrude carbonate units at the base of the Crimson Creek Formation, which may represent an analogous situation to Renison.

As a result of the diverse geology across the North Rosebery Project all VHMS styles and carbonate replacement style models were targeted.

The highest ranking targets returned from Clancy's "Stage 1B" targeting exercise included VHMS Hellyer -Rosebery style targets within the Lake Rosebery lease. Their methodology ranked the actual Rosebery mine as the priority target providing them confidence that the targeting assumption / conditions as outlined above were valid.

Intrusion associated nickel skarn and carbonate replacement style targets were also outlined in the Huskisson River region.

Previous Exploration

Base metal mineralisation was discovered at Rosebery in 1893 and mining operations commenced shortly thereafter. Mining at various scales has taken place almost continuously since then, with modern exploration in the district commencing in the 1970's. Extensive geological mapping along with geochemical and geophysical surveys was carried out by the previous owners of Rosebery and their associated joint venture partners (RFI 2005). Some drill testing has occurred on the North Rosebery lease with peak intercepts reported by RFI of 0.5m at 2.1% Zn, 0.1% As and 13.5m at 0.5% Zn from near Bastyan Dam in the western part of the lease. These intersections and any associated geochemical anomalies need to be re-evaluated in light of Clancy's targeting.

Previous exploration of the Huskisson tenement appears to have a protracted history and drilling identified the Silver Falls prospect in the Pinnacles lease where a narrow zone of low-grade lead mineralisation was intersected according to RFI (2005).

Project Potential and SRK Comment

VHMS style mineralisation targets in the North Rosebery project area represent valid conceptual exploration targets which now require further evaluation by field testing and sampling followed by drilling. The fact that the highest ranking target produced by the methodology was the actual Rosebery mine provides validation of the approach adopted by Clancy.

Bass and Clancy are compiling the historical exploration data to evaluate the results in association with targets generated for VHMS in the east of this project area and for intrusion associated replacement style mineralisation targets in the west around the Meredith granite. The three dimensional approach will help refine target positions and assist in locating any possible mineralisation.

5.1.2 Leven River - Loyetea Project

The Leven River - Loyetea Project incorporates the Wilmott (EL51/2004), Loyetea (EL52/2004), Leven River (EL53/2004) and Grasstree Ridge (EL38/2005) tenements (Figure 21).

Geology and Targets

The Leven River - Loyetea Project tenements were acquired by Clancy to cover the northern strike extents of the Mount Read Volcanic Belt. The Leven River lease occurs 8 km north of Hellyer and this and the Erriba area were selected primarily due to the possibility that these leases represent the northern continuation of the Hellyer stratigraphy within anticlinal positions. Further north, the Loyetea tenement covers the northern most extent of the main Mount Read Volcanic Belt and the eastern contact of the Housetop Granite. Again it is considered by Clancy that structures hosting mineralisation at Hellyer may continue into these regions; however the detail of structural interpretation is not as refined as in other areas.

The Leven River - Erriba area was principally targeted for Hellyer-Rosebery and Mt Lyell VHMS styles offering several specific targets. Around 70% of the Leven River lease is covered by Tertiary basalt which is interpreted to be less than 100m thick. Targeting has attempted to look beneath this Tertiary cover sequence. At Wilmott, extension of the Hellyer host-rock stratigraphy is obscured, but in this case by Ordovician conglomerates, sandstone and limestone. The Dalcoath Devonian-aged granitoid intrudes to the south of the region with a number of known tin-tunsgten occurrences.

The Loyetea area also offers VHMS Hellyer-Rosebery style mineralisation targets as well as carbonate replacement style targets related to the presence of Gordon Limestone with major structural intersections in the vicinity of interpreted Housetop granite.

Previous Exploration

The Leven River lease has been subject to various exploration programs in the past with the most detailed being carried out during the 1980s. Geochemical and geophysical surveys in this era culminated in drilling that intercepted strongly altered volcaniclastic shales (RFI, 2005). However follow-up work and diamond drilling failed to locate any significant mineralisation. Conceptual targets generated by Clancy, including two high ranking electromagnetic anomalies have not been tested by previous explorers (RFI, 2005).

Erriba has also been subject to a number of historic exploration programs for VHMS and skarn-related mineralisation, geochemical and geophysical surveys have been followed by a limited amount of drilling (RFI, 2005). This requires review in relation to the conceptual targets identified by Clancy.

At Loyetea, fairly extensive historical exploration has followed up skarn occurrences and VHMS base metal mineralisation potential. Various geochemical and geophysical surveys have been followed by only minor diamond drilling. This drilling intersected thin zones of low-grade zinc mineralisation adjacent to the Housetop granite, and broad zones of low-grade copper mineralisation interpreted to be underlain by Devonian aged granite (RFI, 2005).

Project Potential and SRK Comment

Discrete VHMS targets in the Erriba lease and broad areas of carbonate replacement style targets, principally in the Lovetea area require rationalisation against previous exploration programs which appear to be fairly extensive. In particular, the effectiveness of VHMS exploration in the Leven River and Erriba leases in areas that are partly covered by Tertiary basalt and other stratigraphic sequences require careful assessment.

5.1.3 Lynchford Project

The Lynchford Project comprises granted tenement EL02/2005 located 7 km to the southwest of Mt Lyell (Figure 21).

Geology and Targets

The Lynchford tenement area covers the southern extent of the Mount Read Volcanic Belt and is considered prospective by Clancy, owing to the presence of andesitic volcanics that may represent the stratigraphic position of Hellyer and Rosebery. The andesites have been intensely deformed and several major fault zones are present in the region including the Henty Fault just west of the tenement. Whilst fault movement is interpreted to most likely be Devonian in age, they could represent reactivated Cambrian structures and may also accommodate more recent deformation.

Despite the presence of Cambrian porphyry and Devonian granites in the area, other mineralisation models including Mt Lyell style VHMS and models relating to Devonian intrusions were not targeted as these intrusions were also considered to be at deep crustal levels.

Previous Exploration

A number of historic gold mines and prospects are known in the Lynchford area, including minor gold production from the Princess, Lynchford and King River workings related to quartz veins within sedimentary units. Modern exploration began systematically in the 1980s focussing on the potential for structurally controlled gold mineralisation. Geochemical surveys were followed by drill testing of anomalies that mostly appear to be located just outside the lease boundary to the west (RFI 2005).

From the VHMS potential, Clancy has identified several high-ranking targets of the Hellver-Rosebery style. RFI (2005) reported several untested EM targets within this lease.

Project Potential and SRK Comment

The Lynchford tenement hosts highly rated targets for VHMS style mineralisation and contains several historic gold workings. Despite its proximity to Mt Lyell it does not appear to have been extensively evaluated with previous exploration being sporadic and patchy.

MDERS AND THE METAL MANUSCRIPT

5.1.4 Waratah Project

The Waratah Project consists of the Waratah lease (EL64/2004) (Figure 21) which surrounds the Mt Bischoff tin mining centre (excised).

Geology and Targets

The Waratah tenement was targeted by Clancy as it covers the subsurface extent of the Meredith granite and contains potential carbonate units within the Proterozoic Burnie and Oonah formations and the base of the Crimson Creek formation. The lease also hosts a small sequence of interpreted Mount Read Volcanics.

Targets generated in the Waratah tenement are largely carbonate replacement related occurring at the base of the Crimson Creek Formation (that hosts Renison) which occurs throughout the western part of this lease. Other carbonate replacement targets generated relate to the Burnie and Oonah formations but Clancy note that all of these formations contain carbonates only in part, and therefore all targets generated require field confirmation prior to further work.

Previous Exploration

Previous exploration has centred on the Mt Bischoff tin mine and the Magnet lead-zinc-silver deposit (mined until the 1940s) that is located along the southwestern tenement boundary and other occurrences to the south. Some of this work has extended onto the current Waratah lease area. Extensive geochemical and geophysical surveys were completed and some drill testing with a number of anomalies considered to be related to mine contamination (RFI 2005). There may be some remaining potential to the north along strike and down-dip of the Magnet deposit.

Project Potential and SRK Comment

Remaining potential at Waratah mostly relates to the southwest lease corner in the vicinity of the Magnet deposit. Review of previous exploration requires rationalisation against targeting results to determine future exploration.

5.1.5 Highclere Project

The Highclere tenement EL04/2005 is located to the west of Loyetea and covers the same Housetop granite intrusion but in this case extending along its western contact (Figure 21).

Geology and Targets

The Highclere region was primarily targeted for carbonate replacement style deposits associated with the far western extent of the Housetop granite. It largely comprises Proterozoic-aged Burnie and Oonah formation and has favourable structural setting. The Housetop granite is notably magnetic compared to other Devonianaged granitoids and is surrounded by contact metamorphic aureole and skarn occurrences. Reprocessing of magnetic data indicate that these features persist at depth and associated targets may also extend to considerable depths. The area was targeted only for this mineralisation style.

Previous Exploration and SRK Comment

In contrast to other tenement areas, only limited historical exploration appears to have been carried out over the Highclere lease. Work completed in the 1980s defined a broad (500m x 500m) soil geochemical anomaly with coincident electromagnetic response which has not been drill tested (RFI 2005).

5.1.6 Oonah Project

The Oonah Project is located about 5km north of the historic Zeehan mining centre and comprises the Montana Flats / Oonah lease (EL63/2004) (Figure 21).

Geology and Targets

The Oonah tenement hosts a large number of recorded base-metal mineral occurrence and historic workings. It was acquired by Clancy due to the favourable structural setting in this region for potential carbonate replacement style deposits. Clancy inferred that the Tenth Legion fault thrusts the Burnie and Oonah formations on top of younger units in the lease area (Core et al, 2006).

Carbonate replacement style targets relate principally to areas of structural complexity within these formations where the Tenth Legion fault may have acted as an aquatard, focussing fluids and leading to mineralisation below and immediately above the structure. The Devonian aged Heemskirk granite and the Gordon Limestone unit are also interpreted in the tenement area.

Previous Exploration and SRK Commenrt

Modern exploration of the Zeehan area dates from the 1970s and numerous programs appear to have included selective drill testing for replacement, vein and skarn tin and gold mineralisation. The targets generated by Clancy require review in light of previous exploration results.

5.1.7 Whyte River Project

The Whyte River Project consists of the Whyte River South / Paradise River lease (EL36/2005) (Figure 21).

Geology and Targets

The prospectivity of the Whyte River tenement is related to the nickel potential of an ultramafic unit in the south of the lease as well the gold potential, as numerous placer and lode gold occurrences are known to the north-east.

Geology of the lease area is dominated by Proterozoic phyllites and amphibolites of the Rocky Cape group of which a thick ultramafic unit forms the base. The Burnie and Oonah formations are in thrust contact with these Proterozoic units and the Devonian aged Meredith granite lies further east with a subvertical contact.

Targeting was based on the model for orogenic gold mineralisation as described in Section 4.3. Although this mineralisation is not represented by operating mines in Tasmania, the critical model elements are all present within the project area and targeting was based on this concept.

A single orogenic gold target was generated based on significant structural intersections in the vicinity of a favourable amphibolite-phyllite-ultramafic contact.

Previous Exploration and SRK Comment

Numerous gold occurrences are located in the area immediately north of the Whyte River South / Paradise River tenement application, although many appear to be of limited extent and generally of low grade (RFI 2005). Extensive previous exploration in this northern area has failed to locate a source of the placer gold occurrences, despite evidence to indicate the gold is locally sourced. SRK therefore consider that the area is worth further exploration but note that the orogenic gold target defined is highly conceptual.

$5.2$ Clancy's Exploration Strategy for VHMS Deposits in northwest Tasmania

Clancy's principal exploration targets in the Mount Read Volcanic belt of northwest Tasmania are for worldclass VHMS style base metal deposits. The geological setting of the well-mineralised Mount Read Volcanic Belt is amenable to exploration of such systems and several examples of world-class deposits such as the Mt Lyell copper-gold deposit, the Hellyer and Rosebery zinc-lead-silver and gold deposits and the Renison and Mt Bischoff tin deposits (Table 7).

Clancy applied their detailed understanding of VHMS and intrusion related systems and developed innovative targeting techniques to select ground in northwest Tasmania which was then vended into a Joint Venture with Bass receiving 75%. These conceptual exploration targets will now largely be explored by Bass, with Clancy being free-carried to pre-feasibility stage and so Bass will largely rationalise previous exploration results against Clancy's conceptual targets to develop ongoing field based programs and ultimately drill testing.

Ongoing liaison between Bass and Clancy involving regional targeting exercises will ensure that a pipeline of new opportunities and projects is maintained for both companies.

Conclusions 6

The mineral exploration assets of Clancy that are the subject of this report offer the investor exploration exposure to a large ground holding of moderately to highly prospective tenements in NSW and Tasmania. The company is targeting large Ordovician porphyry Cu-Au systems in the Lachlan Fold Belt of New South Wales, and world-class base metal (VHMS) styles in the Mount Read Volcanic Belt of Tasmania.

Clancy has invested significant intellectual property and capital in their exploration targeting efforts. The result of this work was the development of a systematic predictive targeting methodology which incorporates the fundamental geological parameters deemed necessary for the development of various mineralisation systems. Validation of this targeting methodology has been successful, particularly in the Lachlan Fold Belt with known porphyry mineral occurrences and deposits in the region highlighted by the probabilistic modelling work.

The Lachlan Fold Belt of NSW has been a highlight of recent exploration and mining success with regards to Ordovician porphyry Cu-Au systems. The world-class Cadia-Ridgeway Au-Cu, and large Northparkes Cu-Au deposits attest to its productivity. In addition, numerous projects such as Alkane's Wyoming and Golden Cross's Copper Hill and Cargo deposits, demonstrate a successful resurgence of exploration interest in the district.

In most of Clancy's NSW tenements, prospective volcano-sedimentary and intrusive rocks of the Ordovician Macquarie Arc have been identified. Characteristic porphyry-style alteration and anomalous Cu-Au soil and rock chip geochemistry has been defined in many of these leases, which further lends credence to the probabilistic modelling methodology by Clancy. The Fairholme, Myall and Goobang leases (100% Clancy) are examples where fractionated Ordovician intrusive rocks and associated porphyry-style alteration have been intersected in drilling and now require follow-up drilling. The Cowal East and Gobondery IV leases (Gold Fields earning 80%) demonstrate a similar prospectivity and level of exploration.

Other Clancy tenements are less advanced in their level of exploration with limited to no previous drilling. The Cundumbul and Orange East projects (100% Clancy), and the Wellington North JV (Gold Fields earning 80%) project fall into this category, but still have demonstrated porphyry Cu-Au potential. A number of Clancy's 100% projects represent more speculative exploration plays with conceptual targets yet to be explored, often owing to deep Mesozoic cover sequences completely obscuring Ordovician basement units.

The Mount Read Volcanic Belt of Tasmania represents one of the most highly and variably mineralised geological units in the world (Corbett, 1992). Clancy's exploration is focussing on the potential for base-metal VHMS mineralisation via a strategic alliance with Bass. Bass is managing exploration and will retain its 75% interest in all of these project areas by sole-funding Clancy to pre-feasibility stage. Previous exploration is generally more extensive on projects in the Mount Read Volcanic Belt, compared to the Lachlan Fold Belt tenements. Clancy's targeting method has highlighted several project areas as high-ranking targets for VHMS mineralisation where previous exploration may have been ineffective. Other mineralisation styles may also be present within this highly and variably mineralised terrane, such as intrusion-associated tin or nickel deposits. Ongoing liaison between Bass and Clancy involving regional targeting exercises will maintain a stream of new projects or opportunities for both companies.

In summary, Clancy has not defined any resources (JORC-compliant or other) for any project, and the properties are therefore speculative by nature, involving varying degrees of exploration risk. However, SRK considers that the projects described within this report are sufficiently prospective to warrant exploration at the budgetary levels proposed by the company. Clancy's use of digital geological and geophysical data in probability based targeting is an innovative process which has been rigorously validated by Clancy's in-house technical team. SRK is of the opinion that this probability based approach is of sound merit, and has been applied by Clancy in an appropriate manner. Clancy's financial and intellectual efforts in developing this targeting methodology has evolved over a 2 year period, which demonstrates the company's commitment to defining quality targets based on rigorous scientific analysis, prior to capital raising and potentially expensive on-ground exploration activities. In light of such, Clancy's portfolio of projects presented in this document have been secured based on a thorough interrogation of available geological data, and represent prospective ground holdings in two geological terranes that each demonstrate potential to host world-class deposits.

References 7

Barnes GJ and Ward D, 2007. Information Memorandum Porphyry Au-Cu Projects Lachlan Fold Belt, NSW Australia. Clancy Exploration Pty Ltd / Geoinformatics Exploration Inc. internal (confidential) report. Version 2 was dated February 2007 and Version 3 was dated March 2007.

Barnes GJ and Ward D, 2006. Information Memorandum Porphyry Au-Cu Projects Lachlan Fold Belt, NSW Australia. Clancy Exploration Pty Ltd / Geoinformatics Exploration Inc. internal (confidential) report. Version 1 was dated December 2006.

Barnes GJ, Core D, Buckingham A and Garwin SL, 2006. Probabilistic targeting for Ordovician porphyry Cu-Au systems targeting, East Lachlan Alliance, NSW Australia. Geoinformatics internal (confidential) report. Geoinformatics Library no L4486.

Cooke DR, Wilson AJ and Lickford V, 2004. Alkalic porphyry Au-Cu deposits of the Macquarie Arc, NSW. In Bierlein FP, Hough MA (eds), Tectonics to Mineral Discovery – Deconstructing the Lachlan Orogen. Proceedings Volume and Field Guide, MORE-SGEG Conference, Orange, NSW, July 6-8, 2004. Geol. Soc of Aust. Abstracts No 74, pp 49-50.

Corbett KD, 1992. Stratigraphic-Volcanic Setting of Massive Sulphide Deposits in the Cambrian Mount Read Volcanics, Tasmania. Economic Geology, 87, pp. 564-586.

Core D, Cameron G, Panizza N, Ly H, Holden D, Bryne D, Gleeson P, Stuart R and Murphy T, 2006. Application of the Geoinformatics Process to exploration targeting in the Mt Read Volcanic Belt, NW Tasmania. Mt Read Volcanics Intervention Project Stage 1b.

Glen RA, Walshe JL, Barron LM and Watkins JJ, 1998. Ordovician covergent-margin volcanism and tectonism in the Lachlan sector of east Gondwana. Geology 26, pp. 751 - 754.

Glen RA, Crawford AJ and Cooke DR, 2003. Tectonic setting of porphyry copper-gold mineralisation in the Macquarie Arc. In Blevin P, Jones M and Chappell B (eds), Magmas to Mineralisation: The Ishihara Symposium, Geoscience Australia, Record 2003/14, 65-68.

Glen RA, Korsch RJ, Direen NG, Jones LEA, Johnstone DW, Lawries KC, Finlayson DM and Shaw RD, 2002. Crustal structure of the Ordovician Macquarie Arc, Eastern Lachlan Orogen, based on seismic-reflection profiling. Australian Journal of Earth Sciences, Vol. 49, pp 323-348.

Gray DR and Foster DA, 2004. Tectonic Framework of the Lachlan Orogen. In Bierlein FP, Hough MA (eds), Tectonics to Mineral Discovery - Deconstructing the Lachlan Orogen. Proceedings Volume and Field Guide, MORE-SGEG Conference, Orange, NSW, July 6-8, 2004. Geol. Soc of Aust. Abstracts No 74, pp 1-20.

GSNSW Metmin Database, 2004. www.minerals.nsw.gov.au

Hay I, 2002. Ninth Annual Report for EL's 4502 and 4936, Fairholme Project, NSW. Newcrest Mining Limited. NSW Department of Primary Industries, Report GS2002_334.

Holliday J, 2004. Past, present and future of exploration in the NSW Lachlan Fold Belt. Presentation to conference delegates, Tectonics to Mineral Discovery - Deconstructing the Lachlan Orogen. MORE-SGEG Conference, Orange, NSW, July 6-8, 2004.

Holliday JR, Wilson AJ, Blevin PL, Tedder IJ, Dunham PD and Pfitzner M, 2002. Porphyry gold-copper mineralisation in the Cadia District, eastern Lachlan fold belt, New South Wales, and its relationship to shoshonitic magmatism. Mineralium Deposita 37; 1, Pages 100-116.

Large RR, 1992. Australian Volcanic-Hosted Massive Sulphide Deposits: Features, Styles and Genetic Models. Economic Geology 87, pp. 471 - 510.

Lickfold V, Cooke DR, Smith SG and Ullrich TD, 2003. Endeavour copper-gold porphyry deposits, Northparkes, New South Wales: Intrusive history and fluid evolution. Econ. Geol. 98: pp1607-1636.

Lord D, Etheridge M, Willson M, Hall G and Uttlev P, 2001. Measuring Exploration Success: An alternate to the discovery cost per ounce method of quantifying exploration effectiveness. Society of Economic Geologists Newsletter Number 45, April 2001.

Lydon JW, 1984. Volcanogenic massive sulphide deposits, Parts 1 & 2. Geoscience Canada v. 11, p. 195-202 and v. 15, p. 43-56.

MiningNews.net, 2006. Alkane expands McPhillamys prospect. MiningNews.net story 23^nd October 2006. Available from: www.miningnewspremium.net/storyview.asp?StoryID=67535

Morgan EJ, Colquhoun GP, Watkins JJ, Raymond OL, Warren AYE, Meakin NS, Henderson GAM, Scott MM, Percival IG, Barron LM and Pogson DJ, 1999. Cabonne Group pp31-58. In Meakin NS and Morgan EJ (compilers) Dubbo 1:250,000 Geological Sheet SI55/04, 2^nd edition Explanatory Notes. Geological Survey of New South Wales.

Nie F, Jiang S, Zhao S and Cooke DR, 2000. Ordovician intrusive-related gold-copper mineralisation in westcentral New South Wales, Australia. Acta Geologica Sinica (English Edition). 74; 4, Pages 807-826.

Pogson DJ and Watkins JJ, 1998. Bathurst 1:250,000 Geological Sheet SI55/08, Explanatory Notes. Geological Survey of New South Wales.

RFI, 2005. Resource Finance and Investments Limited Prospectus dated 16 August 2005.

Richards J, 2003. Tectono-Magmatic Precursors for Porphyry Cu-(Mo-Au) Deposit Formation. Economic Geology 98: pp 1515-1533.

Sherwin L, 1996. Narromine 1:250,000 Geological Sheet SI55/03, Explanatory Notes. Geological Survey of New South Wales.

Sillitoe R H, 1997. Characteristics and controls of the largest porphyry copper-gold and epithermal gold deposits in the circum-Pacific region. Australian Journal of Earth Sciences, Vol. 44, pp 373-388.

Smith S, Mowat B and Sharry M, 2004. Macquarie Arc porphyry Au-Cu systems: A review of the critical exploration features. In: Bierlien FP and Hough MA (eds) Tectonics to mineral discovery - deconstructing the Lachlan Orogen, Proceedings volume and field guide, MORE-SGEG conference, Orange, NSW, July 6-8 2004. Geol. Soc. Australia Abstracts: 74, pp51-62.

Warren AYE, Gilligan LB and Raphael NM, 1995. Cootamundra 1:250,000 Geological Sheet S155/03, Explanatory Notes. Geological Survey of New South Wales.

Wilson AJ, Cooke DR and Harper BL, 2003. The Ridgeway gold-copper deposit: a high-grade alkalic porphyry deposit in the Lachlan Fold Belt, New South Wales, Australia. Econ. Geol. 98: pp1637-1666.

Wilson A, Cooke D and Thompson J, 2002. Alkalic and High-K Calc-Alkalic Porphyry Au-Cu Deposits: A Summary. In Cooke D and Pongratz J, eds, Giant Ore Deposits: Characteristics, Genesis and Exploration, CODES Special Publication 4, pp 51-55.

8 Glossary

Aeromagnetic Survey	Traverses carried out along equally spaced lines that measure the strength of the earth's magnetic field.
Aircore Drilling	Rotary drilling technique in which sample is returned to surface inside the rod string by compressed air.
Alluvium	A general term for unconsolidated material deposited during comparatively recent geologic time by a stream or other form of running water.
Anomaly	A departure from the expected norm. In mineral exploration this term is generally applied to either geochemical or geophysical values higher or lower than the norm.
Aи	Symbol for the chemical element gold.
Azurite	A deep-blue to violet-blue monoclinic mineral $(Cu_3(CO_3)(OH_2)$ . It is an ore of copper and is a common secondary mineral associated with malachite in the upper (oxidized) zones of copper veins.
Breccia	A coarse-grained clastic rock composed of angular broken rock fragments held together by a mineral cement or in a fine-grained matrix.
Cainozoic	A geological period of time from the present to 65Ma.
Cambrian	A geological period of time from 542 to 488Ma.
Carboniferous	A geological period of time from 362 to 291Ma.
Chalcopyrite	A brass-yellow tetragonal mineral generally found in a massive form, and constitutes an important ore of copper. Chemical composition of $CuFeS2$ .

Chert	A hard, extremely dense or compact, dull to semi-vitreous, microcrystalline or cryptocrystalline rock consisting of interlocking crystals of quartz less than about 30 microns in diameter.
Conglomerate	A coarse-grained clastic sedimentary rock, composed of rounded to subangular fragments larger than 2mm in diameter, set in a fine grained matrix.
Cи	Symbol for the chemical element copper.
Devonian	A geological period of time from 418 to 362Ma.
Diorite	A plutonic igneous rock composed of coarse grains of plagioclase feldspar and less than 40 percent hornblende and biotite, or, more rarely, pyroxene or olivine.
	Disseminated sulphideSulphide mineralisation where sulphide grains are dispersed widely between other mineral grains in the rock.
Epiclastic	Consisting of weathered or eroded fragments of pre-existing rocks, where the fragments have been transported and deposited at the surface
Epidote	A yellowish-green or blackish-green mineral with the formula $Ca_2(A)$ , Fe) ₃ Si ₃ O ₁₂ (OH) commonly found associated with albite and chlorite in low-grade metamorphic rocks, or as a rare accessory in igneous rocks where it represents alteration products of ferromagnesian minerals. Common mineral in skarn and porphyry systems.
Felsic Intrusive	A generally finely crystalline or glassy igneous rock having abundant light-coloured minerals (quartz, feldspar, muscovite) resulting from volcanic action at or near the surface of the earth.
Gabbro	A group of dark-coloured, basic intrusive igneous rocks composed principally of basic plagioclase and clinopyroxene with or without olivine and orthopyroxene.
Granite	A plutonic rock in which quartz constitutes 10 to 50 percent of the felsic components and in which the alkali feldspar / total feldspar ratio is generally restricted to the range of 65 to 90%.
Нg	Symbol for the chemical element mercury.
Hematite	An oxide mineral with the general formula alpha $Fe2O3$ .
Κ	Symbol for the chemical element potassium.
Ma	A symbol for millions of years before the present time.
Mο	Symbol for the chemical element molybdenum.
MORB	Acronym for Mid Ocean Ridge Basalt.
Magma	Naturally occurring mobile rock material, generated within the Earth and capable of intrusion or extrusion, from which igneous rocks are thought to have been derived through solidification and related processes.
Magmatic	Of, pertaining to, or derived from magma
Magnetite	An oxide mineral with the general formula $\text{Fe}^{2}\text{Fe}^{3}{}{2}\text{O}{4}$ .
Malachite	A bright-green monoclinic mineral $\langle Cu_2CO_3(OH)_2 \rangle$ . It is an ore of copper and is a common secondary mineral associated with azurite in the upper (oxidized) zones of copper veins.
Massive sulphide	Sulphide mineralisation where a large number of sulphide grains are in contact with each other.
Mesozoic	A geological period of time from 245 to 65Ma.
Metamorphism	The mineralogical, chemical and structural adjustment of solid rocks to physical and chemical conditions which have generally been imposed at depth below the surface zones of weathering, and which differ from the conditions under which the rocks in question originated.
Monzodiorite	A plutonic rock intermediate in composition between monzonite and diorite.
Monzonite	A group of plutonic rocks intermediate in composition between syenite and diorite, containing approximately equal amounts of alkali feldspar and plagioclase, little or no quartz, and commonly augite as the main mafic mineral.
Na	Symbol for the chemical element sodium.
Ordovician	A geological period of time from 490 to 443Ma
P	Symbol for the chemical element phosphorous.

Pb
	Symbol for the chemical element lead.
Pacific Ring of Fire	The Pacific Ring of Fire is a zone of frequent earthquakes and volcanic eruptions that encircles the basin of the Pacific Ocean
Paleozoic	A geological period of time from 543 to 251Ma.
Pelite	An aluminous metamorphosed sedimentary rock.
Permian	A geological period of time from 290 to 251Ma.
Porphyry	A generic term for a very hard igneous rock consisting of large-grained crystals (phenocrysts), such as feldspar or quartz, dispersed in a fine-grained feldspathic matrix or groundmass.
Potassic	Containing predominantly potassium (K) bearing mineral phases.
Psammite	A metamorphic derivative of a clastic sedimentary rock composed of sand-sized particles.
Pyrite	A pale-bronze to yellow isometric mineral with a chemical composition of $FeS_2$ .
Pyroxene	A group of dark rock-forming minerals, closely related in crystal form and composition and having the general formula $\rm{ABSi}_2O_6$ (where A= Ca, Na, Mg or Fe ⁺² , and $B = Mg$ , $Fe^{+3}$ , $Fe$ , $Cr$ , $Mn$ , or Al with silicon rarely replaced by aluminium.
Sedimentary Rock	Rock that has formed through the deposition and solidification of sediment, especially sediment transported by water (rivers, lakes, and oceans), ice (glaciers), and wind.
Sericite	A mineral with the general formula $\text{KAl}2[\text{[A}l\text{Si}_3\text{O}{10}(\text{OH})_2$
Shear zone	A tabular zone of rock that has been crushed and brecciated by many parallel fractures due to shear strain.
Silurian	A geological period of time from 443 to 418Ma.
Skarn	As used by Fennoscandian geologists, an old Swedish mining term for calc-silicate gangue (amphibole, pyroxene, garnet, etc.) of certain iron-ore and sulfide deposits of Archean age, particularly those that have replaced limestone and dolomite. Its meaning has been generally expanded to include lime-bearing silicates, of any geologic age, derived from nearly pure limestone and dolomite with the introduction of large amounts of Si, Al, Fe and Mg.
Slate	A compact, fine-grained metamorphic rock that possesses slaty cleavage and hence can be split into slabs and thin plates.
Sodic	Containing predominantly sodium (Na) bearing mineral phases.
Strike-slip fault	A fracture or a zone of fractures along which there has been displacement of the sides relative to one another and parallel to the strike trend of the fault.
Syenite	A group of plutonic rocks usually containing microcline, orthoclase, and small amounts of plagioclase, hornblende, and/or biotite, and little or no quartz.
Tertiary	A geological period of time from 65 to 1.6Ma
Thrust fault	A fault with a dip of 45 degrees or less over much of its extent with overriding movement of one crustal unit over another.
Turbidite	Geological formations that have their origins in turbidity current deposits (a form of underwater avalanche) that is responsible for distributing vast amounts of clastic sediment into the deep ocean.
Ultramafic Rock	Igneous rocks with no free quartz and generally very little feldspar.
Unconformity	A substantial break or gap in the geologic record where a rock unit is overlain by another that is not next in stratigraphic succession, such as an interruption in the continuity of a depositional sequence of sedimentary rocks or a break between eroded igneous rocks and younger sedimentary strata.
Volcanic Rock	Extrusive igneous rock solidified near or on the surface of the Earth.
Volcaniclastic	Fragmental rock containing volcanic material in any proportion whatever without regard to origin
Weathering	The process of alteration of fresh rock at the earth's surface.
Weights of Evidence	Statistical method used to predict the occurrence of an event with known evidences in a study area.

SOLICITORS' REPORT 5 CLAYTON UTZ

Clayton Utz Lawyers $OVI$ 250 St George's Terrace Perth WA 6000 Australia

GPO Box P1214 Perth WA 6844

T +61 8 9426 8000 F +61 8 9481 3095 www.claytonutz.com

16 May 2007

The Directors Clancy Exploration Limited 57 Havelock Street WEST PERTH WA 6005

Dear Sirs

SOLICITORS' REPORT

This Report is prepared for inclusion in a prospectus to be issued by Clancy Exploration Limited ACN 105 578 756 (the "Company" or "Clancy") for an offer to the public of up to 25,000,000 fully paid ordinary shares in the capital of the Company at an issue price of \$0.20 per share to raise up to \$5,000,000 (before costs of the offer).

This Report is based on, and subject to, the assumptions and qualifications set out in Section 5, and as otherwise specified elsewhere in this Report.

$\mathbf{1}$ . Tenements

This Report provides information on the status of the following exploration licences and explorations licence applications granted or applied for under the Mineral Resources Development Act 1995 (Tas) ("TAS Act") and Mining Act 1992 (NSW) ("NSW Act"), in which the Company has an interest:

(a) EL 03/2005, EL 54/2004, EL 16/2006, EL 51/2004, EL 52/2004, EL 53/2004, EL 38/2005, EL 02/2005, EL 04/2005, EL 64/2004, EL 63/2004 and EL 36/2005, granted under the TAS Act ("TAS Tenements");
(b) EL 6178, EL 6328, EL 6662, EL 6553, EL 6554, EL 6534, EL 6661, EL 6181, EL 6536, EL 6535, EL 6537 and EL 6552, granted under the NSW Act ("NSW Tenements"); and
(c) ELA 3026, ELA 2916, ELA 3007 and ELA 3042, applied for under the NSW Act ("NSW Tenement Applications").

The TAS Tenements, NSW Tenements and NSW Tenement Applications are collectively referred to as the "Tenements".

ILE

Searches $2¹$

For the purposes of this Report, we have reviewed:

(a) in respect of the TAS Tenements, the results of searches conducted by the Department of Infrastructure, Energy & Resources, Tasmania ("DIER") on 8 May 2007, of the register of tenements maintained by the DIER:
(b) in respect of the NSW Tenements and NSW Tenements Applications, the results of searches conducted by the Department of Primary Industries, New South Wales ("DPI") on 9 May 2007, of the register of tenements maintained by the DPI;

(the searches in (a) and (b) are collectively referred to as the "Tenement Searches"),

(c) in respect of the TAS Tenements, a copy of each exploration licence duly signed by the Minister for Infrastructure, Energy & Resources, Tasmania ("TAS Minister");
(d) in respect of the NSW Tenements, a copy of each exploration licence duly signed by the Minister for Mineral Resources, New South Wales ("NSW Minister");
(e) in respect of the NSW Tenement Applications, a copy of each exploration licence application; (the documents in $(c)$ - $(e)$ are collectively referred to as the "Licence Documents"),
(f) in respect of the Tenements, the results of searches conducted by the National Native Title Tribunal ("NNTT") on 8 May 2007, of the registers maintained by the NNTT, including the National Native Title Register, Register of Native Title Claims, Unregistered Claimant Applications and Register of Indigenous Land Use Agreements ("Native Title Searches"); and
(g) in respect of the NSW Tenements and NSW Tenement Applications, the results of searches conducted by the Department of Environment and Conservation, New South Wales ("DEC") on 23 April 2007, of the Aboriginal Heritage Information Management System maintained by the DEC ("Aboriginal Heritage Searches").

The Tenement Searches, Native Title Searches and Aboriginal Heritage Searches are collectively referred to as the"Searches".

The results of the Searches and information from the Licence Documents are provided in Schedules 2 and 3 of this Report. Section 4 of this Report provides a summary of the status of the Tenements. Section 5 of this Report provides general information relevant to the Tenements under the NSW Act, TAS Act, native title legislation and Aboriginal heritage legislation.

3. Material Contacts

For the purposes of this Report, we have reviewed the following material contracts relevant to the Tenements ("Material Contracts"):

(a) Tasmanian Alliance Agreement;
(b) Deed of Assignment, Transfer & Variation Tasmanian Alliance Agreement;
(c) East Lachlan Alliance Restructure Agreement;
(d) Wellington Joint Venture Agreement;
(e) Cowal East Joint Venture Agreement; and
(f) Godonbery Joint Venture Agreement.

Schedule 1 of this Report provides the Material Contracts summaries.

$\boldsymbol{4}$ . Status Of Tenements

Based on the results of the Searches and information from the Licence Documents, and subject to the statements set out in this Report, we are satisfied that the information in this Report (including Schedules 2 and 3), is an accurate statement of the status of the Tenements as at the date the Searches were conducted.

CLANCY EXPLORATION LIMITED

4.1 New South Wales

$(a)$ Tenements

Clancy Exploration Limited is the registered holder of NSW Tenements EL 6178, EL 6328, EL 6662, EL 6553, EL 6554, EL 6534, EL 6661, EL 6181, EL 6536, EL 6535, EL 6537 and EL 6552. The NSW Tenements have all been granted in respect to Group 1 Minerals.

Clancy Exploration Limited is the applicant for NSW Tenement Applications ELA 2916, ELA 3007, ELA 3026 and ELA 3042. The NSW Tenement Applications have all been applied for in respect to Group 1 Minerals.

Refer to Schedule 4 of this Report for a list of the Group 1 Minerals.

$(b)$ Encumbrances and Dealings

There are no encumbrances or dealings registered against the NSW Tenements.

$\left( \mathbf{c} \right)$ Expenditure, Rent and Royalties

The NSW Tenements are each subject to a minimum annual expenditure commitment (see the 'Notes' to Schedule 2). The results of the Tenement Searches do not indicate the status of expenditure commitments and accordingly, we express no opinion on the status of Clancy's expenditure commitments for the NSW Tenements.

There are no rent or royalty conditions applicable to the NSW Tenements.

$(d)$ Security Deposits

The NSW Tenements are each subject to the lodgement of a security deposit in the amount of \$10,000 (see the 'Notes' to Schedule 2). The results of the Tenement Searches indicate that a security deposit in the amount of \$10,000 has been lodged in respect of each of the NSW Tenements.

$(e)$ Licence Conditions

The NSW Tenements are subject to standard licence conditions relating to environmental and rehabilitation matters, drilling requirements, reporting requirements, expenditure commitments and lodgement of security. Each of the NSW Tenements also contains conditions relating to native title and Aboriginal heritage.

$(f)$ Native Title

TOMOROPS

There are no registered Native Title Claims or Indigenous Land Use Agreements or unregistered Native Title Applications overlapping the NSW Tenements and NSW Tenement Applications, except for the following:

EL 6536 is subject to Native Title Claim NC02/9 registered by the Tubba-Gah People on 24 October 2002. Accordingly, it is a condition of EL 6536 that the Company must obtain the written consent of the NSW Minister prior to prospecting on any area of land or water on which native title exists.
ELA 3007 is subject to Indigenous Land Use Agreement NIA 1998/001 between Adelong Consolidated Gold Mines NL, the Walgalu People and the Wiradjuri People, registered on 21 June 1999 ("ILUA"). The Company is not a party to the ILUA, and accordingly, ELA 3007 is not effected by the ILUA.

Refer to Section 5.3 of this Report for general information on native title.

Aboriginal Heritage $\left( \mathbf{q} \right)$

A number of the NSW Tenements and NSW Tenement Applications overlap Aboriginal sites and places (see Schedule 3). Accordingly, it is generally a condition of those Tenements that the Company:

must consider potential impacts on Aboriginal heritage prior to carrying out any prospecting:
must take all necessary precautions in drilling, excavating or disturbing the land and must not knowingly destroy, deface or damage any Aboriginal object or place except in accordance with consent issued under the National Parks and Wildlife Act 1974 (NSW) ("NPW Act"); and
must notify the DPI and, if required by the DPI, must prepare a Review of Environmental Factors and Environmental Impact Statement and obtain the written approval of the DPI prior to carrying out any prospecting.

Refer to Section 5.3 of this Report for general information on Aboriginal heritage.

Land Access and Compensation $(h)$

There are no land access or compensation agreements registered against the NSW Tenements.

$4.2$ Tasmania

$(a)$ Tenements

Bass Metals Limited ("Bass Metals") and Geoinformatics Exploration Tasmania Pty Ltd ("GXL Tasmania"), a wholly-owned subsidiary of Clancy, are the registered holders of TAS Tenements EL 03/2005, EL 54/2004, EL 16/2006, EL 51/2004, EL 52/2004, EL 53/2004, EL 38/2005, EL 02/2005, EL 04/2005, EL 64/2004, EL 63/2004 and EL 36/2005. The TAS Tenements have all been granted in respect to Category 1 Minerals. Pursuant to the Tasmanian Alliance Agreement, Bass Metals holds a 75% interest and GXL Tasmania holds a 25% interest in each of the TAS Tenements.

Refer to Schedule 4 for a list of the Category 1 Minerals and Schedule 1 for a summary of the Tasmanian Alliance Agreement.

(b) Encumbrances and Dealings

There are no encumbrances or dealings registered against the TAS Tenements.

$\left( \mathbf{c} \right)$ Expenditure, Rent and Royalties

The TAS Tenements are each subject to a minimum annual expenditure commitment (see the 'Notes' to Schedule 2). The results of the Tenement Searches do not indicate the status of expenditure commitments, and accordingly, we express no opinion on the status of Clancy's expenditure commitments for the TAS Tenements.

The TAS Tenements are subject to rent at the current rates:

\$19.97 per sq km per annum, for each of the first two years; and
\$39.93 per sq km per annum, for each subsequent year.

The Tenement Searches do not, however, indicate the status of rent obligations, and accordingly, we express no opinion on GXL Tasmania's rent obligations.

There are no royalty conditions applicable to the TAS Tenements.

$(d)$ Performance Deposits and Private Property Deposits

The TAS Tenements are each subject to the lodgement of a performance deposit, while the majority are also subject to a private property deposit (see the 'Notes' to Schedule 2). The Tenement Searches indicate that performance deposits and private property deposits (if required) have been lodged in respect of each of the TAS Tenements.

Licence Conditions (e)

The TAS Tenements are subject to standard licence conditions relating to environment and rehabilitation matters, reporting requirements, expenditure commitments and lodgement of deposits.

Native Title $(f)$

There are no registered Native Title Claims or Indigenous Land Use Agreements or unregistered Native Title Applications overlapping the TAS Tenements.

Aboriginal Heritage $\left( \mathbf{e} \right)$

There are no public registers maintained in Tasmania in relation to Aboriginal heritage. Accordingly, we express no opinion as to the status of Aboriginal heritage for the TAS Tenements.

(h) Land Access and Compensation

There are no land access agreements or compensation agreements in relation to the TAS Tenements. The land underlying the TAS Tenements is, however, subject to various land tenure, including crown land, reserves and private property (see 'Notes' in Schedule 2).

5. General Information Relevant To The Tenements

The Tenements comprise exploration licences and exploration licence applications granted or applied for under the NSW Act or TAS Act. An overview of the general information relevant to the Tenements under the NSW Act, TAS Act, native title legislation and Aboriginal heritage legislation is provided below.

5.1 New South Wales

In New South Wales, exploration licences are granted by the DPI under the provisions of the NSW Act. The holder of an exploration licence is authorised to explore for specific mineral groups within the tenement area.

Table 1: Mineral Groups

Metallic minerals	Group 6
Group	Corundum, diamond, ruby and sapphire
$G$ roup $2$	Group 7
Non metallic minerals.	Opal
Group ?	Group $\delta$
Semi-precious stories	Geothermal substances
Marine addredate	Coal and oil shale
G(0110.4)	Group 9
Clav minerals	Minerals sands $G$ $O$ $n \in {0, \ldots, n}$

Exploration licences may be granted and renewed for periods of up to five years. An exploration licence must be granted over an area of land comprising a minimum of 1 unit and a maximum of 100 units, unless the NSW Minister determines otherwise. A "unit" is one minute of latitude by one minute of longitude. Upon renewal of an exploration licence, the tenement area must be reduced by at least 50%.

An exploration licence is subject to such licence conditions as the NSW Minister may, when granting the licence, impose. Licence conditions generally include conditions relating to exploration activities, the protection of the environment, the protection of public and private interests, rehabilitation of the land, expenditure requirements, reporting requirements and the lodgement of security (to ensure compliance with the conditions of the licence). Upon renewal, the NSW Minister may amend or include further licence conditions.

In respect to expenditure requirements, the current annual rates are as follows:

Table 2: Expenditure Requirements - Rates

	$\frac{1}{2}$ Grach and the contract of the contract $\frac{1}{2}$ Renewall and the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the co
1 Unit	\$5,000 p/a for all groups	\$5,000 p/a for all groups.
$2$ to 6 Units	Group 1 \$2.000 plus \$3,000 per unit p/a Groups 2 5 & 10 Half the Group 1 expenditure applied. Other Groups: At discretion of Exploration Titles. Committee	Group 1 \$2,000 plus \$3,000 per unit p/a Groups 2, 5 & 10 Half the Group 1 expenditure аронесі. Other Groups: At discretion of Exploration Titles Committee
Greater than 6 Units	Group 1: \$20,000 plus \$500 per unit p/a Groups 2, 5 & 10 Half the Group 1 expenditure applied Other Groups: At discretion of Exploration Titles Commutee	Group 1: 530,000 plus \$1000 per unit p/a Groups 2, 5 & 10 Half the Group 1 expenditure applied Other Groups: At discretion of Exploration Titles Committee

The holders of an exploration licence must not carry out exploration activities on the tenement area without an arrangement with the landholder (including native title holders) covering access and, if applicable, compensation for any loss suffered or likely to be suffered by them as a result of the rights conferred by the title.

The holder of an exploration licence may apply for a mining lease in accordance with the NSW Act, however, there is no right to convert the licence under the NSW Act.

$5.2$ Tasmania

CONGROM

In Tasmania, exploration licences are granted by the DIER under the provisions of the TAS Act. An exploration licence authorises the holder to explore for one or more specific categories of minerals within the tenement area.

Table 1: Mineral Categories

Reading Contract of the Contract of the Contract of the Contract of the Contract of the Contract of the Contract of The Contract of The Contract of The Contract of The Contract of The Contract of The Contract of The Contr	EXPERIENCE	KOSTISESTA MUUTTUUD KALLEESSA KUULUUSEEN
Category 1	Metalic minerals and atomic substances	Category 4	Petroleum products, except oil shale
Category 2	Coal, peat, lignite and oil shale	Category 5	Industrial mineral, precious stone and semi-
			precious storie
Category 3	Rock, stone, gravel, sand and day used in	Category 6	Geothermal substance
	construction, bricks and ceramics

In the case of Category 1, 2 and 3 minerals, exploration licences are granted for a period of five years. For Category 4 minerals, the term is determined by the TAS Minister. Exploration licences are only renewable in special circumstances including where discoveries are made late in the tenure of a licence and the TAS Minister is satisfied that further exploration may lead to the establishment of an economic mine.

In the case of Category 1, 2, 5 and 6 minerals, exploration licences may be granted for a maximum area of 250 square kilometres. For Category 3 minerals the maximum area is 500 square kilometres and for Category 4 minerals the maximum area is determined by the Minister. There is no compulsory reduction of area during the term of an exploration licence.

The TAS Minister may grant an exploration licence subject to conditions the TAS Minister considers appropriate. If an exploration licence is held by two or more persons, those persons are jointly and severally liable for complying with the licence conditions of the exploration licence.

In respect of expenditure requirements, the annual rates in Table 2 or Table 3 apply.

For exploration licences granted before 27 February 2007, the following annual rates apply until the next anniversary of the grant of the licence (thereafter the annual rates in Table 3 apply):

Table 2: Expenditure Requirements

		BEATATURE DELTE STEINE EN FRANCISCO
			Greater of (a) \$5,000, and (b) No. of square km x \$250
2.			Greater of (a) \$5,000 and (b) No. of square km x \$500
			Greater of (a) \$5,000, and (b) No. of square km x \$1,000.
			Greater of (a) \$5,000, and (b) No. of square km x \$2,000
			Greater of (a) \$5,000, and (b) No. of square km x \$5,000.

For exploration licences granted on or after 27 February 2007 the following annual rates apply:

Table 3: Expenditure Requirements

	, iztrītiecība szerotētiens vecetiled
		Greater of (a) \$10,000, and (b) No. of square km x \$200
		Greater of (a) \$10,000, and (b) No. of square km x \$300.
ß.		Greater of (a) \$10,000, and (b) No. of square km x \$500.
4.		Greater of (a) \$10,000 and (b) No. of square km x \$700
		Greater of (a) \$10,000, and (b) No. of square km x \$1,000

For exploration licences granted beyond a period of five years, or over an area of less than 1 square kilometre, the minimum expenditure requirements are determined by the TAS Minister and imposed as a special condition of the licence.

Under the TAS Act, generally the holder of an exploration licence must give private landholders fourteen days notice prior to accessing such land.

Furthermore, under the TAS Act, the holder of an exploration licence has the exclusive right to mark out and apply for a mining lease in respect of the area or part of the area of land comprised in the exploration licence and the category of minerals specified in the exploration licence.

5.3 Native Title and Aboriginal Heritage

$(a)$ Native Title

The NTA provides a legislative framework for the recognition and protection of native title and for the validation of certain acts affecting native title. Both NSW and Tasmania have enacted legislation complementary to the NTA which validates certain acts attributable to the State (the Native Title (New South Wales) Act 1994 (NSW) and the Native Title (Tasmania) Act 1994 (Tas)).

In general, under the NTA, grants of exploration licences prior to 1 January 1994 affecting native title are validated as "past acts" and grants of exploration licences between 1 January 1994 and 23 December 1996 affecting native title are validated as"intermediate past acts". In respect of exploration licences, any native title existing at the time of grant continues to exist, but is "suppressed" to the extent of any inconsistency, until the expiry or surrender of the exploration licence.

Under the NTA, future grants of exploration licences (referred to as "future acts") affecting native title, must comply with the "right to negotiate" procedure. The right to negotiate procedure requires the State to give notice of its intention to grant an exploration licence to any registered native title claimants, prescribed bodies corporate and the public. Within three months of the State's notice, native title claims may be made, and within a further month, such claims may be registered. Where there are registered native title claims, the State, the applicant for the tenement and the native title party must negotiate in good faith with a view to obtaining the agreement of the native title party to the grant of the tenement. If no agreement is reached, any party may, no less than six months after the State's notice, apply to the NNTT for a determination as to whether the tenement should be granted, with or without conditions. The Ministers responsible for the administration of the NSW Act and the TAS Act, have the power to overrule any determination by the NNTT, in the interests of the State.

The State may consider that the "expedited procedure" under the NTA applies to the grant of a tenement, in which case the right to negotiate procedure will not apply. The expedited procedure may apply to acts not likely to directly interfere with community or social activities of native title holders, acts not likely to interfere with areas or sites of particular significance to native title holders and acts not likely to involve major disturbance to any land or waters concerned.

The right to negotiate will also not apply where native title has been extinguished, where an exploration licence is granted solely for the purpose of the construction of an infrastructure facility associated with mining or where an Indigenous Land Use Agreement has been entered into consenting to the grant of the tenement.

In NSW, the NSW Act provides for two types of exploration licences, "standard licences" and "low-impact" exploration licences". Grants of low-impact exploration licences are excluded from the right to negotiate procedure due to the exploration licences only authorising the holder to carry out limited exploration activities. At least four months prior to the grant of low-impact exploration licences, the DPI must notify any registered native title claimants, prescribed bodies corporate and NSW Native Title Services Limited. Grants of standard exploration licences are subject to the applicant selecting to follow the right to negotiate procedure under the NTA or the NSW Minister imposing a licence condition requiring the NSW Minister's consent prior to carrying out exploration activities on potential native title land.

Aboriginal heritage $(b)$

In NSW, the NPW Act provides for the protection of Aboriginal relics, sites and places, regardless of whether such relics, sites and places are recorded in the Aboriginal Heritage Information Management System maintained by DEC. Under the NSW Act, the NSW Minister must consider the conservation and protection of Aboriginal sites and relics on land the subject of an exploration licence application, prior to the grant of an exploration licence. The NSW Minister may impose licence conditions as appropriate, including consent to be obtained prior to certain exploration activities being undertaken on such land.

In Tasmania, the Aboriginal Relics Act 1975 (Tas) ("AR Act") provides for the protection of Aboriginal relics, sites and objects. The Minister for Aboriginal Affairs Tasmania takes into consideration the preservation and protection of relics and sites and can make orders declaring protected objects for the purposes of the AR Act.

Assumptions & Qualifications 6.

Our Report is based on, and subject to, the assumptions and qualifications set out below and as otherwise specified elsewhere in this Report:

(a) We have relied upon information provided by third parties, including the DPI, DIER, NNTT and DEC in response to searches made, or caused to be made, by us and have relied upon that information being accurate, complete and up to date. We cannot comment on whether any changes have occurred in respect of the Tenements between the date on which the searches were conducted and the date of the prospectus.
(b) We have relied upon information provided by third parties, including the Company and its representatives and agents, in response to investigations and searches made, or caused to be made, by us and have relied upon that information as being accurate, complete and up to date. We cannot comment on whether any changes have occurred in respect of the Tenements between the date on which the information was provided to us and the date of the prospectus.
(c) Certain of the Tenements comprise applications for exploration licences and we express no opinion as to whether and when such applications will ultimately be granted in whole or in part.
(d) Where agreements have not been registered in relation to the Tenements, we express no opinion as to whether such registration may be effected, or the consequences of non-registration.
(e) Where Ministerial consent is required in relation to any agreements or to the transfer of any granted Tenements, we express no opinion as to whether such consent will be granted, or the consequences of consent being refused, although we are not aware of any specific matter which would cause consent to be refused.
(f) We have assumed that we have been provided with copies of all the material agreements in respect of the Tenements and express no opinion as to whether any additional agreements in respect of the Tenements exist.
(g) We have assumed that the seals and signatures on all of the Material Contracts are authentic, and that the Material Contracts were within the capacity and powers of, and validly authorised, executed and delivered by and are binding on, the parties to them and comprise the entire agreement of the parties to each of them with respect to their respective subject matters.
(h) We have assumed that the parties to each of the Material Contracts are complying with and fulfilling, and will continue to comply with and fulfil, the terms of the Material Contracts, and that the representations made by third parties, including the Company and its representatives and agents, in relation to the Material Contracts are true and correct.
(i) Where compliance with the terms and conditions of any Tenement and the provisions of the NSW Act or TAS Act, including requirements necessary to maintain the Tenements in good standing, or a possible claim in relation to the Tenements by third parties is not disclosed on the face of the Tenement Searches, we express no opinion as to such compliance or claim.
(j) Native title and/or Aboriginal heritage sites or objects may exist in the areas covered by the Tenements. Whilst we have conducted some searches to ascertain what native title claims, if any, exist over these areas, we have not conducted any independent investigations regarding the likely existence or non-existence of native title or Aboriginal heritage sites or objects.
(k) Save as set out in this Report, we have not undertaken any independent investigation as to whether the granted Tenements have been validly granted by Minister administering the NSW Act or the Minister administering the TAS Act in accordance with the NTA and the NSW Act or the TAS Act, respectively.

Yours faithfully Clayton Utz

SCHEDULE 1 - SCHEDULE OF MATERIAL CONTRACTS

Tasmanian Alliance Agreement 1.

On 10 May 2005 Bass Metals, GXL Tasmania and Geoinformatics Exploration Australia Pty Ltd ("GXL Australia") (jointly the "GXL Companies") executed the Tasmanian Alliance Agreement ("TAA"). Pursuant to the TAA, the GXL Companies agree to sell an interest in Tasmanian mining tenements to Bass Metals in consideration for shares in Bass Metals. The parties agree to combine resources with a view to forming a joint venture to develop their respective interests in Tasmania. The rights and obligations of the GXL Companies under the TAA are joint and several.

1.1 Condition Precedent

Under the TAA, the provisions relating to the sale of mining tenements, joint venture, area of mutual interest and Mt Read Volcanics Intervention Project summarised below are conditional upon Ministerial approval required for GXL Tasmania to transfer to Bass Metals a 75% interest in each of the "GXL Tenements", which consist of Tasmanian exploration licence applications ELA51/2004, ELA52/2004, ELA53/2004, ELA54/2004, ELA63/2004, ELA64/2004, ELA2/2005, ELA3/2005 and ELA4/2005.

$1.2$ Bass Metals Interests in Intec Licences

Pursuant to the TAA, Bass Metals has provided representations and warranties in respect of its interest in the "Intec Licences", which consist of Tasmanian tenements M1 68m/1984, Hellyer 10W/1980, RL11/1997, EL17/1999 and EL24/2004. On 21 March 2005, Bass Metals entered into an agreement with Intec Hellyer Metals Pty Ltd ("Intec") (varied on or about 1 April 2005) whereby Intec agreed to sell Bass Metals its interest in M1 68m/1984, Hellyer 10W/1980, RL11/1997, EL17/1999 and EL24/2004 in consideration for the issue of Bass Metals shares and options to Intec ("Acquisition Agreement"). Pursuant to the Acquisition Agreement, Intec has reserved its rights to any limestone reserves on the Intec Licences. Furthermore, on 21 March 2005, Bass Metals and Intec entered into a sub-lease agreement in respect of CML103M/1987 which entitles Bass Metals to conduct exploration and mining on the tenement. Bass Metals has warranted that it will notify the GXL Companies as soon as Bass Metals becomes aware that the sale of tenements under the Acquisition Agreement has been approved by the Minister.

$1.3$ Sale of GXL Tenements

The GXL Companies have agreed to transfer a 75% interest in the GXL Tenements to Bass Metals. In consideration for the transfer of the GXL Tenements, Bass Metals has agreed to:

(a) issue 150,000 ordinary shares in Bass Metals to GXL Tasmania within five days after receipt by Bass Metals of written confirmation from Mineral Resources Tasmania that a 75% interest in each GXL Tenement has been transferred to Bass Metals:
(b) provide substitute security bonds to release those lodged in respect of the GXL Tenements by the GXL Companies; and
(c) reimburse GXL Tasmania for any rents and rates paid by the GXL Companies in respect of the GXL Tenements.

1.4 Joint Venture

Upon completion of the sale of the GXL Tenements, an unincorporated joint venture is deemed to have formed between Bass Metals and the GXL Companies in respect of the GXL Tenements in which Bass Metals has a 75% interest and the GXL Companies a 25% interest ("Joint Venture"). Schedule 5 to the TAA sets out the terms and conditions of the Joint Venture, which are summarised below. The Joint Venture property initially consists of the GXL Tenements and all mining information in the possession or control of either party relating to the GXL Tenements.

Pursuant to the terms of the TAA, Bass Metals has agreed to sole fund the Joint Venture until the completion of a pre-feasibility study on any one of the GXL Tenements. Furthermore, Bass Metals may not withdraw from the Joint Venture until at least 1 year has expired after the date of grant of the last GXL Tenement. At the time of any withdrawal by Bass Metals, the GXL Tenements must be in good standing and expenditure commitments met.

It is anticipated in the terms of the foint Venture at Schedule 5 of the TAA that if the foint Venture decides to proceed with a full feasibility study, the parties must negotiate in good faith to execute a detailed development agreement to govern the feasibility study, construction, development, mining and project financing by the Joint Venture.

1.5 Area of Mutual Interest ("AMI")

Prohibition against independent acquisition of targets

Except as provided under the terms of the TAA, both parties have agreed that they will not acquire an independent interest in any mining tenement in the area of mutual interest ("AMI Interest") until:

(a) the expiry of 5 years after the date of the TAA; or
(b) termination of the last of the joint ventures in existence under the TAA,

whichever is later (the"AMI Period").

The AMI is defined as the area of land set out in the map at Schedule 4 of the TAA, other than:

(a) any Excluded Tenements;
(b) areas where one party has sought to assign its interest in the area and the other party has exercised a preemptive right to acquire it; or
(c) areas where one party has proposed acquiring an AMI interest and the other party has not exercised its pre-emptive right and an interest has been acquired without the other party.

The "Excluded Tenements" held by third parties are the Intec Licences, ML103M/1987, exploration licences EL47/2003, EL48/2003, EL55/2003 (held by Saracen Holdings Ltd), EL28/2002, EL29/2002 (held by Adamus), EL31/2003, EL36/2003 (held by Pioneer Nickel Limited) and EL21/2003 (held by Glengarry Resources Limited), mining leases Lease 2W/1991, Lease 3W/1991, Lease 4W/1991, Lease 7M/1991 and Lease 5M/2002 (held by Henty Gold Ltd); and an"AMI Area"in the North Western region of Tasmania.

Option for a new Joint Venture to acquire AMI Interests

If either party wishes to acquire an AMI Interest, the proposing party must first give the other party notice in writing of its intention to do so. The notice constitutes an offer by the proposing party to enable the parties to acquire the AMI Interest under a new unincorporated joint venture between the parties in which:

(a) Bass Metals has a 75% interest and the GXL Companies have a 25% interest;
(b) Bass Metals will sole fund the new joint venture until completion of a pre-feasibility study; and
(c) Bass Metals may not withdraw from the joint venture for at least 1 year.

The terms and conditions of the new joint venture are also governed by the Joint Venture terms set out at Schedule 5 of the TAA, and summarised below in section 1.9.

If the offer set out in the notice provided by the proposing party is not accepted within 4 weeks, the proposing party may at their own cost acquire the AMI Interest on the terms set out in the notice, provided that the acquisition takes place within 4 months after the date the notice was given.

Restrictions on acquiring AMI Interests during the AMI Period

The TAA also imposes restrictions on Bass Metals acquiring AMI Interests during the AMI Period where:

(a) such AMI Interest relates to any mining tenement that includes any part of a target delineated by the GXL Companies and such delineation has been made before such acquisition and was made exclusively on the strength of data generated by the Geoinformatics Process; or

CLANCY EXPLORATION LIMITED

(b) the principal factor motivating Bass to make such acquisition is data generated by the GXL Companies or Bass Metals through the Geoinformatics Process.

If, during the AMI Period, Bass Metals or a related body corporate of Bass Metals acquires any AMI Interest in respect of a mining tenement on which is located all or part of a target that was delineated by the GXL Companies before expiry of the AMI Period, Bass Metals has agreed to pay the GXL Companies a net smelter returns royalty ("Royalty") in respect of Bass Metals' share of product from such mining tenement. The terms and conditions of the Royalty are set out in Schedule 6 of the TAA and summarised below in section 1.10.

Conversely, the TAA restricts GXL Companies from acquiring any mining tenement in the AMI where:

(a) the mining tenement includes any part of a target identified by Bass Metals and such identification has been made before such acquisition and was made on the strength of data generated otherwise than by the Geoinformatics Process; or
(b) the principal factor motivating either of the GXL Companies to make such acquisition is data generated by a Joint Venture, Bass Metals or any of Bass Metals' related bodies corporate otherwise than from the Geoinformatics Process.

Pre-emptive rights in the AMI

The TAA obliges a disposing party intending to assign part or all of an AMI to provide notice in writing to the other party setting out the terms and conditions of the disposal. This notice constitutes an offer by the disposing party, and gives rise to a pre-emptive right for the other party to give notice of acceptance within 30 days after the notice is given. If the other party does not exercise a pre-emptive right, the disposing party may assign the interest to a third party on the terms and conditions of the notice, provided the assignment is completed within 4 months after the date of the notice. The pre-emptive right does not apply to the assignment by either party of an AMI Interest to its ultimate holding company or to a related body corporate other than its ultimate holding company.

Data Modelling by the GXL Companies $1.6$

The MRVI Project

The TAA sets out the parties' obligations in relation to the Mt Read Volcanics Intervention Project. The parties have agreed that Bass Metals may, at any time from the date of the TAA until the expiry of 3 months after completion of the Bass Metals capital raising process (a process whereby Bass Metals raises capital of at least \$2.5 million by the issue of Bass Metals shares), give notice to the GXL Companies requiring them to undertake data modelling on the AMI Area, including the Excluded Tenements using the GXL Companies' data modelling technology ("MRVI Project").

In consideration for the GXL Companies conducting the MRVIP Project, Bass Metals has agreed to:

(a) reimburse the GXL Companies' expenditure on the MRVI Project;
(b) issue GXL Tasmania (or its nominee) 150,000 Bass Metals shares and 50,000 unlisted Bass Metals options exercisable until 31 December 2007 at an exercise price of 25 cents each;
(c) within 14 days of completion of the first stage of the MRVI Project, issue to GXL Tasmania (or its nominee) a further 300,000 ordinary shares in Bass Metals and a further 100,000 unlisted Bass Metals options exercisable until 31 December 2007 at an exercise price of 25 cents each; and
(d) subject to completion by the GXL Companies of the MRVI Project within 12 months of the commencement notice, issue GXL Tasmania (or its nominee) a further 300,000 Bass Metals shares and a further 100,000 Bass Metals options exercisable until 31 December 2007 at an exercise price of 25 cents each.

Performance shares

For each 500,000 ounces of gold or gold equivalent that satisfy certain criteria and is delineated (as at least 60% of the quantity which is contained in a Measured Mineral Resource and/or an Indicated Mineral Resource) ("Technical Milestone") on any joint venture tenement or Excluded Tenement within 10 years of the date that the MRVI Project commences, Bass Metals will issue to GXL Tasmania (or its nominee) 250,000 Bass Metals shares.

If Bass Metals disposes of all its interests in any of the Excluded Tenements to a third party at any time within 10 years of the commencement of the MRVI Project, Bass Metals will issue to GXL Tasmania (or its nominee) 250,000 Bass Metals shares for each 500,000 ounces of gold or gold equivalent that satisfy certain criteria and which is delineated (as at least 60% of the quantity which is contained in a Measured Mineral Resource and/ or an Indicated Mineral Resource and/or an Inferred Mineral Resource) on such Excluded Tenement as at the date of disposition.

The number of Bass Metals shares GXL Tasmania may earn in relation to minerals delineated on GXL Tenements and Excluded Tenements is limited to 5 million.

For each Technical Milestone achieved within the areas of the Intec Licences within 10 years of the commencement of the MRVI Project, Bass Metals will issue GXL Tasmania (or nominee) 100,000 unlisted Bass Metals options exercisable within 3 years of the issue date at a 20% premium to the average closing price of Bass Metals shares during the 10 trading days immediately preceding the date of the last announcement by Bass Metals relating to any of such targets prior to the achievement of such Technical Milestone.

Escrow

Bass Metals shares issued to GXL Tasmania or its nominee under the TAA, (other than those constituting the purchase consideration for the sale of the GXL Tenements) are subject to 12 months voluntary escrow (or any longer period required by ASX).

$1.7$ Broader Tasmanian Alliance

The parties have further agreed that neither party will, during the AMI Period or the term of any joint venture, enter into agreements with any third party regarding the sale, assignment or farm-in of a relevant interest in any mining tenement in Tasmania without first giving the other party notice and an opportunity to discuss and negotiate mutual acquisition.

1.8 Assignment

Both parties may assign all of their rights and interests in the TAA to its holding company without the consent of the other party. However, assignment of AMI Interests and joint venture interests are subject to pre-emptive rights in favour of the other party.

$1.9₁$ Schedule 5 of the TAA - Joint Venture Terms

Schedule 5 of the TAA sets out the Joint Venture terms for the Joint Venture between Bass Metals and the GXL Companies and for all other new joint ventures the parties form for the duration of the TAA. Standard joint venture arrangements apply including:

(a) joint venture property will be owned by the parties as tenants in common in proportion to their respective joint venture interests from time to time;
(b) the party that holds a majority joint venture interest will be entitled to assume the role of manager of the joint venture and all joint venture activities;
(c) a management committee will be formed, with representatives voting in accordance with their joint venture interests;
(d) the manager has duties to maintain the tenements in good standing, comply with approved programs and budgets and incur expenditure; and
(e) expenditure is in proportion to joint venture interests, except if a party elects to dilute their interest according to the Joint Venture Terms.

Assignment

Assignment of a joint venture interest is prohibited except as set out in the loint Venture terms. As set out above, a pre-emptive right applies to the other party. No assignment is effective until the assignee has entered into a deed with the other party agreeing to be bound by the terms of the TAA in relation to the interest and related obligations.

Termination

A Joint Venture may be terminated by the following events:

(a) one party acquiring all the Joint Venture interest of the other party;
(b) a party withdrawing from the Joint Venture by 60 days notice in writing, in which case the withdrawing party is deemed to have assigned its Joint Venture interest to the non-withdrawing party for \$100.00;
(c) if the other party is wound up or a receiver has been appointed; and
(d) if the other party is in material breach of any of the terms of the Joint Venture and fails to remedy the breach within 30 days.

Other than in circumstances of withdrawal or default, the party that acquires the Joint Venture property will pay the other party a Royalty on all product produced by the mining tenements of the former joint venture. All other rights and obligations of the parties under the Joint Venture will cease except for any liability or obligation incurred before termination or arising out of termination, and the right of a non-defaulting party to seek damages.

1.10 Schedule 6 - Net Smelter Returns Royalty ("Royalty")

As set out above, in some circumstances of acquisition by one party a Royalty will be payable to the other party. The Royalty is calculated as follows: 2% (exclusive of GST) of the amount of gross smelter returns (meaning the total gross proceeds received for the sale of all the Royalty obligant's share or entitlement to all ores, concentrates or other product of any mineral produced from the relevant tenement) at any given time less the total chargeable expenditures at that time from each of the royalty tenements. The Royalty is payable incrementally within 30 days of the end of each quarter.

The Royalty obligant may assign its interest in any of the tenements provided that the assignee enters into a deed acceptable to the Royalty holder whereby the assignee agrees to be bound by the terms of the TAA in relation to the assigned interest. Conversely, the Royalty obligant has a pre-emptive right over the Royalty holder's interest. If the pre-emptive right is not exercised within 30 days of notice, the Royalty holder may assign its interest to a third party. However, a deed must again be entered into whereby the assignee agrees to be bound by the terms of the TAA.

$2.$ Deed of Assignment, Transfer & Variation - Tasmanian Alliance Agreement

On 8 May 2007, GXL Australia, GXL Tasmania (jointly the "GXL Companies"), Bass Metals and Clancy executed a Deed of Assignment, Transfer & Variation ("Deed") in relation to the TAA.

Pursuant to the Deed:

(a) GXL Australia has agreed to transfer its shares and options in Bass Metals, which it was issued and granted under the TAA, to Clancy;
(b) the GXL Companies have agreed to assign their 25% Joint Venture interest with Bass Metals under the TAA, and other benefits under the TAA, to GXL Tasmania; and
(c) Bass Metals consents to the transfers and assignments, to the extent required by the TAA.

$2.1$ Transfer of shares and options in Bass Metals

Pursuant to the Deed, GXL Australia has agreed to transfer to Clancy its 900,000 shares and 250,000 options in Bass Metals, which it was issued and granted under the TAA, with effect from 8 May 2007 ("Transfer Date"). Bass Metals consents to the transfer.

Bass Metals undertakes to release 750,000 shares in Bass Metals from voluntary escrow on or before the Transfer Date. Clancy has agreed to place those 750,000 shares in Bass Metals in voluntary escrow on or before the Transfer Date for the balance of the period required in accordance with the TAA. Clancy has also agreed to place the shares issued upon the exercise of the 250,000 options in Bass Metals in voluntary escrow in accordance with the TAA.

2.2 Assignment of performance share rights in Bass Metals

Pursuant to the Deed, GXL Tasmania has agreed to assign its performance shares rights under the TAA to Clancy, with effect from 8 May 2007 ("Assignment Date"). Bass Metals consents to the assignment.

$2.3$ Assignment of Joint Venture and Residual Interests

Pursuant to the Deed, the GXL Companies have agreed to assign to GXL Tasmania the 25% joint venture interest in the Joint Venture created under the TAA ("Existing JV Interest") as well as other rights, interests and benefits under the TAA ("Residual Interests"), with effect from the Assignment Date. Bass Metals consents to the assignment of the Existing JV Interest and Residual Interests.

GXL Tasmania has agreed to indemnify GXL Australia against all claims, losses, costs, demands and liabilities which GXL Australia may suffer or incur in connection with the assignment of the Existing JV Interest and Residual Interests, from circumstances occurring after such assignments.

The parties agree to vary the terms of the TAA and the Joint Venture to the extent only that the terms of TAA or the Joint Venture might otherwise prohibit such assignments.

$2.4$ Assumption of Burden by Clancy and GXL Tasmania

Clancy and GXL Tasmania covenant with Bass Metals to comply with and observe all the obligations of the GXL Companies under the TAA in so far as they relate to the assigned performance share rights, Existing JV Interest and the Residual Interests, with effect from the Assignment Date.

$2.5^{\circ}$ Release of GXL Australia

Bass Metals has agreed to release GXL Australia from all obligations and liabilities of the GXL Companies relating to the Existing JV Interest, except for those obligations which accrued and any liabilities which arose prior to the Assignment Date.

2.6 Variation of TAA

Under the Deed, the parties agree to vary Clause 8 of the TAA (Area of Mutual Interest) by adding or substituting in references to GXL Tasmania and/or Clancy to the extent necessary to reflect the transfers and assignments under the Deed

East Lachlan Alliance Restructure Agreement $3₁$

On 30 June 2004, GXL Australia, Clancy and Gold Fields Australasia Pty Ltd ("Gold Fields") entered into the East Lachlan Alliance Agreement ("Original Agreement") pursuant to which Gold Fields provides funding for GXL Australia to conduct mineral exploration within a defined "Alliance Area" in New South Wales.

Under the Original Agreement, Clancy agreed to grant Gold Fields the option to spin out one or more joint ventures between Clancy and Gold Fields over "Project Areas" in the vicinity of geological targets within the Alliance Area and to earn a joint venture interest in each of the joint venture areas. Notwithstanding the Original Agreement, Gold Fields has acceded to a request by Clancy to agree to spin out three new joint ventures.

On 9 May 2007, GXL Australia, Clancy and Gold Fields entered into the East Lachlan Alliance Restructure Agreement ("Restructure Agreement") pursuant to which the terms and conditions of the Original Agreement are terminated and replaced by the terms and conditions of the Restructure Agreement.

"Alliance Tenements" means New South Wales exploration licences EL6661, EL6181, EL6536, EL 6535, EL6537, EL6552 and New South Wales exploration licence applications ELA3026, ELA2916, ELA3007 and ELA3042, and any other mining tenement in respect of which Clancy acquires an interest during the Alliance Period. "Alliance Area" means various areas surrounding the Alliance Tenements. "Alliance Period" means the period commencing from the date of the Restructure Agreement and expiring on 29 June 2009.

3.1 Restraint on Acquisition

Pursuant to the Restructure Agreement, during the Alliance Period, Gold Fields (and any related bodies corporate) may not acquire an interest in the Alliance Area.

During the Alliance Period, Clancy (and any related bodies corporate) may acquire an interest in the Alliance Area, however Gold Fields' Claw-Back Right will apply to such interest. If the interest acquired by Clancy involves an agreement with a third party (whether by farm-in, option or otherwise), Clancy must use its best endeavours (for a period of 60 days) to obtain the third party's agreement to extend the application of Gold Fields' Claw-Back Right to such mining tenement, otherwise, the Claw-Back Right will have no application. Furthermore, during the 12 months after the expiry of the Alliance Period, neither Gold Fields nor Clancy may acquire an interest in the Alliance Area unless they notify and offer the other party the opportunity to acquire 50% of the interest. The other party has 20 days in which to accept the offer.

Pursuant to the Restructure Agreement, Gold Fields and Clancy are not prevented from holding 20% or less of the shares of a listed company that may have an interest in the Alliance Area.

$3.2$ Gold Fields' Claw-Back Right

Under the Restructure Agreement, Gold Fields will have the option to form an incorporated or unincorporated joint venture with Clancy in relation to one or more Alliance Tenements where:

(a) an inferred mineral resource is identified on one or more Alliance Tenements of more than 2,000,000 troy ounces of gold or gold equivalent ("Threshold Resource"); or
(b) a pre-feasibility study is completed on a mineral resource of more than 2,000,000 trov ounces of gold or gold equivalent on one or more Alliance Tenements.

If a Threshold Resource is defined within a Claw-Back tenement, Clancy must give Gold Fields notice and provide a copy of any pre-feasibility study. The parties have agreed that Gold Fields has 60 days following notice of a Threshold Resource or pre-feasibility study to conduct due diligence as to whether it will issue a claw-back notice, and to exercise the option to acquire a 60% interest in such Claw-Back tenements.

Gold Fields will elect whether to constitute an incorporated or unincorporated joint venture. Any incorporated or unincorporated joint venture will not be constituted until the following conditions precedent are met:

(a) Ministerial approval in respect of transfer and assignment; and
(b) any approval required pursuant to the Foreign Acquisitions and Takeovers Act 1975 (Cth).

If Gold Fields exercises the option, Gold Fields will pay Clancy twice the amount of expenditure incurred by Clancy on the relevant Alliance Tenements from the date of the Restructure Agreement to the date of Gold Fields being notification of the inferred mineral resource or pre-feasibility study.

The Claw-Back Period will commence on the formation of either an incorporated or unincorporated joint venture and end on the earlier of:

(a) $5$ years;
(b) termination pursuant to Gold Fields acquiring a 60% shareholding in the incorporated joint venture company or earning a 60% interest in the unincorporated joint venture; or
(c) termination of the incorporated or unincorporated joint venture.

3.3 Incorporated Joint Venture

(a) If Gold Fields elects to constitute an incorporated joint venture, Clancy will transfer its interest in the relevant Alliance Tenements to a joint venture company in which Clancy owns 100% of shares.
(b) Gold Fields will have an option to acquire a 60% shareholding in the joint venture company, exercisable by Gold Fields provided Gold Fields has either delivered a bankable feasibility study or contributed at least \$10 million during the Claw-Back Period, whichever occurs first and sole-funded the project up to the earlier of the date the bankable feasibility study is complete and the \$10 million expenditure is reached. If Gold Field acquires a 60% shareholding by contributing \$10 million during the Claw-Back Period, it must use all reasonable endeavours to complete the bankable feasibility study as soon as is reasonably practicable.
(c) If Gold Fields incurs expenditure of more than \$10 million on the bankable feasibility study, the excess will be treated as a loan from Gold Fields to the joint venture company. Once proceeds of the sale of any mineral have been applied towards meeting any outstanding obligations to project financiers (if any) the joint venture company will pay Gold Fields 90% of the proceeds of sale of further minerals from time to time until the loan is repaid.
(d) Upon Gold Fields exercising the option to acquire 60% shareholding in the joint venture company, Gold Fields will have a further option to acquire a further 15% shareholding in the joint venture company, exercisable by Gold Fields after Gold Fields procures all funding required for the joint venture company to proceed to commercial production on one or more of the joint venture tenements.
(e) After exercising the option to acquire a 60% shareholding in the joint venture company, Gold Fields must obtain all approvals required for commencing mining operations and continue sole funding the joint venture expenditure until the earlier of:
(i) 90 days after all such approvals have been obtained; or
(ii) the date Gold Fields exercises its option to earn a further 15% joint venture interest.

3.4 Unincorporated Joint Venture

(a) If Gold Fields elects to constitute an unincorporated joint venture, a joint venture will be deemed to have formed where Clancy has a 100% joint venture interest and Gold Fields has a 0% interest. Clancy's interest in the relevant Alliance Tenements and relevant mining information will constitute joint venture assets.
(b) Gold Fields will have an option to acquire a 60% shareholding in the joint venture company, exercisable by Gold Fields provided Gold Fields has either delivered a bankable feasibility study or contributed at least \$10 million during the Claw-Back Period, whichever occurs first and sole-funded the project up to the earlier of the date the bankable feasibility study is complete and the \$10 million expenditure is reached. If Gold Field acquires a 60% shareholding by contributing \$10 million during the Claw-Back Period, it must use all reasonable endeavours to complete the bankable feasibility study as soon as is reasonably practicable.
(c) If Gold Fields incurs expenditure of more than \$10 million on the bankable feasibility study, Gold Fields will be entitled to recover 40% of such excess from Clancy's share of joint venture product.
(d) After Gold Fields exercises the option to earn a 60% joint venture interest, Gold Fields will be entitled to earn a further 15% joint venture interest by procuring Clancy's share of the funding required for the joint venture to commence commercial production on one or more joint venture tenements.
(e) After Gold Fields exercises the option to earn a 60% joint venture interest, Gold Fields must obtain all approvals required under the bankable feasibility study and continue sole funding the joint venture expenditure until the earlier of:
(i) 90 days after all such approvals have been obtained; or
(ii) the date Gold Fields' exercises its option to earn a further 15% joint venture interest.

Within 60 days of a decision by the joint venture to commence mining, Clancy may elect not to contribute further expenditure and the following terms apply:

(a) an area or areas designated by Gold Fields to conduct mining will be excluded from the provisions of the ioint venture: and
(b) Clancy will be deemed to have offered to sell its interest in the mining area in consideration for:
(v) a 2.5% Net Smelter Returns Royalty for the tenements falling within the designated mining area; and
(vi) a cash payment that corresponds to the same percentage of the net present value of the mining area as Clancy's joint venture interest exceeds 10%.

Additional standard joint venture arrangements apply including:

(a) joint venture property will be owned by the parties as tenants in common in proportion to their respective joint venture interests from time to time:
(b) the party that holds a majority joint venture interest will be entitled to assume the role of manager of the joint venture and all joint venture activities;
(c) a management committee will be formed, with representatives voting in accordance with their joint venture interests;
(d) the manager has duties to maintain the tenements in good standing, comply with approved programs and budgets and incur expenditure; and
(e) expenditure is in proportion to joint venture interests, except if a party elects to dilute their interest according to the joint venture terms.

Upon dilution of a joint venture interest to 10% or less, the diluting party's interest will automatically be converted to a right to receive the Net Smelter Returns Royalty in respect of the continuing party's share of product from the tenements and the assets will vest in the non-diluting party. The terms of the Royalty are set out below.

Termination

The unincorporated joint venture may be terminated by the following events:

(a) one party acquiring the joint venture interest of the other party;
(b) a party withdrawing from the joint venture by 60 days notice in writing, in which case the withdrawing party is deemed to have assigned its joint venture interest to the non-withdrawing party for \$100.00;
(c) if the other party is wound up or a receiver has been appointed; and
(d) if the other party is in material breach of any terms of the joint venture and fails to remedy the breach within 30 days.

Upon termination, all rights and obligations under the joint venture cease except for any liability or obligation incurred before termination or arising out of termination; and the right of a non-defaulting party to seek damages.

$3.5$ Assignment

Assignments of any interest in the Restructure Agreement (including the Claw-Back Rights), any joint venture interest or any share in a joint venture company are subject to pre-emptive rights in favour of the other party. In addition to the pre-emptive right, assignments of Gold Fields' Claw-Back Rights are subject to Clancy's written consent (not to be unreasonably withheld).

Schedule C Net Smelter Returns Royalty ("Royalty") 3.6

The Royalty is calculated as follows: 2.5% (exclusive of GST) of the amount of gross smelter returns (meaning the total gross proceeds received for the sale of all ores, concentrates or product of any mineral produced from the royalty area) at any given time less the total chargeable expenditures at that time. The Royalty is payable incrementally within 30 days of the end of each quarter.

CONSTRUCTION

The Royalty obligant may assign its interest in any of the tenements provided that the assignee enters into a deed acceptable to the Royalty holder whereby the assignee agrees to be bound by the terms of the Restructure Agreement in relation to the assigned interest. The Royalty holder has a pre-emptive right over the Royalty obligant's interest in the tenement. If the pre-emptive right is not exercised within 30 days of notice, the Royalty obligant may assign its interest to a third party.

Wellington Joint Venture Agreement, Cowal East Joint Venture $\mathbf{4}_{-}$ Agreement And Gobondery Joint Venture Agreement

On 9 May 2007, Clancy and Gold Fields entered into three joint venture agreements, the Wellington North Joint Venture Agreement ("Wellington North JV Agreement"), the Gobondery Joint Venture Agreement ("Gobondery JV Agreement") and the Cowal East Joint Venture Agreement ("Cowal East JV Agreement") (together the"JV Agreements").

The JV Agreements contain similar terms, which are summarised below.

The Wellington North JV Agreement is in respect of NSW Tenements EL6178, EL6328 and EL6662, the Gobondery JV Agreements is in respect of NSW Tenement EL6534 and the Cowal East JV Agreement is in respect of NSW Tenements EL6553 and EL6554 (the "JV Tenements").

The JV Agreements also relate to the area of any further mining tenements acquired under the JV Agreements and the area of land within 10km of any part of the boundary of an existing tenement as at the date of the JV Agreements. The JV Tenements and these additional tenements and area of land constitute the "Project Area" for each JV Agreement.

4.1 Initial Joint Venture

Under each JV Agreement, the parties agree to form an initial joint venture in respect of the relevant JV Tenements, in which Gold Fields has an interest of 0% and Clancy 100% ("Initial Joint Venture"). The JV Agreements set out the terms and conditions of the Initial Joint Venture, which are summarised in sections 4.3 and 4.4 below. The joint venture assets consist of the JV Tenements and related mining information.

Clancy has agreed to provide notice to Gold Fields if and when it wishes to acquire any additional tenement in the relevant Project Areas. The notice will constitute an offer by Clancy to use its reasonable endeavours to acquire the additional tenement jointly as an asset of the Initial Joint Venture. Gold Fields has agreed to provide notice of acceptance of the offer within 4 weeks of the notice from Clancy. If Gold Fields does not accept the offer, Clancy may at Clancy's cost acquire the additional tenement on terms no more favourable than those provided in the notice to Gold Fields, provided that the acquisition takes place within 4 months from the date of the notice.

Pursuant to the terms of the JV Agreements, Gold Fields is entitled to earn an 80% interest in the Initial Joint Ventures by sole funding and/or expending the first \$2 million in expenditure on the JV Tenements within 3 years after the formation of the Initial Joint Ventures.

Clancy is the initial manager of the Initial Joint Ventures, but so long as Gold Fields is sole funding the Initial Joint Ventures, Gold Fields may, on 4 months notice, replace Clancy as manager. The activities of Gold Fields whilst manager will be at Gold Fields' sole risk, and all claims from third parties arising from joint venture activities must be borne by Gold Fields.

Furthermore, Gold Fields may terminate the Initial Joint Ventures at any time by giving Clancy 60 days notice, provided that Gold Fields has incurred not less than \$350,000 in respect of the Wellington North JV Agreement, \$450,000 in respect of the Cowal East JV Agreement and \$200,000 in respect of the Gobondery JV Agreement. If Gold Fields has not earned the 80% interest within 3 years after the formation of the Initial JointVentures, the Initial Joint Ventures will terminate.

Upon Gold Fields earning its 80% interest the parties' joint venture interests will be Gold Fields 80% and Clancy 20%.

Gold Field's Claw-Back Right $4.2$

If an Initial Joint Venture has been terminated and:

(a) an inferred mineral resource of more than 2,000,000 troy ounces of gold or gold equivalent is thereafter identified on one or more of the Eligible Claw-Back Tenements ("Threshold Resource"); and
(b) a pre-feasibility study is thereafter completed on an inferred mineral resource of more than 2,000,000 troy ounces of gold or gold equivalent on one or more of the Eligible Claw-Back Tenements,

Gold Fields has an option to acquire a 60% interest in the Eligible Claw-Back Tenements either through an unincorporated joint venture or directly through the acquisition of shares in an incorporated joint venture.

If a Threshold Resource is defined within an Eligible Claw-Back Tenement, Clancy must give Gold Fields notice and provide a copy of any pre-feasibility study. The parties have agreed that Gold Fields has 60 days following notice of a threshold resource or pre-feasibility study to conduct due diligence as to whether it will issue a clawback notice, and to exercise the option to acquire a 60% interest in such Eligible Claw-back Tenements.

The "Eligible Claw-Back Tenements" means a tenement as at the date of the termination of the Initial Joint Venture or any tenement related to a tenement in which Clancy has a legal or equitable interest and on which no mineral resource was defined before the termination of the Initial Joint Venture.

(a) Ministerial approval in respect of transfer and assignment; and
(b) any approval required pursuant to the Foreign Acquisitions and Takeovers Act 1975 (Cth).

Within 14 days of the conditions precedent being satisfied or waived, Gold Fields has agreed to pay Clancy an amount equal to twice the amount of expenditure incurred on the Tenements by Clancy since the date of termination of the Initial Joint Venture. If Gold Fields nominates an Incorporated Joint Venture, this payment will occur contemporaneously with the parties completing the transfer and assignment of assets.

The "Claw-Back Period" will commence on the date on which the last condition precedent is satisfied or waived and it will end the earliest of:

(a) the expiry of 5 years;

NONEGRAPHICATION

(b) termination pursuant to Gold Fields being entitled to exercise the option to acquire a 60% shareholding in the incorporated joint venture, or upon Gold Fields earning its 60% interest in an unincorporated joint venture; or
(c) termination of the unincorporated and incorporated joint venture.

Clancy has agreed not to sell, transfer, assign or create a lien over or otherwise dispose of an Eligible Claw-Back Tenement to anyone other than Gold Fields until the assignee has entered into a deed agreeing to be bound by the terms of the relevant JV Agreement.

$4.3$ Incorporated Joint Venture

If Gold Fields elects to constitute an incorporated joint venture, Clancy has agreed to transfer and assign its interests in the Eligible Claw-Back Tenements to a joint venture company in which Clancy owns 100% of the shares. Gold Fields has agreed to bear all costs associated with this transfer.

Gold Fields will have an option to acquire a 60% shareholding in the joint venture company provided Gold Fields has sole funded the project to completion of a bankable feasibility study within 5 years.

Upon Gold Fields exercising the option to acquire 60% shareholding in the joint venture company, Gold Fields will have a further option to acquire a further 15% shareholding in the joint venture company, exercisable by Gold Fields after Gold Fields procures all funding required for the joint venture company to proceed to commercial production.

After exercising the option to acquire a 60% shareholding in the joint venture company, Gold Fields must obtain all approvals required under the bankable feasibility study and continue sole funding the joint venture expenditure until the earlier of:

(a) 90 days after all such approvals have been obtained; or
(b) the date Gold Fields exercises its option to earn a further 15% joint venture interest ("Continued Sole Funding Period").

After the Continued Sole Funding Period the funding requirements of the joint venture company will be met by each shareholder subscribing for a commensurate number of shares in the issued ordinary share capital of the company.

4.4 Unincorporated Joint Venture

If Gold Fields elects to constitute an unincorporated joint venture, a joint venture will be deemed to have been formed in which Gold Fields has a 0% interest and Clancy has a 100% interest. Clancy's interests in the Eligible Claw-Back Tenements and related mining information constitute the joint venture assets.

Gold Fields will be entitled to earn a 60% interest in the joint venture if Gold Fields sole funds the project until completion of a bankable feasibility study within 5 years.

After Gold Fields exercises the option to earn a 60% joint venture interest, Gold Fields must obtain all approvals required under the bankable feasibility study and continue sole funding the joint venture expenditure until the earlier of:

(a) 90 days after all such approvals have been obtained; or
(b) the date Gold Fields exercises its option to earn a further 15% joint venture interest.

After earning a 60% joint venture interest, Gold Fields will have the option to earn a further 15% joint venture interest by procuring both parties' shares of the funding required to commence commercial production. This loan will be repayable from 90% of Clancy's surplus cash flow. Upon Gold Fields exercising this option, the parties' joint venture interests in the unincorporated joint venture would be Gold Fields: 75% and Clancy: 25%.

Within 60 days of a decision by the joint venture to commence mining, Clancy may elect not to contribute further expenditure and the following terms apply:

(a) an area or areas designated by Gold Fields to conduct mining will be excluded from the provisions of the joint venture; and
(b) Clancy will be deemed to have offered to sell its interest in the mining area in consideration for:
(i) a 2.5% Net Smelter Returns Royalty as set out below at 1.6 for the Tenements falling within the designated mining area; and
(ii) a cash payment that corresponds to the same percentage of the net present value of the mining area as Clancy's joint venture interest exceeds 10%.

The parties have agreed that Gold Fields may at any time during the Claw-Back Period terminate the unincorporated joint venture on 60 days written notice to Clancy.

Additional standard joint venture arrangements apply including:

(a) joint venture property will be owned by the parties as tenants in common in proportion to their respective joint venture interests from time to time;
(b) the party that holds a majority joint venture interest will be entitled to assume the role of manager of the joint venture and all joint venture activities;
(c) a management committee will be formed, with representatives voting in accordance with their joint venture interests;
(d) the manager has duties to maintain the tenements in good standing, comply with approved programs and budgets and incur expenditure; and
(e) expenditure is in proportion to joint venture interests, except if a party elects to dilute their interest according to the joint venture terms.

Upon dilution of a joint venture interest to 10% or less, the diluting party's interest will automatically be converted to a right to receive the Net Smelter Returns Royalty in respect of the continuing party's share of product from the Tenements and the assets will vest in the non-diluting party.

Termination

The unincorporated joint venture may be terminated by the following events:

(a) on party acquiring the joint venture interest of the other party;
(b) a party withdrawing from the joint venture by 60 days notice in writing, in which case the withdrawing party is deemed to have assigned its joint venture interest to the non-withdrawing party for \$100.00;
(c) if the other party is wound up or a receiver has been appointed; and
(d) if the other party is in material breach of any terms of the joint venture and fails to remedy the breach within 30 days.

$4.5$ Assignment

CONSIGNATION

Assignment of any interest in the agreement (including Gold Fields' Claw-Back Rights), any joint venture interest or any shares in a joint venture company is subject to pre-emptive rights in favour of the other party. No assignment is effective, until the assignee has entered into a deed whereby the assignee assumes all obligations of the assignor and agrees to be bound by the terms of the relevant joint Venture Agreement.

4.6 Schedule C Net Smelter Returns Royalty ("Royalty")

The Royalty obligant may assign its interest in any of the tenements provided that the assignee enters into a deed acceptable to the Royalty holder whereby the assignee agrees to be bound by the terms of the JV Agreement in relation to the assigned interest. The Royalty holder has a pre-emptive right over the Royalty obligant's interest in the tenement. If the pre-emptive right is not exercised within 30 days of notice, the Royalty obligant may assign its interest to a third party. However, a deed must again be entered into whereby the assignee agrees to be bound by the terms of the JV Agreement.

SCHEDULE 2 - STATUS OF TENEMENTS

				REVISEDE INTERES
enumummun	31:00	TILANG PANG EUJUUS (PROTEST	280306 Greenthumm Konflexkoe	BIGGIORGILLI	888	i muutas
EL 6178	Granted	Clancy Exploration Ltd	19/01/04	18/01/08		39 units Mineral Group Group 1 - Metallic Minerals Security Deposit: \$10,000 loaged
EL 6328	Granted	Clancy Exploration Ltd	25/10/04	24/10/08		Expenditure Commitment: \$69,000 14 units Mineral Group Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged
EL 6662	Granted	Clancy Exploration Ltd	15/11/06	14/11/08		Expenditure Commitment: \$44,000 31 units Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$35,500
16553	Granted	Clancy Exploration Ltd	03/04/06	02/04/08		10 units Mineral Group Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$25,000
EL 6554	Granted	Clancy Exploration Ltd	03/04/06	02/04/08		12 units. Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$26,000
£1 6534	Granted	Clancy Exploration Ltd	16/03/06	15/03/08		61 units. Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$50,500
f1 6661	Granted	Clancy Exploration Ltd	15/11/06	14/11/08		49 units. Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment, \$44,500
ELA 3026	Pending	Clancy Exploration Ltd	22/02/07		3 units	Mineral Group: Group 1 - Metallic Minerals
EL 6181	Granted	Clancy Exploration Ltd	19/01/04	18/01/08		29 units. Mineral Group. Group 1 - Metallic Minerals. Security Deposit: \$10,000 lodged Expenditure Commitment: \$59,000
EL 6536	Granted	Clancy Exploration Ltd	16/03/06	15/03/08		18 units: Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$29,000
FL 6535.	Granted	Clancy Exploration Ltd	16/03/06	15/03/08		51 units: Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$45,500
EL 6537	Granted	Clancy Exploration Ltd.	16/03/06	15/03/08		37 units. Mineral Group: Group 1 - Metallic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment: \$38,500
EL 6552	Granted	Clancy Exploration Ltd	03/04/06	02/04/08		19 units. Mineral Group. Group 1 - Metalic Minerals Security Deposit: \$10,000 lodged Expenditure Commitment \$29,500
ELA 2916	Pending	Clancy Exploration Ltd	06/11/06			64 units Mineral Group Group 1 - Metallic Minerals
ELA 3007	Pending	Clancy Exploration Ltd	06/02/07			48 units Mineral Group: Group 1 -Metallic Minerals
ELA 3042	Pending	Clancy Exploration Ltd	06/03/07			84 units Mineral Group: Group 1- Metallic Minerals
					ta a ang ta
ammunikana. Terrestrian	arwa	UWKWWW TURNACIULUU U	ESTA CARDINAL COMPOSITION Change AT TRAISE	urxa oʻli Filipping i syymetryk III	833	a municasit Elektronia
11 03/2005	Granted	Bass Metals Limited & Geomformatics Exploration	10/08/05	10/08/10	74 km ²	Mineral Category: Category: I - Metallic Minerals Performance Deposit: \$7,000 lodged Expenditure Commitment: \$55,500 (during first two years) Underlying Land Tenure: CAR Reserve System, Informal
		Tasmania Pty Ltd				Reserve, Forest Reserve, Regional Reserve, State/Multiple Use Forest
EL 54/2004	Granted	Bass Metals Limited & Geomomatics Exploration Tasmania Pty Ltd	10/08/05	10/08/10	$56$ km ²	Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$6,500 lodged Expenditure Commitment: \$42,000 (during first two years). Underlying Land Tenure: CAR Reseive System, Informal Reserve; Crown land-DPIME Approval Required; Forest Reserve: Hydro Electric Corporation Land, State/Multiple Use

ETREDINAL	5200	ETYHTYY MI E ANNO CARD (ANNO CARD CARD CARD CARD CARD CARD CARD CARD	DERETE IMMUNI Green	ELEVATION TANANG A	ungaran pir eter	III
EL 16/2006	Granted	Bass Metals Limited & Geomformatics	Financial Company (1999) 30/01/07 WUNNUNUNU	30/01/12	26 km ²	Mineral Category, Category 1 - Metallic Minerals Performance Deposit: \$7,000 lodged Expenditure Commitment: \$82,000 (during first two years)
FL 51/2004	Granted	Exploration Tasmania Pty Ltd Bass Metals	08/08/05	08/08/10	75 km ²	Underlying Land Tenure: Forest Reserve, Tasmanian Community Forest Agreement Area Mineral Category: Category 1 - Metallic Minerals
		Linuted & Geoinformatics Exploration Tasmania Pty Ltd				Performance Deposit: \$5,000 lodged Private Land Deposit: \$2,000 lodged Expenditure Commitment: \$56,250 (during first two years) Underlying Land Tenure: CAR Reserve System, Informal
EL 52/2004	Granted	Bass Metals Limited &	08/08/05	08/08/10	186 km.	Reserve, Crown Land, Hydro Electric Corporation Land, Private Property, Regional Reserve, State/Multiple Use Forest Mineral Category, Category 1 - Metallic Minerals
		Geomformatics Exploration Tasmania Pty Ltd				Performance Deposit: \$5,500 lodged Private Land Deposit: \$5,000 lodged Expenditure Commitment: \$148,500 (during first two years) Underlying Land Tenure, Crown reserve- Quarry, Ballast,
						Magazine etc, CAR Reserve System Informal Reserve; Crown Land, Forest Communities Managed by Prescription, Forest Reserve, Nature Reserve, Private Property, RFA Private Land Reserve, Regional Reserve: State/Multiple Use Forest, State
EL 53/2004	Granted	Bass Metals Limited & Geoinformatics	08/08/05	08/08/10	$81 \,\mathrm{km}$	Reserve Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$2,000 lodged Private Land Deposit: \$5,000 lodged
EL 38/2005	Granted	Exploration Tasmania Pty Ltd	14/06/06	14/06/11	$13$ km $2$	Expenditure Commitment: \$60,750 (during first two years). Underlying Land Tenure: CAR Reserve System Informal Reserve, Private Property, State/Maltiple Use Forest.
		Bass Metals Limited & Geomformatics Exploration Tasmania Piv Ltd				Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$4,000 lodged Private Land Deposit: \$4,000 lodged Expenditure Commitment: \$10,000 (during first two years).
EL 02/2005	Granted	Bass Metals Limited & Geoinformatics	08/08/05	08/08/10	38 km ²	Underlying Land Tenure, Private Property Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$5,000 lodged Private Land Deposit: \$1,500 lodged
		Exploration Tasmania Pty Ltd				Expenditure Commitment: \$28,500 (during first two years). Underlying Land Tenure: CAR Reserve System, Informal Reserve, Crown Land, Hydro Electric Corporation Land, Private Property, Regional Reserve, State/Multiple Use Forest
EL 04/2005	Granted	Bass Metals Limited & Geoinformatics Exploration	08/08/05	08/08/10	38 km ² WWWW	Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$3,000 lodged Private Land Deposit: \$3,000 lodged
EL 64/2004	Granted	Tasmania Pty Ltd Bass Metals Limited &	10/08/05	10/08/10	104 kmł	Expenditure Commitment: \$28,500 (during first two years). Underlying Land Tenure: Private Property Mineral Category, Category 1 - Metallic Minerals Performance Deposit: \$5,000 lodged
		Geomformatics Exploration Tasmania Pty Ltd				Private Land Deposit: \$1,000 lodged Expenditure Commitment: \$78,000 (during first two years). Underlying Land Tenure: CAR Reserve System Informal
EL 63/2004	Granted	Bass Metals Limited &	08/08/05	08/08/10	$24$ km ²	Reserve; Crown Land; Forest Reserve; Private Property; Regional Reserve: State/Multiple Use Forest Mineral Category: Category 1 - Metallic Minerais Performance Deposit: \$5,000 lodged
		Geoinformatics Exploration Tasmania Pty Ltd	000000000000000000000000000000000000000			Private Land Deposit: \$1,000 lodged Expenditure Commitment: \$18,000 (during first two years). Underlying Land Tenure: Crown Land, Private Property, Regional Reserve.
EL 36/2005	Granted	Bass Metals Limited & Geomomatics Exploration	27/02/07	27/02/12	$17$ km ²	Mineral Category: Category 1 - Metallic Minerals Performance Deposit: \$10,000 lodged Expenditure Commitment: \$12,750 (during first two years).
		Tasmania Pty Ltd.				Underlying Land Tenure: CAR Reserve System, Informal Reserve, Crown Land, Hydro Electric Corporation Land, Regional Reserve, State Multiple Use Forest, Tasmanian Community Forest Agreement Area

				MEAN SOUTH ANYAUER THE THEFT
	TEMPERATUR National Me	Registerfor Native Tine	Uitrepletzine	Register al inije zaode
Kutanoni	Kaukatan	CEL	Genera Agelications	Lusiacum arrum Acrestersbild	Aboriginal Heritage (Sites & Places) (Committee)
EL 6178	Νïί	mmmn МL	MI	Ni∭	Site: Maryvale Creek (Open campsite) Site: Maryvale Creek 2 Site: Maryvale Creek 1 Site Baalveck, Micketymulga Hill Site: Maryvale Creek, Mickeymulga Hill (quarry) Site: Maryvale Creek (campsite) Site Wellington: WF 1 Baalbek Site: R-ST-01 (Avoid site - further road works at some stage may require an application for a consent to destroy).
EL 6328	NJ.	NII	Mi	Ni III III IIII III	Site: Mitchells Creek Reserve Site Mitchels Creek
EL 6662	NI	Nil.	Mi	Nimm	M
EL 6553	Nil.	NI.	Nil	NHUUUUU	刘
EL 6554	Nil	Nil	Mil.	M	斓
fl 6534	Nil	NĤ	NE MEREL	MI WA WA WA	Site: Gabondery
£1 6661	.NII l Nil	Νi	NI MI	ALCOHOLOGICA 州	Mi
ELA 3026 EL 6181	NJ.	Νij Nil.	MI	州	MI. Site: Lewis Ponds 10
		MANAGHAR AN DE SAN SEARCH AN DESCRIPTION			Site SPR-1 Site SPR-2 Site: SPR-3 Site: SPR-4 Site SPR-5 Ste SPR-6 Site SPR-8 Site: 94 44-2-013-SPR-7
EL 6536	ΝIΙ	NC 02/9 Federal Court Number NSD 6010/02 NNTT Number NC 02/9	Mi	Mil	Site: BBS: Spring Creek Dramage Area A1 Site BBS, Spring Creek Drainage Area A2 Site: BBS: Spring Creek Drainage Area A3 Site: BBS: Spring Creek Dramage Area A7 Site: BBS, Goan Creek Dramage Area A2 Site: BBS; Goan Creek Drainage Area A3 Site: BBS, Spring Creek Dramage Area A5 Site: BBS, Spring Creek Drainage Area A6 Site: BBS: Spring Creek Dramage Area A8 Site: BBS: Pilliga West SF: Dinby Creek Dramage Area A2 Site: BBS, Pilliga West SF, Ironbark Lagoon Drainage Area A1 (flakes, artefact, grinding dish, white ochre resource, grinding stones, grinding groove)
EL 6535	MI	Nil,	Nß	NШ	MIL
EL 6537	NI.	ΜÏ	MI	MИ	Site: Goobang Creek/WF 15, Avocavale Site: Goobang Creek/WF 16: Avocavale Site Millwood
1 6552	Νíί	Nil	飘乱	MI	刘
ELA 2916	MI	Nil	M	州	Site Maria Creek 1
ELA 3007	NJ.	МĦ	MI	NIA 1998/001	Site Illabo-Tunut Prodine Site IT4 Site Illabo-Turnut Pipeline Site IT5 (Scatter)
ELA 3042	NI.	NELL WELL AND STATE OF STATE	Ni	涵山	Ste Bellana

SCHEDULE 3 - STATUS OF NATIVE TITLE AND ABORIGINAL HERITAGE

SOLONOMORE

				ELSTRING
ichentar	Ratoxallu REDEELISE Resistant	Resistant RESERVED BALL wence	UnicelSteredit GRIMCHAUM And Ration	E SAN EXECUTIV Inclusivity. USING STAR E TERSTANISMUS	a 1979 - Maria Andrew Maria Barat a Cha
EL03/2005 NW		淋阻	不相	翻
EL 54/2004 NH		孫尉	Mi	Mil
EL 16/2006 NH		本科	捆	制
EL 51/2004 WH		不明	涵	-Nil.
EL 52/2004 NH		不相	不相	MI
EL 53/2004 NW		Alit	МI	.Nit
FL 38/2005 AN		本田	Mil	МÏ
EL 02/2005	Mi	Alil	不相	MI.
EL 04/2005 NH		不自	Mif	INII.
EL 64/2004 Nil		不自	Mil	NII
EL 63/2004	AII	不用	INII	Kill
EL 36/2005 NH		不明	.Nit	INIL

iins

SCHEDULE 4 - GROUP 1 MINERALS AND CATEGORY 1 MINERALS

	GROUP I MARRAIS AND ANNUAL AND
antimony	molybdenne
arsenro	mckel
bismuth	niobium
cadmium	platinum group minerals
caesium	platinum
chromite	rare earth minerals
cobait	rubidrum
columbium	scandium and its ores
copper	selenium
galena	silver
dermanium	sulohur
oold	tantalum
malum	thouum
ron minerals	ùп
lead	tungsten and its ores
hthum	vanadium
mandanese	zinc
mercury	zirconia

MARIA ANEGORY I MINERALS AND LONG

any mineral prescribed to be a metallic mineral.

any substance declared to be an atomic substance.

uranum the field of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of

INVESTIGATING ACCOUNTANT'S REPORT 6

22 May 2007

The Directors Clancy Exploration Limited 57 Havelock Street WEST PERTH WA 6005

Dear Sirs

INVESTIGATING ACCOUNTANT'S REPORT

$\mathbf{1}$ Introduction

The Directors of Clancy Exploration Limited ("Clancy" or "the Company") have requested PKF Corporate Advisory Services (WA) Pty Ltd ("PKF") to prepare an Investigating Accountant's Report ("the Report") for inclusion in a Prospectus to be dated on or around 21 May 2007, relating to the offer of 25,000,000 ordinary fully paid shares at \$0.20 each, to raise up to a total of \$5,000,000 with a minimum subscription of 17,500,000 ordinary fully paid ordinary shares at \$0.20 each, to raise \$3,500,000 ("the Offer"). The Offer has been underwritten by Martin Place Securities, to the extent of the minimum subscription.

All the terms used in this Report have the same meaning as the terms used and defined in the Prospectus unless otherwise defined in this Report.

$\overline{2}$ Background

The Company was incorporated in Western Australia on the 17^th July 2003 as Clancy Exploration Pty Ltd and was converted to a public company on the $6^th$ March 2007, with the purpose of developing its portfolio of exploration interests focussed primarily on copper, gold and base metals.

3 Financial Information

$3.1$ Historical Balance Sheet

The Historical Balance Sheet comprises the unaudited balance sheet and accompanying notes of Clancy as at 31 December 2006 ("the Historical Balance Sheet").

$3.2$ Pro-Forma Balance Sheet

The Pro-Forma Balance Sheet includes the unaudited Pro-Forma Balance Sheet and accompanying notes as at 31 December 2006, which assumes completion of the transactions detailed in Note 2 of the Financial Information included the Prospectus ("the Pro-Forma Balance Sheet").

The Historical and Pro-Forma Balance Sheets are collectively referred to as the Financial Information throughout this Report. The Financial Information is presented in Section 7 of the Prospectus.

Scope 4

We have been requested to prepare a Report considering the Financial Information noted above. Our Report only covers the Sections of the Prospectus noted in this Report. The Financial Information has been prepared subject to the recognition and measurement requirements (but not the disclosure requirements) of Australian equivalents to International Financial Reporting Standards ("AIFRS" or "Accounting Standards"), as currently interpreted.

The Directors of Clancy are responsible for the preparation and presentation of the Financial Information. The Financial Information has been prepared for inclusion in the Prospectus. We disclaim any responsibility for any reliance on this Report or the Financial Information to which it relates for any purpose other than for which it was prepared.

Review of Historical Balance Sheet 41

We have performed a review of the Historical Balance Sheet as at 31 December 2006 as detailed in Section 7 of the Prospectus.

We have performed our review in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Historical Balance Sheet is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

Our review was performed in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports". Our review was limited to enquiries of Clancy's Directors and consultants, review of the Directors' minutes, review of the material documents, analytical procedures applied to the financial data, the performance of limited verification procedures and comparison for consistency in application of the Accounting Standards.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and accordingly do not express an audit opinion on the Historical Balance Sheet of Clancy.

$4.2^{\circ}$ Review of Pro-Forma Balance Sheet

We have performed a review of the Pro-Forma Balance Sheet of Clancy as set out in Section 7 of the Prospectus. The purpose of the Pro-Forma Balance Sheet is to demonstrate the financial effect of the Pro-Forma transactions disclosed in Note 2 of the Financial Information included in the Prospectus, assuming they had taken place on 31 December 2006.

We have performed our review in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Pro-Forma Balance Sheet is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia, assuming the Pro-Forma transactions had taken place on 31 December 2006.

Our review was performed in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports". Our review was limited to enquiries of Clancy's Directors and consultants, review of the Directors' minutes, review of the material documents, review of the Pro-Forma transactions, analytical procedures applied to the financial data, the performance of limited verification procedures and comparison for consistency in application of the Accounting Standards.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and accordingly do not provide an audit opinion on the Pro-Forma Balance Sheet of Clancy.

5 Statements

5.1 Historical Balance Sheet

Based on the scope of our review, which is not an audit, nothing has come to our attention that causes us to believe that the Historical Balance Sheet as set out in Section 7 of the Prospectus is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

$5.2$ Pro-forma Balance Sheet

Based on the scope of our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro-Forma Balance Sheet as set out in Section 7 of the Prospectus, assuming the Pro-Forma transactions had taken place on 31 December 2006, is not presented fairly in accordance with the recognition and measurement requirements (but not the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

Subsequent Events 6

To the best of our knowledge and belief, and based on the work we have performed in relation to the scope of work set out in Section 4 of this Report, there have been no material transactions or events, other than those included in Section 7 of the Prospectus, which would require a comment on, or adjustment to, the Financial Information referred to in our Report or that would cause the Financial Information included in this Prospectus to be misleading.

Declaration 7

PKF Corporate Advisory Services (WA) Pty Ltd is responsible for this Report. The Financial Information presented in Section 7 of the Prospectus has been prepared by the Company, and is the responsibility of the Directors of Clancy. This Report is strictly limited to the matters contained herein and is not to be read as extending by implication or otherwise to any other matter.

PKF Corporate Advisory Services (WA) Pty Ltd does not have any interest that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this matter.

Except for fees relating to this Report, which are based on normal commercial terms, PKF Corporate Advisory Services (WA) Pty Ltd does not have any interest in Clancy nor in the outcome of the Offer. The partners of PKF Chartered Accountants and Business Advisers are the owners of PKF Corporate Advisory Services (WA) Pty Ltd.

PKF Corporate Advisory Services (WA) Pty Ltd has not made, and will not make, any recommendation through the issue of the Report to potential investors of Clancy as to the merits of the investment.

The nature of this Report is such that it should be given by an entity which holds an Australian Financial Services licence under the Financial Services Reform Act 2001. PKF Corporate Advisory Services (WA) Pty Ltd holds an appropriate Australian Financial Services Licence.

Consent for the inclusion of this Report in the Prospectus in the form and context in which it appears has been given. At the date of this Report, this consent has not been withdrawn.

Yours faithfully

Neil Smith Director

FINANCIAL INFORMATION 7

Overview

THE MANUSCRIPT

This section contains historical financial information, provided on both an actual and pro-forma basis, for Clancy Exploration Limited.

The historical financial information comprises:

The balance sheet of Clancy Exploration Limited as at 31 December 2006; and
The notes to the financial information.

The pro-forma historical information comprises:

The balance sheet of Clancy Exploration Limited as at 31 December 2006, prepared on the basis that the pro-forma transactions set out in Note 2 have occurred; and
The notes to the financial information.

Basis of Preparation of Historical Financial Information

The pro-forma balance sheet as at 31 December 2006 presents the balance sheet as at 31 December 2006, as reviewed by PKF, adjusted for the impact of the Offer and other pro-forma transactions as detailed in Note 2 to the financial information as at 31 December 2006.

The financial information is presented in an abbreviated form and does not comply with all the presentation and disclosure requirements of Australian Accounting Standards applicable to annual reports prepared in accordance with the Corporations Act 2001.

Set out below is the historical balance sheet of Clancy Exploration Limited as at 31 December 2006 and the pro-forma balance sheet as at 31 December 2006.

		Reviewed Historical Balance Sheet 31 December 2006	Reviewed Pro-Forma Balance Sheet 31 December 2006
	Notes	s	\$
Current Assets
Cash and cash equivalents	3	1,345	4,385,464
Total Current Assets		1,345	4,385,464
Non-Current Assets
Other financial assets	4		358,526
Total Non-Current Assets			358,526
Total Assets		1,345	4,743,990
Current Liabilities
Other payables	5	112,881	1,266
Total Current Liabilities		112,881	1,266
Total Liabilities		112,881	1,266
Net Assets		(111,536)	4,742,724
Equity
Issued capital	6	ŧ	4,852,553
Reserves	7		222,308
Accumulated losses	8	(111, 537)	(332, 137)
Total Equity		(111, 536)	4,742,724

Notes to the Financial Information

1. Summary of significant accounting policies

The historical and pro-forma balance sheets have been prepared in accordance with the recognition and measurement requirements (but not the disclosure requirements) of Australian equivalents to International Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards. Compliance with AIFRS ensures that the balance sheets and notes of Clancy Exploration Limited comply with International Financial Reporting Standards (IFRS).

$(a)$ Basis of Accounting

The historical and pro-forma balance sheets have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of the historical and pro-forma balance sheets in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the historical and pro-forma balance sheets are disclosed where appropriate.

$(1)$ Going Concern Basis of Accounting

The financial information has been prepared on the basis of a going concern. The Company's ability to continue as a going concern is contingent upon raising additional capital to fund exploration commitments, other principal activities and for use as working capital. If additional capital is not raised, the going concern basis may not be appropriate with the result that the Company may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial information. No allowance for such circumstances has been made in the financial information.

$(c)$ Basis of Consolidation

The proforma balance sheet comprises the balance sheet of Clancy Exploration Limited and its subsidiaries ('the Group').

The balance sheets of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Clancy Exploration Limited has control.

$(d)$ Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other shortterm, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

(e) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

$(f)$ Acquisition of Assets

The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is the published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

A business combination involving entities under common control does not fall within the scope of AASB 3 'Business Combinations'. Included in the pro-forma balance sheet is the acquisition of Geoinformatics Exploration Tasmania Pty Ltd. As this acquisition does not fall within the scope of AASB 3 the transaction has been accounted for at net asset value.

$\left( \mathbf{q}\right)$ Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

(h) Exploration and Evaluation Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.

These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in respect of which:

(i) such costs are expected to be recouped through successful development and exploitation or from sale of the area: or
(ii) exploration and evaluation activities in the area have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations in, or relating to, the area are continuing.

When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made.

ENGA MORTON

$(i)$ Loans

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process.

$(i)$ Equity

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. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

$\alpha$ Share Based Payments

Share-based compensation benefits were provided to the directors and a consultant during the period. An expense was recognised in the income statement and an equity reserve was created in the balance sheets in respect of these options. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted.

(I) Goods and Service Tax (GST)

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

Where the GST incurred on the 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
Receivable and payable 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 the payables in the balance sheets.

$(m)$ Investments and other financial assets

Financial assets in the scope of AASB 139 Financial Instrument: Recognition and Measurement are classified as either financial assets at fair value through profit and loss, loans and receivables, held-to-maturity investments, or available for sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments at fair value through profit or loss, directly attributable transaction costs. The group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year end.

(i) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category financial assets at fair value through profit or loss'. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit of loss.

(ii) Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-forsale or are not classified as any of the other categories of financial assets. After initial recognition available-forsale investments traded in an active market are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or Ince

$2.$ Actual and Proposed Transactions and Assumptions to Arrive at Pro-Forma Balance Sheet

The pro-forma balance sheet has been included for illustrative purposes to reflect the position of Clancy Exploration Limited on the assumption that the following transactions had occurred as at 31 December 2006:

(a) Each share in the capital of the Company has been divided into 100 shares in the capital of the Company;
(b) The receipt of \$351,119 in loan funds from Geoinformatics Exploration Australia Pty Ltd;
(c) Expenditure of \$160,000 incurred for the period from 1 January to 30 April 2007;
(d) The issue of 3,400,000 fully paid ordinary shares to Geoinformatics Exploration Australia Pty Ltd in satisfaction of part of the intercompany loan;
(e) The acquisition of Geoinformatics Exploration Tasmania Pty Ltd for equity consideration of 4,600,000 fully paid ordinary shares. Geoinformatics Tasmania is the registered holder of E3/2005, E54/2004, E51/2004, E52/2004, E53/2004, E38/2005, E2/2005, E4/2005, E64/2004, E63/2004, E16/2006 and E36/2005;
(f) The issue to Directors of 1,150,000 options to acquire fully paid ordinary shares at 20 cents, 250,000 options to acquire fully paid ordinary shares at 30 cents and 250,000 options to acquire fully paid ordinary shares at 40 cents expiring 30 April 2010;
(g) The issue to employees and consultants of 650,000 options to acquire fully paid ordinary shares at 20 cents. 150,000 options to acquire fully paid ordinary shares at 30 cents and 150,000 options to acquire fully paid ordinary shares at 40 cents expiring 30 April 2010;
(h) The acquisition of shares and options in Bass Metals Limited for equity consideration of 2,805,506 fully paid ordinary shares;
(i) The issue pursuant to this Prospectus of 25,000,000 ordinary shares at \$0.20 each, raising \$5,000,000 cash;
(j) The payment of an estimated \$633,000 in cash costs incurred by the Company in relation to the capital raising;
(k) The re-payment of the balance of the inter-company loan of \$334,000; and
(l) The issue of 2,000,000 options to the value of \$85,000 as part consideration for broker underwriting services.

3. Cash and cash equivalents

	Reviewed Historical Balance Sheet	Reviewed Pro-Forma Balance Sheet
	31 December 2006	31 December 2006
	s	S
Cash at bank and on hand	1,345	4,385,464
Adjustments arising in the preparation of the pro-forma cash balance are summarised as follows:
Actual balance as at 31 December 2006		1,345
Interim debt funding (note 2(b))		351,119
Issue of 25,000,000 fully paid shares at $$0.20$ per share (note $2(i)$ )		5,000,000
Capital raising costs (note 2(j))		(633,000)
Repayment of interim debt funding (note 2(k))		(334.000)
		4,385,464

The pro-forma Cash balance has been prewpared on the basis that the maximum subscription of \$5,000,000 is reached. If only the minimum subscription of \$3,500,000 is raised then the pro forma Cash balance would be \$2,980,464, a decrease of \$1,405,000.

Other financial assets $\overline{4}$ .

		Reviewed Historical Balance Sheet	Reviewed Pro-Forma Balance Sheet
		31 December 2006	31 December 2006
		\$	\$
Other financial assets			358,526
Adjustments arising in the preparation of the pro-forma other financial assets balance are summarised as follows:
Actual balance as at 31 December 2006
Acquisition of Geoinformatics Exploration Tasmania Pty Ltd (Note 2(e)			1
Available-for-sale financial assets -- Acquisition of shares in Bass Metals Limited (Note 2 (h))			317,250
Derivatives - Acquisition of options in Bass Metals Limited (Note 2(h))			41,275
			358,526
Other payables
Current
Loan - Geoinformatics Exploration Australia Pty Ltd		112,881	1,266
Adjustments arising in the preparation of the pro-forma other payables balance are summarised as follows:
Actual balance as at 31 December 2006			112,881
Interim debt funding (note 2(b) & (c))			511,119
Conversion of debt to equity(note 2(d)			(290,000)
Repayment of interim debt funding (note 2(k))			(334,000)
Assumption of loan liability as a result of the acquisition of Geoinformatics Tasmania Pty Ltd (note 2(e))			1,266
			1,266
Issued Capital
	No. of Shares
Ordinary shares fully paid			4,852,553
Adjustments arising in the preparation of the pro-forma issued capital balance are summarised as follows:
Issued on incorporation at 31 December 2006	120,000	1	1
Division of capital by 100:1 (note 2(a))	11,880,000
Conversion of debt to equity (note 2(d)	3,400,000		290,000
Issued on acquisition of Geoinformatics Exploration Tasmanía Pty Ltd (note 2(e))	4,600,000		Ŧ
Issued on acquisition of shares and options in Bass Metals Limited (note 2(h))	2,805,506		280,551
Issue of 25,000,000 fully paid ordinary shares
pursuant to the prospectus (note 2(i)) Transaction costs relating to share issue (note 2(j))	25,000,000		5,000,000
	47,805,506		(718,000) 4,852,553

The pro-forma Issued Capital balance has been prepared on the basis that the maximum subscription of \$5,000,000 is reached. If only the minimum subscription of \$3,500,000 is raised then the pro forma Issued Capital balance would be \$3,447,553, a decrease of \$1,405,000.

	Reviewed Historical Balance Sheet 31 December 2006	Reviewed Pro-Forma Balance Sheet 31 December 2006
	\$	\$
Option Reserve and Available-for-sale Asset Reserve (i) Option Reserve 4,600,000 options to acquire ordinary shares Movements during the period:		222,308
Issue of options to directors (note 2(f)) Issue of options to employees and consultants (note $2(q)$ ) Issue of options to broker under broker agreement (note 2(I)) At 31 December 2006 (4,600,000) options to acquire ordinary shares)		37.751 21,583 85,000 144,334
Option terms and conditions are detailed in section 10.2 of the Prospectus.
(ii) Available-for-sale Asset Reserve Revaluation increment on acquisition of Bass Metals Limited shares and options (note 2(h))		77.974
Accumulated Losses
Accumulated losses from incorporation date to 31 December 2006	111,537	332,137
Adjustments arising in the preparation of the pro-forma accumulated losses balance are summarised as follows:
Balance as at 31 December 2006		111,537
Expenses for the period 1 January to 30 April 2007 (note 2 (c))		160,000
Share based remuneration on issue of options to Directors, employees and consultants (note $2(f)$ , $(q)$ ) Accumulated losses assumed following the acquisition of		59,333
Geoinformatics Exploration Tasmania Pty Ltd (note 2 (e))		1,267
		332,137

9. Related Parties

$(i)$ Parent entity

ENANGALEMENTONIA

Geoinformatics Exploration Australia Pty Ltd ("GXL Australia") is the Company's ultimate Australian parent entity. GXL Australia is a wholly owned subsidiary of Geoinformatics Explorations Ireland Limited ("GXL Ireland") of the Irish Republic. GXL Ireland is in turn a wholly owned subsidiary of 2012860 Ontario Limited of Canada which in turn is a wholly owned subsidiary of the ultimate parent of the Geoinformatics group Geoinformatics Exploration Inc. ("Geoinformatics"), a TSX Venture Exchange listed company incorporated in Canada.

$(ii)$ Transactions with related parties prior to 31 December 2006

The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year (for information regarding outstanding balances at year-end, refer to note 5):

Lista L

	2006 s
Reimbursement of expenses
Expenses incurred on behalf of Parent	17.415
Purchase of goods and services
Purchase of services from Parent including reimbursable expenses	88.093
Expenses incurred on Company's behalf by Parent	51,132
Loans
Loan repayment to Parent	11.402

Transactions with related parties as a pro-forma transaction $(iii)$

The following table provides the total amount of transactions that were entered into with related parties during the pro forma period:

Purchase of goods and services	S
Purchase of services from Parent including reimbursable expenses	145,928
Expenses incurred on Company's behalf by Parent	31,191
Costs of Issue expenses incurred on Company's behalf by parent	334,000
Loans
Conversion of GXL Australia debt into equity (2,600,000 shares at 5 cents)	130,000
Conversion of GXL Australia debt into equity (800,000 shares at 20 cents)	160,000
Repayment of GXL Australia debt	334,000
Acquisition of Financial Assets
Acquisition of Bass shares and options from GXL Australia for 2,805,506 Shares	358,526
Acquisition of Companies
Acquisition of shares in GXL Tasmania from GXL Australia for 4,600,000 Shares

(iv) Directors

The Directors of the company in office at any time during, or since the end of the year are:

Mr Mark Robert Stewart Dr Nicholas John Archibald Mrs Jennifer Kathleen Archibald (resigned 30 September 2006) Mr Darren John Holden (resigned 30 September 2006) Dr Alasdair James Macdonald (appointed 10 January 2007) Mr Mark Andrew Lester (appointed 9 March 2007)

The Directors have been in office since the start of the financial year or from the date of their appointment to the date of this report, unless otherwise indicated.

Dr Archibald is also a director of GXL Australia, GXL Ireland and Geoinformatics.

Directors' Interests in Shares and Options $(iv)$

The Directors held no shares or options in the Company at 31 December 2006.

$(v)$ Transactions with Directors

During the period there were no transactions with Directors.

The Directors have interests in the following Shares and Options, as a result of the pro forma transactions:

				MARK AND THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE
James Macdonald		250,000
Mark Stewart		500,000	250,000	1000
The Archibald	mrimannan	200,000
P

Dr Archibald is a director of GXL Australia which holds 22,805,506 Shares in Clancy. Dr Archibald is also a director and shareholder of Geoinformatics which ultimately holds 100% of the shares in GXL Australia.

$(v_i)$ Director's Remuneration

The Directors received no remuneration during the year. The non-executive directors fees accrue from date of appointment in the case of Mr Lester and Dr Macdonald.

$10.$ Commitments

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

The company has certain obligations to perform minimum exploration work totalling \$425,500; and
There is an additional obligation to perform minimum exploration work totalling \$799,000 in respect of tenements where joint venture partners are required to incur all expenditure in order to earn or retain their interests in the tenements. Should the joint venture partners not fulfil their obligations, the company may be required to undertake these additional obligations.

11. Contingent Assets and Liabilities

There are no material contingent assets or liabilities existing at 31 December 2006 or at the date of completion of these financial statements.

$12.$ Subsequent Events

Other than as noted below, the directors are not aware of any matter or circumstance since the end of the financial period that has significantly affected or may significantly affect the operations, the results of those operations or the state of affairs of the Company in subsequent financial years;

On 10 January 2007, Dr Alasdair James Macdonald was appointed a director of the Company;
On 22 January 2007, at an extraordinary general meeting of Company, its sole shareholder resolved:
to change its company type from a proprietary company limited by shares to a public company limited by shares;
to change the name of the company to Clancy Exploration Limited;
to repeal the whole of its existing Constitution and adopt the Constitution of a public company including Australian Stock Exchange Listing Rules including participation in CHESS;
On 9 March 2007, the sole shareholder resolved to divide the Company's share capital such that each existing share was divided into 100 shares; and
On 9 March 2007, Mr Mark Andrew Lester was appointed a director of the Company;

13. Economic Dependency

The Communication of the Communication

The Company was dependent upon its Parent for 100% of its funding during the year ended 31 December 2006.

CORPORATE GOVERNANCE 8

The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent they are applicable, the Company has adopted the Ten Essential Corporate Governance Principles and Best Practice Recommendations ("Recommendations") as published by the ASX Corporate Governance Council.

Further information about the Company's corporate governance practices is set out on the Company's website at www.clancyexploration.com. In accordance with the recommendations of the ASX, information published on the Company's website includes charters (for the board and its sub-committees), codes of conduct and other policies and procedures relating to the Board and its responsibilities.

As the Company's activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be given further consideration.

The Board has established an audit sub-committee consisting of the non-executive Chairman, the nonexecutive Finance Director and the Company Secretary. The objective of the audit sub-committee is to assist the Board in fulfilling its corporate governance and oversight responsibilities relating to financial accounting practices, internal control systems, external reporting and the external audit function.

A remuneration sub-committee of the Board has been established, consisting of the non-executive Chairman, the non-executive Finance Director and the Company Secretary. The remuneration sub-committee reviews and recommends to the Board remuneration and incentive policies for executives and non-executives.

In addition, all matters of remuneration will continue to be determined in accordance with Corporations Act requirements, especially in respect of related party transactions. That is, no Director participates in any deliberations regarding his or her own remuneration or related issues.

The Board sets out below its"if not, why not" report in relation to those matters of corporate governance where the Company's practices depart from the Recommendations.

Principle 2 Recommendation 2.1

A majority of the Board is not independent.

Currently the Board consists of two independent directors, Dr Macdonald and Mr Lester, and two nonindependent directors. The Chairman, Dr Macdonald, is independent and has the casting vote. The Board considers that the structure of the Board provides a level of governance adequate to ensure the independence of Board decision-making.

Principle 2 Recommendation 2.4

There is no nomination committee.

The Board considers those matters and issues arising that would usually fall to a nomination committee. The Board considers that no efficiencies or other benefits would be gained by establishing a separate nomination committee.

Principle 8 Recommendation 8.1

During the past 12 months there was no performance evaluation of the Board, its committees and individual directors.

It is proposed the Chairman will conduct a review in the 2007/8 financial year.

Principle 9 Recommendation 9.3

Incentive Options to acquire ordinary shares have been granted to non-executive Directors.

Non-executive Directors receive a package consisting of an annual fee plus statutory superannuation in addition to the above Options and may also be paid fees or other amounts as the Directors determine if a non-executive Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

Individuals must be renumerated for being a director of a listed public company. Quality directors can only be attracted if they can be appropriately renumerated for their efforts and the risks inherent in public office. Cashbased forms of remuneration are a drain on the limited cash resources of an exploration company, therefore option-based remuneration has been provided.

RISK FACTORS $\boldsymbol{q}$

The New Shares offered by this Prospectus should be considered speculative because of the nature of the business activities of the Company. Whilst the Directors commend the Offer, potential investors should consider the risk factors described in this section, together with the information contained elsewhere in this Prospectus before deciding whether the New Shares offered are a suitable investment having regard to their own personal investment objectives and financial circumstances. This list is not exhaustive and potential investors should read this Prospectus in its entirety and if in any doubt consult their professional adviser before deciding whether to participate in the Offer.

$9.1$ General Economic Risks and Business Climate

Share market conditions may affect the Shares regardless of operating performance. Share market conditions are affected by many factors such as:

general economic outlook;
movements in international stock markets;
movements in or outlook on interest rates and inflation rates;
currency fluctuations;
commodity prices;
trends in the mining industry;
changes in investor sentiment towards particular market sectors; and
the demand and supply for capital.

Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence individual projects in which the Company has an interest.

$9.2$ Control Risks

At completion of the Offer, GXL Australia will have an interest of between 47.7% and 56.6% of Clancy's issued capital depending on the quantum raised, representing a controlling interest in Clancy. Such a controlling interest has the potential to impinge upon the ability of the Board to run Clancy in a fully independent manner.

9.3 Exploration, Development, Mining and Processing Risks

The business of mineral exploration, project development and mining by its nature contains elements of inherent risk. Ultimate and continuous success of these activities is dependent on many factors such as:

the discovery and/or acquisition of economically recoverable ore reserves;
successful conclusions to bankable feasibility studies; $\bullet$
$\bullet$ access to adequate capital for project development;
design and construction of efficient mining and processing facilities within capital expenditure budgets; $\bullet$
securing and maintaining title to tenements and compliance with the terms of those tenements; $\bullet$
$\bullet$ obtaining consents and approvals necessary for the conduct of exploration and mining; and
access to competent operational management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

Adverse weather conditions over a prolonged period can adversely affect exploration and mining operations and the timing of revenues.

Whether or not income will result from projects undergoing exploration and development programs depends on the successful establishment of mining operations. Factors including costs, actual mineralisation, consistency and reliability of ore grades and commodity prices affect successful project development and mining operations.

Mining is an industry which has become subject to increasing legislative regulation including but not limited to environmental responsibility and liability. The potential for liability is an ever present risk. The use and disposal of chemicals in the mining industry is under constant legislative scrutiny and regulation. The introduction of new laws and regulations or changes to underlying policy may adversely impact on the operations of the Company.

9.4 Native Title and Aboriginal Heritage

The Native Title Act 1993 (Cth) recognises certain rights of indigenous Australians over land and water where those rights have not been extinguished. These rights, where they exist, may impact on the ability of the Company to carry out exploration or obtain mining tenements. In applying for certain mining tenements, the Company must observe the provisions of the native title legislation (where applicable) and Aboriginal heritage legislation which protects Aboriginal sites.

Further information about native title and Aboriginal heritage is contained in the Solicitor's Report in Section 5 of this Prospectus.

$9.5 -$ Risks Specific to the Company Projects and Investments

The Company's projects represent the main business activity and focus of the Company. Risks specific to these Projects include the following:

Operating Risks

The current and future operations of the Company, including exploration, appraisal and possible production activities may be affected by a range of factors, including:

geological conditions;
limitations on activities due to seasonal weather patterns and cyclone activity;
alterations to joint venture programs and budgets;
unanticipated operational and technical difficulties encountered in geophysical surveys, drilling and production activities;
mechanical failure of operating plant and equipment;
adverse weather conditions, industrial and environmental accidents, acts of terrorism or political or civil unrest and other force majeure events;
occupational health and safety in a potentially dangerous workplace;
industrial action, disputation or disruptions;
unavailability of aircraft or drilling equipment to undertake airborne electromagnetic and other geological and geophysical investigations;
shortages or unavailability of manpower or appropriately skilled manpower;
unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment; and
prevention or restriction of access by reason of political unrest, outbreak of hostilities, and inability to obtain consents or approvals.

Commodity Prices

Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world-wide and regional supply and demand for the specific commodity, commodity trading on the futures markets, general world economic conditions and the outlook for interest rates, inflation and other economic factors on both a regional and global basis. These factors may have a positive or negative effect on the Company's exploration, project development and production plans and activities, together with the ability to fund those plans and activities.

Currency

The USD/AUD exchange rate is affected by numerous factors beyond the control of the Company. These factors include Australia's and the USA's economic conditions and the outlook for interest rates, inflation and other economic factors. These factors may have a positive or negative effect on the Company's exploration, project development and production plans and activities, together with the ability to fund those plans and activities.

Environment

The Company's projects are subject to State and Federal laws and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mining projects, these projects would be expected to have a variety of environmental impacts should development proceed.

The Company intends to conduct its activities in an environmentally responsible manner and in accordance with applicable laws and industry standards. Areas disturbed by the Company's activities will be rehabilitated as required by applicable laws and regulations.

Title

The exploration licences comprising some of the tenements which the Company holds or in which it has an interest may be the subject of applications for extension in the future.

If a tenement is not extended, the Company may suffer significant damage through loss of the opportunity to discover and/or develop any mineral resources on that tenement.

In addition, the Company cannot guarantee that those tenements that are applications for tenements will ultimately be granted in whole or in part.

Access permission has been obtained in respect of some but not all of the Company's tenements. Access permission may not be granted in respect of those tenements for which the Company has not already obtained access permission.

For more details on title to the tenements, refer to the Solicitor's Report in Section 5 of this Prospectus.

Insurance Risks

The Company intends to adequately insure its operations in accordance with industry practice. However, in certain circumstances the Company's insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company. Insurance of all risks associated with minerals exploration and production is not always available and where available the costs can be prohibitive. There is a risk that insurance premiums may increase to a level where the Company considers it is unreasonable or not in its interests to maintain insurance cover or not to a level of coverage which is in accordance with industry practice. The Company will insure the risks it considers appropriate for the Company's need and for its circumstances.

Change in Government Policy and Legislation

The Company's business may be affected by new and changing Government policies, including taxation, royalties, environmental regulation, land access and economic regulation relating to the minerals industry.

Joint Venture Parties and Contractors

The Directors are unable to predict the risk of the financial failure or default by a participant in any joint venture to which the Company may become a party or insolvency or other managerial failure by any of the contractors used by the Company in its exploration activities.

Limited History

The Company was incorporated in July 2003 and its operational and financial historical performance is limited. The Company's future prospects must be considered in light of the difficulties commonly encountered in the early stages of a company's development, particularly those companies involved in the exploration for mineral resources.

Contractual Risks

The Company's interests in some of its tenements and rights are governed by virtue of the Company having contractual rights.

As in any contractual relationship, the ability of the Company to ultimately benefit is dependent upon the Company's ability to comply with its obligations, and the relevant counterparty complying with its contractual obligations to deliver title.

Future Funding

The future capital requirements of the Company will depend on many factors including its business development activities. The Company believes its available cash and the net proceeds of this Offer will be adequate to fund its business development activities, exploration program and other objectives in the short term as stated in this Prospectus.

Should the Company require additional funding there can be no assurance that additional financing will be available on acceptable terms, or at all. Any inability to obtain additional finance, if required, would have a material adverse effect on the Company's business and its financial condition and performance.

Value of Bass Metals Shares and Bass Metals Options

The Bass Metals Shares and Bass Metals Options are subject to many of the same risks to which the Company is subject. There can be no guarantee that the value of the Bass Metals Shares and Bass Metals Options will not decrease or in fact they may become worthless. Certain of the Bass Metals Shares and Bass Metals Options are subject to trading restrictions preventing the Company from selling those shares for a period of time.

Ongoing Access to Geoinformatics Process

The Company's Target Bank has been generated from the results of the application of the Geoinformatics Process. If the relationship with GXL Australia fails or GXL Australia is unable or unwilling to provide future access to the Geoinformatics Process, Clancy may be forced to reduce its reliance on this technical advantage for its future pipeline of projects.

ADDITIONAL INFORMATION 10

10.1 Rights Attaching to Shares

$(a)$ General

The Shares to be issued pursuant to this Prospectus are ordinary shares and will as from their allotment rank equally in all respects with all existing Shares in the Company.

The rights attaching to the Shares arise from a combination of the Company's Constitution, the Corporations Act, the ASX Listing Rules and general law. A copy of the Company's Constitution is available for inspection free of charge during business hours at its registered office.

A summary of the rights attaching to the Shares is set out below. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

(b) Voting Rights

Subject to the Constitution of the Company and any rights or restrictions at the time being attached to a class of shares, at a general meeting of the Company every Shareholder present in person, or by proxy, attorney or representative has one vote on a show of hands, and upon a poll, one vote for each Share held by the Shareholder. In the case of an equality of votes, the chairperson has a casting vote.

$(c)$ Dividends

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, the Company may pay dividends as the Directors resolve but only out of profits of the Company. The Directors may determine the method and time for payment of the dividend.

$(d)$ Winding up

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, on a winding up of the Company any surplus must be divided among the shareholders of the Company.

Transfer of Shares $(e)$

Generally, shares are freely transferable, subject to satisfying the requirements of the ASX Listing Rules, ASTC Rules and the Corporations Act. The Directors may decline to register any transfer of Shares but only where permitted to do so by the Corporations Act, the ASX Listing Rules, the ASTC Rules, or under the Company's Constitution.

$(f)$ Further Increases in Capital

Subject to the Corporations Act, the ASX Listing Rules, the ASTC Rules and any rights attached to a class of shares, the Company (under the control of the Directors) may allot and issue shares and grant options over shares, on any terms, at any time and for any consideration, as the Directors resolve.

$\left( \mathbf{q} \right)$ Variation of Rights

Subject to the Corporations Act, the ASX Listing Rules, the ASTC Rules and the terms of issue of shares in a particular class, the Company may vary or cancel rights attached to shares in that class by either special resolution passed at a general meeting of the holders of the shares in that class, or with the written consent of the holders of at least 75% of the votes in that class.

(h) Meetings and Notices

Each Shareholder will be entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive notices, accounts and other documents required to be furnished to Shareholders under the Company's Constitution, the Corporations Act and the ASX Listing Rules.

10.2 Terms of Options

One Incentive Option entitles the holder to subscribe for one Share on the following terms:

$(i)$ the exercise price of each Option is \$0.20;
$(ii)$ the Options expire at 5.00 pm WST on 30 April 2010;
(iii) Shares issued as a result of the exercise of any Options will rank equally in all respects with Shares;
(iv) the Options are exercisable by completing an application for exercise of Options and delivering the same together with payment for the number of shares in respect of which the Options are exercised to the registered office of the Company;
within 14 days of the receipt of a properly executed notice of exercise and application monies the Company $(v)$ will issue to the Option holder the number of Shares specified in that notice;
(vi) Option holders are permitted to participate in new issues of securities offered to Shareholders on the prior exercise of the Option in which case the Option holder shall be afforded the period of at least 10 business days prior to the record date (to determine the entitlements to the issue) to exercise the Option;
(vii) in the event of any reorganisation (including consolidation, subdivision, reduction or cancellation) of capital of the Company, the rights of Option holders are to be changed to the extent necessary to comply with ASX Listing Rules on a reorganisation of capital at the time of the reorganisation;
(viii) the Options may be cancelled in the event that the grantee voluntarily terminates his employment or engagement with Clancy or Clancy terminates the grantee's employment or engagement for reasons of serious misconduct; and
(ix) the Options will be subject to escrow for a period of not less than two years from the date of listing on ASX.

The Company will not apply for official quotation of the Incentive Options, but will apply for official quotation of all Shares issued and allotted pursuant to the exercise of the Incentive Options.

The terms of the Series 1 and Series 2 Performance Options are identical to the terms listed above in all respects except that the Series 1 Performance Options are exercisable at 30 cents and the Series 2 Performance Options are exercisable at 40 cents. Additionally, the Company will not apply for official quotation of the Series 1 and Series 2 Performance Options, but will apply for official quotation of all Shares issued and allotted pursuant to the exercise of the Series 1 and Series 2 Performance Options.

The terms of the Broker Performance Options are identical to the terms of the Incentive Options in all respects except that the Broker Performance Options are exercisable on or before the date being two years after the expiry of any ASX restriction arrangement. Additionally, the Company will not apply for official quotation of the Broker Performance Options, but will apply for official quotation of all Shares issued and allotted pursuant to the exercise of the Broker Performance Options.

10.3 Related Party

Pursuant to the Corporations Act, GXL Australia is a related party of the Company.

Following the sale of GXL Tasmania and the Bass Metals Securities to the Company, GXL Australia is the beneficial owner of 22,805,506 Shares and is a substantial Shareholder of the Company.

Assuming the capital structure of the Company is as set out in Table 1 of Section 1.3 of this Prospectus and that none of the Options have been exercised, the voting power of GXL Australia in the Company is 47.7%. If only the Minimum Subscription is reached, the voting power of GXL Australia in the Company is 56.6%. Dr Nick Archibald, a non-executive Director of the Company, is also a director of GXL Australia and Geoinformatics.

10.4 Interests of Directors

Other than as set out below or elsewhere in this Prospectus:

(a) no Director holds, or during the last two years has held, any interest in:
(i) the formation or promotion of the Company;
(ii) property acquired or to be acquired by the Company in connection with its formation or in connection with the promotion of the Offer; or
(iii) the Offer; and
(b) no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid by any person and no benefits have been given or agreed to be given by any person to a Director or proposed Director to induce him or her to become, or to qualify him or her as, a Director, or otherwise for services provided by him or her in connection with the formation or promotion of the Company or the Offer.

Remuneration of Directors

In accordance with the Constitution, the existing Shareholders of the Company as at the date of this Prospectus have determined in general meeting that the maximum non-executive Director remuneration is \$200,000 per annum.

The Directors have resolved that each non-executive Director is entitled to receive fees of \$24,000 per annum (plus superannuation) and the non-executive Chairman of Directors is entitled to receive \$40,000 per annum (plus superannuation). In addition the non-executive Directors have been granted Incentive Options as disclosed below.

The Company has entered into a Management Agreement with Mr Stewart the details of which are disclosed at Section 10.5 of this Prospectus.

A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

Interests of Directors in the Company

Under the Constitution, the Directors are not required to hold any Shares in the Company.

As at the date of this Prospectus, the Directors have relevant interests in the following Shares and Options of the Company:

James Macdonald	250,000
ANGIL	500,000	250,000	0.000
Nick Archibald	200,000		IXII.

The terms of these Options are summarised in Section 10.2.

Dr Archibald is a director of GXL Australia which holds 22,805,506 Shares in Clancy. Dr Archibald is also a director and shareholder of Geoinformatics which ultimately holds 100% of the shares in GXL Australia.

10.5 Material Contracts

$(a)$ Underwriting Agreement

On 22 May 2007, Clancy and Martin Place Securities ("Underwriter") entered into an underwriting agreement ("Underwriting Agreement"), pursuant to which the Underwriter has agreed to underwrite the Minimum Subscription, namely the issue of the first 17.5 million Shares at an issue price of \$0.20 per Share ("Underwritten Shares") to raise a minimum sum of \$3.5 million ("Underwritten Amount").

CONSTRUCTION

The Underwriter will be paid a management fee of 2 million Broker Performance Options, a management fee of 1% of all funds raised, an underwriting commission of 5% of the Underwritten Amount and a capital raising commission of 5% of the funds raised above the Underwritten Amount. The Underwriter will be reimbursed for its costs and expenses associated with the underwriting.

The Underwriter may terminate or cancel the Underwriting Agreement immediately and be relieved of its obligations under the Underwriting Agreement if any one or more of the following events occurs, and in the Underwriter's opinion, the event has or could have a materially adverse effect on the success of the Offer:

the All Ordinaries Index Number or the Dow Jones Industrial Average is at any time more than 10.0% $(i)$ below its level as at the close of business on the business day immediately preceding the date of the Underwriting Agreement;
$(ii)$ a material new circumstance has arisen since the Prospectus was lodged that would in the reasonable opinion of the Underwriter have been required by sections 710 or 711 of the Corporations Act to be included in the Prospectus if it had arisen before the Prospectus was lodged;
Clancy makes default under or is in breach of any of its material obligations under the Underwriting $(iii)$ Agreement and following consultation between Clancy and the Underwriter, that failure is not remedied within five business days afterwards;
$(iv)$ any warranty or representation by Clancy in the Underwriting Agreement ceases to be true in any material respect and, following consultation between Clancy and the Underwriter, the matters rendering the warranty untrue are not remedied within five business days afterwards;
$(v)$ any material adverse change occurs in the financial position of Clancy or any subsidiary;
$(v_i)$ any director or officer of Clancy named in the Prospectus dies or is charged with or convicted of an indictable offence:
(vii) any material statement in the Prospectus is found to be or becomes misleading or deceptive or there is found to be a material omission from the Prospectus of material required by sections 710 or 711 of the Corporations Act;
(viii) the adoption or announcement by or on the authority of the government of the Commonwealth of Australia of:
(i) any future change in fiscal or monetary or taxation policy which would materially and adversely affect companies generally or Clancy in particular or investment in stocks and shares in Australia including but not limited to any change which is likely to materially and adversely affect interest rates (to a degree of a change of 1% or more in Reserve Bank interest rates) not already announced or anticipated as at the date of the Underwriting Agreement; or
(ii) any law or prospective law or other measure having the effect of restraining capital issues, corporate profits or foreign investment,

and which, in either case, would materially and adversely affect the issue;

any person who has previously consented to the inclusion of its, his or her name in the Prospectus or $(ix)$ to be named in the Prospectus, withdraws that consent;
any information supplied at any time by Clancy (or any person on its behalf) to the Underwriter in $(\times)$ respect of any aspect of the Offer is or becomes false or misleading;
$(x_i)$ any of the results of investigations of Clancy or of any subsidiary conducted pursuant to Clancy's due diligence program and verification material is or becomes false or misleading;
$(xii)$ any material contravention by Clancy or an officer of any of them of any provision of the Corporations Act, or the ASX Listing Rules or any requirement of ASX or the ASIC or any governmental agency;
(xiii) a resolution is passed or an order made by a court of competent jurisdiction for the winding up of Clancy or any subsidiary, other than an order for the purpose of reconstruction or amalgamation made with the prior consent of the Underwriter;
(xiv) a receiver or receiver and manager is appointed to all or any part of the assets or undertaking of Clancy or any subsidiary;
Clancy or any subsidiary enters into any scheme of arrangement with its creditors or any class of them $(xv)$ or indicates its intentions to do so;
(xvi) Clancy or any subsidiary suspends payments of its debts or is unable to pay its debts within the meaning of the Corporations Act;
(xvii) Clancy or any subsidiary is placed under official management or an official manager is appointed;
(xviii) a liquidator or provisional liquidator is appointed to Clancy or any subsidiary;
$(xix)$ an inspector is appointed pursuant to the Corporations Act to investigate all or any part of the affairs of Clancy or any subsidiary;
$(xx)$ there is an outbreak of hostilities (whether or not war has been declared) not presently existing or a major escalation in existing hostilities occurs involving any one or more of the Commonwealth of Australia, the United Kingdom, the United States of America, European Union, the Peoples Republic of China, Taiwan, Japan, Indonesia;
$(xxi)$ Clancy or any party having power to do so appoints a voluntary administrator to Clancy or any subsidiary or any part of the business or asset of Clancy becomes subject to any form of administration;
(xxii) any waiver or exemption to the ASX Listing Rules granted by ASX being illegal, improper or ultra vires ASX power to grant such waiver or exemption; or
(xxiii) on or before four business days after the Closing Date, Clancy fails to deliver to the Underwriter a duly signed certificate certifying that, to the best of the knowledge, information and belief of the Company:
(i) no event set out above has occurred;
(ii) Clancy has complied with all obligations on its part to be performed in respect of the Offer, under the Underwriting Agreement, the Corporations Act and the ASX Listing Rules;
(iii) Clancy is not otherwise in breach of any provisions of the Underwriting Agreement;
(iv) Clancy is not aware of nor has it received any notice of any breach of any term of any material contract referred to in the Prospectus;
(v) Clancy is not aware of nor has it received any notice or demand from any government statutory or regulatory authority, or a party to any contract or claim which could adversely affect the rights of Clancy in relation to any mining right, lease or tenement or any application made for any mining right, lease or tenement; and
(vi) that all mining, exploration or prospecting rights, leases and tenements referred to in the Prospectus are current and all conditions attached thereto and payments due on them have been satisfied.

Clancy has agreed to accept full responsibility and assume all liability in relation to the Offer, the form and content of the Prospectus, any advertising and publicity approved and authorised by Clancy and any claims and proceedings that may arise out of or in connection from such matters. In addition, Clancy has agreed to indemnify and keep indemnified the Underwriter in relation to, amongst other things, any breach of the Underwriting Agreement, any statement, misstatement, representation, non-disclosure, inaccuracy or misleading or deceptive material in the Prospectus, failure by the Clancy to rectify material omissions from the Prospectus and the failure to lodge a supplementary prospectus where necessary.

(b) Letter Agreement between GXL Australia and Clancy relating to purchase of GXL Tasmania

On 4 May 2007 Clancy and GXL Australia entered into a letter agreement whereby Clancy agreed to purchase and GXL Australia agreed to sell:

(i) all of the issued shares in GXL Tasmania in consideration for \$460,000, paid by the issue of 4,600,000 Shares to GXL Australia;
(ii) 911,250 issued shares in Bass Metals in consideration for \$264,375, paid by the issue of 2,643,750 Shares to GXL Australia; and

(iii)306,250 listed and unlisted options, entitling the holder to subscribe for and to be allotted one share in the capital of Bass Metals upon exercise of the option and payment to Bass Metals of the exercise price, in consideration for \$16,176, paid by the issue of 161,756 Shares to GXL Australia.

$(c)$ Letter Agreement between GXL Australia and Clancy relating to databases and target banks

The exploration of the Lachlan Fold Belt and Mount ReadVolcanic Belt is supported by information and analysis which has been mutually developed by GXL Australia and Clancy. The information has been organised into databases of information and target banks ("Databases and Target Banks"). On 7 May 2007, GXL Australia and Clancy entered into a letter agreement whereby GXL Australia acknowledged that, subject to the rights of Gold Fields and Bass Metals under the strategic alliance agreements with each of Gold Fields and Bass Metals, Clancy owns all rights, title and interests in the Databases and Target Banks in the Lachlan Fold Belt and the Mount Read Volcanic Belt ("Databases and Target Banks Agreement").

Pursuant to the terms of the Databases and Target Banks Agreement, GXL Australia must keep copies of and provide reasonable access to the Lachlan Fold Belt and Mount Read Volcanic Belt Databases and Target Banks for a period of five years from the date of the agreement. Thereafter, GXL Australia and Clancy have agreed to use reasonable commercial endeavours to agree upon commercial terms to maintain the records.

Unless waived by Clancy, GXL Australia will not use the Databases or Target Banks in any way to acquire mineral interests and will not acquire mineral interests in the strategic alliance areas set out in Exhibits A and B to the Databases and Target Banks Agreement. Subject to this restriction, GXL Australia is entitled to retain a copy of the Databases and Target Banks on the GXL Australia computer system and have a perpetual royaltyfree licence to use the Databases and work product arising from any further analysis of the Databases. All information relating to the Databases and Target Banks is confidential.

$(d)$ Letter Agreement between GXL Australia and Clancy relating to use of premises, equipment and data management

On 7 May 2007, Clancy and GXL Australia entered into a letter agreement whereby Clancy assumed responsibility for certain costs for the use of premises, equipment and data management ("Premises, Equipment and Data Management Agreement"). Pursuant to the terms of the Premises, Equipment and Data Management Agreement, as at the date of Clancy listing on ASX, Clancy has agreed to pay \$3,135.00 per month for the overheads relating to the use of the premises, equipment, parking and other overhead costs detailed in Schedule 1 to the Premises, Equipment and Data Management Agreement.

This arrangement may be terminated by either party, subject to the provision of not less than 60 days' written notice.

The parties have also agreed that from the date of listing, Clancy will pay GXL Australia \$2,083.33 per month in respect of data management infrastructure and data bank maintenance and access, which arrangement may be terminated by either party on 30 days written notice. Furthermore, GXL Australia will provide the services of its technical staff from time to time on Clancy projects at an hourly charge out rate applicable at the time such work is undertaken. The parties have agreed to negotiate a confidentiality agreement in relation to the technical information and processes provided by GXL Australia.

$(e)$ Funding from GXL Australia

By a letter dated 4 May 2007, GXL Australia agreed to provide Clancy with an interest-free loan up to a maximum amount of \$338,000 to be used solely for the purpose of funding Clancy's IPO and listing on ASX. The amounts advanced to Clancy are repayable to GXL Australia within 30 days of listing on ASX, or such other date as may be agreed by the parties.

In addition, GXL Australia has provided services of certain of its employees to Clancy to assist Clancy with the IPO, which costs have been capped at \$290,000, and converted to shares in Clancy.

$(f)$ Management Agreement - Mr Mark Stewart

On 2 May 2007, Clancy entered into an employment agreement with Mark Stewart pursuant to which Mark Stewart has been appointed as Managing Director of Clancy ("Management Agreement"). The Management Agreement commences on the date that Clancy is listed on ASX and continues until terminated by either party.

As consideration for Mark Stewart fulfilling the duties set out in the Management Agreement, Clancy has agreed to pay a remuneration made up of a salary of \$200,000 per annum and superannuation. Furthermore, Clancy has agreed to:

(i) pay all reasonable expenses incurred in the course of Mark Stewart's employment;
(ii) grant 500,000 options to Mark Stewart at an exercise price of 20c which will expire on 30 April 2010;
(iii) grant 250,000 options to Mark Stewart at an exercise price of 30c which will expire on 30 April 2010; and
(iv) grant 250,000 options to Mark Stewart at an exercise price of 40c which will expire on 30 April 2010.

Mark Stewart has acknowledged that the options may be classified as restricted securities by ASX, and if not, has agreed to enter into a voluntary restriction agreement for a period of not less than two years from the date Clancy lists on ASX.

Mark Stewart may terminate his employment by providing three months notice in writing, and Clancy may terminate Mark Stewart's employment for reasons other than serious misconduct with payment of 12 months salary or 12 months notice for termination within the first 12 months of employment, and a payment equivalent to 6 months salary or 6 months notice at any time thereafter. Clancy may terminate the Management Agreement immediately for serious misconduct without any obligation to provide notice or pay compensation, and the board may in its discretion cancel the share options without recourse. Clancy owns all intellectual property that Mark Stewart develops or conceives during the course of or arising out of his employment with Clancy.

10.6 Deeds of Indemnity, Access and Insurance

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 Company may maintain insurance policies for the benefit of the relevant officer for the term of the appointment and for a period of seven years after retirement or resignation. The Deeds of Indemnity, Access and Insurance also provide for the right to access Board papers.

10.7 Consents and Competent Persons

Each of the parties referred to in this Section 10.7:

(i) does not make, or purport to make any statement in this Prospectus other than those referred to in this Section 10.7; and
(ii) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section10.7.

Clayton Utz has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as solicitor to the Offer in the form and context in which it is named, and to the inclusion of the Solicitor's Report included in Section 5 of the Prospectus in the form and context in which it is included.

SRK Consulting has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the independent geologist in the form and context in which it is named and to the inclusion of the Independent Technical Assessment included in Section 4 of the Prospectus in the form and context in which it is included.

PKF Corporate Advisory Services (WA) Pty Ltd has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the investigating accountant of the Company in the form and context in which it is named and to the inclusion of the Investigating Accountant's Report included in Section 6 of the Prospectus in the form and context in which it is included.

Ernst & Young has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the auditor of the Company in the form and context in which it is named.

Computershare Investor Services Pty Ltd has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the share registry of the Company in the form and context in which it is named.

Martin Place Securities has given and has not, before the lodgement of this Prospectus, withdrawn its consent to being named as Underwriter to the Issue.

Bass Metals has given and has not, before the lodgement of this Prospectus, withdrawn its consent to being named and to the inclusion of statements in relation to Bass Metals in the form and context in which they are included.

The information in this Prospectus that relates to Exploration Results, Mineral Resources and Ore Reserves for the Lachlan Fold Belt projects and Mount Read Volcanic Belt projects is based on information compiled by Mr Gordon Barnes, BSc, MSc, MAIG, MSEG, who is a Member of the Australasian Institute of Geoscientists. Mr Gordon Barnes is a full-time employee of GXL Australia and will become a full-time employee of the Company upon listing on ASX. Mr Gordon Barnes has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Gordon Barnes consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which it appears.

10.8 Interests of Persons Named

Other than as set out below or elsewhere in this Prospectus:

(a) no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, or any promoter of the Company or broker to the Issue, holds, or during the last two years has held, any interest in:
(i) the formation or promotion of the Company;
(ii) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the Offer; or
(iii) the Offer; and
(b) no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid by any person and no benefits have been given or agreed to be given by any person to any expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus, or to any firm in which any of those persons is or was a partner or to any company in which any of those persons is or was associated with, for services rendered by that person in connection with the formation or promotion of the Company or the Offer.

Clayton Utz has acted as solicitor to the Offer and provided advice and assistance in relation to certain aspects of this Prospectus, the Company's due diligence regime, its application and admission to ASX and the preparation of the Solicitor's Report included in Section 5 of this Prospectus. In respect of these services, Clayton Utz will be paid approximately \$100,000 (plus GST).

SRK Consulting has acted as an independent geologist and has prepared the Independent Technical Assessment included in Section 4 of this Prospectus. SRK Consulting Pty Ltd will be paid approximately \$36,000 (plus GST) in respect of these services.

PKF Corporate Advisory Services (WA) Pty Ltd has acted as the investigating accountant to the Offer and prepared the Investigating Accountant's Report included in Section 6 of this Prospectus. PKF Corporate Advisory Services (WA) Pty Ltd will be paid approximately \$10,000 (plus GST) in respect of these services.

Ernst & Young has agreed to act as auditor to the Company and will receive fees for rendering these services in accordance with its normal time based charges.

Dabinett Corporate Pty Ltd, a company associated with Mr Rowan Caren, has drafted certain sections of this Prospectus and will receive consulting fees of approximately \$35,000 (plus GST) and has been granted 100,000 Incentive Options.

Martin Place Securities Pty Ltd has agreed to act as Lead Manager and Underwriter to the Issue and will receive a management fee equivalent to 1% of funds raised and an underwriting fee equivalent to 5% of funds raised. Additionally, Martin Place Securities Pty Ltd has been granted 2,000,000 Broker Performance Options.

GXL Australia, a promoter of the Company, has vended GXL Tasmania and investments in Bass Metals Securities to the Company, in return for which GXL Australia has been issued 7,405,506 Shares by the Company. As a result of these transactions, more details of which are summarised in the Solicitor's Report in Section 5 of this Prospectus, and its pre-existing shareholding GXL Australia will have a relevant interest of 47.7% (56.6% in the event only the Minimum Subscription is reached) in the Company's issued Shares following the allotment of the New Shares offered by this Prospectus. GXL Australia has entered into an agreement with Clancy whereby GXL Australia will receive a fee of \$25,000 per annum for database and infrastructure maintenance. Additionally, a separate agreement between the parties, entitles GXL Australia to a fee in return for the provision of office space and facilities equivalent to approximately \$37,000 per annum.

10.9 Litigation

As at the date of this Prospectus, the Company and GXL Tasmania are not involved in any material legal proceedings, nor so far as the Directors are aware, are any such legal proceedings pending or threatened against the Company or GXL Tasmania which may have a material adverse effect on the Company or GXL Tasmania.

10.10 Expenses of the Offer

The total expenses connected with the Offer which are expected to be settled in cash are estimated to be approximately \$633,000 (\$539,000 if only the Minimum Subscription is reached). A further \$85,000 expense connected with the Offer will be settled by the issue of 2,000,000 Broker Performance Options. These expenses will be borne by the Company.

10.11 Tax Consideration

Potential investors in the Company should seek and rely on their own professional taxation advice in relation to an investment in the Company.

10.12 Distribution of Prospectus

The Prospectus has been prepared by the Company. In preparing the Prospectus, the Company has taken reasonable steps to ensure that the information in the Prospectus is not false or misleading. In doing so, the Company has had regard to the prospectus requirements of the Corporations Act.

Prospective investors should read the full text of the Prospectus as the information contained in individual sections is not intended to and does not provide a comprehensive review of the business and financial affairs of the Company nor the New Shares offered pursuant to the Prospectus.

No person is authorised to give any information in relation to or to make any representation in connection with the Offer described in the Prospectus that is not contained in the Prospectus. Any such information or representation may not be relied upon as having been authorised by the Company in connection with the Offer.

ADDITIONAL MAGAZINAL ON

The Prospectus provides information to assist investors in deciding whether they wish to invest in the Company and should be read in its entirety. If you have any questions about its contents or investing in the Company you should contact your stockbroker, accountant or other financial adviser.

10.13 Privacy

The Application Form accompanying this Prospectus requires you to provide information that may be personal information for the purposes of the Privacy Act 1988 (Cth) (as amended). The Company (and its share registry on behalf of the Company) may collect, hold and use that personal information in order to assess your Application, service your needs as a Shareholder and provide facilities and services that you request and to administer the Company.

Access to information may also be provided to the Company's agents and service providers on the basis that they deal with such information in accordance with the Company's privacy policy.

If you do not provide the information requested of you in the Application Form, the Company's share registry may not be able to process your Application or administer your holding of Shares appropriately. Under the Privacy Act 1988 (Cth) (as amended), you may request access to your personal information held by (or on behalf of) the Company. You can request access to your personal information by telephoning or writing to the Company to the attention of the Privacy Officer.

DIRECTORS' STATEMENTS AND CONSENTS 11

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and that in respect to any other statements made in this Prospectus by persons other than Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making the statements being included in this Prospectus were competent to make such statements, those persons having given their consent to the statements being included in this Prospectus in the form and context in which they appear and have not withdrawn that consent before lodgement of this Prospectus with ASIC, or to the Directors knowledge before any issue of New Shares pursuant to this Prospectus.

This Prospectus is issued by Clancy Exploration Limited. This issue of this Prospectus has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each of the Directors of the Company has consented to the lodgement of this Prospectus with ASIC and has not withdrawn that consent.

Dated: 22 May 2007

Mark Stewart Managing Director For and on behalf of Clancy Exploration Limited

GLOSSARY

The following defined terms apply throughout this Prospectus unless the context requires otherwise:

"\$" means Australian dollars unless otherwise specified;

"Applicant" means a person who completes and lodges an Application Form;
"Application" means an application for New Shares pursuant to this Prospectus;
"Application Form" means the application form attached to this Prospectus;
"ASIC" means the Australian Securities & Investments Commission;
"ASTC Rules" means the settlement rules of Australian Settlement and Transfer Corporation Pty Ltd;
"ASX" means ASX Limited (ACN 008 624 691);
"ASX Listing Rules" means the Listing Rules of ASX as amended from time to time;
"AFSL" means an Australian Financial Services Licence as defined by the Corporations Act;
"Bass Metals" means Bass Metals Limited (ABN 31 109 933 955);
"Bass Metals Listed Option" means an option to acquire one Bass Metals Share exercisable at 40 cents on or before 30 April 2010;
"Bass Metals Options" means Bass Metals Listed Options and/or Bass Metals Unlisted Options;
"Bass Metals Securities" means Bass Metals Shares and Bass Metals Options held by Clancy;
"Bass Metals Shares" means fully paid ordinary shares in the capital of Bass Metals;
"Bass Metals Unlisted Option" means an option to acquire one Bass Metals Share exercisable at 25 cents on or before 31 December 2007;
"Broker Performance Option" means an option granted to the Broker exercisable at 20 cents on or before the date being two years after the date of expiry of any ASX imposed restriction arrangement;
"Closing Date" means the last date on which Application Forms may be submitted;
"Company" or "Clancy" means Clancy Exploration Limited (ABN 65 105 578 756);
"Constitution" means the Constitution of the Company;
"Corporations Act" means the Corporations Act 2001 (Cth);
"Director(s)" or "Board" means the directors of the Company as at the date of this Prospectus;
"Exposure Period" means the period of seven days after the date of lodgment of this Prospectus with ASIC, which period may be extended by ASIC by not more than seven days pursuant to Section 727(3) of the Corporations Act;
"Geoinformatics" means Geoinformatics Exploration Inc.;
"Geoinformatics Process" means a process conducted by Geoinformatics team of geoscientists to understand, quantify, analyse and prioritise exploration drill targets which integrates data aggregation, data mining, and three-dimensional modelling:
"Gold Fields" means Gold Fields Australasia Pty Ltd (ABN 59 087 624 600);
"GXL Australia" means Geoinformatics Exploration Australia Pty Ltd (ACN 009 249 585);
"GXL Tasmania" means Geoinformatics Exploration Tasmania Pty Ltd (ACN 113 307 038;)

CELOSSING

"Incentive Option" means an Option issued to a director, consultant or employee of the Company exercisable at 20 cents on or before 30 April 2010;

"Issue" means the issue of a minimum of $17,500,000$ and a maximum of $25,000,000$ Shares under this Prospectus;

"Martin Place Securities", "Underwriter" or "Broker" means Martin Place Securities Pty Ltd (ABN 30 094 927 947):

"Maximum Subscription" means 25,000,000 Shares under this Prospectus;

"Minimum Subscription" means 17,500,000 Shares under this Prospectus;

"New Shares" means a Share issued pursuant to this Prospectus;

"Offer" means the offer of New Shares pursuant to this Prospectus;

"Official List" means the official list of ASX:

"Opening Date" means the first date on which Application Forms can be received;

"Option" means an option to subscribe for one Share;

"Option holder" means a holder of an Option(s);

"Performance Option" means a Series 1 and/or Series 2 Performance Option;

"Prospectus" means this prospectus dated 22 May 2007;

"RFI" means Resource Finance & Investments Ltd re-named Bass Metals Limited (ABN 31 109 933 955);

"Series 1 Performance Option" means an Option granted to an executive officer of Clancy exercisable at 30 cents on or before 30 April 2010;

"Series 2 Performance Option" means an Option granted to an executive officer of Clancy exercisable at 40 cents on or before 30 April 2010;

"Share" means a fully paid ordinary share in the capital of the Company;

"Shareholder" means a holder of a Share(s);

"Share Registry" means Computershare Investor Services Pty Ltd;

"Target" means an area identified through application of the Geoinformatics Process as having potential mineralisation of interest and upon which exploration will be conducted, subject to securing rights of tenure;

"Target Bank" means a register of identified Targets ranked in terms of prospectivity which Clancy has a proprietary interest in and which GXL Australia is required to manage and maintain; and

"WST" means Western Standard Time

	Andy Clancy Exploration Limited Experiment ABN 65 105 578 756					Registry Use Only
Application Form									Adviser Code
This Application Form is important. If you are in doubt as to how to deal with it, please contact your stockbroker or professional adviser without delay. You should read the						Broker Code
entire prospectus carefully before completing this form. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the prospectus.
liwe apply for					В		I/we lodge full Application Money
						46)					2
Number of Shares in Clancy Exploration Limited at A\$0.20 per Share or such lesser
number of Shares which may be allocated to me/us Individual/Joint applications - refer to naming standards overleaf for correct forms of registrable title(s)
Title or Company Name		Given Name(s)				Sumame
Joint Applicant 2 or Account Designation

Joint Applicant 3 or Account Designation


Enter your postal address - Include State and Postcode Unit	Street Number		Street Name or PO Box /Other Information



City / Suburb / Town								Siate		Postcode

Enter your contact details
Contact Name							Telephone Number - Business Hours / After Hours

CHESS Participant Holder Identification Number (HIN)
Χ										Please note that if you supply a CHESS HIN but the name and address details on your form do not correspond exactly with the registration details held at CHESS, your application will be deemed to be made
				subregister.						without the CHESS HIN, and any securities issued as a result of the IPO will be held on the Issuer Sponsored
Cheque details - Make your cheque or bank draft payable to Clancy Exploration Limited - Application A/C
Drawer			Cheque Number	BSB Number			Account Number		A\$	Amount of cheque
			Cheque Number	BSB Number			Account Number			Amount of cheque
Drawer

$IPO$

$052641,$

$\ddag$

How to complete this form

$\overline{A}$ Shares Applied for

Enter the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares. Applications for greater than 10,000 Shares must be in multiples of 1,000 Shares.

Application Monies B.

Enter the amount of Application Monies. To calculate the amount, multiply the number of Shares by the price per Share.

Applicant Name(s) $|C|$

Enter the full name you wish to appear on the statement of share holding. This must be either your own name or the name of a company. Up to 3 joint Applicants may register. You should refer to the table below for the correct forms of registrable title. Applications using the wrong form of names may be rejected. Clearing House Electronic Subregister System (CHESS) participants should complete their name identically to that presently registered in the CHESS system.

Postal Address

Enter your postal address for all correspondence. All communications to you from the Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

Contact Details

Enter your contact details. These are not compulsory but will assist us if we reed to contact you.

E CHESS

Clancy Exploration Limited (the Company) will apply to the ASX to participate in CHESS, operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of Australian Stock Exchange Limited. In CHESS, the company will operate an electronic CHESS Subregister of security holdings and an electronic Issuer Sponsored Subregister of security holdings. Together the two Subregisters will make up the Company's principal register of securities. The Company will not be issuing certificates to applicants in respect of Shares allotted. If you are a CHESS participant (or are sponsored by a CHESS participant) and you wish to hold Shares allotted to you under this Application on the CHESS Subregister, enter your CHESS HIN. Otherwise, leave this section blank and on allotment, you will be sponsored by the Company and allocated a Securityholder Reference Number (SRN).

Payment

Make your cheque or bank draft payable to Clancy Exploration Limited -Application A/C in Australian currency and cross it Not Negotiable. Your cheque or bank draft must be drawn on an Australian Bank.

Complete the cheque details in the boxes provided. The total amount must agree with the amount shown in box B.

Cheques will be processed on the day of receipt and as such, sufficient cleared funds must be held in your account as cheques returned unpaid may not be re-presented and may result in your Application being rejected. Pin (do not staple) your cheque(s) to the Application Form where indicated. Cash will not be accepted. Receipt for payment will not be forwarded.

Φ
1
1

Before completing the Application Form the applicant(s) should read the prospectus to which this application relates. By lodging the Application Form, the applicant agrees that this application for Shares in Clancy Exploration Limited is upon and subject to the terms of the prospectus and the Constitution of Clancy Exploration Limited, agrees to take any number of Shares that may be allotted to the Applicant(s) pursuant to the prospectus and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form.

Lodgement of Application

Application Forms must be received at the Perth office of Computershare Investor Services Pty Limited by no later than 5.00pm AWST on 28 June 2007. Return the Application Form with cheque(s) attached to:

Computershare Investor Services Pty Limited	OR.	Computershare Investor Services Pty Limited
GPO Box D182		Level 2.
PERTH WA 6840		45 St Georges Terrace
		PERTH WA 6000

Privacy Statement

Personal information is collected on this form by Computershare Investor Services Pty Limited ("CIS"), as registrar for securities issuers ("the issuer"), for the purpose of maintaining registers of securityhoiders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise required or permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS, in accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the issuer in addition to general corporate communications. You may elect not to receive marketing material by contacting CIS. You can contact CIS using the details provided on the front of this form or E-mail [email protected]

If you have any enquiries concerning your application, please contact the Computershare Investor Services Pty Limited on 1300 557 010.

Correct forms of registrable title(s)

Note that ONLY legal entities are allowed to hold Shares. Applications must be made in the name(s) of natural persons, companies or other legal entities in accordance with the Corporations Act. At least one full given name and the surname is required for each natural person. The name of the beneficial owner or any other registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms of registrable title(s) below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual - Use given name(s) in full, not initials.	Mr John Alfred Smith	J.A Smith
Joint - Use given name(s) in full, not initials.	Mr John Alfred Smith & Mrs Janet Marie Smith	John Alfred & Janet Marie Sisillis
Company - Use company @e, not abbreviations	ABC Pty Ltd	ABC PA ABC Co
Trusts - Use trustee(s) personal name(s) - Do not use the name of the trust	Ms Penny Smith	Penny Smith Family Trust
Deceased Estates - Use executor(s) personal name(s) - Do not use the name of the deceased	Mr Michael Smith	Estate of Late John Smith 1536.2
Minor (a person under the age of 18) - Use the name of a responsible adult with an appropriate designation.	Mr John Alfred Smith	Peter Smith
Partnerships - Use partners personal name(s) - Do not use the name of the partnership	Mr John Smith & Mr Michael Smith <36hn Smith & Son A/C>	John Smith & Star
Clabs/Unincorporated Bodies/Business Names - Use office bearer(s) personal name(s) - Do not use the name of the club etc.	Ms Janet Smith	Baan ABL Tentis Association
Superannuation Funds - Use the name of trustee of the fund - Do not use the name of the fund	John Smith Pty Ltd	John Smith Pty Ltd Superamuation Fund

	Andy Clancy Exploration Limited Experiment ABN 65 105 578 756					Registry Use Only
Application Form									Adviser Code
This Application Form is important. If you are in doubt as to how to deal with it, please contact your stockbroker or professional adviser without delay. You should read the						Broker Code
entire prospectus carefully before completing this form. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the prospectus.
liwe apply for					В		I/we lodge full Application Money
						46)					2
Number of Shares in Clancy Exploration Limited at A\$0.20 per Share or such lesser
number of Shares which may be allocated to me/us Individual/Joint applications - refer to naming standards overleaf for correct forms of registrable title(s)
Title or Company Name		Given Name(s)				Sumame
Joint Applicant 2 or Account Designation

Joint Applicant 3 or Account Designation


Enter your postal address - Include State and Postcode Unit	Street Number		Street Name or PO Box /Other Information



City / Suburb / Town								Siate		Postcode

Enter your contact details
Contact Name							Telephone Number - Business Hours / After Hours

CHESS Participant Holder Identification Number (HIN)
Χ										Please note that if you supply a CHESS HIN but the name and address details on your form do not correspond exactly with the registration details held at CHESS, your application will be deemed to be made
				subregister.						without the CHESS HIN, and any securities issued as a result of the IPO will be held on the Issuer Sponsored
Cheque details - Make your cheque or bank draft payable to Clancy Exploration Limited - Application A/C
Drawer			Cheque Number	BSB Number			Account Number		A\$	Amount of cheque
			Cheque Number	BSB Number			Account Number			Amount of cheque
Drawer

$IPO$

$052641,$

$\ddag$

How to complete this form

$\overline{A}$ Shares Applied for

Enter the number of Shares you wish to apply for. The application must be for a minimum of 10,000 Shares. Applications for greater than 10,000 Shares must be in multiples of 1,000 Shares.

Application Monies B.

Enter the amount of Application Monies. To calculate the amount, multiply the number of Shares by the price per Share.

Applicant Name(s) $|C|$

Postal Address

Contact Details

Enter your contact details. These are not compulsory but will assist us if we reed to contact you.

E CHESS

Payment

Complete the cheque details in the boxes provided. The total amount must agree with the amount shown in box B.

Φ
1
1

Lodgement of Application

Computershare Investor Services Pty Limited	OR.	Computershare Investor Services Pty Limited
GPO Box D182		Level 2.
PERTH WA 6840		45 St Georges Terrace
		PERTH WA 6000

Privacy Statement

If you have any enquiries concerning your application, please contact the Computershare Investor Services Pty Limited on 1300 557 010.

Correct forms of registrable title(s)

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual - Use given name(s) in full, not initials.	Mr John Alfred Smith	J.A Smith
Joint - Use given name(s) in full, not initials.	Mr John Alfred Smith & Mrs Janet Marie Smith	John Alfred & Janet Marie Sisillis
Company - Use company @e, not abbreviations	ABC Pty Ltd	ABC PA ABC Co
Trusts - Use trustee(s) personal name(s) - Do not use the name of the trust	Ms Penny Smith	Penny Smith Family Trust
Deceased Estates - Use executor(s) personal name(s) - Do not use the name of the deceased	Mr Michael Smith	Estate of Late John Smith 1536.2
Minor (a person under the age of 18) - Use the name of a responsible adult with an appropriate designation.	Mr John Alfred Smith	Peter Smith
Partnerships - Use partners personal name(s) - Do not use the name of the partnership	Mr John Smith & Mr Michael Smith <36hn Smith & Son A/C>	John Smith & Star
Clabs/Unincorporated Bodies/Business Names - Use office bearer(s) personal name(s) - Do not use the name of the club etc.	Ms Janet Smith	Baan ABL Tentis Association
Superannuation Funds - Use the name of trustee of the fund - Do not use the name of the fund	John Smith Pty Ltd	John Smith Pty Ltd Superamuation Fund

Clancy of the Overflow

I had unitten him a setter which I had, for want of better Ruswledge, sent to where I met him down the Sachtan, years ago, He was shearing when I knew him, so I sent the retter to him, Just on spec, addressed as follows, "Klanery, of The Overflow" And an answer came directed in a uniting unexpected, (And I think the same was written with a thumb-nail dipped in tar) Twas his shearing mate who unote it; and verbation I will quote it. "Retaincy's gone to Oneenstand droving, and we don't sense where he are."

In my wild erratic fancy visions come to me of Clancy Gone a droving "down the Rooper" where the Mestern drovers go; As the stock are stowty stringing, Klancy rides behind them singing, For the drover's life has pleasures that the townspolk never know.

And the bush hath friends to meet him, and their sindly vices greet him In the murner of the breezes and the river on its bars, And he sees the vision sprendid of the suntit-prains extended, And at night the wond rows glory of the evertasting stars.

I am sitting in my dingy little office, where a stingy Ray of suntight struggles feelty down between the houses tall, And the foetid air and gritty of the dustry, dirty city Through the open window floating, spreads its foulness over all

And in place of towing cattle, I can bear the fiendish rattle Of the tramwarps and the buses making hurry down the street; And the language uninviting of the gutter children fighting, Comes fitfully and faintly through the ceaseless tramp of feet.

And the hurrying people daunt me, and their pallid faces haunt me As they shoulder one another in their unsh and nervous haste, With their eager erjes and greedy, and their stanted forms and weedy, For townspolk have no time to grow, they have no time to waste.

And I somehow rather fancy that I d like to change with Keranery, Like to take a term at droving where the seasons come and go, White he faced the round eternal of the cash-book and the journal -But I doubt he'd suit the office, Clancy, of The Overflow.

A.B. "Banjo" Paterson

CLANCY EXPLORATION LIMITED ACN 105 578 756

A: 57 Havelock Street West Perth, WA 6055

T: (08) 9481 8241

F: (08) 9226 1299

E: [email protected]

W: www.clancyexploration.com

AI assistant

RAREX LIMITED — Capital/Financing Update 2007

65681_rns_2007-06-03_da1b537a-5bd4-4ab0-9c34-2790ae2cf95d.pdf

II.

CORPORATE DIRECTORY

Directors

Company Secretary

Principal Place of Business

Share Registry

Proposed ASX Trading Symbol: CLY

Solicitor to the Offer and Solicitor Reporting on Tenements

Underwriter

Auditor

Independent Geologists

Investigating Accountant

Lachlan Fold Belt Copper-Gold Projects, NSW

Mount Read Voicanic Belt Projects. Tasmania

Seven Tasmanian projects, 25% owned by Clancy, 75% owned by Bass Metals

Projected Brothoffulle

Tedime Street

Investment Risks International Property Constants and Property Risks

IMPORTANT NOTICE

Web Site – Electronic Prospectus

Exposure Period

Glossary

LOCATION OF CLANCY PROJECTS IN AUSTRALIA

CAPITAL STRUCTURE

INDICATIVE TIMETABLE

NOTES

CONTENTS

CHAIRMAN'S LETTER

DETAILS OF THE OFFER $\mathbf{1}$

$1.1$ The Offer

$1.2$ Key Dates

1.3 Capital Structure

Table 1: Capital Structure - Maximum Subscription

Table 2: Capital Structure - Minimum Subscription

Table 3: Options

Escrow $1.4$

$1.5$ Expenditure Plans and Use of Funds

$1.6$ Minimum Subscription

$1.7$ Maximum Subscription

1.8 Dividend Policy

1.9 How to Apply For New Shares

1.10 Allocation and Allotment of New Shares

1.11 Application Money Held in Trust

1.12 ASX Listing

1.13 CHESS

1.14 Risk Factors

1.15 Underwriting

Albudian City Album District in City

DIRECTORS AND OFFICERS $\overline{2}$

$2.1$ The Board Of Directors

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

Non-Executive Chairman

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

Managing Director

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

Non-Executive Director (Technical)

Mr Mark Lester BCom. CA

Non-Executive Director (Financial)

2.2 Company Officers

Mr Gordon Barnes BSc. MSc. MAIG. MSEG

Exploration Manager

Mr Rowan Caren BCom, CA

Company Secretary

3 COMPANY AND PROJECT OVERVIEW

$3.1$ Background

3.2 Objectives

$3.3$ The Geoinformatics Process and Clancy's Target Bank

Innovation in Data Analysis / Expert Geoscientists $(a)$

(b) The Geoinformatics Process

$(c)$ Clancy's Target Bank

$(d)$ Advantages of Targeting Methodology

$(e)$ Pipeline of Quality Targets

3.4 Lachlan Fold Belt Copper-Gold Projects, NSW

$(a)$ Background

East Lachlan Alliance with Gold Fields

Porphyry copper-gold mineralisation in the Macquarie Arc

(b) Clancy Projects (non-joint venture)

RAREX LIMITED Capital/Financing Update 2007