RAREX LIMITED — Capital/Financing Update 2016

Apr 10, 2016

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12 April 2016

Dear Shareholder

INFORMATION FOR SHAREHOLDERS PRO RATA RENOUNCEABLE RIGHTS ISSUE

As you may be aware, Clancy Exploration Limited (“ Company ”) will shortly be offering to you an opportunity to acquire more shares in the Company pursuant to a pro-rata renounceable rights issue to shareholders of approximately 2,062,847,857 fully paid ordinary shares (" New Shares ") on the basis of seven (7) new shares for every share held by you at 5.00pm AWST on 15 April 2016 (“ Record Date ”), with 1 free attaching quoted option for every three (3) New Shares subscribed, at an issue price of 0.1 cent ($0.001) per new share, to raise approximately $2,062,847 (" Rights Issue "). This offer will be made pursuant to a prospectus (" Prospectus ") and if you wish to participate in the Rights Issue, you will need to complete the Entitlement and Acceptance Form that will accompany the Prospectus.

A copy of the Prospectus has been lodged with ASIC and ASX and is available on the Company’s website (www.gippslandltd.com) the ASX’s website (www.asx.com.au) and will be despatched to persons holding shares as at the Record Date.

Pursuant to the Listing Rules of ASX Limited (" Listing Rules "), the Company is required to provide to you certain information before proceeding with the Rights Issue. This letter contains all the information required by Appendix 3B of the Listing Rules.

1. Approximately 2,062,847,857 new shares will be issued pursuant to the Rights Issue.

2. Approximately 687,615,952 quoted options will be issued pursuant to the Rights Issue

3. The new shares to be issued will rank equally in all respects from the date of issue with the existing quoted fully paid ordinary shares in the capital of the Company.

4. The quoted options will form a new class of capital. Shares issued upon the exercise of quoted options will rank equally in all respects from the date of issue with the existing quoted fully paid ordinary shares in the capital of the Company

5. The issue price of the new shares will be $0.001 (0.1 cent) each.

6. The Company will apply for quotation of the new shares and the quoted options issued pursuant to the Rights Issue on the official list of the ASX.

7. The purpose of the Rights Issue is, after meeting the expenses of the Rights Issue, to raise funds to fund the exploration of existing projects, the search for a new project and working capital.

Clancy Exploration Limited 3 Corporation Place Orange NSW 2800 Ph: 02 6361 1285 Fax: 02 6361 1202 ACN: 105 578 756

1. It is anticipated the new shares and quoted options will be entered into uncertificated holdings on 9 May 2016.

2. The total number and class of all securities quoted on ASX (including the maximum number of new shares and quoted options to be issued in the Rights Issue) is as follows:

Number	Class
2,357,540,408	Ordinary shares
1,388,044,624	Quoted options

1. There are no securities which are not quoted on the ASX.

2. The Company currently has no dividend policy.

3. No shareholder approval for the Rights Issue is required.

4. The Rights Issue is renounceable . This means that shareholders who do not wish to subscribe for some or all of the New Shares offered under the Rights Issue may sell their respective rights.

5. The New Shares in the Rights Issue will be offered on the basis of seven new shares for every share held by the shareholder at 5.00pm AWST on the Record Date which is 15 April 2016.

6. The offer under the Rights Issue relates to fully paid ordinary shares in the capital of the Company and free attaching quoted options.

8. The " ex date " is 13 April 2016.

9. There are no holdings on different registers (or subregisters), therefore there will be no aggregation for calculating entitlements.

10. In determining the entitlement of shareholders any fractional entitlements have been rounded up to the nearest whole number.

11. The Company will not be sending an offer under the Rights Issue to any security holders with registered addresses outside of Australia and New Zealand.

12. In compliance with Listing Rule 7.7.1, the Company has decided that it is unreasonable to make the offer to security holders registered outside of Australia and New Zealand having regard to each of the following:

    • the number of security holders with registered addresses outside of Australia and New Zealand;

    • the number and value of the securities to be offered to security holders outside of Australia and New Zealand; and

    • the cost of complying with the legal requirements and requirements of regulatory authorities in the overseas jurisdictions.

The Company will send to each of the security holders outside of Australia and New Zealand details of the offer and advise them that the Company will not be making the offer to them.

1. The closing date for receipt of acceptances is 5.00pm AWST on 2 May 2016.

Clancy Exploration Limited 3 Corporation Place Orange NSW 2800 Ph: 02 6361 1285 Fax: 02 6361 1202 ACN: 105 578 756

1. The Rights Issue is fully underwritten by Patersons Securities Ltd. The Company will pay Patersons Securities an underwriting fee of approximately $123,771 and a management fee of approximately $37,500 (assuming full subscription and all excluding GST) in respect of the Offers. Patersons Securities will be paid for its services as Nominee on standard industry terms and conditions.

2. The Prospectus for the Rights Issue and the accompanying Entitlement and Acceptance Form will be sent to you on 20 April 2016.

3. The latest date for entry of the securities into your security holdings is 9 May 2016.

4. The above information was provided to the ASX on 11 April 2016.

Actions required of eligible shareholders

There are a number of actions eligible shareholders may take:

• You may take up all or some of your rights to subscribe for new shares pursuant to the Prospectus ( Entitlements ). To take up all or some of your Entitlements you will need to ensure your application money for the Entitlements you wish to take up is received by Security Transfer Registrars Pty Ltd ( Share Registry ) by no later than 5:00 pm (AWST) on 2 May 2016, by either completing and returning your Entitlement and Acceptance Form together with your application money or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form.

• You may seek to sell all or some of your Entitlements on ASX. You can seek to sell your Entitlements on ASX from 13 April 2016 until the close of market on 2 May 2016. To sell any of your Entitlements you need to contact your broker as soon as possible.

• You may transfer all or some of your Entitlements to another person other than on ASX. To transfer all or some of your Entitlements you will either need to contact your CHESS controlling participant (usually your broker) and follow their instructions or complete a renunciation and transfer form (which can be obtained from Share Registry) and return it, together with the purchaser’s cheque for the Entitlements they wish to take up so that it is received by the Share Registry by no later than 5:00 pm (AWST) on 2 May 2016.

• You may do nothing. If you choose to do nothing with your Entitlements, while you will continue to hold the same number of shares, your interest in the Company will be diluted and you will receive no value for your Entitlements.

If you have any queries regarding your entitlement or participation in the upcoming Rights Issue, please do not hesitate to contact the Company's share registry, Security Transfer Registrars Pty Ltd, on +61 8 9315 2333.

Yours faithfully

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Rowan Caren Company Secretary

Clancy Exploration Limited 3 Corporation Place Orange NSW 2800 Ph: 02 6361 1285 Fax: 02 6361 1202 ACN: 105 578 756