RAREX LIMITED — Interim / Quarterly Report 2008

Jul 24, 2008

About Clancy

Clancy Exploration (ASX: CLY) is an Australian-focused copper, gold and base metals explorer.

The Company’s portfolio has been built up over the past five years to consist of highly prospective copper-gold projects in the Lachlan Fold Belt of NSW and base metal projects in the Mount Read Volcanic Belt of Tasmania.

Clancy’s competitive advantages include support from major shareholder, Geoinformatics Exploration Inc (TSX-V), having one of the largest ground positions of any explorer in the prospective Macquarie Arc (>2035km2), and the innovative use of geological and geophysical data in probability based targeting.

The Company’s objective is to advance its properties to a stage of commercial development by applying faster, less expensive and more reliable analytical methods to resource exploration. The exploration activities are well-funded and substantial upside exists with the potential addition of resources.

Additionally, Clancy has established joint ventures with Gold Fields Limited on three projects in NSW (managed by Clancy) and with Bass Metals Limited (ASX: BSM) on the Tasmanian tenement package (managed by Bass Metals). Clancy, in conjunction with its JV partners, has spent significant funds on the projects to date, with a combined $7.4 million to be spent on the Company’s tenement package within two years of listing.

Quarterly Activities Report

For the Period Ending 30 June 2008

Overview

The Board of Clancy Exploration Limited is pleased to release its quarterly activities report for the period ending 30 June 2008.

Clancy has continued with its aggressive exploration campaign to commence testing as many “A class” targets as possible in 2008 and is confident that the aim of testing at least 17 targets will be achieved.

Drilling has been brought forward on the Cowal East project at the request of our joint venture partner Gold Fields and we expect a regular flow of drilling results for the rest of the year.

Highlights

• Aircore and Diamond drilling commenced in July at the Cowal East project to test a significant hydrothermal system at Wyrra identified from previous aircore drilling.

• RC drilling commenced at the Wellington North project in May with high grade molybdenum and anomalous copper and gold mineralisation identified.

• A 4 km long IP anomaly identified at the Cundumbul project.

• Results from drill core not assayed by a previous explorer at the Myall project return spot highs of 1580ppm Cu and 0.143g/t Au.

• Two new exploration licence applications over A-Class targets in Macquarie Arc.

• Effective management of cash resources and regular joint venture funding by Gold Fields results in a cash balance of $3.5m at 30 June 2008.

A 30,000m drilling program is planned from April to December 2008 with a healthy exploration budget and a well-credentialed team in place to commence testing 17 targets.

Lachlan Fold Belt Projects – New South Wales

Cowal East: EL6553 and EL6554

(Gold Fields earning 80%)

The Cowal East project consists of two tenements, Koobah EL6553 and Wyrra EL6554, that are located in the Cowal Igneous Complex, east of the Cowal gold mine and north and south of the Marsden copper-gold prospect. Aircore drilling in the previous quarter identified an intense phyllic alteration zone in the southern part of Wyrra that is anomalous in copper (>500ppm), zinc (>750ppm) and molybdenum (>10ppm). A single point gold result of 0.135g/t was also identified within the zone. A review of previous drilling elsewhere within EL6554 identified anomalous gold, copper and molybdenum geochemistry coincident with a circular magnetic anomaly in the central part of the tenement. The scale of anomalies suggests significant hydrothermal alteration systems are present in both areas. Furthermore, both the southern and central anomalies are linked by a major NNEtrending structure that bisects EL6554 over a strike length of 8.5km. Most of this strike length has not been tested with drilling.

Given the significance of these results follow-up drilling was brought forward and commenced in early July 2008. Three aircore holes (395m) were completed into the circular magnetic anomaly and diamond drilling is in progress into the phyllic alteration zone in the south. Results will be reported next quarter.

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NNE-trending structure over 8km
long with associated anomalous
geochemistry. Very little drilling
across this structure.
Circular magnetic anomaly
(high rimmed by a low) with
anomalous basement gold,
copper and molybdenum.
Aircore drilling commenced.
Intense phyllic alteration with
anomalous copper, zinc,
molybdenum and gold.
Diamond drilling in progress.
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Wyrra EL6554 1VD magnetics, major structure, summary of drilling completed to date and
target areas to follow-up.
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Wellington North: EL6178, EL6328, EL6662 and ELA3469

(Gold Fields earning 80%)

Wellington North covers approximately 40km of strike length of the Molong Volcanic Belt immediately north of Wellington. An extensive program of gradient array IP and 2D IP surveys were completed in the previous quarter. A number of IP anomalies were identified for follow-up, some of which had coincident magnetic anomalies. Five RC holes (750m) were drilled into coincident magnetic and IP anomalies, four at Rose Hill, and one at Dunbell.

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Location of Clancy drillholes at Rose Hill (top) and Dunbell (bottom) showing IP anomalies and RTP magnetics.

The drilling at Rose Hill has identified high-grade molybdenum and anomalous copper and gold mineralisation. Hole RHRC002 intersected 6m at 0.18% copper and 926ppm molybdenum from 100m downhole within strongly altered (magnetite and K-feldspar) diorite with disseminated pyrite and chalcopyrite throughout. Included in this interval is an intersection of 2m at 0.32% copper, 1315ppm molybdenum and 0.11g/t gold from 101m. Large intervals of drill hole RHRC002 are anomalous in molybdenum including 36m @ 240ppm molybdenum from 87m and 10m @ 81ppm molybdenum from 134m. The anomalous molybdenum intervals have high magnetic susceptibility and can therefore be mapped out with magnetic surveys. The grades of molybdenum and copper along with the gold association confirm that porphyry-style mineralisation and alteration is present Rose Hill.

Rose Hill is within a NNE-trending structural corridor that hosts numerous other coincident magnetic and IP anomalies over a 5km strike length, none of which have been drill tested. The RC holes at Rose Hill are the first ever to be drilled within this structural corridor. Previous drilling by other explorers was restricted to broadly-spaced, shallow (generally <25m) aircore holes. A ground magnetic survey has commenced at Rose Hill to map out the magnetic unit hosting the molybdenum mineralisation. Follow-up drilling is planned after that.

No significant results were returned for the Dunbell RC hole (DBRC001), which was testing a discrete chargeability anomaly. In the southern part of the Dunbell target, a circular magnetic anomaly with a coincident resistivity anomaly was followed-up with a ground magnetic survey. Preliminary processing of the ground magnetic data has resolved a prominent magnetic low rimmed by a magnetic high. A substantial amount of structure has also been revealed. Processing and interpretation of the ground magnetic data is in progress, however the features defined to date suggest that an intrusive system is present at Dunbell which may be prospective for porphyry copper and gold mineralisation.

A total of 62 rock chip samples were collected from outcropping areas on the periphery of the ground magnetic low. One sample of a base metal – carbonate vein returned 0.52g/t Au, 181ppm Cu, 1480ppm Pb, 686ppm Zn, 240ppm Sb and 38.1g/t Ag. Another four samples returned >10ppm Mo. All of the anomalous samples are on the flank of the ground magnetic low at Dunbell. The base metal – carbonate vein may be distal to a porphyry system which is represented by the combined magnetic and IP anomalies. Drilling will commence at this target in the next quarter.

Wellington North RC drilling results

Hole	East	North	Total Depth (m)	From (m)	Interval (m)	Au (g/t)	Cu (%)	Mo (ppm)
DBRC001 682772 6404279 150						No Significant Assays
RHRC001 678412 6412745 150						No Significant Assays
RHRC002 678390 6412235 150 including including				21	2	0.09	0.17	52
				47	1	0.23	0.37	119
				61	1	0.13	0.20	58
				87 100 101	36 6 2	0.04 0.06 0.11	0.08 0.18 0.32	240 926 1315
				134	10	0.02	0.03	81
RHRC003 678452 6412176 149				15	1	0.68	0.57	6
				59	1	0.24	0.50	37
				72	4	0.19	0.19	61
RHRC004 678728 6412498 150				122	2	0.60	0.07	4

Note – The above intercepts are based on one metre spear RC samples. Italicised text refers to sub-intervals. The samples were analysed by ALS Orange for gold by fire assay / AAS finish (method code Au-AA22), and for the other elements by ALS Brisbane by four acid digest ICP AES/OES (method code ME-MS61). Standards and duplicates are inserted into the sample stream to monitor laboratory performance.

Cundumbul: EL6661 and EL6912

(Clancy 100%)

Gradient array IP surveys were completed at Naroogal and Mehruda. Preliminary data have been received for the Naroogal gradient survey and show a number of discrete chargeable anomalies in the northern part of the grid and a +4km long, 500-600m wide chargeable anomaly, much of which is +20ms chargeability. Further processing of the IP data is in progress with field checking of defined anomalies planned for the next quarter.

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RTP magnetics
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Cundumbul RTP magnetics (RHS) showing magnetic signatures associated with likely intrusive complexes (blue), the gradient array IP survey areas at Naroogal and Mehruda (white perimeters) and basement chargeable IP anomalies in pink (LHS).

Myall EL6913 (Clancy 100%)

Myall is located 25km southwest of Narromine and covers most of the Narromine Igneous Complex, a major regional NW-trending composite magnetic feature at the northern end of Junee-Narromine Volcanic Belt of the Macquarie Arc. The complex is obscured by deep (often >100m) poorly consolidated Mesozoic sedimentary rocks and unconsolidated Quaternary and Tertiary sediments. The Narromine Igneous Complex has a similar gravity and magnetic response as the 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.

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Geology of the Narromine Igneous Complex showing Clancy’s Myall tenement EL6913 and geochemical and geophysical anomalies.

Large geochemical dispersion halos are present at Myall, based on a compilation of previous aircore drilling. Widespread basement copper anomalies (>500ppm Cu) flank, and partially overlap, the annular magnetic low. The elevated copper comprises a NW-trending chain of discrete anomalies that extends over a strike length of 13.5km with a maximum width of +3km at >500ppm Cu. Large areas within discrete anomalies are +1000ppm Cu, typified by the Kingswood prospect where the +1000ppm Cu zone extends over 2.5 x 1.5km. The size and magnitude of these dispersion halos are very significant and are on a par with those from Northparkes.

Drilling by previous explorers at Kingswood has identified porphyry-style mineralisation and alteration including sheeted quartz-magnetite veining, quartz-magnetite-chalcopyrite-bornite veins, quartz-pyrite veins and intense silica-sericite-pyrite alteration. The host rocks include a fractionated suite of intrusive rocks ranging from gabbro and mafic diorite through to quartz diorite, diorite porphyry, monzodiorite and dacite porphyry. The most significant drilling intercept reported by previous explorers was 107m @ 0.11g/t Au and 0.43% Cu, including 18m @ 0.29g/t Au and 0.93% Cu.

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 exists at Myall. Furthermore, the scale and geometry of these features at Myall is comparable to Northparkes, an observation that is reinforced by the similar magnetic and gravity anomalies in both areas.

Work is in progress on re-logging the previous drill core, with the objective of building a coherent 3D geology model for Kingswood. The re-logging has also identified nine separate intervals of core (107m) from hole NACD154 (drilled in May 1999), that were not assayed. The core intervals were mostly pink-red monzonite intruding a granodiorite host, so they were cut and submitted for analysis. Results have been received, and a preliminary assessment shows spot highs of 1580ppm Cu and 0.143g/t Au.

The work completed by Clancy has also identified coincident zones of elevated basement copper-gold and magnetic lows, which may represent magnetite destructive alteration. These areas have been targeted for follow-up aircore drilling which will be undertaken in the fourth quarter of 2008. Deep diamond drilling of targets defined by 3D modelling is also planned.

Gobondery EL6534

(Gold Fields earning 80%)

Gobondery is located 47km west of the Northparkes copper-gold mine (Rio Tinto). No significant results were received for the remaining core at the Forest View and Allandale prospects (holes FVD002 and ALRCD001). A review of the drill core and analytical results suggest that the IP anomalies have been adequately explained. Specular hematite is the source of the chargeability high at Forest View and disseminated pyrite in volcanic sediment is the source of the chargeability high at Allandale.

An outcome of the review was that the gradient array IP survey be extended to close the gap between Allandale and Forest View, as well as extend the 3D IP coverage north of Allandale. These surveys have been completed and the data are currently being processed.

One RC hole was drilled into the southern A-Class target at Gobondery. The hole was terminated at 183m in Devonian cover. Drilling conditions were difficult due to very high saline water flows. The target will be revisited later in the year once appropriate site preparations have been completed for the difficult drilling conditions.

Spring Creek EL6536

(Clancy 100%)

The Spring Creek licence covers about 10km of strike length on the northern end of the Molong Volcanic Belt. There is no outcrop of the Ordovician volcanic belt, which is covered by up 200m of Triassic sedimentary rocks of the Great Australian Basin. One RC hole was drilled into an A-Class target associated with a magnetic anomaly over the interpreted arc basement. The hole was terminated at 156m with the bottom 50m consisting of magnetic Mesozoic dolerite. The dolerite explains the magnetic anomaly and therefore the target has been downgraded for Ordovician porphyry copper-gold. However, the dolerite may be equivalent in age to the rare earth-rich Toongi intrusion and so was sampled in 10m composites. Results will be reported in the next quarter.

Corporate Activity

Clancy held its Annual General Meeting on 30 May 2008 and all resolutions put to the meeting were passed. A presentation of on-going work was given by Gordon Barnes, Clancy’s Exploration Manager and this was made available to the public via the website.

Clancy also had a booth at the AMEC National Mining Congress in Perth in May and will have a booth at the Diggers and Dealers conference in early August. Clancy will also be presenting and have a booth at the Excellence in Mining Conference in Sydney in September.

Clancy continues to expand its footprint in the Macquarie Arc, with two new exploration licence applications over A-Class targets during the quarter: one at Moonagee in the northern section of the Junee-Narromine Belt north of Nyngan; and parts of another at Gunningbland in the Northparkes Igneous Complex.

Effective cost monitoring and cash management as well as regular funding of the three joint ventures with Gold Fields has resulted in an increase in the cash position of the company compared to 31 March 2008 to $3.5m.

Please direct enquiries to:

Mark Stewart Managing Director Tel: +61 8 9481 8241 Email: info@clancyexploration.com

Shane Murphy Porter Novelli Tel: +61 8 9386 1233 Mob: +61 (0) 420 945 291

Web: www.clancyexploration.com

Footnote:

The information in this document that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Gordon Barnes who is a Member of the Australian Institute of Geoscientists. Mr Barnes is a full-time employee of Clancy Exploration Limited and 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 the report of the matters based on his information in the form and context in which it appears.