RAREX LIMITED — Interim / Quarterly Report 2011

Sep 12, 2011

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITY

HALF YEAR ENDED 30 JUNE 2011

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

CORPORATE DIRECTORY

DIRECTORS

Dr Michael Etheridge Non-Executive Chairman

Mr Gordon Barnes Managing Director

Dr James Macdonald

Non-Executive Director (Technical)

Mr Mark Lester

LAWYERS

Holborn Lenhoff Massey

3rd Floor, Irwin Chambers 16 Irwin Street Perth 6000 Western Australia

Hilary Macdonald Suite 29, 18 Stirling Highway Nedlands 6009 Western Australia

Non-Executive Director (Financial)

AUDITOR

COMPANY SECRETARY

Deloitte Touche Tohmatsu

Mr Rowan Caren

CHIEF FINANCIAL OFFICER

Woodside Plaza, Level 14 240 St Georges Terrace Perth 6000 Western Australia

Mr Gavin Doig

SHARE REGISTRY

PRINCIPAL PLACE OF BUSINESS

3 Corporation Place Orange NSW 2800 New South Wales

Telephone: (02) 6361 1285 Facsimile: (02) 6361 1202 Website: www.clancyexploration.com

Computershare Investor Services Pty Ltd Level 2 45 St Georges Terrace Perth, WA 6000 Western Australia

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

REGISTERED OFFICE

Suite 4, 6 Richardson Street West Perth WA 6005 Western Australia

ASX CODE : CLY, CLYO

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 30 JUNE 2011

The Board of Directors has pleasure in presenting their report on the consolidated entity for the halfyear ended 30 June 2011.

1. DIRECTORS

The names of the company‘s directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Dr A J Macdonald Dr M A Etheridge (appointed 11 March 2011) Mr G J Barnes Mr M A Lester

2. REVIEW OF OPERATIONS

The consolidated entity continued to explore its portfolio of exploration properties during the half-year.

3. FINANCIAL RESULTS

A summary of consolidated revenues and results for the half-year ended 30 June 2011 is set out below:

Revenue Expenses Loss from continuing operations before income tax expense Income tax expense Loss from continuing operations after income tax expense attributable to owners of the parent	2011 $ 68,644 1,337,402 (1,268,758) - (1,268,758)	2010 $ 32,436 1,640,507
		(1,608,071) -
		(1,608,071)

4. AUDITORS’ INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

The auditors‘ independence declaration is set out on page 2 and forms part of the directors‘ report for the half year ended 30 June 2011.

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

On behalf of the directors.

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G BARNES Managing Director

Signed at Orange this 13th day of September 2011.

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

The Board of Directors Clancy Exploration Limited 3 Corporation Place, Orange, NSW, Australia 2800

Tel: +61 (0) 8 9365 7000 Fax: +61 (8) 9365 7001 www.deloitte.com.au

13 September 2011

Dear Board Members

Clancy Exploration Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Clancy Exploration Limited.

As lead audit partner for the review of the financial statements of Clancy Exploration Limited for the half-year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Neil Smith Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2011

Continuing operations Notes Other revenue 3 Revenue Employee benefits expense 4(b) Consulting and outsourced services expense Exploration expenditure 4(c) Computer related costs Travel expense Occupancy costs Insurance expense Marketing expense Depreciation, amortisation and impairment expense 4(a) Finance costs Net joint venture reimbursed exploration expenditure & joint venture contributions 4(c) Other expenses Total expenses Loss from continuing operations before income tax expense Income tax expense Loss from continuing operations after income tax expense Other comprehensive income: Net fair value loss on revaluation of available-for-sale investment Other comprehensive loss net of tax Total comprehensive loss attributable to owners of the parent Earnings per share (cents per share) - basic; loss for the half-year - diluted; loss for the half-year	Consolidated 30.06.2011 30.06.2010 $ $ 68,644 32,436
	68,644 32,436 (447,083) (690,402) (160,636) (141,141) (608,222) (547,371) (8,009) (7,897) (36,909) (11,794) (13,701) (31,756) (11,900) (11,254) (2,666) (4,484) (33,707) (18,939) (1,183) (197) - (159,513) (13,386) (15,759)
	(1,337,402) (1,640,507)
	(1,268,758) (1,608,071) - -
	(1,268,758) (1,608,071) - (562)
	- (562)
	(1,268,758) (1,608,633)
	(1.1) cents (2.0) cents (1.1) cents (2.0) cents

The above Condensed Statement of Comprehensive Income is to be read in conjunction with the accompanying notes.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011

Notes ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables Total Current Assets Non-current Assets Plant and equipment Intangible assets Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Provisions Total Current Liabilities Non-current Liabilities Provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 6 Reserves 6 Accumulated losses TOTAL EQUITY	Consolidated 30.06.2011 31.12.2010 $ $ 4,691,289 1,660,368 174,442 493,043
	4,865,731 2,153,411
	119,792 130,375 5,942 5,969
	125,734 136,344
	4,991,465 2,289,755
	183,423 298,474 10,051 - 50,682 32,470
	244,156 330,944
	32,938 -
	32,938 -
	277,094 330,944
	4,714,371 1,958,811
	13,457,020 10,166,442 1,557,748 824,008 (10,300,397) (9,031,639)
	4,714,371 1,958,811

The above Condensed Statement of Financial Position is to be read in conjunction with the accompanying notes.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 JUNE 2011

CONSOLIDATED Notes	Ordinary Shares $ Options Reserve $ Investment Revaluation Reserve $ (Accumulated Losses) $ Total Equity $
At 1 January 2011 Total comprehensive income for the period, net of tax Issue of share capital 6 Transaction costs on share issues 6 Proceeds- Free Attaching Options Exercised 6 At 30 June 2011 At 1 January 2010 Total comprehensive income for the period, net of tax Issue of share capital 6 Transaction costs on share issues 6 Share-based payments 4(b), 6 At 30 June 2010	10,166,442 824,008 - (9,031,639) 1,958,811 - - - (1,268,758) (1,268,758) 3,646,798 733,740 - - 4,380,538 (356,265) - - - (356,265) 45 - - - 45
	13,457,020 1,557,748 - (10,300,397) 4,714,371
	7,377,178 639,868 562 (6,287,680) 1,729,928 - - (562) (1,608,071) (1,608,633) 900,000 - - - 900,000 (76,813) - - - (76,813) - 184,140 - - 184,140
	8,200,365 824,008 - (7,895,751) 1,128,622

The above Condensed Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2011

Notes CASH FLOWS USED IN OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Receipts of Research and Development Rebate NET CASH FLOWS USED IN OPERATING ACTIVITIES CASH FLOWS USED IN INVESTING ACTIVITIES Purchase of plant and equipment Purchase of intangible assets Proceeds from sale of fixed assets NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Costs of share issue Proceeds from borrowings Repayment of borrowings Loans to related entity - payments made NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD 5	Consolidated 30.06.2011 30.06.2010 $ $ 45,568 282 (1,363,848) (1,615,698) 28,553 32,436 (1,183) (197) 375,843 -
	(915,067) (1,583,177)
	(21,765) (4,019) (1,600) (1,910) 268 -
	(23,097) (5,929)
	4,315,583 900,000 (356,265) (76,813) 19,409 - (9,358) - (284) (212)
	3,969,085 822,975
	3,030,921 (766,131) 1,660,368 1,907,948
	4,691,289 1,141,817

The above Condensed Statement of Cash Flows is to be read in conjunction with the accompanying notes.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

1. CORPORATE INFORMATION

The condensed consolidated financial report of Clancy Exploration Limited (―the Company‖) for the half-year ended 30 June 2011 was authorised for issue in accordance with a resolution of the directors on 13th September 2011.

Clancy Exploration is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the annual Financial Report of Clancy Exploration Limited for the year ended 31 December 2010.

It is also recommended that the half-year financial report be considered together with any public announcements made by Clancy Exploration Limited and its controlled entities (‗the Group‘) during the half-year ended 30 June 2011 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of Preparation

The half-year condensed consolidated financial report is a general purpose financial report, which has been prepared in accordance with the requirement of the Corporations Act 2001 , applicable Accounting Standards, including AASB 134 ―Interim Financial Reporting‖ and other mandatory professional reporting requirements. The half-year financial report has been prepared on a historical cost basis, except for the revaluation of financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars unless otherwise noted.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

(b) Changes in accounting policies

From 1 January 2011 the Group has adopted the following standards and interpretations, mandatory for annual reporting periods beginning 1 January 2011. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.

• (i) AASB 124 (Revised) Related Party Disclosures;

• (ii) AASB 2009-12 Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052];

• (iii) AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19 [AASB1];

• (iv) AASB Int. 19 Extinguishing Financial Liabilities with Equity Instruments;

• (v) AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement [AASB Interpretation 1];

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

(b) Changes in accounting policies (Continued)

• (vi) AASB 2010-1 Amendments to Australian Accounting – Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters;

• (vii) AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB139];

• (viii) AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13];

• (ix) AASB 2010-5 Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042];

The Group has not elected to early adopt any new standards or amendments.

(c) Significant accounting policies

The half-year condensed consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 31 December 2010 except for the adoption of amending standards mandatory for annual periods beginning on or after 1 January 2011, as described above in Note 2(b).

(d)

Basis of consolidation

The half-year condensed consolidated financial statements comprise the financial statements of Clancy Exploration Limited and its controlled subsidiary.

(e) New Standards and Interpretations Not Yet Adopted

New accounting standards and interpretation have been published which are not mandatory for the 31 December 2011 financial year. Any options for early adoption have not been applied in the preparation of this financial report. The following amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application:

AASB 9: Financial Instruments. Amendments to AASB 9. Adoption of amended AASB 9 is likely to result in changes in the way in which the Group classifies financial assets on or after 1 January 2013.

AASB 2009-11: Amendments to Australian Accounting Standards arising from AASB 9. This standard gives effect to the consequential changes arising from the issuance of AASB 9: Financial Instruments and will impact the Group on or after 1 January 2013.

AASB 1053: Application of Tiers of Australian Accounting Standards. Establishes a differential financial reporting framework comprising two tiers of reporting requirements for preparing general purpose financial statements:

Tier 1: Australian Accounting Standards which applies to for-profit entities in the private sector that have public accountability, as defined by this Standard and Australian Government and State, Territory and Local Governments.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

(e) New Standards and Interpretations Not Yet Adopted (Continued)

Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements which applies to for-profit entities in the private sector that do not have public accountability, all not for profit private sector entities and public sector entities other than the Australian Government and State, Territory and Local Governments. While comprising the recognition, measurement and presentation requirements of Tier 1, the disclosures corresponding to those requirements are substantially reduced.

As the Group is a for-profit entity in the private sector with public accountability, this standard is not expected to have any impact on the Group's financial statements when it becomes effective on 1 July 2013.

AASB 2010-2: Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements: Gives effect to Australian Accounting Standards AASB 1053. It will not have any impact on the Group's financial statements as the Group, being listed on the ASX, is classified as a reporting entity and accordingly this standard will not apply to it statements when it becomes effective on 1 July 2013.

AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB7]: The amendments increase the disclosure requirements for transactions involving transfers of financial assets. Disclosures require enhancements to the existing disclosures in IFRS 7 where an asset is transferred but is not derecognised and introduce new disclosures for assets that are derecognised but the entity continues to have a continuing exposure to the asset after the sale.

This standard is not expected to have any impact on the Group's financial statements when they become effective on 1 July 2011 as no assets have been or are being transferred.

AASB 2010-7: Amendments to IFRS 9: Fair Value Option for Financial Liabilities: The requirements for classifying and measuring financial liabilities were added to AASB 9. The existing requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities the change in fair value is accounted for as follows:

• (a) The change attributable to changes in credit risk are presented in other comprehensive income (OCI); and

• (b) The remaining change is presented in profit or loss.

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

Adoption of this pending standard is likely to result in changes in the way in which the Group discloses financial liabilities. The Group has been unable to assess (as at authorisation of these financial statements) the financial impact of these changes on the Group‘s financial statements in the period of initial application when they become effective on 1 January 2013.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

(e) New Standards and Interpretations Not Yet Adopted (Continued)

AASB 2010-8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets: Amends AASB 112 Income Taxes to provide a presumption that recovery of the carrying amount of an asset measured using the fair value model in IAS 40 Investment Property will, normally, be through sale. Consequently, Interpretation 112 Income Taxes — Recovery of Revalued Non-Depreciable Assets would no longer apply to investment properties carried at fair value. The amendments also incorporate into AASB 112 the remaining guidance previously contained in Interpretation 112, which is accordingly withdrawn.

Adoption of Revised AASB 2010-8 is not expected to have any impact on the Group's financial statements when they become effective on 1 January 2012 as the Group does not have any investment properties.

(f)

Segment Reporting

A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments. The company operates in a single business segment, in one geographical location. The operations of the consolidated entity consist of gold and copper exploration and development, within Australia. Accordingly, no segment information is presented in this halfyear financial report.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

Notes 3. OTHER REVENUE Sale of interest in tenements Interest received 4. EXPENSES (a) Depreciation, amortisation and impairment included in income statement Depreciation of plant & equipment Amortisation of software Loss on scrapping of assets (b) Employee benefits expense Salaries, superannuation and associated expenses Share based payments (c) Exploration expenditure Gross direct exploration expenditure - Self funded projects (including depreciation) Contributions & management fees paid to joint venture partner Total gross exploration expenditure Less: Depreciation classified separately in income statement Net disclosure in income statement	Consolidated 30.06.2011 30.06.2010 $ $ 40,091 - 28,553 32,436
	68,644 32,436
	28,812 14,821 3,896 4,118 999 -
	33,707 18,939
	447,083 506,262 - 184,140
	447,083 690,402
	617,967 557,116 - 159,513
	617,967 716,629 (9,745) (9,745)
	608,222 706,884

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

			Consolidated	Consolidated
			30.06.2011	30.06.2010
			$	$
5.	CASH AND CASH EQUIVALENTS
	Cash at bank		3,105,082	56,053
	Short term bank deposits		1,586,207	1,085,630
	Cash on hand		-	134
			4,691,289	1,141,817
		Notes	$	$
6.	CONTRIBUTED EQUITY
	Ordinary shares	(a)	13,457,020	8,200,365
	(a) Ordinary shares
	Issued and fully paid		13,457,020	8,200,365

Fully paid ordinary shares carry one vote per share and carry the right to dividends

Movement in ordinary shares on issue Beginning of financial year Add: Shares issued pursuant to a 1 for 4 rights issue (i) Free attaching options exercised (ii) Shares issued pursuant to a private placement (iii) Less: Transaction costs on share issues (iv) End of half-year	30.06.2011 30.06.2010 Number of shares $ Number of shares $ 109,513,447 10,166,442 75,212,008 7,377,178 54,756,724 3,646,798 - - 300 45 - - - - 6,923,077 900,000 - (356,265) - (76,813) 164,270,471 13,457,020 82,135,085 8,200,365

(i) Pursuant to the prospectus issued 3 May 2011, 54,756,724 ordinary shares and 54,756,724 free attaching options were issued in June 2011, at a subscription price of 8 cents per share, as a result of a one for two non-renounceable rights offer. These shares were listed on the Australian Securities Exchange on 24 June 2011. The offering successfully raised $4,380,538 before costs of the issue. According to its interpretation of AASB 139 the company is required to determine the value of the free attaching options and using that value, apportion part of the proceeds of the share issue to the options reserve. These options were valued at $733,740 according to the Binomial Tree method with an exercise price of 15 cents when the market trading price was 6.3 cents, a volatility factor of 75.4% and a risk free rate of 4.69%. Refer note: Movements in shares under option, below.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

6. CONTRIBUTED EQUITY (Continued)

Movement in ordinary shares on issue (Continued)

• (ii) On 13 May 2011 300 previously issued free attaching options were exercised over 300 ordinary shares at an exercise price of 15 cents per share.

• (iii) On 7 April 2010 6,923,077 ordinary shares were issued at a price of 13 cents per share to Austock Corporate Finance on behalf of sophisticated investors.

• (iv) The transaction costs represent the cost of issuing shares pursuant to the prospectus per (i) above and the private placement as per point (iii) above.

Movement in shares under option

Note Exercise price Options expiring on 10 July 2011 $0.20 Options expiring on 30 September 2011 $0.20 Options expiring on 10 August 2013 $0.175 Options expiring on 31 December 2013 (i) $0.195 Options expiring on 30 September 2013 (ii) $0.185 Options expiring on 31 July 2013 (iii) $0.15 Options expiring on 31 July 2013 (iv) $0.15	On issue at 1 January 2011 Issued Exercised On issue at 30 June 2011 2,000,000 - - 2,000,000 2,250,000 - - 2,250,000 2,050,000 - - 2,050,000 1,650,000 - - 1,650,000 1,100,000 - - 1,100,000 27,378,362 (300) 27,378,062 54,756,724 54,756,724
	36,428,362 54,756,724 (300) 91,184,786

• (i) On 28 January 2010, the Company issued 1,650,000 options to directors.

• (ii) On 4 May 2010, the Company issued 1,100,000 options to employees.

• (iii) Pursuant to a 1 for 3 renounceable rights issue, under a replacement prospectus issued 21 July 2010, participating shareholders received 1 free attaching option for every new share subscribed. Accordingly 27,378,362 new options were issued. These options were listed on the ASX on 5 August 2010 and expire on 31 July 2013 with an exercise price of 15 cents.

• (iv) Pursuant to a 1 for 2 renounceable rights issue, under a prospectus issued dated 3 May 2011, participating shareholders received 1 free attaching option for every new share subscribed. Accordingly 54,756,724 new options were issued. These options were listed on the ASX on 24 June 2011. and expire on 31 July 2013 with an exercise price of 15 cents

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2011

7. COMMITMENTS AND CONTINGENCIES

The only changes to the commitments and contingencies disclosed in the most recent annual financial report are specified below: (a) Exploration Expenditure Commitments: Under 27 (30.06.2010: 29) New South Wales (―NSW‖) Government and 1 (30.06.2010: 1) Western Australian (―WA‖) and nil (2010: 4) Tasmanian Government exploration licences Payable - not later than one year - later than one year and not later than five years

Consolidated 30.06.2011 30.06.2010 $ $ 469,184 455,092 219,018 379,222

688,202 834,314

(b) Operating Lease Commitments

The Company has operating lease commitments in respect of its office and core shed together with a photocopier, as follows:

Payable - not later than one year - later than one year and not later than five years	74,172 54,801 23,249 -
	97,421 54,801

8. EVENTS AFTER THE BALANCE SHEET DATE

On 10 July 2011 2,000,000 unlisted options expired.

On 13 July 2011 the Company signed a binding Memorandum of Understanding for a drilling earn-in agreement with Australian Mineral and Waterwell Drilling Pty Ltd (―AMWD‖) for drilling services of $5 million or a three year period, AMWD will invoice a cash amount equivalent to 75% of agreed drilling costs, on a monthly basis. The Company will issue fully paid ordinary shares to AMWD for the balance of 25%, which shares will be escrowed for 12 months. It will also issue 2,000,000 listed options to AMWD.

On 22 July 2011 Director Dr M A Etheridge took over the role of Non-executive Chairman from Dr A J Macdonald. Dr Macdonald remains on the board as a Non-executive Director.

No matters or circumstances other than those disclosed above have arisen since the end of the half year which have significantly affected or may significantly affect the operations or the state of affairs of the consolidated entity in the future financial years.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Clancy Exploration Limited, I state that:

In the opinion of the Directors:

• (a) the financial statement and notes set out on pages 3 to 14 are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the consolidated entity‘s financial position as at 30 June 2011 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 including compliance with Accounting Standards; and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board,

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G Barnes Managing Director

Signed at Orange, this 13th day of September 2011

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Tel: +61 (0) 8 9365 7000 Fax: +61 (8) 9365 7001 www.deloitte.com.au

Independent Auditor’s Review Report to the Members of Clancy Exploration Limited

We have reviewed the accompanying half-year financial report of Clancy Exploration Limited, which comprises the condensed statement of financial position as at 30 June 2011, and the condensed statement of comprehensive income, the condensed statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 3 to 15.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Clancy Exploration Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Clancy Exploration Limited, would be in the same terms if given to the directors as at the time of this auditors review report.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Clancy Exploration Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

Neil Smith Partner Chartered Accountants Perth, 13 September 2011