RAREX LIMITED — Interim / Quarterly Report 2011

Apr 27, 2011

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Clancy Exploration Limited Phone: (02) 6361 1285
3 Corporation Place Fax: (02) 6361 1202
Orange NSW 2800 www.clancyexploration.com
Australia info@clancyexploration.com
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QUARTERLY ACTIVITIES REPORT For the period ending 31 March 2011

The Board of Clancy Exploration Limited is pleased to release its Quarterly Activities report for the period ending 31 March 2011.

Highlights

• A total of 9,315m of drilling was completed on the NSW projects in the March 2011 quarter.

• RC drilling at the 100%-owned Condobolin project intersected significant gold, silver and base metal mineralisation, with multiple target zones remaining open at depth and along strike:

• 8m @ 3.7g/t gold , 7.1g/t silver, 0.62% lead from 59m; including

  • 2m @ 9.8 g/t gold , 13.5 g/t silver, 1.54% lead from 64m

• 8m @ 3.73g/t gold , 17g/t silver, 0.47% copper from 72m; including

  • 2m @ 10.35g/t gold , 10.75g/t silver, 0.57% lead, 0.64% zinc from 76m; and

  • 2m @ 1.77g/t gold, 33g/t silver, 0.98% copper from 72m

• 2m @ 3.1g/t gold , 17.2g/t silver, 0.85% copper from 70m; including

  • 1m @ 4.08g/t gold, 30g/t silver, 1.56% copper from 70m

• 24m @ 0.9% zinc, 0.8% lead, 8.9g/t silver from 88m; including

  • 6m @ 2.7% zinc, 2.7% lead, 30g/t silver from 100m

• 18m @ 1.1% zinc, 0.36g/t gold, 3.5g/t silver, 0.19% lead from 70m; including

  • 4m @ 3.7% zinc, 1.3g/t gold , 12g/t silver, 0.64% lead from 76m

• RC drilling at the 100%-owned Trundle project intersected significant copper and gold mineralisation. Eight out of ten holes returned significant gold-copper and/or silver results including:

• 2m @ 20g/t gold, 6.97% copper, 81g/t silver from 64m

• 42m @ 0.45g/t gold from 32m; including

  • 6m @ 0.99g/t gold from 38m

• 58m @ 0.44g/t gold, 0.17% copper from 22m; including

  • 4m @ 1.19g/t gold, 0.41% copper from 28m

• Diamond drilling at the Parkes JV returned the following significant gold intercept:

• 21m @ 0.49 g/t gold from 73m; including  2m @ 2.07 g/t gold from 81m.

• Regional aircore drilling is in progress at the Myall JV and will continue into June 2011 quarter.

• Mapping, rock chip and soil sampling has identified encouraging alteration, gossan and sulphide mineralisation at the Moorefield JV with results pending.

• Aeromagnetic and radiometric surveys were completed, or are in progress at the 100%-owned Roseholme , Currumburrama , Billabong Creek and Condobolin projects.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

Clancy managed projects

Field work resumed at a number of projects in the March 2011 quarter after wet weather significantly impacted field activity in the previous quarter. RC drilling was completed at Condobolin and Trundle and combined aeromagnetic and radiometric surveys were completed at Roseholme and Currumburrama. Aeromagnetic and radiometric surveys are also planned for Billabong Creek and Condobolin, these surveys will commence shortly. A total of 2,311m of RC drilling was completed on the Clancy managed projects in the March 2011 quarter.

Condobolin EL6939 and ELA4103

(NSW, Clancy 100%)

Condobolin is located in the central west of NSW immediately north of the Condobolin township. Condobolin has a substantial mining history, predominantly as a base metals field (lead, zinc and copper), as well as gold. The mineralisation is hosted in epithermal-style quartz veins within the metasedimentary units of the Ordovician Girilambone Group, associated with pyrite, sphalerite, galena, chalcopyrite, arsenopyrite and free gold.

An RC drill program was designed to follow up the high-grade rock chip results returned during first pass exploration of the Phoenix, Mascotte, Bluebell and Potters prospects in October 2010. Nineteen RC holes (1787m) were drilled to test whether the lodes mined historically are present at depth (Figure 1). Each drill hole intersected hydrothermally altered slate and phyllite that hosts coarse sulphides within epithermal veins. Significant results have been received, which were released to the market on 23 March 2011.

Two gold-copper-silver-lead lodes have been intersected beneath historic workings at the Phoenix prospect, confirming that mineralisation extends at depth and is open down dip and along strike:

• An upper lode of >3g/t Gold over a drilled width of 8m with a higher grade zone of ~10g/t Gold was intersected by two RC holes (CORC005 & CORC008) with the following intercepts:

• CORC005: 8m @ 3.7g/t Gold , 7.1g/t Silver, 0.62% Lead from 59m; including

  • 2m @ 9.8 g/t Gold , 13.5 g/t Silver, 1.54% Lead from 64m

• CORC008: 8m @ 3.73g/t Gold , 17g/t Silver, 0.47% Copper from 72m; including

  • 2m @ 10.35g/t Gold , 10.75g/t Silver, 0.57% Lead, 0.64% Zinc from 76m; and

  • 2m @ 1.77g/t Gold, 33g/t Silver, 0.98% Copper from 72m

• A lower lode in CORC005 with 2m @ 3.1g/t Gold , 17.2g/t Silver, 0.85% Copper from 70m; including

• 1m @ 4.08g/t Gold, 30g/t Silver, 1.56% Copper from 70m

The 8m gold lode zone in hole CORC005 was also analysed by screen fire assay for coarse gold, the results from which demonstrate that there is approximately 10% coarse gold fraction at Phoenix. Further 1m sampling of mineralised zones at all prospects will be undertaken and the samples submitted for screen fire assay.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

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Figure 1 Condobolin Collar, prospect locations and significant drill intercepts on regional aerial photograph.

Hole CORC017 at the Potters prospect intersected a wide zinc halo around a massive silver-lead-zinc lode. This hole also intersected a 1m-wide stope situated near the bottom of the historic workings (96m):

• 24m @ 0.9% zinc, 0.8% lead, 8.9g/t silver from 88m, including

• 6m @ 2.7% zinc, 2.7% lead, 30g/t silver from 100m.

A wide, zinc halo was also intersected around higher-grade silver-lead-zinc-gold lenses at the Mascotte prospect, particularly in hole CORC015:

• 18m @ 1.1% zinc, 0.36g/t gold, 3.5g/t silver, 0.19% lead from 70m, including

• 4m @ 3.7% zinc, 1.3g/t gold , 12g/t silver, 0.64% lead from 76m.

Drilling at the Bluebell prospect was cut short due to rain, however hole CORC012 intersected low to moderate-grade mineralisation in the distal part of the Bluebell epithermal system:

• 4m @ 0.29g/t gold, 1.14% copper, 8.17g/t silver from 98m.

The RC drilling results have confirmed that high-grade materials sampled previously from the surface are present at depth and the mineralisation remains open in most directions. Each of the four prospects drilled has potential for further significant mineralisation at depth and along strike. The drilling at Phoenix has confirmed that the width of mineralisation and gold grade are consistent with depth and extend beyond historic workings. The RC drilling is the first step in a broader, regional scale exploration program to test the

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

potential of the Condobolin Mineral Field. Field work will continue into the next quarter with further drilling, geochemical and geophysical surveys planned. A combined aeromagnetic and radiometric survey is scheduled for late April 2011.

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NW SE
Footprint of old
workings
8m at
3.73 g/t gold
17.0 g/t silver
0.47% copper
0.35% lead
0.42% zinc
8m at
3.7 g/t gold
Legend
7.1 g/t silver
0.62% lead
0.26% zinc <0.05 <0.01
0.05 – 0.2 0.01 – 0.05
2m at
0.2 – 0.5 0.05 – 0.1
3.1 g/t gold 100m
17.2 g/t silver 0.5 – 1 0.1 – 0.5
0.85% copper 112m
0.17% lead Open at depth & >1 >0.5
0.5% zinc
along strike Au (g/t) Cu (%)
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Figure 2 Oblique NW-SE section for Phoenix prospect, holes CORC005 & CORC008. Gold (left) and copper (right) histograms on drill hole traces. See Figure 1 for section location.

Trundle EL4512 and EL7187

(NSW, Clancy 100%)

Trundle consists of two exploration licences EL4512 and EL7187 and is located 25km west of the Northparkes copper-gold mine (Rio Tinto) and bears many similarities to Northparkes. A 10 hole (1,239m) RC drilling program was completed, testing numerous shallow copper-gold skarn targets at the Trundle Park prospect. Results have been received and were released to the market on 28 February 2011. Eight of the ten holes returned significant gold-copper and/or silver results, including the following intercepts:

• TPRC003: 56m @ 0.88g/t gold from 34m; including

• 2m @ 20g/t gold, 6.97% copper and 81g/t silver from 64m

• TPRC009: 52m @ 0.45g/t gold from 32m; including

• 6m @ 0.99g/t gold from 38m

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

 TPRC005: 58m @ 0.44g/t gold, 0.17% copper from 22m; including

o 4m @ 1.19g/t gold and 0.41% copper from 28m

The high grade gold, copper, silver intercept in hole TPRC003 is associated with quartz veining. The veining is also elevated in arsenic, bismuth, tellurium and antimony, typical of epithermal style mineralisation. The epithermal veining overprints the gold-copper magnetite skarn, which indicates that there are at least two distinct phases of gold-copper mineralisation at Trundle Park. The high grade intercept is 75m south of workings last operated in the 1930’s (production unknown) and is interpreted to be representative of what was mined previously, the implication being that this mineralisation is consistent for at least 75m along strike and is open to the north, south and at depth.

The broad intervals of moderate grade gold and copper in the skarn is typified by the intercept in TPRC005. The known strike length of the gold-copper rich magnetite skarn to date is 2.2km, the majority of which has not been drill tested. Follow-up drilling is planned.

Billabong Creek EL6802, Roseholme EL6822 and Currumburrama EL6784

(NSW, Clancy 100%)

Combined aeromagnetic and radiometric surveys covering porphyry and epithermal targets were completed at Roseholme and Currumburrama and a survey is in progress at Billabong Creek (Figure 3). Roseholme is located at the northern end of the Northparkes Igneous Complex 29km NNW of Rio Tinto's Northparkes copper-gold mine. Currumburrama is located 40km east of West Wyalong, north of Goldminco's Silverstone and Imola porphyry prospects. Billabong Creek is located 40km east of Wagga Wagga on the Gilmore Fault, a major regional NW-trending composite structure that marks the southern boundary of the Macquarie Arc. Results from the aeromagnetic and radiometric surveys will be reported in the June 2011 quarter.

Gold Fields managed JV projects

Work continued at steady pace on the Gold Fields JV's after a disrupted December 2010 quarter due to flooding. Aircore drilling continued at the Myall JV and one diamond hole was completed at the Parkes JV. A total of 7,004m of drilling was completed on the Gold Fields JV projects in March 2011 quarter.

Myall EL6913

(NSW, Gold Fields 51%, Clancy 49%, Gold Fields earning 80%)

Myall (EL6913) is located 25km southwest of Narromine at the northern end of the Junee-Narromine Volcanic Belt of the Macquarie Arc. A substantial regional aircore drilling program is in progress to complete 500 x 500m drill coverage across the entire tenement area. In the March 2011 quarter, 62 aircore holes for 6,781m were completed and the regional aircore program is now approximately one quarter complete. Four of the aircore holes completed to date, have intersected attributes consistent with porphyry-style systems and one hole intersected alteration related to potential orogenic gold style mineralisation. This program will continue into the June 2011 quarter.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

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Figure 3 Map showing the Clancy projects in the Macquarie Arc of Lachlan Fold Belt. Inset – the location within NSW.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

Wellington North EL6178, EL6328, EL6662, EL7200 and EL7440

(Gold Fields 82%, Clancy 18%)

The Wellington North project covers approximately 30km of strike length of the Molong Volcanic Belt immediately north of Wellington. A substantial 3D IP survey covering approximately 15km[2] was completed at the Girraween prospect. Several chargeable anomalies have been defined coincident with hydrothermal alteration, anomalous geochemistry and magnetic/gravity anomalies. Follow-up drilling is planned. Further work is also planned at the Boda, Heathrow and Tomkins porphyry prospects.

Parkes EL7676 and EL7677

(Gold Fields 80%, Clancy 20%)

The Parkes project covers 474km[2] of the highly prospective Northparkes Igneous Complex. Rio Tinto’s Northparkes copper-gold mine is located approximately 15km to the north of the Parkes project. One diamond hole (MGD001, 216.7m) was completed at the MacGregors prospect, testing an orogenic gold target. Results have been received and include the following intercept:

• MGD001: 21m @ 0.49 g/t gold from 73m; including o 2m @ 2.07 g/t gold from 81m.

Mineralisation is confined within a moderately east dipping basaltic/andesitic volcanic unit at the sheared contact with strongly phyllic altered andesite porphyry. The mineralisation is within quartz-carbonatechlorite-pyrite-arsenopyrite stockwork veins. Follow-up drilling is planned.

Soil sampling was also completed at MacGregors to confirm the position of previous soil anomalies and evaluate the along strike potential. Two significant arsenic anomalies have been defined to date and a second phase of soil sampling is in progress to infill and extend the arsenic anomalies.

An aeromagnetic and radiometric survey was completed at the Bogan Gate prospect in the west of the project area, which has defined several anomalies that require field investigation.

Moorefield EL7675

(Gold Fields 80%, Clancy 20%)

Moorefield covers 285km[2] between Fifield and Condobolin in the central west of New South Wales. Soil and rock chip sampling was undertaken at the Boxdale and Lima prospects. At Lima, encouraging alteration, gossan and outcropping sulphide mineralisation is present within Silurian Mineral Hill Volcanics. Results for the soil and rock chip samples are pending.

Corporate

Dr Mike Etheridge was appointed to the Board of Clancy as a non-executive director in March 2011. Mike is a geologist who has had a varied career in academia, a government research organisation and in industry. He moved from public sector research to industry in 1989, and co-founded the geoscience consultancy business Etheridge Henley Williams (EHW). EHW grew to over 30 staff on three continents before it merged with the SRK Consulting group to become SRK’s Australasian business in 1997. Mike left SRK Australasia, where he was chairman, in 2004 to pursue a career as a professional company director in the resources and related

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2011

R&D sectors. He is currently non-executive chairman of ABM Resources Ltd (ASX: ABU) and Zeus Uranium Ltd (a pre-IPO venture), and a non-executive director of DET CRC Ltd, a collaborative research organisation involving the mining industry, universities and government research bodies.

The Perth office was closed on 31 March 2011 and all head office operational functions have been relocated to the Orange office. The registered office remains in Perth, as shown below.

Corporate Office Registered Office 3 Corporation Place Suite 4, 6 Richardson Street Orange West Perth NSW 2800 WA 6005

PO Box 7040 Orange NSW 2800

Telephone: +61 2 6361 1285 Facsimile: +61 2 6361 1202

Please direct enquiries to:

Gordon Barnes Shane Murphy Managing Director FD Phone: +61 2 6361 1285 Phone: +61 8 9386 1233 Email: info@clancyexploration.com Mobile: +61 (0)420 945 291 Web: www.clancyexploration.com

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.

About Clancy Exploration

Clancy Exploration (ASX: CLY) is an Australian-focused copper, gold, base metals and tin explorer. The Company’s portfolio consists of copper-gold projects in the Lachlan Fold Belt of NSW, base metal and tin projects in the Mount Read Volcanic Belt of Tasmania, Nadbuck near Broken Hill in NSW and Yalgoo, adjacent to the Golden Grove mine in Western Australia.

In NSW, Clancy has 12 wholly owned and managed projects and 7 joint venture projects which are managed by Gold Fields Australasia Pty Ltd. In Tasmania, Clancy has 2 base metal joint venture projects with Bass Metals and 2 tin joint venture projects with TNT Mines Pty Ltd (a wholly owned subsidiary of Minemakers Ltd). The Tasmanian projects are managed by Clancy's joint venture partners. This mix of Clancy and joint venture project funding allows a high level of exploration activity to be maintained, whilst prudently managing Clancy’s financial resources. Details of Clancy’s projects can be found at the Company's website: www.clancyexploration.com

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