RAREX LIMITED — Interim / Quarterly Report 2012

Apr 29, 2012

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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 2012

The Board of Clancy Exploration Limited is pleased to release its Quarterly Activities report for the period ending 31 March 2012.

Highlights

• RC drilling at Meritilga within the Condobolin project intersected a high-grade gold shoot:

• 4m @ 20g/t Au , 0.26% Cu and 30.2g/t Ag ; including:

  • 1m @ 62g/t Au, 60g/t Ag

• The high-grade shoot is open at depth and along strike to the south and is adjacent to broad zones of lower-grade gold, copper and silver mineralisation:

• 31m @ 0.4g/t Au, 0.18% Cu and 16g/t Ag

• 18m @ 0.33g/t Au, 0.6% Cu and 8.2g/t Ag

• The mineralisation is associated with the previously untested Meritilga Fault Zone, which has a strike length of 1km

• Also at Condobolin , RC drilling at the Potters, Phoenix and Bluebell prospects returned encouraging base metal and silver intercepts:

• 11m @ 1.5% Pb, 0.58% Zn and 17.68g/t Ag; including:

  • 2m @ 7.1% Pb, 2.4% Zn and 83.5g/t Ag

• 10m @ 1.79% Zn, 1.23% Pb and 12.9g/t Ag; including:

  • 4m @ 4.1% Zn, 2.87% Pb and 29.6g/t Ag

• An off-market takeover bid for Genesis Resources Ltd (ASX: GES) was launched on 2 April 2012

Clancy Managed Projects

RC and diamond drilling were completed at Condobolin and Gobondery and RC drilling was completed at Trundle. Auger soil geochemical surveys continued at Cundumbul. A total of 4,250m of drilling and 729 auger soil samples were completed on the Clancy managed projects during the quarter.

Condobolin EL7748

(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 metasedimentary units,

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

inferred to be the Ordovician Girilambone Group. The veins are associated with pyrite, sphalerite, galena, chalcopyrite, arsenopyrite and gold.

RC drilling following up significant geophysical and geochemical anomalies at Meritilga intersected a highgrade gold shoot in hole CORC029, with the following significant results (refer to ASX release on 20 March 2012):

• 4m @ 20g/t Au , 0.26% Cu and 30.2g/t Ag from 75m; including:

o 1m @ 62g/t Au, 60g/t Ag from 76m

The high-grade shoot is open at depth and along strike to the south and is adjacent to broad zones of lowergrade gold, copper and silver mineralisation; e.g. 31m @ 0.4g/t Au, 0.18% Cu and 16g/t Ag from 34m in CORC027 and 18m @ 0.33g/t Au, 0.6% Cu and 8.2g/t Ag from 60m in CORC026. The mineralisation is associated with the previously untested Meritilga Fault Zone, which has a strike length of 1km.

The gold, copper, lead, silver and zinc mineralisation at Meritilga and the broader Condobolin Mineral Field appears to be a manifestation of a zoned hydrothermal system, with near surface, low-sulphidation epithermal mineralisation potentially linked at depth to a deeper intrusive source.

RC drilling at the Potters, Phoenix and Bluebell prospects also returned encouraging intercepts (refer to ASX release on 30 March 2012). At Potters, drilling tested the footprint of the old workings. Ore-grade material remains in close proximity to the workings with hole CORC023 intersecting 11m @ 1.5% Pb, 0.58% Zn and 17.68g/t Ag from 48m, including 2m @ 7.1% Pb, 2.4% Zn and 83.5g/t Ag from 51m. Hole CORC022 was drilled to intersect extensions of the Potters lode, 20m below the known extent of the workings. At 136m, 10m @ 1.79% Zn, 1.23% Pb and 12.9g/t Ag was intersected. The zone included 4m @ 4.1% Zn, 2.87% Pb and 29.6g/t Ag from 136m.

Diamond drilling to follow up results of the successful February 2011 RC program was completed. Three holes were drilled at the Phoenix prospect and three holes were completed at the Mascotte prospect. Patchy, low-grade gold, zinc, silver and lead results were returned from a number of holes. At Phoenix, several mineralised shear zones were intersected, which present as milled breccias that are heavily quartz veined with massive pyrite, sphalerite and galena. On a broad scale, these are thought to represent dilational zones similar to those which occur at Mineral Hill, some 60km north of Condobolin, which are also zoned with respect to gold and base metals. Crucial to the understanding of the Condobolin Mineral Field is the fact that the host rock sequence is most likely Silurian in age, consisting of thick packages of foliated volcaniclastic rocks, inferred to be a stratigraphic equivalent of the Silurian host rocks at Mineral Hill

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

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Figure 1 - Plan view of RC drill program over the Condobolin Mineral Field showing major intercepts at Phoenix, Potters and Bluebell prospects and arsenic in soil anomaly.

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OPEN
OPEN
OPEN
OPEN
OPEN
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Figure 2 - Plan view of RC drill program at the Meritilga Prospect showing major intercepts, interpreted mineralisation geometry and 3D IP chargeability anomalies at 100m vertical depth.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

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N (Projected
30m from
SW onto
section)
20mV/V Chargeability Zone
OPEN
31m @ 0.4 g/t Au, 0.18%
Cu, 16 g/t Ag
OPEN
4m @ 20 g/t Au, 0.26% Cu, OPEN
30.2 g/t Ag OPEN 30m
Edge of 20mV/V anomaly
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Figure 3 - Cross section looking northeast at the Meritilga Prospect showing the high grade shoot (red) the lower grade gold-silver-copper halo (yellow), and faults (dotted black lines).

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 has many similarities to Northparkes. RC drilling to test the iron potential of magnetite skarn horizons at Trundle Park and Mordialloc was completed (15 holes, 1183m). No significant iron assays were returned. However, TPRC022 at the Trundle Park prospect intersected significant silver and base metal mineralisation consisting of 1m @ 284 g/t Ag, 2.54% Pb and 0.68% Zn from 30m.

Gobondery EL6534

(NSW, Clancy 100%)

Gobondery (EL6534) is located approximately 50km NW of Northparkes, just south of Tullamore. Shallow RC and diamond drilling was completed, testing the iron potential of magnetite-dominant skarn in the central part of the tenement (14 holes, 496m). Assay results of >50% Fe were returned from a massive magnetitehematite skarn, however the drilling indicates that the skarn is spatially restricted and therefore has limited tonnage potential. Results include:

• GOD001: 8.3m @ 51.2% Fe from 4.7m

• GORC006: 9m @ 50.3% Fe from 7m

• GORC007: 5m @ 50.4% Fe from 2m

• GORC009: 3m @42.7% Fe from 4m

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

Orange East EL6181

(NSW, Clancy 100%)

Orange East (EL6181) is located east of the city of Orange and contains several target styles including Ordovician porphyry copper-gold and post-Ordovician copper-gold targets. Auger soil sampling was completed and processing of results will continue into the June 2012 quarter.

Cundumbul EL6661 and EL7399

(NSW, Clancy 100%)

The Cundumbul project covers 204.9km[2] of prospective arc units in the Molong Volcanic Belt between Molong and Wellington. There are numerous intrusive complexes at Cundumbul that have anomalous copper and/or gold associated with them. An extensive regional auger soil sampling program is in progress and will continue into the June 2012 quarter. Geological mapping is also planned.

Gold Fields Managed JV Projects

Wet weather again affected field activities on the Gold Fields JV’s, with widespread flooding in many areas. Regional aircore drilling continued at the Myall JV and RC drilling is in progress at the Wellington North JV. A total of 5,955m of drilling was completed on the Gold Fields JV projects in the March 2012 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. Regional aircore drilling continued with 3,829m of drilling completed during the quarter. An infill ground gravity survey was also completed on the SLR trend. Wet weather again interrupted drilling activities with widespread flooding in March delaying the completion of a diamond hole.

Wellington North EL6178, EL6328, EL6662, EL7200 and EL7440

(NSW, Gold Fields 87%, Clancy 13%)

The Wellington North project covers approximately 30km of strike length of the Molong Volcanic Belt immediately north of Wellington. Assay results were received for RC drilling completed in the previous quarter at Glenrowan and Mayhurst. At Mayhurst, several low-grade Au-Cu-Mo intercepts associated with encouraging porphyry-style alteration and a chargeable IP anomaly will be followed up with deeper RC/diamond holes in the June quarter. Target definition auger drilling also continued at Mayhurst and Roselawn.

Moorefield EL7675

(NSW, Gold Fields 80%, Clancy 20%)

Moorefield covers 285km[2] between Fifield and Condobolin in the central west of New South Wales. Analysis of results from auger drilling completed at Boxdale in the previous quarter has defined a significant broad zone of arsenic anomalism (>40 ppm As) over a strike length of 4.5km. Within the broader zone of arsenic anomalism, coincident zones of Au-As (> 300ppm As and > 50ppb Au) have been defined.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

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Figure 4 – 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 2012

Corporate

Off-market takeover bid for Genesis Resources Ltd

Clancy (ASX: CLY) launched an off-market takeover bid for Genesis Resources Ltd (ASX: GES) on 2 April 2012. CLY will offer consideration of 8.0 cents per GES ordinary share in the form of CLY shares. The CLY shares will have an issue price equal to the volume weighted average price at which CLY shares trade on ASX over the 2 trading days prior to the date 5 trading days before despatch of the bidder’s statement and Offer to GES shareholders. If the ratio had been set by reference to the closing price of CLY on 30 March 2012, GES shareholders would receive 2 CLY shares for every 1 GES share held. The Offer does not extend to GES options but does extend to any GES shares issued upon exercise of a GES option before or during the Offer period.

CLY believes that the bid provides it with the opportunity to build a sizeable exploration business, with a diversified portfolio of exploration tenements in Australia and Europe. The GES exploration licences in Queensland and the Northern Territory and its joint venture agreement giving it the right to earn the majority position in the Plavica gold and copper project in Macedonia, complement CLY’s substantial ground position in the prospective Lachlan Fold Belt in New South Wales.

Drill for equity arrangement

CLY has entered into a drill for equity arrangement with Australian Mineral & Waterwell Drilling (“AMWD”) whereby AMWD has become Clancy’s preferred drilling contractor for a $5 million drilling contract or a three year period. To date Clancy has issued 3,691,539 shares representing drilling costs of $183,501 (being 25% of total drilling costs of $734,000) to AMWD and these shares are escrowed for one year from their respective dates of issue. The equity component of the deal represents a cash flow benefit to Clancy.

Please direct enquiries to:

Gordon Barnes Managing Director Phone: +61 2 6361 1285

Email: info@clancyexploration.com 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.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 March 2012

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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