RAREX LIMITED — Interim / Quarterly Report 2013

Sep 5, 2013

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITY

HALF YEAR ENDED 30 JUNE 2013

CLANCY EXPLORATION LIMITED

CORPORATE DIRECTORY

DIRECTORS

Dr Michael Etheridge Non-Executive Chairman

Mr Gordon Barnes Managing Director

Dr James Macdonald Non-Executive Director (Technical)

Ms Natalie Forsyth-Stock Executive Director (Financial)

COMPANY SECRETARY

Mr Rowan Caren

CHIEF FINANCIAL OFFICER

Natalie Forsyth-Stock

PRINCIPAL PLACE OF BUSINESS

3 Corporation Place Orange New South Wales 2800

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

REGISTERED OFFICE

Suite 4, 6 Richardson Street West Perth Western Australia 6005

ASX CODE : CLY

LAWYERS

Holborn Lenhoff Massey

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

Watson Mangioni

Level 13 50 Carrington Street Sydney New South Wales 2000

AUDITOR

Ernst & Young Ernst & Young Centre 680 George Street Sydney New South Wales 2000

SHARE REGISTRY

Security Transfer Registrar

770 Canning Highway Applecross WA 6153 Australia

Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

DIRECTORS' REPORT 1
AUDITORS' INDEPENDENCE DECLARATION 2
STATEMENT OF COMPREHENSIVE INCOME 3
STATEMENT OF FINANCIAL POSITION 4
STATEMENT OF CHANGES IN EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7
DIRECTORS' DECLARATION 15
AUDITORS' REPORT 16

DIRECTORS' REPORT

FOR THE HALF YEAR ENDED 30 JUNE 2013

The Board of Directors has pleasure in presenting their report on the consolidated entity for the half ended 30 June 2013. half-year

1. DIRECTORS

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

Dr A J Macdonald Dr M A Etheridge Mr G J Barnes Ms N L Forsyth-Stock

2. REVIEW OF OPERATIONS

The consolidated entity continued to explore its portfolio of exploration properties venture with Mitsubishi Materials Corporation of Japan (Mitsubishi) office he and those under joint (Mitsubishi), during the half-year. joint

On 20 May 2013, the Company signed a Farm In and Joint Ve Exploration Inc (HPX) on the Fairholme Agreement HPX has the right to earn exploration over one year, with a minimum spending commitment of right to fund a further A$ 4 million in exploration over the subsequent two years with the aim of delineating a scoping study to take HPX's stake to Prefeasibility Study (depending on the cost of the study Venture Agreement with High Power Fairholme copper gold project in New South Wales. Under the terms of the has earn an initial 49% of the Fairholme project by funding A$1 of A$500,000. HPX then to 65%. HPX can increase its stake to 80% or 85% study). nture with Power A$1 million in then will have the the of delineating 85% by funding a

3. FINANCIAL RESULTS

The loss of the Company for the period ending 30 June 201 During half year, total expenses amounted to the 2013 was $118,666 (2012: loss of $1,252,343 (2012: $1,847,588). loss of $1,719,576).

Unrestricted cash and cash equivalents amounted to $ $1,839,986). ash and $1,775,014 as at 30 June 2013 (31 December 31 December 2012:

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

The auditors' independence declaration is set out on page 2 and forms part of the directors' report for the half year ended 30 June 2013. out

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

On behalf of the directors.

G BARNES Managing Director

Signed in Orange this 6th day of September 2013.

Ernst & Young 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Auditor's Independence Declaration to the Directors of Clancy Exploration Limited

In relation to our review of the financial report of Clancy Exploration Limited for the half-year ended 30 June 2013, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Ryan Fisk Partner 6 September 2013

STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 30 JUNE 2013

		Consolidated
Income	Notes	30.06.2013$	30.06.2012$
Other Income	3	1,133,677	128,012
Total Income		1,133,677	128,012
ExpensesEmployee benefits expense		(557,189)	(543,006)
Consulting and outsourced servicesexpense		(181,245)	(365,669)
Exploration expenditure		(282,684)	(829,644)
Share based payment expenseComputer related costs	7	(43,390)(797)	-(9,614)
Travel expense		(10,561)	(15,442)
Occupancy costs		(4,597)	-
Insurance expense		(13,460)	(13,905)
Marketing expense		(2,788)	(1,324)
Depreciation, amortisation andimpairment expense	4	(15,996)	(34,780)
Unrealised loss on financialinstruments	6	(124,484)	(4,250)
Other expenses		(15,152)	(29,954)
Total expenses		(1,252,343)	(1,847,588)
Loss from continuing operationsbefore income tax expense		(118,666)	(1,719,576)
Income tax expense		-	-
Loss from continuing operations after income taxexpense		(118,666)	(1,719,576)
Other comprehensive income:
Other		-	-
Other comprehensive loss net oftax		-	-
Total comprehensive loss attributable to owners of theparent		(118,666)	(1,719,576)
Loss per share
- basic and diluted		(0.1) cents	(1.0) cents

The above Statement of Comprehensive Income is to be read in conjunction with the accompanying notes, on pages 7-14.

STATEMENT OF FINANCIAL POSITION

FOR THE HALF YEAR ENDED 30 JUNE 2013

		Consolidated
		30.06.2013	31.12.2012
	Notes	$	$
ASSETS
Current Assets
Cash and cash equivalents	5	1,775,014	1,839,986
Restricted cash asset	5	300,000	300,000
Trade and other receivables		291,537	575,447
Financial Asset	6	786,999	911,483
Total Current Assets		3,153,550	3,626,916
Non-current Assets
Plant and equipment		83,658	99,425
Intangible assets		6,067	1,221
Total Non-current Assets		89,725	100,646
TOTAL ASSETS		3,243,275	3,727,562
LIABILITIES
Current Liabilities
Trade and other payables		177,351	320,353
Provisions		53,525	40,841
Unearned revenue		22,191	89,891
Exploration expenditure reimbursed inadvance		221,918	898,913
Total Current Liabilities		474,985	1,349,998
Non-current Liabilities
Provisions		58,527	45,935
Total Non-current Liabilities		58,527	45,935
TOTAL LIABILITIES		533,512	1,395,933
NET ASSETS		2,709,763	2,331,629
EQUITY
Contributed equity	7	14,455,728	13,958,929
Reserves		1,660,974	1,660,974
Accumulated losses		(13,406,939)	(13,288,274)
TOTAL EQUITY		2,709,763	2,331,629

The above Statement of Financial Position is to be read in conjunction with the accompanying notes on pages 7 – 14.

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 30 JUNE 2013

CONSOLIDATED	Notes	OrdinaryShares	OptionsReserve	(AccumulatedLosses)	TotalEquity
		$	$	$	$
At 1 January 2013		13,958,929	1,660,974	(13,288,273)	2,331,629
Total comprehensiveincome for the period, netof tax		-	-	(118,666)	(118,666)
Issue of share capital	7	500,000	-	-	500,000
Transaction costs onshare issues	7	(3,201)	-	-	(3,200)
At 30 June 2013		14,455,728	1,660,974	(13,406,939)	2,709,763
At 1 January 2012		13,409,971	1,660,974	(11,356,904)	3,714,041
Total comprehensiveincome for the period, netof tax		-	-	(1,719,576)	(1,719,576)
Issue of share capital	7	106,326	-	-	106,326
Transaction costs onshare issues	7	(4,514)	-	-	(4,514)
At 30 June 2012		13,511,783	1,660,974	(13,076,480)	2,096,277

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes on pages 7-14.

STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2013

			Consolidated
		30.06.2013	30.06.2012
	Notes	$	$
CASH FLOWS USED IN OPERATING ACTIVITIES
Management Fee Received		16,275	-
Reimbursement of Exploration Expenses		162,752	-
Payments to suppliers and employees		(2,178,961)	(1,895,770)
Interest received		39,111	52,762
Receipts of Research and Development Rebate		408,084	-
NET CASH FLOWS USED IN OPERATING ACTIVITIES		(1,552,739)	(1,843,008)
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of plant and equipment		(2,589)	(6,118)
Purchase of intangible assets		(6,444)	(562)
Proceeds from sale of fixed assets		-	-
Sale of interest in tenements		1,000,000	-
Payments for financial instruments		-	(115,625)
NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES		990,967	(122,305)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue		500,000	-
Costs of share issue		(3,200)	(4,514)
NET CASH FLOWS FROM / (USED IN) FINANCINGACTIVITIES		496,800	(4,514)
NET INCREASE/(DECREASE) IN CASH AND CASHEQUIVALENTS		(64,972)	(1,969,827)
Cash and cash equivalents at beginning of period		1,839,986	3,230,010
CASH AND CASH EQUIVALENTS AT END OF PERIOD	5	1,775,014	1,260,183

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes on pages 7 to 14.

1. CORPORATE INFORMATION

The consolidated financial report of Clancy Exploration Limited ("the Company") for the half-year ended 30 June 2013 was authorised for issue in accordance with a resolution of the directors on [ ] September 2013.

Clancy Exploration is a company incorporated in Australia and limited by shares which are publicly traded on the Australian Securities Exchange. The principal activities during the year of the entities within the consolidated entity were mineral exploration and development.

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 and should be read in conjunction with the annual Financial Report of Clancy Exploration Limited for the year ended 31 December 2012.

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 2013 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of Preparation

The half-year consolidated financial report has been prepared in accordance with AASB 134 "Interim Financial Reporting". 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

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2012, except for the adoption of new standards and interpretations as at 1 January 2013, noted below:

AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Other Comprehensive Income

[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]

This standard requires entities to group items presented in other comprehensive income on the basis of whether they might be reclassified subsequently to profit or loss and those that will not. This amendment had no material impact on the financial position of performance of the Company

AABS 10 Consolidated Financial Statements, AABS 127 Separate Financial Statements

AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG-112 Consolidation - Special Purpose Entities.

The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control.

This standard had no material impact on the financial position of performance of the Company.

AABS 11 Joint Arrangements

AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly- controlled Entities - Nonmonetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method.

This standard had no material impact on the financial position of performance of the Company.

AABS 12 Disclosure of Interests in Other Entities

AASB 12 includes all disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

This standard had no material impact on the financial position of performance of the Company.

AABS 13 Fair Value Measurement

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets.

AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. Consequential amendments were also made to other standards via AASB 2011-8.

Additional disclosures have been made in Note 6 of the accounts in relation to this standard.

(c) Basis of consolidation

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

AASB 2012-3	Amendments toAustralianAccountingStandards -Offsetting FinancialAssets and FinancialLiabilities	AASB 2012-3 addsapplication guidance to AASB132 Financial Instruments:Presentation to addressinconsistencies identified inapplying some of theoffsetting criteria of AASB132, including clarifying themeaning of "currently has alegally enforceable right ofset-off" and that some grosssettlement systems may beconsidered equivalent to netsettlement.	1 January2014	No impactexpected	1 Jan2014
AASB 2011-4	Amendments toAustralianAccountingStandards toRemove IndividualKey ManagementPersonnelDisclosureRequirements[AASB 124]	This amendment deletes fromAASB 124 individual keymanagement personneldisclosure requirements fordisclosing entities that are notcompanies. It also removesthe individual KMP disclosurerequirements for all disclosingentities in relation to equityholdings, loans and otherrelated party transactions.	1 July3013	No impactexpected	1 Jan2014

(d) 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 half-year financial report.

			Consolidated
			30.06.2013	30.06.2012
		Notes	$	$
3.	OTHER INCOME
	Profit on sale of interest in tenements	(i)	1,000,000	-
	Management fees	(ii)	94,566	-
	Interest received		39,111	52,762
	Unrealised gain on financial assets		-	75,250
			1,133,677	128,012

(i) On 12 February 2013, the Company entered into a Joint Venture Termination, Subscription and Royalty agreement with Gold Fields Australia Pty Ltd, under which the Company sold its joint venture interests in six copper-gold projects in NSW. The sale consideration was A$1 million in cash which was paid immediately upon settlement. The equity component of A$500,000 was received immediately upon settlement of the placement. Placement shares were allotted at 3.5c per share. Clancy retains its 2.5% Net Smelter Return (NSR) royalties on the six projects (in addition to Wellington North), subject to Gold Fields having the right at any time to purchase the NSR's for A$20 million each. No value has been recognised for the NSR royalties as the receipt of any royalty payment is highly uncertain at 30 June 2013.

(ii) On 20 May 2013, the Company signed a Farm In and Joint Venture Agreement with High Power Exploration Inc (HPX on the Fairholme copper gold project in New South Wales. Under the terms of the Agreement, HPX has the right to earn an initial 49% of the Fairholme project by funding A$1 million in exploration over one year with a minimum spending commitment of A$500,000. HPX then will have the right to fund a further A$ 4 million in exploration over the subsequent two years with the aim of delineating a scoping study to take HPX's stake to 65 %. HPX can increase its stake to 80% or 85% by funding a Prefeasibility Study (depending on the cost of the study). No management fees have been recognised in respect of this joint venture as at 30 June 2013.

4. EXPENSES

Depreciation, amortisation and impairment included in Statement of Consolidated Income

Depreciation of plant & equipment	14,398	30,062
Amortisation of software/leaseholdimprovements	1,598	4,718
	15,996	34,780

		Consolidated
		30.06.2013	31.12.2012
		$	$
5.	CASH AND CASH EQUIVALENTS
	Cash at bank	1,219,727	1,289,986
	Short term bank deposits	555,287	550,000
		1,775,014	1,839,986

In addition, as at 30 June 2013 the Company has $300,000 in restricted cash (2012: $300,000) which is included as a current asset in the Statement of Financial Position, held at Westpac Banking Corporation which have been provided as set-off security in respect of a $250,000 bank guarantee facility provided in turn for exploration licence security purposes and a $50,000 corporate credit card facility.

6. FINANCIAL ASSETS

			Consolidated
	Notes	30.06.2013	31.12.2012
		$	$
Shares held for sale	(i)	734,130	815,700
Options	(ii)	52,869	95,783
		786,999	911,483

• i) 8,157,000 shares held in Genesis Resources Limited (ASX: GES). The Directors has valued these shares at 9 ¢ per share, based on the market price as at 30 June 2013.
• ii) 2,125,000 options in Genesis Resources Limited. The options have been valued using the binomial option pricing model, assuming a fair market value of 9 cents per Genesis Resources Limited share as at 30 June 2013 (10 ¢ as at 31 December 2012),), a risk free rate of 3.76% (31 December 2012: 3.0%) and a volatility of 81% (31 December 2012:101%).

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

Level 2- Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable)

Level 3- Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable).

For financial instruments that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisations (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

As at 30 June 2013, the Company held the following classes of financial instruments measured at fair value:

Financial Assets

		30 June 2013	Level 1	Level 2	Level 3
		$	$	$	$
	EquityInstruments	734,130	734,130	-	-
	Options	52,869	-	52,869	-
	Total	786,999	734,130	52,869	-
				Consolidated
				30.06.2013	31.12.2012
			Notes	$	$
7.	CONTRIBUTED EQUITY
	Ordinary shares		(a)	14,455,728	13,958,929

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

		30.06.2013	31.12.2012
	Movement in ordinaryshares on issue		Number ofshares	$	Number of shares	$
	As at 1 JanuaryShares issuedpursuant to adrilling for equity		191,704,335	13,958,929	165,242,425	13,409,971
	agreementShares issuedpursuant to offmarket takeover	(i)(ii)	--	--	2,719,58518,096,000	106,327361,920
	offerShares issuedpursuant toemployee share	(iii)	-	-	5,646,235	88,226
	schemeShares issuedpursuant to JointVenturetermination,subscription androyalty agreementwith Gold FieldsAustralia Pty Ltd	(iv)	14,285,714	500,000	-	-
Less:	Transaction costson share issues		-	(3,201)	-	(7,514)
	As at end of the period		205,990,049	14,455,728	191,704,335	13,958,929

(i) On 1 December 2011, 20 December 2011, 25 January 2012 and 18 April 2012 respectively, 200,507, 771,447, 527,399 and 2,192,186 ordinary shares were issued to Australian Mineral and Waterwell Drilling Pty Ltd ("AMWD"), subject to a 12 month escrow, pursuant to a drilling earn-in agreement. Under this agreement, AMWD

provides drilling services up to the value of $5 million or for a three year period from 23 September 2011, with 25% of monthly invoice amount settled by the issue of fully paid ordinary shares escrowed for 12 months from date of issue. During the period to 30 June 2013, there were no services provided under the drilling earn-in agreement.

• (ii) On 21 August 2012 the Company issued 18,096,000 shares at 2 cents per share pursuant to the Company's off market takeover offer of Genesis Resources Limited. The shares were issued to Genesis Resources Limited shareholders who accepted the Company's off market takeover offer. The takeover offer was unsuccessful and as a result the Company acquired 6,032,000 shares in Genesis Resources Limited, which represents a minority (non controlling) interest in Genesis.
• (iii) On 16 July 2012 and 6 November 2012 respectively, 2,758,723 (net of a buyback of 294,958 shares) and 2,887,602 shares were issued to employees and directors of the Company pursuant to the Employee Share Scheme. The shares were valued in accordance with the requirements of AABS 2 Share based payments. As the shares vest over a one year period part of the cost was recognised as an asset (pre paid share based payments) and was expensed in the current period.
• (iv) On 12 February 2013, the Company entered into a Joint Venture Termination, Subscription and Royalty agreement with Gold Fields Australia Pty Ltd, under which the Company sold its joint venture interests in six copper-gold projects in NSW. Clancy received a total of A$1.5 million from a combination of the sale consideration and a placement of shares to a related body corporate of Gold Fields. The equity component of A$500,000 was received immediately upon settlement of the placement. Placement shares were allotted at 3.5 cents per share

Movement in shares under option

	Exerciseprice	On issue at1 January2013	Issued	Exercised	On issue at30 June2013
Options expiring on 10
August 2013	$0.175	2,050,000	-	-	2,050,000
Options expiring on 31
December 2013	$0.195	1,650,000	-	-	1,650,000
Options expiring on 30
September 2013	$0.185	1,100,000	-	-	1,100,000
Options expiring on 31
July 2013	$0.150	94,134,786	-	-	94,134,786
		98,934,786	-	-	98,934,786

8. COMMITMENTS AND CONTINGENCIES

Consolidated
30.06.2013	31.12.2012
$	$

The only changes to the commitments and contingencies disclosed in the most recent annual financial report are specified below:

(a) Exploration Expenditure Commitments:

Under 11 (2012: 30) New South Wales ("NSW") Government and nil (2012: 1) Western Australian ("WA") and 2 (2012: 2) Tasmanian Government exploration licences

Payable

- not later than one year	151,967	639,759
- later than one year and not later than five years	199,545	59,108
	351,512	698,867

(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

	103,368	142,590
- later than one year and not later than five years	24,292	63,514
- not later than one year	79,076	79,076

9. EVENTS AFTER THE BALANCE SHEET DATE

There are no events after balance date that the directors believe are relevant to be disclosed.

DIRECTORS' DECLARATION

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

In the opinion of the Directors:

• (a) the financial statement and notes set out on pages 3 to 1 Corporations Act 2001, including: 18 are in accordance with the
  • (i) giving a true and fair view of the consolidated entity's financial position as at 30 2013 and of its performance for the half including:fair consolidated the half-year ended on that date; and June
  • (ii) complying with Accounting Standard AASB 134 Corporations Regulations 2001 Interim Financial Reporting ulations including compliance with Accounting Standards and the 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. believe payable.2013 debts

On behalf of the Board,

G Barnes Managing Director

Dated at Orange, this 6th day of September

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

To the members of Clancy Exploration Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Clancy Exploration Limited, which comprises the condensedstatement of financial position as at 30 June 2013, the condensedstatement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

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 controls as the directors determine are 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 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 2013 and its performance for the halfyear 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 and the entities it controlled during the period, 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.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report.

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 2013 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.

Ernst & Young

Ryan Fisk Partner 6 September 2013