RAREX LIMITED — Interim / Quarterly Report 2012

Jan 28, 2013

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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 December 2012

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

Highlights

• Strong arsenic in soil anomalies identified for follow-up at Condobolin

• Petrology on drill core from the Phoenix and Mascotte prospects at Condobolin identified encouraging potassic alteration, including the presence of adularia; this suggests that gold and base metal mineralisation is a low-sulphidation epithermal system linked to a deeper magmatic system

• Altered diorite intrusion associated with copper-zinc anomalism identified from re-logging of previous aircore holes at Currumburrama

• Narrow high-grade gold intercept returned from diamond drilling at Myall ; 0.5m @ 204g/t Au from 221.9m

• Gravity survey in progress at Genaren covering the northwest portion of the Northparkes Igneous Complex; a gravity survey will commence shortly at Currumburrama

• EM surveys completed at Condobolin and Fairholme

• Helicopter-borne magnetic and radiometric surveys to commence shortly at Cundumbul and Currumburrama

• Mechanical auger soil sampling and structural mapping in progress at Cundumbul

Clancy Managed Projects

Auger soil surveys continued at Cundumbul and a major mapping project was initiated. Auger soil sampling was completed at Condobolin, a gravity survey is in progress at Genaren and EM surveys were completed at Fairholme and Condobolin.

Condobolin EL7748

(NSW, Clancy 100%)

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

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

XRF analysis of auger soil samples collected in the previous quarter was completed and a subset of samples over anomalous areas was submitted for laboratory analysis. Detailed 50m x 50m infill soil sampling (383 samples) was completed over anomalous areas around Meritilga and the northern radiometric anomaly in the Mt Tilga area. Laboratory results have been received and show that there are strong arsenic anomalies (300ppm to >500ppm As with spot highs up to 0.15%), trending NW-SE across Mt Tilga, west of Mt Tilga and Meritilga. At Meritilga there are two distinct zones: one over the ‘Pygmy Hill’; and another 500m NE of Mascotte (Figure 1). These results have provided targets for future drill testing.

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Figure 1 – Condobolin soil sample results showing arsenic anomalies at Meritilga and Mt Tilga.

Fixed loop EM surveys covering 0.23km[2] were completed at Meritilga and Potters. The results show that the mineralised bodies consist of disseminated and vein-hosted lodes, rather than massive sulphide bodies. Future drill targeting has therefore benefited from the EM results as the style of target has been constrained.

Petrographic results were received for drill core samples from Phoenix and Mascotte. Encouraging potassic alteration (including K-feldspar as adularia) and three distinct phases of quartz veining were identified. The

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

presence of adularia, in particular, suggests the gold and base metal mineralisation may be associated with a low-sulphidation epithermal system linked to a deeper magmatic system, confirming that the current deposit model for the project area is accurate.

Fairholme EL6552 and EL6915

(NSW, Clancy 100%)

The Fairholme project covers 172km[2] of the Fairholme Igneous Complex and is located 12km north of the Cowal gold mine. The geophysical characteristics of the Fairholme Igneous Complex are similar to the Cowal Complex to the south, which hosts the Cowal gold mine (Barrick) and the Marsden copper-gold deposit (Newcrest).

Nine 200m by 200m EM survey loops were completed to assess the conductivity of the surface layers in order to determine the most appropriate electrical surveying method for exploration at Fairholme. The EM survey confirmed the presence of conductive overburden over much of the project area, however some localities of relatively low conductivity are present. IP transmitters could be sited within these lowconductive areas, which should enable the IP effect to be measured at depth with long transmitting time.

Re-logging of previous diamond holes was undertaken and a number of core samples of porphyritic dykes were submitted for major and trace element analysis to determine the relative fertility of the different intrusive suites. Results are pending.

Cundumbul EL6661 and EL7399

(NSW, Clancy 100%; Mitsubishi earning 49%)

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. Detailed geological mapping, soil sampling and rock chip sampling continued. Mechanical auger drilling in areas of deeper soil cover is in progress. A total of 1,375 soil sample results were received and 121 mechanical auger holes (317m) were completed in the December quarter.

A major mapping project was initiated during the quarter, which is managed by SRK Consulting. The objective of the mapping project is to unravel the structural-magmatic-mineralisation history of the project area and identify priority areas for follow-up. Results will be reported in the March 2013 quarter.

Regional auger soil sampling was extended to close off anomalies at the Wahringa, Mehruda and Bakers Swamp areas. XRF analyses have been completed and arsenic anomalism has been extended at Wahringa 1 and forms a halo around copper anomalism at Naroogal. Laboratory analysis of anomalous samples is in progress.

Results for rock chip samples collected in the previous quarter were received and include anomalous silver and antimony results of 43.5g/t Ag and 668ppm Sb respectively from the Wahringa 1 anomaly area. Mechanical auger drilling was undertaken at the Andrews prospect where a strong arsenic anomaly was identified by regional soil sampling in the previous quarter. Logging of bottom of hole samples identified volcanic and intrusive rocks including variably altered quartz-feldspar porphyry and feldspar porphyry. Mechanical auger drilling will continue into the March 2013 quarter. A helicopter-borne magnetic and radiometric survey (1935 line km) is also planned for the March 2013 quarter.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

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CNR0145: 0.43% Cu, 0.63g/t Ag
CNR0146: 391ppm As , 3.45ppm Mo
CNR0201: 0.14% Cu and
10.75ppm Mo
CNR0195: 43.5g/t Ag, 0.15%
Ba, 0.12% Cu, 668ppm Sb and
0.26% Sr
CNR0178: 1.23% Cu
CNR0157: 0.25g/t Au, 0.39%
Ba, 0.18% Cu
CNR0162: 0.24% Cu
CNR0135: 0.3g/t Au
CNR0097: 0.38% Cu, 2.5g/t Ag
CNR0054: 5.5% Cu , 31g/t Ag
CNR0053: 1.1% Cu
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Figure 2 – Cundumbul-Bakers Swamp Prospects and Significant Rock Chip Results

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

Genaren EL7927

(NSW, Clancy 100%; Mitsubishi earning 49%)

Genaren is located at the northern end of the Northparkes Igneous Complex 29km north of Rio Tinto's Northparkes copper-gold mine. A gravity survey commenced in December 2012 and will be completed in the March 2013 quarter.

Currumburrama EL6784

(NSW, Clancy 100%; Mitsubishi earning 49%)

Currumburrama is located 40km east of West Wyalong and covers a large basement magnetic complex that is inferred to be the Ordovician arc based on magnetic and gravity data. Aircore chips from previous drilling were re-examined to clarify the basement rock types. The re-logging has shown that the centre of the tenement is dominated by intrusive rocks varying in composition from diorite to feldspar porphyry. These rocks have intruded andesite to dacite volcanic and volcaniclastic rocks, which are in turn flanked by weakly deformed limestone. The geology suggests the presence of an intrusive centre and is coincident with copperzinc anomalism identified in previous air core drilling. Gravity and magnetic surveys are planned for the March 2013 quarter.

Gold Fields Managed JV Projects

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. Results were received for two diamond holes (MYACD368 & MYACD373) completed in the previous quarter near the Barina prospect. An intermediate sulphidation carbonate base metal vein intersected in MYACD368 returned following significant high-grade gold intercept:

• 0.5m @ 204g/t Au , 93g/t Ag & 8.6% Zn from 221.9m

There is no significant lower-grade wall rock gold mineralisation and whilst the assay interval was 0.5m, the gold is likely confined to a much narrower interval. Work on the significance of this intercept is ongoing. The second hole (MYACD373) intersected 200m plus (apparent thickness) of sub-angular magmatichydrothermal breccia, however no significant results were returned.

Two aircore pre-collared diamond holes (MYACD374 & 375; 552m) were completed at the Statesman prospect. Both holes intersected barren, early stage albite-magnetite-actinolite alteration and no significant results were returned.

Cowal East EL6553 and EL6554

(NSW, Gold Fields 81.5%, Clancy 18.5%)

The Cowal East project is located in the Cowal Igneous Complex, east of the Cowal gold mine and north and south of the Marsden copper-gold prospect. Aircore drilling is planned for the March 2013 quarter.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

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

Corporate

Flagship Project Search

Clancy continued its search for a flagship project during the quarter. A number of opportunities have been assessed to date and the Company will continue its search for a more advanced project in 2013. The Company believes that a clearly articulated growth strategy to build scale, either through project acquisition

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2012

and/or corporate activity, will enable it to raise the capital required to advance its business and deliver value to shareholders. The Company looks forward to delivering on this strategy in the first half of 2013.

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 and Nadbuck near Broken Hill in NSW.

In NSW, Clancy has 8 wholly owned and managed projects and 6 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 1 tin joint venture project 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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