RAREX LIMITED — Interim / Quarterly Report 2015

Oct 27, 2014

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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 and CASHFLOW REPORT For the period ending 30 September 2014

The Board of Clancy Exploration Limited is pleased to release its Quarterly Activities report for the period ending 30 September 2014.

Summary

• Typhoon 3D IP survey completed at the Fairholme JV . Chargeable anomalies have been defined. Follow-up diamond drilling of defined targets is planned for December 2014.

• The Fairholme joint venture partners were awarded a A$198,750 grant by the NSW government under the New Frontiers Co-operative Drilling program.

• RC drilling was completed at the Cundumbul JV . Encouraging phyllic alteration has been intersected and assay results are pending.

• Two new directors, Nathan Featherby and Evan Cranston, have been appointed to the board. James Macdonald has resigned as a director.

Exploration

Fairholme EL6552 and EL6915

(NSW, Clancy 51%; Kaizen Discovery Inc 49%, earning 65% and funding 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 porphyry copper-gold deposit (Newcrest).

The helicopter-borne magnetic survey completed in the previous quarter identified a northwest trending ovoid magnetic feature in the central part of EL6552, south of the Boundary prospect. This zone is interpreted to be a dilation zone favourable for the emplacement of porphyry intrusions (Figure 1).

A Typhoon 3D Induced Polarisation (IP) survey covering the porphyry-style prospects of Dungarvan, Gateway and Boundary was completed in August 2014 for a total acquisition of 424.6 line km of 3D time domain IP data. The major technical challenge in the survey was to measure IP responses below approximately 100 m of highly conductive cover. Extensive pre-survey modelling was used to generate a 3D survey plan that would minimise signal interference and provide deep penetration of current into the subsurface, resulting in extremely low noise levels and allowing systematic and reliable 3D mapping of the basement chargeability responses, despite strong signal attenuation by the conductive cover.

The 3D IP data collected in this survey were inverted jointly in 3D with the Typhoon gradient array IP data collected last year. The 3D inversion models were constrained by physical property measurements on drill core (density, porosity, chargeability, resistivity and remanent magnetism), which were also completed

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 30 September 2014

during the quarter. Data processing and interpretation are currently being finalised, however preliminary results are highly encouraging. Several chargeable anomalies have been defined, including a large three-lobe basement chargeable anomaly coincident with the dilation zone described above (Figure 1). The chargeable anomaly could be mapping sulphide distribution associated with a porphyry-style system. This area has not been tested by previous drilling.

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Chargeable anomaly
Dilation zone
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Figure 1: Fairholme EL6552 showing results from the helicopter-borne magnetic survey (TMI image) , interpreted dilation zone (black dashed line) and the chargeable IP anomaly (at 300m RL; yellow line) defined by the recently completed Typhoon 3D IP survey.

Anomaly ranking and drill target selection will be completed in early November 2014 and follow-up diamond drilling of defined targets is scheduled for December 2014. The joint venture partners were awarded a A$198,750 grant by the NSW government under the New Frontiers Co-operative Drilling program. These funds will contribute to the costs of the follow-up drilling. The New Frontiers funding encourages private exploration drilling in the search of mineral deposits in areas of NSW not fully explored using the latest technology.

Cundumbul EL6661 and EL7399

(NSW, Clancy 100%; Mitsubishi earning 49% and funding 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.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 30 September 2014

RC drilling (21 holes; 2,924m) was completed at the Mehruda Mo prospect and at the Andrews prospect. At the Mehruda Mo Prospect the drilling tested for the presence of a vertical alteration halo and mineralisation zonation. Intense silica-sericite-pyrite alteration was intersected, associated with a roughly N-S trending shear zone and gravity low anomalies. Mineralisation consists of pyrite, very minor chalcopyrite and molybdenite in quartz-carbonate veins. RC drilling at the Andrews prospect targeted coincident 3D IP and geochemical anomalies. The drilling was completed close to the end of the quarter and results are expected in late October 2014.

Genaren EL7927

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

Genaren is located at the northern end of the Northparkes Igneous Complex 29km north of the Northparkes copper-gold mine. In the March quarter 2014, Clancy completed 18 out of a planned 55, reconnaissance air core (AC) drill holes to test three prospects. The program was curtailed prematurely due to unseasonable wet weather. Drilling is planned to recommence in the December 2014 quarter in order to complete the planned program.

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Figure 2: Map showing location of Clancy projects in central NSW.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 30 September 2014

Corporate

As at 30 September 2014, the company held cash and restricted cash of $1,383,000.

Two new Non Executive Directors, Nathan Featherby and Evan Cranston, were appointed to the board effective 22 October 2014. Dr James Macdonald has resigned as a director of the Company.

The Clancy Board welcomes Nathan and Evan and looks forward to working closely with them in implementing its strategy of identifying and acquiring a more advanced flagship project to advance its business and deliver value to shareholders.

The Board would like to thank Dr James Macdonald for his contribution to Clancy over the past seven years. James was the founding Chairman of the Company upon its listing in 2007, before stepping into the role of Non-executive director in 2011.

In November 2013, the Company announced that it had entered into an agreement with ABM Resources NL (ASX: ABU) (ABM) whereby Clancy will have the option to acquire 100% of ABM’s interests in the North Arunta Project Region in the Northern Territory. Due to the challenging state of the equity markets the required capital raising could not be completed and the transaction will not proceed.

Clancy Tenement Listing

(As at 30 September 2014)

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State Project Lease No Status ProjectJV Manager interestClancy (km2)Area Note
NSW Condobolin EL7748 Renewed No Clancy 100% 362.8
Mitsubishi Materials
NSW Genaren EL7927 Renewed Yes Clancy 100% 193.6
Corp earning 49%
Mitsubishi Materials
NSW Cundumbul EL6661 Renewed Yes Clancy 100% 141.4
Corp earning 49%
Mitsubishi Materials
NSW Cundumbul EL7399 Renewed Yes Clancy 100% 63.5
Corp earning 49%
NSW Fairholme EL6552 Renewal Yes Clancy 51% 54.5 Kaizen Discovery Inc
Pending earning 65%
Kaizen Discovery Inc
NSW Fairholme EL6915 Renewed Yes Clancy 51% 117.5
earning 65%
NSW Kiola EL8151 Granted No Clancy 100% 284.2
NSW Orange East EL6181 Renewed No Clancy 100% 40.2
NSW Trundle EL8222 Granted No Clancy 100% 167.2
Mount
NSW EL8226 Granted No Clancy 100% 45.8
Tennyson
NSW Mount Pleasant EL8237 Granted No Clancy 100% 63.5
NSW Koobah EL8302 Granted No Clancy 100% 28.6
NT Reynolds Range EL30297 Application No Clancy 100% 639.7
NT Lander River EL30422 Application No Clancy 100% 326.8
NT Barrow Creek EL30445 Application No Clancy 100% 735.7
TAS Lake Margaret EL28/2009 Granted Yes Bass Metals 25% 59.0 Clancy interest carried to Prefeasibility study
TAS Sock Creek EL20/2010 Granted Yes Bass 25% 11.0 Clancy interest carried
Metals to Prefeasibility study
TNT
TAS Oonah EL63/2004 Renewed Yes Mines 25% 24.0 Clancy contributing
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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 30 September 2014

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 announcement that relates to Initial Exploration Results 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 2012 edition of the “Australasian Code for Reporting 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 and base metal and tin projects in the Mount Read Volcanic Belt of Tasmania.

In NSW, Clancy has 7 wholly owned and managed projects, 2 joint venture projects with Mitsubishi Materials Corporation (MMC) of Japan and 1 joint venture project with Kaizen Discovery Inc., all of which are managed by Clancy. In Tasmania, Clancy has 2 base metal joint venture projects with Bass Metals (ASX: BSM) and 1 tin joint venture project with Niuminco Group Limited (ASX: NIU). 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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Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

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CLANCY EXPLORATION LIMITED
ABN Quarter ended (“current quarter”)
65 105 578 756 30 September 2014
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A’000 (3 months)
$A’000
1.1 Receipts from product sales and related 60 60
debtors
1.2 Payments for (a) exploration & evaluation (931) (931)
(b) development
(c) production
(167) (167)
(d) administration
1.3 Dividends received
1.4 Interest and other items of a similar nature
received 11 11
1.5 Interest and other costs of finance paid
1.6 Income taxes (paid)/refunded
1.7 Other
Cash calls received from JV partners 599 599
Net Operating Cash Flows (428) (428)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects
(b) equity investments
(c) other fixed assets
1.9 Proceeds from sale of: (a) prospects
(b) equity investments
(c) other fixed assets 66 66
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Other (provide details if material)
Refund of fee paid to ABM 150 150
Net investing cash flows 216 216
1.13 Total operating and investing cash flows
(carried forward) (212) (212)
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• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

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1.13 Total operating and investing cash flows (brought
forward) (212) (212)
Cash flows related to financing activities
1.14 Proceeds from issues of shares,options, etc.
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings
1.17 Repayment of borrowings
1.18 Dividends paid
1.19 Other
- -
Net financing cash flows
Net increase (decrease) in cash held (212) (212)
1.20 Cash at beginning of quarter/year to date 1,295 1,295
1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter
1,083 1,083
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 91
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Payments of salaries, consulting fees and directors fees to directors and director related entities.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and
liabilities but did not involve cash flows
None
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting
entity has an interest
None
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$A’000 $A’000
3.1 Loan facilities - -
3.2 Credit standby arrangements - -
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• See chapter 19 for defined terms.

Appendix 5B Page 2

17/12/2010

Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

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$A’000
4.1 Exploration and evaluation 1,155
(includes approximately $1,116,000
which is to be funded by JV partners
pursuant to cash calls during the
quarter )
4.2 Development -
4.3 Production -
4.4 Administration 165
Total 1,320
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Reconciliation of cash

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Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter
shown in the consolidated statement of cash flows) to $A’000 $A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 833 1,045
5.2 Deposits at call 250 250
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 1,083 1,295
Excludes $300,000 of restricted cash.
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Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference Nil EL 30470 Osborne Range	Nature of interest (note (2))	Interest at beginning of quarter Nil	Interest at end of quarter 100%

• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

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Total number Number quoted Issue price per Amount paid up per
security (see note security (see note 3)
3) (cents) (cents)
7.1 Preference
+securities
(description)
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital, buy-
backs,
redemptions
7.3 +Ordinary 206,254,392 206,254,392
securities
7.4 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital, buy-
backs
7.5 +Convertible
debt securities
( description)
7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
7.7 Options Exercise Price Expiry Date
(description and
conversion
factor)
7.8 Issued during
quarter
7.9 Exercised during
quarter
7.10 Expired during
quarter
7.11 Debentures
(totals only)
7.12 Unsecured
notes (totals
only)
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• See chapter 19 for defined terms.

Appendix 5B Page 4

17/12/2010

Appendix 5B Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

• 2 This statement does / ~~does not~~ * (delete one) give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: 28 October 2014 ( ~~Director~~ /Company secretary)

Print name: Rowan Caren

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 5