RAREX LIMITED — Interim / Quarterly Report 2016

Oct 27, 2015

Clancy Exploration Limited 3 Corporation Place Orange NSW 2800 Australia

Phone: (02) 6361 1285 Fax: (02) 6361 1202 www.clancyexploration.com info@clancyexploration.com

QUARTERLY ACTIVITIES and CASHFLOW REPORT For the period ending 30 September 2015

The Board of Clancy Exploration Limited is pleased to release its Quarterly Activities report for the period ending 30 September 2015.

Summary

• Typhoon IP survey completed at the Trundle JV:
  • o Two large chargeable anomalies defined at Mordialloc and Trundle Park;
  • o Significant drill target defined at Mordialloc NE;
  • o Diamond drilling of the Mordialloc NE target scheduled for December.
• 3D-IP survey completed at the Condobolin JV:
  • o Chargeable anomalies defined;
  • o Geological mapping of targets in progress;
  • o Follow-up RC drilling planned.

Exploration

Trundle EL8222

(NSW, Clancy 100%; High Power Exploration Inc, earning 51%)

The Trundle project consists of a single exploration licence EL8222 located 25km west of the Northparkes copper-gold mine (Figure 4). There is extensive evidence of porphyry and skarn-style copper-gold mineralisation similar to the Cadia Valley and Northparkes. Several prospects at Trundle have strong similarities to the porphyry deposits at Northparkes, with characteristic magnetic and gravity anomalies and coincident anomalous copper and gold geochemistry. There is significant potential for porphyry copper-gold discovery at depth and numerous copper-gold anomalies on the Trundle licence remain under-explored.

A 38km2 Typhoon IP survey was completed in August covering a prospective zone of magnetic anomalies extending from Trundle Park area in the south to north of Mordialloc (Figure 1). The aim of the survey was to detect chargeable bodies at depth to assist with defining the deeper source of the copper-gold anomalism and vectoring to the richer potassic core of a porphyry system. The survey was configured as a perpendicular pole-dipole array to minimise electromagnetic coupling. A total of 496 line km of IP data were collected on a nominal 300m NS by 100m EW receiver dipole spacing. Wet weather impacted field production and the survey area had to be reduced from ~50km2 to 38km2 .

Two encouraging zones of broad anomalous chargeability have been defined in the Trundle Park and Mordialloc areas (Figure 2). The Mordialloc anomaly is the largest (4x2km) and extends to a depth of at least 500m vertical. It has an eastern and western lobe with the highest overall chargeabilities in the eastern lobe, which has been selected for follow-up drilling and is referred to here as the Mordialloc NE target. The western lobe encompasses a chargeable anomaly defined by a smaller, conventional 3D IP survey conducted by Clancy in 20101 . A previous diamond drill hole (CTD006) on the periphery of 3D IP anomaly intersected 48m @ 0.15%Cu, 0.12g/t Au, 41ppm Mo from 478m in a quartz monzonite porphyry with quartz-pyrite veining1 . In contrast, the Mordialloc NE target has not been effectively tested by previous drilling. It is a chargeable anomaly with a dimension of 1.7km x 1km at about 475m vertical depth and the chargeable zone extends close to surface (Figure 3).

Figure 1 – Trundle EL8222 showing the TMI magnetic image (translucent colour) over the aerial photograph. The Typhoon IP survey covered a zone of prospective magnetic anomalies extending from the Trundle Park area in the south to north of Mordialloc (white perimeter).

1 See ASX release dated 18 June 2010 for further details

A number of aircore holes drilled by previous explorers cover the Mordialloc NE target however the deepest of these holes is only 18m, which is an ineffective test of the target given the depth to which the chargeable zone extends. Two of the shallow holes intersected anomalous Cu in andesite in bottom of hole samples from 3m depth: TR452 – 1m @ 3,152ppm Cu and TR455 – 1m @ 785ppm Cu (Figure 3). Neither of these holes was followed up. Previous exploration was focussed 1km to the west of the Mordialloc NE target, on historic copper-gold workings associated with the numerous skarns. The Mordialloc NE target is therefore a completely new target.

Figure 2 – Typhoon IP chargeability at Trundle at ~475m below surface (translucent colour) over the aerial photograph. Broad zones of anomalous chargeability have been defined at Mordialloc and Trundle Park. The relatively low zone chargeability in the centre of the survey area is associated with a drainage basin marked by the arrows.

Figure 3 – Typhoon IP chargeability at Mordialloc at ~475m below surface (translucent colour) over the aerial photograph.The Mordialloc NE target is outlined in white. A selection of previous drill holes are shown (black dots) and holes mentioned in the text are labelled. The deepest hole over the Mordialloc NE target is only 18m. See Figure 2 for chargeability scale.

Further modelling of the geophysical data for the Mordialloc NE target is underway to optimise drill targeting and it is anticipated that diamond drilling will commence in December.

The Trundle Park chargeability anomaly is a NE-trending zone approximately 2.7km long and 1km wide (Figure 2). It too is associated with skarn occurrences and old workings but has been partly tested by previous drilling. Further work is required to define a follow-up strategy for Trundle Park. The Mordialloc NE target will be the initial priority. The Trundle Park and Mordialloc chargeable anomalies are separated by a broadly EW-trending local drainage basin that drains to the west through the Trundle township (Figure 2). The basin has relatively high surface conductivity and therefore electrical signal from the basement was attenuated, resulting in much lower chargeability within the basin. It is likely that this area has not been adequately tested by the Typhoon survey.

Condobolin EL7748

(NSW, Clancy 100%; Ramelius Resources Ltd, earning 80% and funding 100%)

Condobolin EL7399 is located in the central west of NSW immediately north of the Condobolin township (Figure 4). 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, arsenopryrite and free gold.

Figure 4 – Map showing location of Clancy projects in central NSW.

A 3D IP survey was completed to extend the previous IP survey coverage at Meritilga to the north. A total of 7.9km2 was surveyed. The aim of the survey was to further define basement structures associated with the numerous gold and base metal occurrences in the Condobolin Mineral Field. A number of chargeable anomalies have been defined that require follow-up. Detailed geological mapping is in progress and followup RC drilling is planned. Drilling will commence after the necessary permitting has been completed.

Corporate

As at 30 September 2015, the company held cash and restricted cash of $1,050,000.

During the quarter the Company received notice from Mitsubishi Materials Corporation (MMC) that it would not continue with formal joint ventures on the Cundumbul and Genaren projects, having met its A$3 million earn-in expenditure commitment over three years. Both of these projects have now reverted to 100% Clancy ownership.

Clancy Tenement Listing

(As at 30 September 2015)

State	Project	Lease No	Status	JVProject	Manager	Clancyinterest	Area(km2)	Note
NSW	Condobolin	EL7748	Renewed	Yes	Ramelius	100%	181.5	Ramelius ResourcesLtd earning 80%
NSW	Genaren	EL7927	Renewed	No	Clancy	100%	193.6
NSW	Cundumbul	EL6661	Renewed	No	Clancy	100%	141.4
NSW	Cundumbul	EL7399	Renewalpending	No	Clancy	100%	26.0
NSW	Fairholme	EL6552	Renewed	Yes	Clancy	51%	54.5	Kaizen Discovery Incearning 65%
NSW	Fairholme	EL6915	Renewalpending	Yes	Clancy	51%	114.7	Kaizen Discovery Incearning 65%
NSW	Kiola	EL8151	Granted	No	Clancy	100%	284.2
NSW	Orange East	EL6181	Renewed	No	Clancy	100%	40.2
NSW	Trundle	EL8222	Granted	Yes	HPX	100%	167.2	High PowerExploration Incearning 51%
NSW	Mount Tennyson	EL8226	Granted	No	Clancy	100%	45.8
NSW	Mount Pleasant	EL8237	Granted	No	Clancy	100%	63.5
NSW	Koobah	EL8302	Granted	No	Clancy	100%	28.6
TAS	Lake Margaret	EL28/2009	Renewalpending	Yes	BassMetals	25%	59.0	Clancy interest carriedto Prefeasibility study
TAS	Sock Creek	EL20/2010	Granted	Yes	BassMetals	25%	11.0	Clancy interest carriedto Prefeasibility study
TAS	Oonah	EL63/2004	Renewed	Yes	TNTMines	25%	24.0	Clancy contributing

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 qual ify 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, 1 joint venture project with High Power Exploration Inc, 1 joint venture project with Ramelius Resources Limited and 1 joint venture project with Kaizen Discovery Inc. 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

Appendix 5B

Rule 5.3

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

CLANCY EXPLORATION LIMITED

ABN Quarter ended ("current quarter") 65 105 578 756 30 September 2015

Year to date (3 months)

Current quarter $A'000

Consolidated statement of cash flows

Cash flows related to operating activities

			$A'000
1.1	Receipts from product sales and relateddebtors	3	3
1.2	Payments for (a) exploration & evaluation(b) development	(272)	(272)
	(c) production(d) administration	(158)	(158)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	4	4
1.5	Interest and other costs of finance paid
1.6	Income taxes (paid)/refunded
1.7	Other
	Cash calls received from JV partners	35	35
	Net Operating Cash Flows	(388)	(388)
	Cash flows related to investing activities
1.8	Payment for purchases of:(a) prospects
	(b) equity investments
	(c) other fixed assets	(3)	(3)
1.9	Proceeds from sale of:(a) prospects
	(b) equity investments
	(c) other fixed assets	-	-
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other (provide details if material)
	Net investing cash flows	(3)	(3)
1.13	Total operating and investing cash flows
	(carried forward)	(391)	(391)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought
	forward)	(391)	(391)
1.141.151.161.171.18	Cash flows related to financing activitiesProceeds from issues of shares,options, etc.Proceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowingsDividends paid
1.19	Other
	Net financing cash flows	-	-
	Net increase (decrease) in cash held	(391)	(391)
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	1,231	1,231
1.22	Cash at end of quarter	840	840

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	65
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$A'000	Amount used$A'000
3.1	Loan facilities	-	-
3.2	Credit standbyarrangements	-	-

+ See chapter 19 for defined terms.

Estimated cash outflows for next quarter

	Total	499
4.4	Administration	174
4.3	Production	-
4.2	Development	-
		pursuant to cash calls during thequarter)
		(includes approximately $263,000which is to be funded by JV partners
4.1	Exploration and evaluation	325
		$A'000

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.	Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	15	27
5.2	Deposits at call	825	1,204
5.3	Bank overdraft	-	-
5.4	Other (provide details)	-	-
	Total: cash at end of quarter (item 1.22)	840#	1,231*
	# Excludes $210,000 of restricted cash butincludes $249,000 sequestered for Trundleproject.
*Excludes $210,000 of restricted cash butincludes $456,000 sequestered for Trundleproject.

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at	Interest at
		reference	(note (2))	beginning ofquarter	end ofquarter
6.1	Interests in miningtenements	Nil
	relinquished,reduced or lapsed
6.2	Interests in miningtenements acquiredor increased	Nil

+ See chapter 19 for defined terms.

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.

		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	256,254,392	256,254,392
	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)

+ See chapter 19 for defined terms.

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.

Sign here: ............................................................ Date: 28 October 2015 (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.

== == == == ==

+ See chapter 19 for defined terms.