RAREX LIMITED — Interim / Quarterly Report 2015

Mar 11, 2015

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITY

HALF YEAR ENDED 31 DECEMBER 2014

CLANCY EXPLORATION LIMITED

CORPORATE DIRECTORY

DIRECTORS

LAWYERS

Dr Michael Etheridge Non-Executive Chairman

Mr Gordon Barnes Managing Director

Mr Nathan Featherby Non-Executive Director

Mr Evan Cranston

Non-Executive Director

COMPANY SECRETARY

Mr Rowan Caren

CHIEF FINANCIAL OFFICER

Kellie Pickering

PRINCIPAL PLACE OF BUSINESS

3 Corporation Place Orange New South Wales 2800

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

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

REGISTERED OFFICE

255 Hay Street Subiaco Western Australia 6008

ASX CODE : CLY

CLANCY EXPLORATION LIMITED

TABLE OF CONTENTS

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 .......................................................................................................................13 AUDITORS’ REPORT ...................................................................................................................................14

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

DIRECTORS’ REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

The Board of Directors has pleasure in presenting its report on the consolidated entity for the half-year ended 31 December 2014.

1. DIRECTORS

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

Dr M A Etheridge Mr G J Barnes Mr Nathan Featherby (appointed 22 October 2014) Mr Evan Cranston (appointed 22 October 2014) Dr A J Macdonald (resigned 22 October 2014) Ms N L Forsyth-Stock (resigned 26 November 2014)

2. REVIEW OF OPERATIONS

During the half year, the consolidated entity continued to explore its portfolio of exploration properties, as well as those under joint venture with Mitsubishi Materials Corporation of Japan and Kaizen Discovery Inc.

3. FINANCIAL RESULTS

The loss of the Company for the period ending 31 December 2014 was $580,348 (Six months to 30 June 2014: loss of $723,234). During the half year, total expenses amounted to $750,693 (Six months to 30 June 2014: $771,568).

Unrestricted cash and cash equivalents amounted to $738,472 as at 31 December 2014 (at 30 June 2014: $1,295,092).

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

The auditors’ independence declaration is set out on page 2 and forms part of the Directors’ Report for the half year ended 31 December 2014.

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

On behalf of the directors.

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G BARNES Managing Director

Signed in Orange this 12[th] day of March 2015.

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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 audit of the financial report of Clancy Exploration Limited for the six months ended 31 December 2014, 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.

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Ernst & Young

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Ryan Fisk Partner Sydney 12 March 2015

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Income Notes Other Income 3 Total Income Expenses Employee benefits expense Consulting and outsourced services expense Self-funded exploration expenditure Net recovery from joint venture partners Share based payment expense Computer related costs Travel expense Occupancy costs Insurance expense Marketing expense Depreciation, amortisation and impairment expense 4 Impairment of exploration asset 6 Other expenses Total expenses Loss from continuing operations before income tax expense Income tax expense Loss from continuing operations after income tax expense Other comprehensive income Total comprehensive loss attributable to owners of the parent Loss per share - basic and diluted	Consolidated 6 months to 31 December 2014 6 months to 30 June 2014 $ $ 170,345 48,334
	170,345 48,334 (452,497) (486,398) (102,637) (233,723) (112,924) (124,109) 224,182 150,108 - (726) (436) (413) (17,757) (23,223) (4,359) (4,301) (12,232) (12,647) (1,203) (913) (5,273) (14,170) (250,000) - (15,557) (21,053)
	(750,693) (771,568)
	(580,348) (723,234) - -
	(580,348) (723,234) - -
	(580,348) (723,234)
	(0.3) cents (0.4) cents

The above Statement of Comprehensive Income is to be read in conjunction with the accompanying notes, on pages 7- 12.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

STATEMENT OF FINANCIAL POSITION

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes ASSETS Current Assets Cash and cash equivalents 5 Restricted cash asset 5 Trade and other receivables Prepaid exploration expenditure Total Current Assets Non-current Assets Plant and equipment Intangible assets Exploration asset 6 Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Provisions Unearned revenue Exploration expenditure reimbursed in advance Total Current Liabilities Non-current Liabilities Provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 8 Reserves Accumulated losses TOTAL EQUITY	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 738,472 1,295,092 300,000 300,000 118,328 88,965 10,404 -
	1,167,204 1,684,057
	22,940 53,694 1,980 2,715 - 400,000
	24,920 456,409
	1,192,124 2,140,466
	227,348 228,230 87,318 103,221 - 32,821 - 314,582
	314,666 678,854
	24,211 28,017
	24,211 28,017
	338,877 706,871
	853,247 1,433,595
	14,457,200 14,457,200 1,665,605 1,665,605 (15,269,558) (14,689,210)
	853,247 1,433,595

The above Statement of Financial Position is to be read in conjunction with the accompanying notes on pages 7 – 12.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

CONSOLIDATED Notes	Ordinary Shares $ Options Reserve $ (Accumulated Losses) $ Total Equity $
At 1 July 2014 Total comprehensive income for the period, net of tax At 31 December 2014 At 1 January 2014 Total comprehensive income for the period, net of tax Share based payment – employee, directors and consultants shares At 30 June 2014	14,457,200 1,665,605 (14,689,210) 1,433,595 - - (580,348) (580,348)
	14,457,200 1,665,605 (15,269,558) 853,247
	14,457,200 1,660,974 (13,965,976) 2,152,198 - - (723,234) (723,234) - 4,631 - 4,631
	14,457,200 1,665,605 (14,689,210) 1,433,595

The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes on pages 7-12.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes CASH FLOWS USED IN OPERATING ACTIVITIES Management Fee Received Reimbursement of Exploration Expenses Payments to suppliers and employees Interest received NET CASH FLOWS USED IN OPERATING ACTIVITIES CASH FLOWS USED IN INVESTING ACTIVITIES Purchase of plant and equipment Prepayment on acquisition of tenements Refund of prepayment on acquisition of tenements 6 Proceeds from sale of fixed assets NET CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue Costs of share issue NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD 5	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 83,455 139,598 1,056,834 700,280 (1,925,326) (1,268,778) 17,962 20,928
	(767,075) (407,972)
	- (2,100) - (150,000) 150,000 - 60,455 -
	210,455 (152,100)
	- 4,631 - (236)
	- 4,395
	(556,620) (555,677) 1,295,092 1,850,769
	738,472 1,295,092

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes on pages 7 to 12.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

1. CORPORATE INFORMATION

The consolidated financial report of Clancy Exploration Limited (“the Company”) for the half-year ended 31 December 2014 was authorised for issue in accordance with a resolution of the directors on 12 March 2015.

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 30 June 2014.

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 2014 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.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

On 5 June 2014, the Company announced that it intended to change its financial year end from 31 December to 30 June. The Company’s financial year end was changed to coincide with the tax year. The results for the six months ended 31 December 2014 reflect the first interim period since the Company changed its financial year to 30 June. This report presents financials for the six month period to 31 December 2014, with comparatives for the six month period to 30 June 2014.

Going Concern

For the six months ended 31 December 2014, the consolidated entity has incurred a net loss after income tax of $580,348 (six months ended 30 June 2014: $723,234), and experienced net cash outflows from operations of $767,075 (six months ended 30 June 2014: $407,972), and net cash inflows from investing activities of $210,455 (six months ended 30 June 2014: outflow of $152,100). As at 31 December 2014, the consolidated entity had cash and cash equivalents of $738,472 (at 30 June 2014: $1,295,092).

The ability of the Company and the consolidated entity to continue as going concerns is principally dependent upon:

• Joint venture partners continuing to expend funds and pay management fees on the Company’s projects;

• Reduction of planned expenditures; and/or

• Raising additional capital to fund exploration and provide additional working capital.

These conditions indicate a material uncertainty that may cast significant doubt about the Company and the consolidated entity’s ability to continue as going concerns.

The directors have prepared a cash flow forecast for the period ending 31 March 2016 which indicates that the current cash resources may not meet expected cash outgoings without additional capital. The directors anticipate that these requirements will be met through a combination of some or all of the following:

• Joint venture partners continuing to expend funds and pay management fees on the Company’s projects;

• · Reduction of planned expenditures; and/or

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

• Further capital raisings.

The directors are satisfied that they will achieve the matters set out above and therefore the going concern basis of preparation is appropriate. The financial report has therefore been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

Should the Company and the consolidated entity be unable to achieve the initiatives referred to above, there is a material uncertainty whether the Company and the consolidated entity will be able to continue as going concerns and, therefore, whether they will realise their assets and discharge their liabilities in the normal course of business and at the amounts stated in the financial report.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Company and the consolidated entity not continue as going concerns.

(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 30 June 2014.

The Group has adopted all mandatory new and amended standards and interpretations applicable for the current period. The adoption of these standards and interpretations had no material impact on these financial statements or on the financial position or performance of the Group.

The Group has not elected to early adopt any other new standards or amendments that are issued but not yet effective. Certain amounts in the comparative financial statements have been reclassified to conform to the current period presentation.

(c) Basis of consolidation

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

(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.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

Notes 3. OTHER INCOME Management fees Interest received Profit on sale of motor vehicles	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 117,270 27,424 18,460 20,910 34,615 -
	170,345 48,334

Two vehicles owned by the Company were sold during the six months ending 31 December 2014. Details of the sale are provided below:

Original cost of motor vehicles Accumulated depreciation at date of disposal Written down value Proceeds on sale Profit on sale of motor vehicles	$ 117,280 (91,440)
	25,840 60,455
	34,615

4. EXPENSES Depreciation, amortisation and impairment included in Statement of Consolidated Income Depreciation of plant & equipment Amortisation of software/leasehold improvements	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 4,538 13,143 735 1,027
	5,273 14,170

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

5. CASH AND CASH EQUIVALENTS Cash at bank Short term bank deposits	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 488,472 1,045,092 250,000 250,000
	738,472 1,295,092

In addition, as at 31 December 2014 the Company has $300,000 in restricted cash (30 June 2014: $300,000) which is included as a current asset in the Statement of Financial Position, held at Westpac Banking Corporation. This has been established as 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. EXPLORATION ASSET

Exploration asset at 30 June 2014 Impairment due to transaction not proceeding Prepaid deposit refunded Exploration asset at 31 December 2014	$ 400,000 (250,000) (150,000)
	-

The exploration asset related to 2 deposits paid on the Arunta Base Metals transaction in Northern Territory that was abandoned during the period. The deposit of $150,000 was refundable if the transaction did not proceed, however the $250,000 portion was not refundable and has been impaired through the profit and loss account.

7. FINANCIAL ASSETS

For all financial instruments held as at 31 December 2014, the carrying value approximates fair value.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

					Consolidated	Consolidated
					6 months ended 31	6 months ended
					December 2014	30	June 2014
				Notes	$		$
8.	CONTRIBUTED EQUITY
	Ordinary shares				14,457,200	14,457,200
	Fully paid ordinary shares	carry one vote	per	share and carry	the right to dividends.
		6	months ended			6 months ended 30
		31	December 2014			June 2014
	Movement in ordinary shares on issue	Number of shares		$	Number of shares		$
	As at beginning of period:	206,254,392		14,457,200	206,254,392		14,457,200
	Shares issued		-	-	-		-
	As at end of the period:	206,254,392		14,457,200	206,254,392		14,457,200

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

9. COMMITMENTS AND CONTINGENCIES

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

) Exploration Expenditure Commitments: Under 12 (30 June 2014: 12) New South Wales (“NSW”) Government and 3 (30 June 2014: 2) Tasmanian Government exploration licences Payable - not later than one year - later than one year and not later than five years	Consolidated 6 months ended 31 December 2014 6 months ended 30 June 2014 $ $ 127,861 260,789 47,999 400,285
	175,860 661,074

(a) Exploration Expenditure Commitments:

(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 - not later than one year - later than one year and not later than five years	84,072 12,046 69,378 23,837
	153,450 35,883

10. EVENTS AFTER THE BALANCE SHEET DATE

On 5 January 2015 Clancy Exploration Limited received a request from a shareholder for a general meeting of shareholders to be held under section 249D of the Corporations Act 2001 (Cth).

The main resolution proposed was that Michael Etheridge be removed as a director of the Company. This resolution was defeated at the general meeting held on 27 February 2015, and Mike Etheridge remains Chairman of the Clancy Board.

As permitted under the Corporations Act, the Board elected to include an additional resolution, proposing that the Company issue up to 50 million shares at an issue price of 1.5 cents ($0.015) via a placement to Iskandia Holdings SCA (“Iskandia”), to raise $750,000. This resolution was passed at the same general meeting.

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CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITY

DIRECTORS’ DECLARATION

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

In the opinion of the Directors:

• (a) the financial statement and notes set out on pages 3 to 12 are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 including compliance with Accounting 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.

On behalf of the Board,

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G Barnes Managing Director

Signed in Orange this 12[th] day of March 2015

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Ernst & Young 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

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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 consolidated statement of financial position as at 31 December 2014, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting 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 31 December 2014 and its performance for the half-year 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 half-year, 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 31 December 2014 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 .

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Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 2 in the financial report which describes the principal conditions relating to the possibility of additional funding being required by the consolidated entity. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.

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Ernst & Young

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Ryan Fisk Partner Sydney 12 March 2015

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation