RAREX LIMITED — Interim / Quarterly Report 2015

Jan 28, 2016

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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 31 December 2015

The Board of Clancy Exploration Limited is pleased to release its Quarterly Activities report for the period ending 31 December 2015.

Summary

• One diamond drill hole was completed at the Trundle JV ; results pending.

• Three reverse circulation drill holes completed at the Condobolin JV.

• New joint venture formed with Alkane Resources at Orange East .

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. There is extensive evidence of porphyry and skarn-style copper-gold mineralisation similar to the Cadia Valley and Northparkes. As announced in the September 2015 quarterly report two encouraging zones of broad anomalous induced polarisation (IP) chargeability have been defined in the Trundle Park and Mordialloc areas.

During the quarter the Mordialloc NE IP chargeability anomaly (Figures 1 & 2) was tested with a single air core pre-collar diamond hole to a down hole depth of 589.35m (Table 1).

Table 1: Trundle Collar

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Easting Northing RL Depth Dip
Hole ID Hole Type Grid ID Diameter Dip°
(m) (m) (m) (m) Azimuth°
Air core-
TRACD001 MGA94_Z55 569850 6361750 286 589.35 NQ -80 270
Diamond
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The hole was drilled steeply to the west (80°/270°) in order to best transect the northern portion of the IP chargeability anomaly. The hole intersected a thick sequence of andesitic volcaniclastic rocks at the top of the hole followed by a series of gently dipping garnet-rich calc-silicate skarn and silica hornfels horizons intruded by a porphyritic monzonite dyke. The rocks are crosscut by abundant carbonate-sulphide bearing veins. Disseminated sulphides are also present in the matrix, with the dominant sulphide being pyrite. These sulphides are likely to be the source of the IP chargeability anomaly. Samples have been submitted to the laboratory and assays are awaited.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2015

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1m @ 3,120ppm Cu from 3m (BOH)
Vertical Section: Figure 2
48m @ 0.15%Cu, 0.12g/t Au, 41ppm Mo
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Figure 1 – Plan view location of drill traces (heavy black) and drill collars (black dots) with respect to the IP chargeability horizontal slice at 0m RL over the RTP regional magnetic background image. TRACD001 is in the top right of the image. The interpreted outline of monzonite (orange stipple) at Mordialloc is also shown.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2015

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Figure 2 – Vertical east-west cross section looking north with TRACD001 (heavy black) shown transecting the IP chargeability shells over the RTP magnetic image.

Condobolin EL7748

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

Condobolin EL7399 is located in the central west of NSW immediately north of the Condobolin township (Figure 3). 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, arsenopyrite and free gold.

A 3-hole (639m) reverse circulation drilling program was completed in mid-December to test 3D IP chargeability targets generated by previous surveys. All holes were drilled distal to major known prospects. Minor quartz veining and sulphides were intersected, hosted by variably-phyllic altered metasediments of the Ordovician Girilambone Group. No significant gold intercepts (>1.0g/t) were returned.

Orange East EL6181 & ELA5243

(NSW, Clancy 100%; Alkane Resources Ltd, earning 60% and funding 100%)

Orange East is located 15km ESE of the city of Orange and contains several target styles including Ordovician porphyry copper-gold and post-Ordovician copper-gold targets. Numerous old workings occur in the area and many are focused along regional-scale structures, such as the Lucknow and Godolphin faults. Previous work by Clancy defined a soil anomaly at the Gunnarbee prospect, which has similar geochemical, structural and geological characteristics as the nearby McPhillamys gold deposit, 15km along strike to the south (Figure 3).

During the quarter a farm-in agreement was entered into with Alkane Resources Ltd (Alkane; ASX: ALK) over the Orange East project whereby Alkane can earn a 60% interest by spending $500,000 on exploration over

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2015

three years. Alkane can earn a further 20% interest (80% total) by spending an additional $500,000 on exploration over the subsequent two years. Alkane will manage the exploration program.

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Figure 3 – Map showing location of Clancy projects in central NSW.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2015

Corporate

During the quarter Dr Mike Etheridge resigned as chairman and director of the Company. As at 31 December 2015, the company held cash and restricted cash of $947,000.

Clancy Tenement Listing

(As at 31 December 2015)

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JV Clancy Area
State Project Lease No Status Project Manager interest (km2) Note
Ramelius Resources
NSW Condobolin EL7748 Renewed Yes Ramelius 100% 181.5
Ltd earning 80%
NSW Genaren EL7927 Renewed No Clancy 100% 95.4
NSW Cundumbul EL6661 Renewed No Clancy 100% 141.4
Renewal
NSW Cundumbul EL7399 No Clancy 100% 26.0
pending
NSW Fairholme EL6552 Renewed Yes Clancy 51% 54.5 Kaizen Discovery Inc
earning 65%
NSW Fairholme EL6915 Renewal Yes Clancy 51% 114.7 Kaizen Discovery Inc
pending earning 65%
NSW Kiola EL8151 Granted No Clancy 100% 284.2
NSW Orange East EL6181 Renewed Yes Alkane 100% 40.2 Alkane earning 60%
High Power
NSW Trundle EL8222 Granted Yes HPX 100% 167.2 Exploration Inc
earning 51%
Mount
NSW EL8226 Granted No Clancy 100% 45.8
Tennyson
NSW Mount Pleasant EL8237 Granted No Clancy 100% 63.5
NSW Jemalong EL8302 Granted No Clancy 100% 28.6
NSW Jemalong ELA5218 Application No Clancy 100% 80.1
Renewal Bass Clancy interest carried
TAS Lake Margaret EL28/2009 pending Yes Metals 25% 59.0 to Prefeasibility study
TNT
TAS Oonah EL63/2004 Renewed Yes Mines 25% 24.0 Clancy contributing
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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.

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Clancy Exploration Limited (ASX: CLY)

Quarterly Activities Report for period ending 31 December 2015

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 six wholly owned and managed projects and four joint venture projects with High Power Exploration Inc, Ramelius Resources Limited (ASX: RMS), Kaizen Discovery Inc and Alkane Resources Ltd (ASX: ALK) respectively. In Tasmania, Clancy has one base metal joint venture project with Bass Metals (ASX: BSM) and one 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

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Name of entity
CLANCY EXPLORATION LIMITED
ABN Quarter ended (“current quarter”)
65 105 578 756 31 December 2015
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A’000 (6 months)
$A’000
1.1 Receipts from product sales and related 3 6
debtors
1.2 Payments for (a) exploration & evaluation (301) (573)
(b) development
(c) production
(d) administration (145) (302)
1.3 Dividends received
1.4 Interest and other items of a similar nature
received 5 9
1.5 Interest and other costs of finance paid
1.6 Income taxes (paid)/refunded
1.7 Other
Cash calls received from JV partners 334 369
Net Operating Cash Flows (103) (491)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects
(b) equity investments
-
(c) other fixed assets (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)
1.13 Total operating and investing cash flows
(carried forward) (103) (494)
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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) (103) (494)
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 (103) (494)
1.20 Cash at beginning of quarter/year to date 840 1,231
1.21 Exchange rate adjustments to item 1.20
1.22 Cash at end of quarter
737 737
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 74
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 480
(includes approximately $50,000
which is to be funded by JV partners
pursuant to cash calls during the
quarter)
4.2 Development -
4.3 Production -
4.4 Administration 204
Total 684
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Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of quarter(item 1.22) #Excludes $210,000 of restricted cash but includes a total of $222,000 sequestered for Trundle and Fairholme projects. *Excludes $210,000 of restricted cash but includes $249,000 sequestered for Trundle project.	Current quarter $A’000 24 713 - - 737#	Previous quarter $A’000 15 825 - - 840*

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 EL20/2010 ELA 5218	Nature of interest (note (2)) Sock Creek: JV with Bass Metals Jemalong	Interest at beginning of quarter 25% 0%	Interest at end of quarter 0% 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 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)
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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: 29 January 2016 ( ~~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