RAREX LIMITED — Interim / Quarterly Report 2018

Mar 15, 2018

CLANCY EXPLORATION LIMITED

ABN: 65 105 578 756 AND CONTROLLED ENTITIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HALF YEAR ENDED 31 DECEMBER 2017

CLANCY EXPLORATION LIMITED

CORPORATE DIRECTORY

DIRECTORS

Mr David Lenigas Non-Executive Chairman

Mr David Scoggin Non-Executive Director

Mr Scott Patrizi Non-Executive Director

Mr Shaun Hardcastle Non-Executive Director

COMPANY SECRETARY

Ms Oonagh Malone

PRINCIPAL PLACE OF BUSINESS

Suite 23, 513 Hay Street Subiaco Western Australia 6008

Telephone: (08) 6143 6720 Facsimile: (08) 9388 8824 Website: www.clancyexploration.com

REGISTERED OFFICE

Suite 23, 513 Hay Street Subiaco Western Australia 6008

ASX CODE : CLY

LAWYERS

Bellanhouse

Level 19, Alluvion 58 Mounts Bay Rd Perth Western Australia 6000

AUDITOR

Walker Wayland WA Audit Pty Ltd 129 Melville Parade Como Western Australia 6152

SHARE REGISTRY

Security Transfer Australia

770 Canning Highway Applecross WA 6153 Australia

Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

CLANCY EXPLORATION LIMITED

TABLE OF CONTENTS

DIRECTORS' REPORT
AUDITOR'S INDEPENDENCE DECLARATION
CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 3
CONDENSED STATEMENT OF FINANCIAL POSITION
CONDENSED STATEMENT OF CHANGES IN EQUITY
CONDENSED STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS' DECLARATION
AUDITOR'S REPORT ………………………………………………………………………………………………

DIRECTORS' REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2017

The Board of Directors has pleasure in presenting its report on the consolidated entity for the half-year ended 31 December 2017.

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.

Mr David Lenigas Mr David Scoggin Mr Scott Patrizi Mr Shaun Hardcastle (appointed 1 December 2017) Mr Evan Cranston (resigned 1 December 2017)

2. REVIEW OF OPERATIONS

During the half year, the Company acquired 100% of the Hong Kong Gold Project and commenced an exploration program targeting conglomerate-hosted gold, lode gold and VHMS mineralisation. In relation to the Leogang Cobalt Nickel Project in Austria, the Company has been focused on assessing the potential of the project with the view of identifying a new cobalt mining precinct in Europe. The Company also continued to seek new partners for the Trundle, Condobolin and Fairholme projects.

3. FINANCIAL RESULTS

The loss of the Company for the period ending 31 December 2017 was $6,007 (Six months to 31 December 2016: loss of $281,268). During the half year, total expenses amounted to $415,168 (Six months to 31 December 2016: $294,825).

Unrestricted cash and cash equivalents amounted to $1,146,983 as at 31 December 2017 (at 30 June 2017: $1,463,081).

4. AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

The auditor's independence declaration is set out on page 2 and forms part of the Directors' Report for the half year ended 31 December 2017.

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

On behalf of the Directors.

D LENIGAS Chairman

Signed this 15th day of March 2018.

AUDITOR'S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF CLANCY EXPLORATION LTD

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2017 there have been no contraventions of:

• $(i)$ the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and
• $(ii)$ any applicable code of professional conduct in relation to the review.

Walker Wayland WA Molit Pty 401

WALKER WAYLAND WA AUDIT PTY LTD

JOHN DORAZIO FCA Director Level 3, 1 Preston Street, COMO WA 6152 Dated this 15th day of March 2018.

ClinchardJoe Lamhut FCA; John Gorazio FCA; Bishard Gregson CA

.Liabifity limited by a scheme approved.under Professional Standards Legislation

CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2017

			Consolidated
Income	Notes	6 months to31 December 2017$	6 months to31 December 2016$
Other income	3	8,415	13,557
Sale of tenements	4	455,786	-
Loss on revaluation of financial assets	9	(55,040)	-
Total Income		409,161	13,557
Expenses
Administration expenses		(136,402)	(134,506)
Consultants & management expenses		(126,478)	(103,761)
Depreciation, amortisation and impairmentexpense	5	(2,096)	(2,581)
Financial costs		-	(1,270)
Legal expenses		(44,885)	(5,435)
Share based payments expense		(92,000)	-
Exploration expenses		(13,307)	(44,006)
Loss on sale of plant and equipment		-	(3,266)
Total expenses		(415,168)	(294,825)
Loss from continuing operations beforeincome tax expense		(6,007)	(281,268)
Income tax expense		-	-
Loss from continuing operations after income taxexpense		(6,007)	(281,268)
Other comprehensive income		-	-
Total comprehensive loss attributable to owners of the parent		(6,007)	(281,268)
Loss per share- basic and diluted		(0.0002) cents	(0.01) cents

The above Condensed Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes.

CONDENSED STATEMENT OF FINANCIAL POSITION

FOR THE HALF YEAR ENDED 31 DECEMBER 2017

		Consolidated
		31 December 2017	30 June 2017
	Notes	$	$
ASSETS
Current Assets
Cash and cash equivalents	6	1,146,983	1,463,081
Restricted cash asset	6	132,970	132,153
Trade and other receivables		11,689	23,362
Total Current Assets		1,291,642	1,618,596
Non-current Assets
Exploration & evaluation assets	8	1,683,440	-
Other financial assets	9	400,746	-
Plant and equipment		6,207	8,302
Total Non-current Assets		2,090,393	8,302
TOTAL ASSETS		3,382,035	1,626,898
LIABILITIES
Current Liabilities
Trade and other payables	10	105,657	50,072
Total Current Liabilities		105,657	50,072
TOTAL LIABILITIES		105,657	50,072
NET ASSETS		3,276,378	1,576,826
EQUITY
Contributed equity	11	19,039,198	17,425,639
Reserves	12	2,183,087	2,091,087
Accumulated losses		(17,945,907)	(17,939,900)
TOTAL EQUITY		3,276,378	1,576,826

The above Condensed Statement of Financial Position is to be read in conjunction with the accompanying notes.

CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2017

CONSOLIDATED	Notes	OrdinaryShares	OptionsReserve$	(AccumulatedLosses)	TotalEquity
		$		$	$
At 1 July 2017		17,425,639	2,091,087	(17,939,900)	1,576,826
Total comprehensiveincome for the period, netof tax		-	-	(6,007)	(6,007)
Transactions with owners in their capacity as owners
Share issues		1,620,000	-	-	1,620,000
Exercise of options		714	-	-	714
Transaction costs		(7,155)	-	-	(7,155)
Share based payments		-	92,000	-	92,000
At 31 December 2017		19,039,198	2,183,087	(17,945,907)	3,276,378
At 1 July 2016		17,074,543	1,685,087	(16,941,286)	1,818,344
Total comprehensiveincome for the period, netof tax		-	-	(281,268)	(281,268)
Transactions with owners in their capacity as owners
Share issues		350,000	-	-	350,000
Transaction costs		(10,763)	-	-	(10,763)
At 31 December 2016		17,413,780	1,685,087	(17,222,554)	1,876,313

The above Condensed Statement of Changes in Equity is to be read in conjunction with the accompanying notes.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2017

	Consolidated
		6 months ended31 December2017	6 months ended31 December2016
	Notes	$	$
CASH FLOWS USED IN OPERATING ACTIVITIES
Payments to suppliers and employees		(317,277)	(483,713)
Interest received		7,620	8,137
NET CASH FLOWS USED IN OPERATING ACTIVITIES		(309,657)	(475,576)
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds from sale of fixed assets		-	3,944
NET CASH FLOWS FROM INVESTING ACTIVITIES		-	3,944
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue		-	350,000
Proceeds from exercise of share options		714	-
Costs of share issue		(7,155)	(10,763)
NET CASH FLOWS FROM FINANCING ACTIVITIES		(6,441)	339,237
NET DECREASE IN CASH AND CASH EQUIVALENTS		(316,098)	(132,395)
Cash and cash equivalents at beginning of period		1,463,081	1,868,760
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6	1,146,983	1,736,365

The above Condensed Statement of Cash Flows is to be read in conjunction with the accompanying notes.

1. CORPORATE INFORMATION

The consolidated financial report of Clancy Exploration Limited ("the Company") for the half-year ended 31 December 2017 was authorised for issue in accordance with a resolution of the directors on 15th March 2018.

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 2017.

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 31 December 2017 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.

This report presents financials for the six month period to 31 December 2017, with comparatives for the six month period to 31 December 2016.

(b) Changes in accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 30 June 2017.

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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) New Standards and Interpretations

In the half year ended 31 December 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group's operations and effective for annual reporting periods commencing on or after 1 July 2016. It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group and, therefore, no change is necessary to accounting policies.

		Consolidated
		6 months ended31 December 2017$	6 months ended31 December 2016$
3.	OTHER INCOME
	Interest received	8,415	13,557
		8,415	13,557

4. SALE OF TENEMENTS

During the half year, Cadence Minerals Plc ("Cadence") elected to proceed with the exercise of an option to acquire an initial 10% interest the Leogang Cobalt Nickel Project in Austria. Under the terms of the agreement Clancy was issued 73,750,000 Cadence ordinary shares having a fair value at the date of the transaction of $455,786.

		Consolidated
		6 months ended31 December 2017	6 months ended31 December 2016
		$	$
5.	EXPENSES
	Depreciation of plant & equipment	2,096	2,581
		2,096	2,581

		Consolidated
		31 December 2017$	30 June 2017$
6.	CASH AND CASH EQUIVALENTS
	Cash at bank	946,983	1,263,081
	Short term bank deposits	200,000	200,000
		1,146,983	1,463,081

In addition, as at 31 December 2017 the Company has $132,970 in restricted cash (30 June 2017: $132,153) which is included as a current asset in the Condensed Statement of Financial Position, held at Westpac Banking Corporation. This has been established as security in respect of a $130,000 bank guarantee facility provided in turn for exploration licence security purposes.

7. FINANCIAL ASSETS

For all financial instruments held as at 31 December 2017, the carrying value approximates fair value.

8. EXPLORATION AND EVALUATION ASSETS

	Consolidated
	31 December 2017	30 June 2017
	$	$
Opening balance	-	-
Tenement acquisition costs1	1,620,000
Stamp duty on acquisition of tenement	63,440	-
	1,683,440	-

1 Fair value of 270,000,000 shares in Clancy Exploration Ltd issued as consideration for the acquisition of the Hong Kong Gold Project on 1 December 2017.

The balance carried forward represents the acquisition costs of the Hong Kong Gold Project which is in the exploration and evaluation phase. Ultimate recoupment of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of respective areas.

9. OTHER FINANCIAL ASSETS

	Consolidated
	31 December 2017$	30 June 2017$
Market value of shares held at balance date– Cadence Minerals PLC (73,750,000 shares)	400,746	-
	400,746	-

The shares in Cadence Minerals PLC were received as consideration for the disposal of 10% of the Leogang Cobalt Nickel Project in Austria (refer Note 4). The market value of the shares as at 31 December 2017 is based on a closing price of Cadence shares of GBP0.00315 and an exchange rate of 1AUD = 0.5797GBP. The movement in the value of the shares during the half year resulted in a loss of $55,040 (2017: nil).

10. TRADE AND OTHER PAYABLES

		Consolidated
		31 December 2017$	30 June 2017$
	Trade and other payables	105,657	50,072
		Consolidated
		31 December 2017$	30 June 2017$
11.	CONTRIBUTED EQUITY
	Ordinary shares	19,039,198	17,425,639

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

	6 months ended31 December 2017	12 months ended30 June 2017
Movement inordinary shares onissue	Number ofshares	$	Number of shares	$
As at beginning ofperiod:	2,714,207,075	17,425,639	2,357,540,408	17,074,543
Shares issued	270,000,000	(1) 1,620,000	350,000,000	350,000
Shares issued	178,500	(2) 714	6,666,667	20,000
Less: Transactioncosts		(7,155)		(18,904)
As at end of theperiod:	2,984,385,575	19,039,198	2,714,207,075	17,425,639

(1) Fair value of shares issued 1 December 2017 for acquisition of Hong Kong Gold Project.

(2) Shares issued on exercise of options.

12. RESERVES

		Consolidated
	31 December 2017	30 June 2017
	$	$
Share-based payment reserve	2,183,087	2,091,087
	2,183,087	2,091,087

13. COMMITMENTS AND CONTINGENCIES

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

	Consolidated
	31 December 2017	30 June 2017
	$	$
(a)Exploration Expenditure Commitments:
Under 8 (30 June 2017: 8) New South Wales ("NSW") Governmentexploration licences
Payable
- not later than one year	580,550	559,550
- later than one year and not later than five years	1,693,540	1,609,540
	2,274,090	2,169,090

(b) Operating Lease Commitments

The Company has operating lease commitments in respect of a photocopier, as follows:

	Consolidated
	31 December 2017	30 June 2017
	$	$
Payable
- not later than one year	2,448	2,448
- later than one year and not later than five years	1,020	2,224
	3,468	4,672

14. SEGMENT REPORTING

As a result of the acquisition of the Leogang Cobalt Nickel Project in Austria and the Hong Kong Gold Project in Western Australia during the six months ended 31 December 2017, the group has changed its internal organisation and the composition of its reportable segments. Accordingly, the Group has restated the operating segment information for the six months ended 31 December 2016.

Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (CODM), which has been identified by the Group as the Board of directors.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components.

At 31 December 2017 the Group had the following segments:

	Operating Profit/(Loss)		Total Assets		Total Liabilities
	31/12/2017	31/12/2016	31/12/2017	31/12/2016	31/12/2017	31/12/2016
	$	$	$	$	$	$
Gold	-	-	1,683,440	-	(63,440)	-
Cobalt/Nickel	(1,863)	-	-	-	-	-
Copper/Gold	(11,444)	(47,272)	6,207	10,841	-	-
Corporate	7,300	(233,996)	1,692,388	1,889,878	(42,217)	(24,406)
	(6,007)	(281,268)	3,382,035	1,900,719	(105,657)	(24,406)

15. EVENTS AFTER THE BALANCE SHEET DATE

There are no matters or circumstances which have arisen since the end of the half year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial periods, other than:

On 1st February 2018, Ms Oonagh Malone was appointed Company Secretary and Mr Rowan Caren resigned as Company Secretary.

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 2017 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,

D LENIGAS Chairman

Signed this 15th day of March 2018

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF CLANCY EXPLORATION LIMITED FOR THE PERIOD ENDED 31 DECEMBER 2017

REPORT ON THE HALF-YEAR FINANCIAL REPORT

We have reviewed the accompanying half-year financial report of Clancy Exploration Limited, which comprises the condensed statement of financial position as at 31 December 2017, the condensed statement of profit or loss and other comprehensive income, the condensed statement of changes in equity and the condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.

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:

• $(i)$ giving a true and fair view of Clancy Exploration Limited financial position as at 31 December 2017 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.

Directors' Responsibility for the Half-Year Financial Report

The directors of Clancy Exploration Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF CLANCY EXPLORATION LIMITED FOR THE PERIOD ENDED 31 DECEMBER 2017

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 half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of Clancy Exploration Limited's financial position as at 31 December 2017 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, 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 enguiries, 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.

Walker Woyland with health Ply Ctal.

WALKER WAYLAND WA AUDIT PTY LTD

JOHN DORAZIO FCA Director Level 3, 1 Preston Street, COMO WA 6152 Dated this 15th day of March 2018.

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Liables lim tod by a schema approvedunder Professional Standards Lealslation