RAREX LIMITED — Interim / Quarterly Report 2019

Mar 14, 2019

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITIES

HALF YEAR ENDED 31 DECEMBER 2018

CORPORATE DIRECTORY

DIRECTORS

Mr Shaun Hardcastle Non-Executive Director

Mr Scott Patrizi Non-Executive Director

Mr David Scoggin 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 Website: www.clancyexploration.com

REGISTERED OFFICE

Suite 23, 513 Hay Street Subiaco Western Australia 6008

ASX CODES: CLY, CLYO

LAWYERS

Bellanhouse

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

AUDITOR

Walker Wayland WA Audit Pty Ltd Level 3, 1 Preston Street Como Western Australia 6152

SHARE REGISTRY

Automic Registry Services Level 5 126 Phillip Street Sydney NSW 2000 Australia

Telephone: 1300 288 664

CLANCY EXPLORATION LIMITED AND CONTROLLED ENTITIES TABLE OF CONTENTS

DIRECTORS' REPORT

The Board of Directors have pleasure in presenting its report on the consolidated entity for the half-year ended 31 December 2018.

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 Scoggin
• Mr Scott Patrizi
• Mr Shaun Hardcastle
• Mr David Lenigas (resigned 8 March 2019)

2. PRINCIPAL ACTIVITIES

The principal activities of the Group are mineral exploration and development. No significant change in the nature of these activities occurred during the half year.

3. REVIEW OF OPERATIONS

During the half year, the Company:

• completed the first stage of the Moroccan cobalt licence acquisition by acquiring an initial 20% interest in Atlas Managem S.A.R.L, which holds three Moroccan licences;
• disposed of a 70% equity interest in the Hong Kong Gold Project in the Pilbara to Pacton Gold Inc and entered into a joint venture agreement with Pacton Gold Inc in relation to its remaining 30% interest; and
• sold the net smelter royalties granted to the Company over the Myall Project, Wellington North Project, Parkes East Project and Moorefield Projects to Magmatic Resources Limited.

4. FINANCIAL RESULTS

The loss of the Company for the period ending 31 December 2018 was $1,206,211 (Six months to 31 December 2017: loss of $6,007). During the half year, total expenses amounted to $1,351,011 (Six months to 31 December 2017: $415,168).

Unrestricted cash and cash equivalents amounted to $480,043 as at 31 December 2018 (30 June 2018: $470,269).

5. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD

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 8th March 2019, Mr David Lenigas resigned as Executive Chairman of the Company.

6. AUDITOR'S INDEPENDENCE DECLARATION

The auditor's independence declaration under Section 307C of the Corporations Act 2001 is set out on page 3 and forms part of the Directors' Report for the half year ended 31 December 2018.

DIRECTORS' REPORT (continued)

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

On behalf of the Directors.

Scott Patrizi Non-Executive Director

Signed this 15th day of March 2019.

Auditor's Independence Declaration Under Section 307C of The Corporations Act 2001 to The Directors of Clancy Exploration Limited

I declare that, to the best of my knowledge and belief, during the half-year end 31 December 2018 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 with And it Hylld

WALKER WAYLAND WA AUDIT PTY LTD

John Dorazio FCA Director Level 3, 1 Preston Street, COMO WA 6152

Dated this $/s^{\prime\prime}$ day of March 2019.

	Consolidated
		6 monthsended 31December2018	6 monthsended 31December2017
Income	Notes	$	$
Other income	3	97,854	8,415
Sale of tenements	4	591,479	455,786
Loss on revaluation of financial assets	9	(544,533)	(55,040)
Total Income		144,800	409,161
Expenses
Administration expenses		(155,089)	(136,402)
Consultants & management expenses		(148,277)	(126,478)
Depreciation, amortisation and impairment expense	5	(2,090)	(2,096)
Legal expenses		(209,648)	(44,885)
Share based payments expense	15	(568,993)	(92,000)
Exploration expenses		(266,914)	(13,307)
Total expenses		(1,351,011)	(415,168)
Loss from continuing operations before income tax expense		(1,206,211)	(6,007)
Income tax expense		-	-
Loss from continuing operations after income tax expense		(1,206,211)	(6,007)
Other comprehensive income
Exchange rate differences on translating foreign operations		(1,085)	-
Total comprehensive loss attributable to owners of the parent		(1,207,296)	(6,007)
Loss per share
- basic and diluted		(0.0360) cents	(0.0002) cents

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE HALF YEAR ENDED 31 DECEMBER 2018

		Consolidated
		31 December2018	30 June2018
	Notes	$	$
ASSETS
Current Assets
Cash and cash equivalents	6	480,043	470,269
Restricted cash asset	6	134,784	133,847
Trade and other receivables		76,924	46,885
Total Current Assets		691,751	651,001
Non-current Assets
Exploration & evaluation assets	8	555,617	1,683,440
Other financial assets	9	1,801,750	277,512
Plant and equipment		2,056	4,146
Total Non-current Assets		2,359,423	1,965,098
TOTAL ASSETS		3,051,174	2,616,099
LIABILITIES
Current Liabilities
Trade and other payables	10	220,386	97,272
Total Current Liabilities		220,386	97,272
TOTAL LIABILITIES		220,386	97,272
NET ASSETS		2,830,788	2,518,827
EQUITY
Contributed equity	11	20,405,945	19,455,681
Reserves	12	2,846,995	2,279,087
Accumulated losses		(20,422,152)	(19,215,941)
TOTAL EQUITY		2,830,788	2,518,827

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2018

CONSOLIDATED	Notes	OrdinaryShares	OptionsReserve	Share BasedPaymentsReserve	ForeignCurrencyTranslationReserve	(AccumulatedLosses)	TotalEquity
		$	$	$	$	$	$
At 1 July 2018		19,455,681	2,279,087	-	-	(19,215,941)	2,518,827
Currency translation differences		-	-	-	(1,085)	-	(1,085)
Total comprehensive income for the period, net of tax		-	-	-		(1,206,211)	(1,206,211)
Transactions with owners in their capacity as owners
Share issues	11	1,010,003	-	-	-	-	1,010,003
Transaction costs	11	(59,739)	-	-	-	-	(59,739)
Share based payments	15	-	152,500	416,493	-	-	568,993
At 31 December 2018		20,405,945	2,431,587	416,493	(1,085)	(20,422,152)	2,830,788
At 1 July 2017		17,425,639	2,091,087	-	-	(17,939,900)	1,576,826
Total comprehensive income for the period, net of tax		-	-	-	-	(6,007)	(6,007)
Transactions with owners in their capacity as owners
Share issues	11	1,620,000	-	-	-	-	1,620,000
Exercise of options	11	714	-	-	-	-	714
Transaction costs	11	(7,155)	-	-	-	-	(7,155)
Share based payments	15	-	92,000	-	-	-	92,000
At 31 December 2017		19,039,198	2,183,087	-	-	(17,945,907)	3,276,378

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

6

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

		Consolidated
		6 months to31 December2018	6 months to31 December2017
	Notes	$	$
CASH FLOWS USED IN OPERATING ACTIVITIES
Payments to suppliers and employees		(693,924)	(317,277)
Interest received		1,647	7,620
NET CASH FLOWS USED IN OPERATING ACTIVITIES		(692,277)	(309,657)
CASH FLOWS USED IN INVESTING ACTIVITIES
Payments for capitalised exploration expenditure		(49,587)	-
Payments to acquire tenements		(247,084)	-
Proceeds from disposal of tenements		208,200	-
Proceeds from disposal of royalty		100,000	-
NET CASH FLOWS FROM INVESTING ACTIVITIES		11,529	-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue		750,003	-
Proceeds from exercise of share options		-	714
Costs of share issue		(59,739)	(7,155)
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES		690,264	(6,441)
NET DECREASE IN CASH AND CASH EQUIVALENTS		9,516	(316,098)
Cash and cash equivalents at beginning of period		470,269	1,463,081
Effect of movement in exchange rate		258	-
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6	480,043	1,146,983

The above Consolidated 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 2018 was authorised for issue in accordance with a resolution of the Directors on 15th March 2019.

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 2018.

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 halfyear ended 31 December 2018 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 2018, with comparatives for the six month period to 31 December 2017.

Going concern

As at 31 December 2018, the Group had working capital of $336,581 (30 June 2018: $419,882) and returned a loss attributable to owners of $1,206,211 (31 December 2017: $6,007). The ability of the Group to continue as a going concern is dependent upon the future successful raising of the necessary funding through disposal of assets, equity and/or debt and the successful exploitation of the Group's tenements.

The Directors believe it is appropriate to prepare the Financial Statements on a going concern basis because the Directors have appropriate plans to raise additional funds if required.

These Financial Statements have been prepared on the basis that the Group can meet its commitments as and when they fall due and can therefore continue normal business activities and the realisation of its assets and settlement of its liabilities can occur in the ordinary course of business.

In the event the Group is not able to achieve the above requirements, there is uncertainty whether the Group will continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in its financial report.

(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 2018.

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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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) Exploration and Evaluation Expenditure Assets

Exploration and evaluation costs are accumulated and accounted for separately on an area of interest basis. An area of interest is represented by an exploration project, which may include multiple tenements within a single geographic region.

For each area of interest, the company makes an election regarding its treatment of exploration and evaluation expenditure and whether it will be charged to the income statement as incurred, under the expense category "exploration expenditure," or capitalised as an exploration and evaluation asset.

An exploration and evaluation can only be recognised in relation to an area of interest if the following conditions are satisfied:

• a) the rights to tenure of the area of interest are current; and
• b) at least one of the following conditions is also met:
  • i. the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
  • ii. exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Capitalised exploration and evaluation expenditures are recorded as an exploration asset at cost less impairment charges. All capitalised exploration and evaluation expenditure are monitored for indicators of impairment. Where an impairment indicator is identified, an assessment is performed for each area of interest to which the exploration and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered it is charged to the income statement.

Exploration expenditure in relation to the joint operations managed by the consolidated entity is funded by the jointly controlled operation partner. The consolidated entity makes a cash call for expenditure at the beginning of each quarter for these joint operations on the basis of forecast expenditure. The consolidated entity recognises exploration expenditure reimbursed in advance at year end in the event that cash has been received in advance of expenditure. Exploration expenditure in respect of these joint operations is classified in the statement of comprehensive income within the income or expense category "Net joint venture reimbursed expenses".

(e) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key estimates

(i) Impairment – general

The Group assesses impairment at the end of each reporting period by evaluation of conditions and events specific to the Group that may be indicative of impairment triggers. Where impairment has been triggered, assets are written down to their recoverable amounts.

(ii) Options and Share Based Payments value

The options and share based payments issued by the Group during the half year (refer Note 7) have been valued by the Directors using the Black-Scholes option pricing model based on the inputs shown at Note 7.

NOTES TO ACCOUNTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) New Standards and Interpretations

In the half year ended 31 December 2018, 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 2018. 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.

The directors have reviewed the new AASB 9 Financials instruments standard which takes effect from 1 July 2018 but have yet to irrevocably designate that all financials instruments held by the company as at the half year ended 31 December 2018 qualify in meeting the measurement criteria of this standard. A further review of this standard against the company's financial instruments will be considered more stringently for the year ended 30 June 2019.

The adoption of AASB 15 Revenue from Contracts with Customers from 1 July 2018 has not affected balances of the Company because no revenue or potential revenue of the Company is recognised or measured differently by this standard. Future effects of the implementation of this standard will mostly depend on the wording and effect of relevant contracts.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted by the Company.

3. OTHER INCOME

	Consolidated
	6 monthsended 31December2018$	6 monthsended 31December2017$
Interest received	2,558	8,415
Proceeds from sale of royalty	100,000	-
Foreign Exchange Loss	(4,704)	-
	97,854	8,415

4. SALE OF TENEMENTS

During the half year ended 31 December 2018, Pacton Gold Inc ("Pacton") acquired a 70% equity interest in Clancy's Hong Kong Project in the Pilbara (Exploration Licence E47/3566).

	$
Cash consideration	208,200
Fair value of Pacton shares received as consideration	1,561,687
Total Consideration	1,769,887
Less: carrying value of 70% interest in Hong Kong Project	1,178,408
Gain on sale of tenement	591,479

During the half year ended 31 December 2017, 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.

5. EXPENSES

	Consolidated
	6 monthsended 31December2018$	6 monthsended 31December2017$
Depreciation of plant & equipment	2,090	2,096
	2,090	2,096

6. CASH AND CASH EQUIVALENTS

		Consolidated
	31 December2018$	30 June2018$
Cash at bank	480,043	470,269
	480,043	470,269

In addition, as at 31 December 2018 the Company has $134,784 in restricted cash (30 June 2018: $133,847) which is included as a current asset in the Consolidated 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 2018, the carrying value approximates fair value.

8. EXPLORATION AND EVALUATION ASSETS

	Consolidated
	31 December2018$	30 June2018$
Hong Kong Gold Project	2,558	8,415
Opening balance	1,683,440	-
Tenement acquisition costs	-	(2) 1,620,000
Stamp duty on acquisition of tenement	-	63,440
Less: Disposal of 70% interest	(1) (1,178,408)	-
Closing balance	505,032	1,683,440
Moroccan Cobalt Project
Opening balance	-	-
Capitalised exploration costs	50,585	-
Closing balance	50,585	-
	555,617	1,683,440

(1) 70% of the carrying value of the Hong Kong Gold Project

(2) 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 remaining 30% interest in the Hong Kong Gold Project and capitalised exploration costs in relation to the Moroccan cobalt licences, which are both 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 December2018$	30 June2018$
Market value of shares held at balance date
– Cadence Minerals PLC (73,750,000 shares)	152,458	277,512
– Pacton Gold Inc (3,780,613 shares)	1,142,208	-
Investment in Atlas Managem Sarl (20% interest)	507,084	-
	1,801,750	277,512

The shares in Cadence Minerals PLC were received as consideration for the disposal of 10% of the Leogang Cobalt Nickel Project in Austria. The shares in Pacton Gold Inc were received as consideration for the disposal of a 70% interest in the Hong Kong Gold Project in Western Australia. The market value of the shares as at 31 December 2018 is based on a closing price of Cadence Minerals PLC shares of GBP0.00115 and an exchange rate of 1AUD = 0.5563GBP and a closing price of Pacton Gold Inc shares of CAD0.29 and an exchange rate of 1AUD = 0.9622CAD. The movement in the value of the shares during the half year resulted in a loss of $544,533 (2017: $55,040).

10. TRADE AND OTHER PAYABLES

	Consolidated
	31 December2018$	30 June2018$
Trade and other payables	220,386	97,272
	220,386	97,272

11. CONTRIBUTED EQUITY

	Consolidated
	31 December2018$	30 June2018$
Ordinary shares	20,405,945	19,455,681
	20,405,945	19,455,681

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

	6 months ended31 December 2018		12 months ended30 June 2018
Movement in ordinaryshares on issue	Number ofshares	$	Number ofshares	$
As at beginning of period:	3,124,385,675	19,455,681	2,714,207,075	17,425,639
Shares issued	250,000,000	750,000	270,000,000	(2) 1,620,000
Shares issued	130,000,000	(1) 260,000	178,500	(3) 714
Shares issued	1,000	3	140,000,000	420,000
Shares issued	-	-	100	-
Less: Transaction costs		(59,739)		(10,672)
As at end of the period:	3,504,386,675	20,405,945	3,124,385,675	19,455,681

(1) Fair value of shares issued 24 October 2018 for part consideration in relation to the Moroccan licences.

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

(3) Shares issued on exercise of options.

NOTES TO ACCOUNTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

12. RESERVES

	Consolidated
	31 December2018$	30 June2018$
Ordinary shares	2,431,587	2,279,087
Share-based payment reserve	416,493	-
Foreign currency translation reserve	(1,085)	-
	2,846,995	2,279,087

13. COMMITMENTS AND CONTINGENCIES

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

(a) Exploration Expenditure Commitments

	Consolidated
	31 December2018$	30 June2018$
Estimated commitments for which no provisions were included inthe financial statements are as follows:
Payable
- not later than one year	503,837	547,291
- later than one year and not later than five years	315,510	899,003
	819,347	1,446,294

(b) Operating Lease Commitments

The Company has no operating lease commitments.

(c) Contractual Commitments

The Company has entered an agreement to acquire up to 100% of three cobalt licences in Morocco. The remaining commitments in relation to the consideration for the acquisition of the licences are as follows:

• ("Stage 2"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in Clancy within 6 months and 5 days from the completion of Stage 1, in consideration for a further 20% interest;
• ("Stage 3"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in Clancy within 6 months and 5 days from the completion of Stage 2, in consideration for a further 20% interest;
• ("Stage 4"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in Clancy within 6 months and 5 days from the completion of Stage 3, in consideration for a further 20% interest; and
• ("Stage 5"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in Clancy within 6 months and 5 days from the completion of Stage 4, in consideration for a further 20% interest, such that Clancy (or a subsidiary of Clancy) will have acquired or been issued a 100% interest at the completion of Stage 5.

Clancy has the right to accelerate any of the above payments. Clancy will also issue, 10 million options with an exercise price of $0.005 and an expiry date of 2 years from the date of issue to Contacio Pty Ltd (an unrelated party of Clancy) for facilitating the Acquisition.

NOTES TO ACCOUNTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

14. SEGMENT REPORTING

As a result of the acquisition of the Moroccan licences during the six months ended 31 December 2018, the Group has changed its internal organisation and the composition of its reportable segments.

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 2018 the Group had the following segments:

	Operating Profit/(Loss)			Total Assets		Total Liabilities
	31/12/2018$	31/12/2017$	31/12/2018$	31/12/2017$	31/12/2018$	31/12/2017$
Gold(Western Australia)	160,152	-	505,032	1,683,440	-	(63,440)
Cobalt/Nickel (Austria)	-	(1,863)	-	-	-	-
Cobalt (Morocco)	(232,734)	-	627,397	-	(147,434)	-
Copper/Gold (New South Wales)	(12,475)	(11,444)	-	6,207	-	-
Corporate	(1,121,154)	7,300	1,918,745	1,692,388	(72,952)	(42,217)
	(1,206,211)	(6,007)	3,051,174	3,382,035	(220,386)	(105,657)

NOTES TO ACCOUNTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

15. SHARE BASED PAYMENTS

During the half year ended 31 December 2018, the following share based payments were made. The options and performance rights have been valued by the Directors using the Black-Scholes option pricing model based on the following:

		Consultant	Director Performance Rights
	Options	Options	Tranche 1	Tranche 2	Tranche 3	Tranche 4
Underlying value of the security	$0.003	$0.002	$0.002	$0.002	$0.002	$0.002
Exercise price	$0.004	$0.005	Not applicable	Not applicable	Not applicable	Not applicable
Valuation date	20/8/18	24/10/18	31/10/18	31/10/18	31/10/18	31/10/18
Expiry date	9/5/19	24/10/20	3/8/19	20/8/21	20/8/21	20/8/21
Life of Options in years	0.7 years	2 years	0.75 years	2.8 years	2.8 years	2.8 years
Volatility	136.69%	190.13%	190.08%	190.08%	190.08%	190.08%
Risk free rate	2.02%	2.06%	2.02%	2.02%	2.02%	2.02%
Probability of vesting1	Not applicable	Not applicable	100%	30.6%	26.30%	23.40%
Number of Options	125,000,000	10,000,000	115,500,000	115,500,000	115,500,000	115,500,000
Valuation per Option	$0.0011	$0.0015	$0.002	$0.0006120	$0.0005260	$0.0004680
Valuation	$137,500	$15,000	$231,000	$70,686	$60,753	$54,054

1 The probability of vesting in relation to share price vesting conditions is calculated using a probability calculation model and the volatility of the share price.

Share based payments expense in the Statement of Profit or Loss and Other Comprehensive Income consists of the above options and performance rights as follows:

Options
Options	$137,500
Consultant Options	$15,000
Sub-Total -Options	$152,500
Director Performance Rights
Tranche 1	$231,000
Tranche 2	$70,686
Tranche 3	$60,753
Tranche 4	$54,054
Sub-Total –Director Performance Rights	$416,493
Total Share Based Payments Expense	$568,993

NOTES TO ACCOUNTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

15. SHARE BASED PAYMENTS (continued)

During the half year ended 31 December 2017, the following options, which were issued to Directors and vested immediately, were recorded at their fair value in the share-based payment reserve. The options have been valued by the Directors using the Black-Scholes option pricing model based on the following:

	Director Options #1
Underlying value of the security	$0.006
Exercise price	$0.007
Valuation date	1 December 2017
Expiry date	30 November 2020
Life of Options in years	3 years
Volatility	142.34%
Risk free rate	1.94%
Number of Options	20,000,000
Valuation per Option	$0.0046
Valuation	$92,000

16. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD

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 8th March 2019, Mr David Lenigas resigned as Executive Chairman of the Company.

DIRECTORS' DECLARATION

In the opinion of the Directors of Clancy Exploration Limited:

• 1. The financial statements and notes, as set out within this financial report, are in accordance with the Corporations Act 2001 and:
  • a. comply with Australian Accounting Standards which, as stated in accounting policy Note 2 to the financial statements, constitutes compliance with International Financial Reporting Standards; and
  • b. give a true and fair view of the financial position as at 31 December 2018 and of the performance for the half year ended on that date of the Company.
• 1. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Scott Patrizi Non-Executive Director

Signed this 15th day of March 2019

Independent Auditor's Review Report 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 ("the Company") and its controlled entities ("the Group"), which comprises the consolidated statement of financial position as at 31 December 2018, 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 policies and other explanatory information, and the directors' declaration.

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 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.

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 the group's financial position as at 31 December 2018 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. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Clancy Exploration Limited. would be in the same terms if given to the directors as at the time of this auditor's 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:

• giving a true and fair view of the group's financial position as at 31 December 2018 $(i)$ and of its performance for the half-year ended on that date:
• $(ii)$ and complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Emphasis of Matter - Going Concern

Without modifying our opinion, we draw attention to the following matter. As a result of the matters disclosed in Note 1 "Going Concern" of the financial report, there is a material uncertainty whether the group can continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. The ability of the group to continue as a going concern is dependent upon its ability to generate additional funding through further capital raising and the successful exploitation of its tenements.

Walker Wayland WA Andit My List

WALKER WAYLAND WA AUDIT PTY LTD

John Dorazio FCA Director Level 3, 1 Preston Street, COMO WA 6152 Dated this $/1$ day of March 2019.