CLANCY EXPLORATION LIMITED ABN: 65 105 578 756

AND CONTROLLED ENTITY

FINANCIAL STATEMENTS FOR THE YEAR ENDED

30 JUNE 2016

CORPORATE DIRECTORY

1

DIRECTORS' REPORT

The Board of Directors has pleasure in presenting its report on the consolidated entity consisting of Clancy Exploration Limited and the entity it controlled at the end of, or during, the year ended 30 June 2016.

1. Directors

(i) Names, Qualifications and Experience

The names and details of the Company's directors in office at any time during the year to 30 June 2016 and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr. Evan Cranston, BComm, LLB

Non-Executive Chairman - Appointed 7 July 2016 Non-Executive Director - Appointed 23 October 2014

Mr. Cranston is a corporate lawyer with over 10 years' experience specialising in corporate and mining law. Mr. Cranston has broad experience in the areas of capital raisings, initial public offerings, tenement acquisition agreements, mineral rights agreements, joint ventures, mergers and acquisitions and corporate governance. He holds a Bachelor of Commerce and Bachelor of Laws from the University of Western Australia and was admitted as a barrister and solicitor of the Supreme Court of Western Australia.

Mr. Cranston is currently an executive director of Attila Resources Limited (ASX: AYA) and non-executive director of Carbine Resources Limited (ASX: CRB), Primary Gold Limited (ASX: PGO) and Boss Resources Limited (ASX: BOE). Mr. Cranston was a non-executive director of Cradle Resources Limited (ASX: CXX) until 9 May 2016.

Mr. Cranston was Chairman of the Audit Committee from 27 November 2014 until the Committee was ceased in March 2016.

Mr. David Scoggin, BA

Non-Executive Director - Appointed 31 March 2016

Mr. Scoggin is a native of Santa Barbara, California and received his Bachelor of Arts from Princeton University, majoring in international relations and finance. He started his career in Tokyo and Hong Kong working as a proprietary trader for both Credit Agricole Indosuez and ING Barings. In 2000, he relocated to Australia where he started a 12-year period as a portfolio manager/senior trader managing hedge funds for Susquehanna International Group and Evolution Financial Group. He specializes in risk assessment, mergers and acquisition analysis, and has held several corporate advisory roles.

Mr. Scott Patrizi, BComm

Non-Executive Director - Appointed 7 July 2016

Mr. Patrizi is a corporate finance professional having been previously employed with Deloitte Touche Tohmatsu in Perth. Mr. Patrizi holds a Bachelor of Commerce from the University of Western Australia. During his time at Deloitte, Mr. Patrizi worked across a range of industries including mining, oil and gas, healthcare, education and private equity providing merger and acquisition, valuation and due diligence services. Prior to Deloitte, Mr. Patrizi worked for Argonaut Limited, a full service advisory, stockbroking & research and investment house focused on clients in the natural resources sector, where he gained significant equity capital market experience.

Mr. Nathan Featherby, B.Comm

Non-Executive Director - Appointed 23 October 2014, Resigned 7 July 2016

No-Executive Chairman - Appointed 8 April 2016, Resigned 7 July 2016

Mr. Featherby has 10 years of investment banking and natural resource investment experience. He has previously worked as a stockbroker and independent financier in Australia with a specialisation in resources. Mr. Featherby holds a Bachelor of Commerce from Curtin University. He is Executive Chairman of Ochre Management Pty Ltd, a Western Australian merchant bank which focuses on advisory and investments in small to medium capitalisation mining and exploration companies. Mr. Featherby is also executive chairman of Ochre Group Holdings Limited (ASX: OGH) and a director of Silver Mines Limited (ASX: SVL) and Ascot Resources (ASX:AZQ).

Mr. Gordon Barnes, BSc, MSc, MAIG, MSEG, GAICD Managing Director until resignation on 31 March 2016

Mr. Barnes is an exploration geologist with a background in exploration project management and technical consulting services. He has 27 years of practical experience, ranging from active field based projects through to multi-commodity project generation initiatives in Australia, Asia, North and South America. Mr. Barnes graduated from Royal Melbourne Institute of Technology with a Bachelor of Science in Applied Geology in 1987 and completed a MSc in Ore Deposit Geology at the University of Western Australia in 1996. He is a Member of the Australian Institute of Geoscientists, the Society of Economic Geologists and a Graduate of the Australian Institute of Company Directors. Mr. Barnes continues to provide consultancy services to the Company.

Mr. Barnes was appointed as Managing Director on 1 January 2011 and resigned on 31 March 2016. He has not held a directorship in any other listed entity in the past three years.

DIRECTORS' REPORT

1. Directors (continued)

   Dr. Michael Etheridge, FTSE, FAICD, FAIG, FGSA

   Non-Executive Chairman until resignation on 26 November 2015

   Dr. Etheridge is a geologist who has had a varied career in universities, a government research organisation and in industry. He was non- executive chairman of ABM Resources Ltd (ASX: ABU) until 8 March 2016. Until November 2013, he was deputy chairman of Zeus Resources Ltd (ASX: ZEU). Dr. Etheridge is a Fellow of the Australian Academy of Technological Sciences and Engineering, the Australian Institute of Company Directors, the Society of Economic Geologists and the Australian Institute of Geoscientists. Dr. Etheridge was appointed as a director of the Company on 11 March 2011 and was Chairman from 25 July 2011 to 26 November 2015.

   The Company's Audit Committee ceased on 30 March 2016.

2. Company Secretary

   Mr. Rowan Caren, B.Com, CA

   Mr. Caren is a Chartered Accountant with over 27 years' commercial experience. He has been directly involved in the minerals exploration industry for over 17 years. In 2004 he created a specialist company secretarial and advisory consultancy, Dabinett Corporate. He has provided financial and corporate services to several listed and unlisted companies involved in the resources sector. He qualified with PricewaterhouseCoopers and worked with them in Australia and overseas for six years.

   Mr. Caren graduated with a Bachelor of Commerce (Accounting) from the University of Western Australia and is a member of the Institute of Chartered Accountants in Australia. Mr. Caren was a member of the Audit Committee from 27 November 2014 until the cessation of the Committee on 30 March 2016.

3. Principal Activities

   The principal activities during the year of the entities within the consolidated entity were mineral exploration and development.

4. Review of financial performance

   The net consolidated loss from continuing operations for the year ended 30 June 2016, after income tax, amounted to $1,296,630 (2015:

   $955,446).

   During the year ended 30 June 2016, total expenses amounted to $1,345,157 (2015: $1,227,945). Unrestricted cash and cash equivalents amounted to $1,868,760 as at 30 June 2016 (30 June 2015: $1,231,434). Under the terms of certain joint venture agreements, the Company has an obligation to spend $Nil (30 June 2015: $174,645) of the cash balance on the respective joint venture projects, or in the event the joint venture partner does not elect to contribute beyond its minimum contribution, this amount may be refunded.

5. Dividends

   No dividend has been declared or paid by the Company since the end of the previous financial year and the directors do not at present recommend a dividend.

6. Review of Operations

   During the year the Company continued to explore its gold, copper and base metals projects in New South Wales, directly and through joint venture partners.

7. Likely Developments and Expected Results

   Other than as referred to in this report, further information as to likely developments in the operations of the Company and likely results of those operations in future financial years would, in the opinion of the directors, be speculative.

8. Significant Changes in the State of Affairs

   There have been no significant changes in the state of affairs during the financial year ending 30 June 2016, other than as follows:

   • Completion of a rights issue which raised $2.05m at an issue price of 0.1 cents per share;

   • Several parties farming into the Company's projects elected to withdraw from the earn-in arrangements during the year;

   • The Company relocated its corporate offices from Orange in NSW to Perth; and

   • There were a number of board changes during the year with Gordon Barnes and Michael Etheridge resigning whilst David Scoggin was appointed.