MAGONTEC LIMITED — AGM Information 2008

Nov 17, 2008

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Stuart Fitton Executive Chairman

Advanced Magnesium Limited Annual General Meeting 2008 – Chairman’s Address commercialising advanced material solutions

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Specialist Alloys

� AM-EX1: A light weight extrusion alloy with the potential to take a high percentage of aluminium extrusion market. Auto industry main prospect

� AM-HP2plus: High temperature, high performance and creep resistant alloy which is being trialled presently by die-casters to the auto industry in Europe

• AM -cas t : mas A t er a ll oy or spec a f i li s t a ll oys requ r ng z rcon um gra n re i i i i i fi n ng. i Potential high premium price alloy for which a marketing program is being developed.

� AM-lite : Only electroplatable magnesium on the market. Light weight and ideal for 3C’s – cell phones, cameras, computers

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Valuable Suite of Alloys with Real Potential – 2009 will be a Defining Year

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Environmental Solutions

� AM-cover : A replacement for SF6 as a magnesium cover gas. The carbon credit revenue resulting from switching to AM-cover from SF6 is encouraging die casters to move to AM-cover

� AM-converter: AM-converter has the potential to revolutionise all stages of the magnesium operating cycle from primary production through to die casting. In cell rec y clin g enables o p erations to reduce the costs and increases their productivity by over 25% plus, as well as lowering the use of cover gas and decreasing energy use, emissions and waste for landfill

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Two Environmental Solutions Adding Credibility to Magnesium as a 21[st] Century Metal

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Cash Position
Actual Forecast
2007 -08 2008 - 09
Opening Cash Balance 1 July 6,564,759 2,996,127
Inflows
Receipts from customers $196,129 $1,251,000
Sale of plant and equipment $278,213
Interest received $250,253 $118,000
Outflows
Redundancies ($597,639) ($154,151)
Operating activity outflows and other ($3,679,926) ($3,043,300)
Purchase of plant and equipment ($15,662) ($47,000)
Net Cash Inflows/ (Outflows) ($3,568,632) ($1,875,451)
Closing Cash Balance 30 June $2,996,127 $1,120,676
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*Actual to 18 November 2008

Sufficient cash to get through 2009 financial year and possibly to commercial viability

Status - Financial � Over $1.8 million in cash � No debt � Net (creditors – debtors) debtors of $22,000 � Gross operating cash spend per month 235,000 $ � People cost per month $115,000 � Patents per month $15,000 � Travel and Accommodation per month $36,700

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Status – Financial
(cont)
Current Shareholders’ Funds
Cash at 17 November 2008 $1,831,151
Net Debtors $22,000
Inventory $204,081
Shareholder’s funds as at 17 November 2008 $2,057,232
Shareholder’s funds as at 30 June 2008 $3,201,538
Reduction in shareholder’s funds $1,144,306
Reduction explained by:
Net expenditure July – Sept 2008 $828,261
Net expenditure Oct – 17 Nov 2008 $328,610
Less: increase in net debtors ($22,000)
Plus: other $9,345
Reduction in shareholder’s funds 1 Jul 08 – 17 Nov 08 $1,144,306
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Status - Operating

• AM-lite® - Focus moving to the surface finishing process

• AM-cover® - Bundling with Carbon Credit schemes

• AM-converter™ - Proven in cold chamber die-casting process

• Proving up in primary production and hot chamber die - casting

• AM-HP2® - New trial at Honsel in December

• AM-EX1 - Commence trialling in China in November

• AM-cast™ - Trialling in Japan

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Strong suite of alloys and products at different stages of development and marketing

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Organisation Lean organisation possessing wide ranging industry skills

� Salaried - 6

• Contract - 4

• Part-time - 3

• Agent - 1

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Looking Forward Operating Environment � Global credit crisis and recession � China slowing up dramatically � Magnesium industry will increasingly be dominated by bigger operations � AML’s suite of magnesium alloys and associated products remain attractive � AML has strong presence in China Tough environment but reasons for confidence

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Strategies

� Continuing vigorous control of expense base – impact of weak dollar on global expense base � Pressure on Germany, China and US divisions to cover cost-base in local currency � AM-converter and AM-cover focus � Get AM-EX1 to market by March 2009 � Continue development of AM-HP2 plus as funds allow � Seek joint venture partners for investment in specific projects – alloy production, billet-casting, AM-converter manufacturing, electroplating

Driving business for cash while keeping longer term options open

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Goals 2009
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• Overarching goal: survival and then profitability in 2010

• Annual operating cash spend of $3 million

• Annual sales revenue of $1.25 million

• End cash at 30 June 2009 $1.12 million

• Establish Chinese subsidiary by 31 January 2009

• Establish two operating businesses by 30 June 2009

Pivotal Year - Develop sustainable cash flow with increased operating focus