MAGONTEC LIMITED — AGM Information 2022

May 24, 2022

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Suite 1.03, Level 1 46A Macleay St Potts Point NSW 2011 Australia Ph: +61 2 8084 7813

Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street Sydney, NSW 2000

25 May 2022

Dear Sir/Madam,

Magontec Limited – 2022 Annual General Meeting Wednesday 25 May 2022 11:00am Executive Chairman’s Address

Attached is the address of Mr Nicholas Andrews, Executive Chairman of Magontec Limited, to be delivered at the Company’s 2022 AGM today.

The slides referred to in the body of the address appear in this document at the foot of the Chairman’s address.

Shareholders’ attention is drawn to heading “Slide 10 – Capital management” and the commentary below. There, Mr Andrews references a Board determination to pay a dividend of 0.6 cents per ordinary share for the 6 months to 30 June 2022.

Yours sincerely

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Mr John Talbot Company Secretary Magontec Limited

Contact details: +61 (0) 405 317 594

John Talbot, Company Secretary Magontec Limited, has authorised the release of this document to the market on 25 May 2022

ADDRESS BY EXECUTIVE CHAIRMAN MAGONTEC LIMITED

TO ANNUAL GENERAL MEETING 25 May 2022

Slide 1 (Frontispiece)

Ladies and Gentlemen, I would now like to move on to a discussion of our company and go through a few slides that explain the critical trends in our industries, a review of our business performance, some corporate issues and some financial commentary and outlook.

As many shareholders will have observed from comments in our 2021 Annual Report and in our more recent 2022 first quarter report, the global magnesium industry has experienced some challenging times over the last 9 months.

Slide 2 (Disclaimer)

Slide 3: Mg price chart

In 2021 the price of magnesium metal soared to nearly ¥63,000 per tonne, up 309% from 1 January to 26th September last year. While the price has now settled at a lower level, around ¥32,500 per tonne, this is still well ahead of its prior 10 year average price of a little over ¥16,000 per tonne. The rise in the price of our key raw material has had two countervailing effects; on the one hand it has raised the cost of inventories and debtors while, on the other, it has increased the selling price of our magnesium alloys and anodes.

The more important of these effects is the higher selling price. The profit that has flowed from higher magnesium prices has significantly reduced Magontec debt, a topic I shall return to later in the presentation.

The key questions for medium term profitability for Magontec are

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• will prices remain at higher levels? and

• will high prices continue to generate higher profits?

So firstly, why is the price of magnesium so high and what is the likely trajectory?

Around 90% of all magnesium is made using the Pidgeon process. The inputs are dolomite (a low-cost magnesium host rock), ferro silicone (a high cost reducing agent that extracts Mg from dolomite), energy and labour.

Energy in the Chinese magnesium industry is almost entirely derived from coke gas, a by-product from coke made for use in the steel industry, that is diverted to fire Pidgeon magnesium retorts. The price of Pidgeon process magnesium is thus largely derived from the price of coal and labour.

In China imported coal volumes have been disrupted and a nation-wide restructuring of the coal industry has closed private coal mines, many of which were low cost and lightly regulated. The result has been a decline in available volumes and supply disruption leading to historic coal price volatility.

New emission controls imposed on coke makers and magnesium producers by Chinese environmental authorities have made matters more complicated. Many companies have been shuttered while they buy and install emission abatement equipment. And over the long-term Chinese labour prices have continued to rise and are now higher than in some European countries.

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Slide 4: Mg & FeSi price chart

As I said earlier, ferro silicon is a key input raw material for Pidgeon process magnesium, and it is currently in a sharp upswing, putting renewed upward pressure on magnesium prices.

For Chinese magnesium producers able to operate, profitability has been very high. But high raw material, emission remediation, energy and labour costs appear likely to ensure that the price of magnesium will continue to track above the long-run average.

While this has raised the cost of magnesium relative to other competitor metals, there have been price rises and disruption across the entire metals industry supply chain, particularly in the aluminium industry, which closely competes with magnesium.

Slide 5: Magontec alloy and anode profitability

Over the last three quarters our metals and magnesium anode products, Magontec’s principal operating activities, have enjoyed a boost in profitability that coincides with this rise in magnesium prices.

At the beginning of this period there was an inventory effect where material acquired at a lower cost was sold into a higher priced market. More recently profitability has been sustained in all key magnesium metals products. In part this reflects a greater scope to arbitrage a higher commodity price relative to its cost of processing and in part a change in non-class 1 scrap values - material that was previously uneconomic to process, can now be profitably used as cast house feedstock. So higher selling prices have sustained higher levels of profitability through the first 4 months of 2022, and we think these

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conditions are likely to persist while magnesium prices remain at elevated levels.

Slide 6: Qinghai – dates and QSLM commentary

Moving on to our Qinghai business, we have continued to operate our cast house on reduced volumes, and in each period since the end of March 2019 this business has been unprofitable awaiting the recommencement of supply from QSLM.

We have persisted at Qinghai because to seek a temporary cessation of operations would likely become an effective withdrawal and would be difficult to reverse. At the Qinghai cast house we have an experienced team of 70 including managers, engineers, cast house operators and a settled administration team.

We have been able to contain losses at relatively low levels and we have retained important customers in China, Japan and North America. Effectively, our average EBITDA loss of $0.35 million at Qinghai for each of the five half year periods since 1 July 2019, has been an option on the QSLM plant restarting and the original production plan being achieved. Looking forward, we now expect a resumption of liquid pure magnesium supply within a few weeks. In my most recent communication with the leadership at Qinghai we have been told that remediation work in the dehydration plant has progressed and that commissioning will commence this month. I do caution that commissioning rarely goes to plan and there may still be further delay.

If the commissioning process is successfully completed on the foreshadowed timetable, we can expect limited volumes of magnesium

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in the second or third quarter of this year. Remediation work has focussed on only one out of 6 dehydration lines so output will likely be just 1/6[th] of the total plant annual production capacity of 100,000 tonnes.

As shown on this slide, at full production Magontec expects to receive 56% or a maximum 56,000 metric tonnes per annum of QSLM production volumes, which would markedly increase revenues and profitability. At the more limited flows anticipated over the coming months we expect a reversal of the current loss position for this asset.

The wait for a return to normal operations at Magontec Qinghai has been a frustrating experience for all shareholders, as it has for management. At this stage I can add little more other than to say that I communicate regularly with the QSLM management who are responsive and engaged. Our excellent President of Magontec Asia, Tong Xunyou, has visited regularly to inspect the factory and speak with the local management. If the Board did not believe that the metal would flow again, it would move quickly to close this operation.

Slide 7: Cathodic Corrosion Protection

I want to focus a little on the CCP business in this presentation. People often assume that Magontec is just a materials company and forget that we have a significant presence as a very successful manufacturing business.

Our most successful enterprise in terms of market share, innovation and contribution to profit is the manufacture and sale of magnesium and electronic anodes. These products are installed directly into hot water tanks on the production lines of our customers; companies such as

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Bosch in Europe, Haier in China, Bradford White in the USA and more recently, DUX here in Australia.

The magnesium anodes business has benefitted from the rising price of magnesium metal, as we saw in an earlier slide, but our real achievement has been in growing our global sales volumes.

We have won large market shares by being a highly efficient manufacturer and through our global distribution platform, with representatives located in and focussed on every regional market. While innovation is important, profitability in the CCP business is also driven by volume throughput. As one of the largest manufacturers of these products we have developed a low-cost manufacturing process resulting in a very profitable business.

As a competitive and diverse CCP manufacturer, we plan to continue to grow our customer base through service and innovation.

In Germany and China, we have chemical and electrical engineering teams developing new products and refining existing products. This provides a competitive edge in a market that is undergoing rapid change as consumers shift from carbon energy heating devices to higher technology heat pump devices that can use renewable energy.

Emerging global demand for zero emission and energy efficient hot water systems is a very positive trend for our electronic anode systems where revenues have grown by 80% over the last five years with the sharpest increase occurring in 2021 and continuing into 2022.

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Slide 8 – 1[st] Quarter 2022 results review

The broader picture over the last few months shows that Magontec has been a beneficiary of the rise in magnesium prices and strong markets for its CCP products.

These charts show the Gross Profit, Gross Profit Margin and Underlying Operating Cashflow over the last 5 quarters – data that we released in Magontec’s most recent financial results announcement last month. While Magontec has enjoyed a period of particularly strong earnings growth, as I said in my 1Q 2022 commentary, this is unlikely to be sustained, at least at this level, for each subsequent quarter.

Forecasting earnings and demand in each of our industry segments is difficult in normal times. With the world in its current state of turmoil it is foolhardy to try to look too far forward.

My observation to you is that the CCP industry (around 52% of our profits in 2022 YTD) generally experiences low volatility, as such a large proportion of hot water appliances go to the replacement market.

The automotive market is considerably more volatile. While we have learned to live and prosper with lower levels of throughput in our European and Chinese magnesium alloy factories, it is not difficult to see that there may be bumps in the road ahead for this key customer base. Future year profits and earnings consistency would certainly be greatly enhanced by the recommencement of supply of pure magnesium raw material from Qinghai. Low emission QSLM-sourced metal will likely be highly prized and prioritised by all global automotive manufacturers and their Tier 1 suppliers under all economic circumstances. The

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recommencement of supply from our Qinghai cast house will also enhance the earnings power of the wider Magontec metal business in China and Europe.

The other enduring feature of this period of strong earnings growth is its impact on the group’s balance sheet. Debt has fallen to low levels and Magontec is now well positioned to grow its sales in both its main businesses and look at new endeavours.

Slide 9: Working Capital and Net Debt

Magontec’s balance sheet has been measurably changed by higher levels of profitability over recent months.

The chart on the left shows the decline in net debt from $11.9 million at the end of the first quarter of 2021 to $5 million at the end of the March quarter in 2022.

The chart on the right shows the group’s working capital and how much of that is funded by banking lines, now just 12%, and how much is funded by shareholders equity, now 88%.

At a time of rising inflation Magontec has a low exposure to rising interest rates. The company also has access to some of the necessary funds and banking lines to grow the business as opportunities present. When material flows again from our Qinghai plant, we will have additional funding lines, not shown in our finance reports, that are available to that business under our agreements with QSLM.

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Slide 10 – Capital management

Over the last 18 months the Board has paid close attention to capital management.

In 2020 a buyback of un-marketable share parcels was approved and followed in 2021 by a 1-for-15 stock consolidation. These actions were designed to tidy up the company’s register, make our company more attractive to a wider group of shareholders and to position the company for the future. In 2022 we have been pleased to see several new

institutional shareholders join the Magontec register together with some new high-net-worth investors.

As our businesses have moved into a more profitable stage the Board has now been able to discuss the merits of a dividend. Given the cash generation of the last few months, there is a small surplus of funds that could be used for this purpose.

The Board, by formal decision, has determined that a dividend of 0.6 cents per ordinary share for the 6 months to 30 June 2022 be paid. The dividend will be unfranked, and shareholders will be offered an opportunity to participate in a Dividend Reinvestment Plan. Full details of the dividend will be decided by the Board in the legal formality of declaring the dividend upon release of the 2022 half year accounts at the end of August 2022. That formality will include setting the Record and Payment dates.

I am very pleased to be able to convey this development to shareholders. The 2021 financial results, the financial results to 31 March 2022 and the continued strong performance described in my

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earlier comments, all point to the likelihood of a 2022 result at least on a par with that of 2021.

While the outlook from today appears to be riddled with more than the usual level of uncertainties, if -

• Magontec’s strong performance to date is not significantly eroded in the balance of the current financial year; and

• general economic circumstances and the Company’s specific economic circumstances at the end of the current financial year are relatively benign (at least as far as Magontec is concerned), I will have a confidence to advance a case to the Board towards year’s end, for the determination of a further dividend in relation to end 2022 in the order of that currently determined. Of course, that will be a collective decision for the Board having regard to the then prevailing circumstances

Slide 11 – conclusion

Before I close and answer your questions, I want to make a short comment on our Board.

As Chairman of Magontec Limited I am very grateful for the support of the Directors who serve our company. Our Board includes specific and relevant skills.

Our China-based Director, Zhong Jun Li, is a magnesium industry veteran and plays an important and active role in assisting Magontec’s efforts in China.

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Atul Malhotra has had a long career in the European manufacturing industry, was a senior executive at one of Europe’s leading magnesium die casting companies and has close connections with European and North American automotive companies, a key customer base for our metals business.

Robert Kaye is a highly experienced Sydney-based company director and a senior counsel. Robert offers the Magontec Board a comprehensive legal overview.

Andre Labuschagne has also been a longstanding Director. He originally joined the Magontec Board as a representative of a substantial shareholder, Straits Mine Management. In February this year Straits sold their shares to a small group of new and existing shareholders. Andre’s experience in the Australian listed sector as a mining company CEO and Director, and his understanding of Magontec’s business make him a valuable contributor and I am very pleased that he has agreed to remain as a director of our company.

Our Board now comprises a majority of Independent Directors and moves to compliance with this aspect of the ASX Corporate Governance Principles and Recommendations (4th Edition).

Due to COVID restrictions in China and other travel issues, not all of your Directors could attend today’s meeting. However, I am sure you will agree with me that having Directors located in, and with a detailed knowledge of, our key operating and selling regions around the world, is important for a company as geographically diverse as Magontec.

Thank you for your time. I am now happy to take your questions.

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2022

Annual General Meeting

Magontec Limited ASX:MGL

Nicholas Andrews

Executive Chairman & CEO 25 May 2022

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Disclaimer

This Presentation has been prepared by Magontec Limited (ABN 30 147 131 977) (Magontec or the Company). This Presentation contains summary information about Magontec and its activities current as at the date of this Presentation. The information in this Presentation is of a general background nature and does not purport to be complete or to comprise all the information that a shareholder or potential investor in Magontec may require in order to determine whether to deal in Magontec shares. It should be read in conjunction with Magontec’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. This document is not a prospectus or a product disclosure statement under the Corporations Act (Cth) 2001 (Corporations Act) and has not been lodged with the Australian Securities and Investments Commission (ASIC).

Not investment or financial product advice

This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire Magontec shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek financial, legal and taxation advice appropriate to their jurisdiction. Magontec is not licensed to provide financial product advice in respect of Magontec shares. Cooling off rights do not apply to the acquisition of Magontec shares.

Financial data

All dollar values are in Australian dollars (A$) unless stated otherwise and financial data is presented within the financial year end of 31 December 2021 unless stated otherwise. Any pro forma historical financial information included in this Presentation does not purport to be in compliance with Article 11 of Regulation S-X of the rules and regulations of the US Securities and Exchange Commission.

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance

This Presentation contains certain “forward-looking statements”. The words “expect”, “should”, “could”, “may”, “will, “predict”, “plan”, “scenario”, “forecasts”, “anticipates”, “outlook” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. There can be no assurance that actual outcomes will not differ materially from these forward-looking statements, and there are risks associated with the Company and the industry (including those set out below) which may affect the accuracy of the forward-looking statements. The Company does not undertake any obligation to release publicly any revisions to any forward looking statement to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Investment Risk and other risks

Investment in Magontec shares is subject to investment and other known and unknown risks, some of which are beyond the control of Magontec Limited, including risk factors associated with the industry in which Magontec operates and risks specific to Magontec, such as: construction, development and operational risk associated with the Golmud Plant, fluctuations in magnesium alloy prices and exchange rates, risks associated with operating in China, financing risks, market price and demand risk and other risks generally relating to security investments.

Not an offer

This document may not be released or distributed in the United States. This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. Securities in the Company have not been, and will not be, registered under the U.S. Securities Act of 1933 or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States unless the securities are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, registration.

To the maximum extent permitted by law, Magontec and its respective advisers and affiliates, directors, officers and employees:

Make no representation or warranty, express or implied, as to the accuracy, reliability or completeness of information in the presentation; and

Exclude and disclaim all liability, for any expenses, losses, damages or costs incurred by you as a result of your participation in the proposed offering and the information in this presentation being inaccurate or incomplete in any way for any reason, whether by negligence of otherwise.

2

Magnesium price volatility (RMB/tonne)

¥70,000 Mg 99.9% China RMB

¥60,000

Magnesium price breaks out of 10-year trend

¥50,000

¥40,000

• 309% 1 Jan 2021 to 26 Sept 2021 + 112% 1 Jan 2021 to 23 May 2022

¥30,000

¥20,000

¥10,000 2010 2011

2012 2013 2014 2015

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2016 2017 2018 2019 2020 2021 2022
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Volatility drivers

energy costs

Labour prices

Emission abatement costs

3

Ferro Silicon & Magnesium price volatility (RMB/tonne)

¥70,000

¥60,000

¥50,000

¥40,000

Mg 99.9% China RMB FeSi 75% Ch RMB/mt

Ferro Silicon, a key raw material for magnesium

• also impacted by coal price rises - upward pressure on magnesium prices

¥23,000

¥18,000

¥13,000

¥30,000

¥8,000

¥20,000

¥10,000

2010 2011 2012 2013 2014 2015

energy costs

Volatility drivers

2016

2017

Labour prices

2018 2019

¥3,000 2021 2022

2020

Emission abatement costs

4

25.0%

20.0%

15.0%

10.0%

5.0%

Magnesium alloy and Cathodic Corrosion Protection - profitability

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Global Magnesium Alloy Metals Global CCP (Anodes)
Volumes (mt) GP Margin (%) Volumes (mt) GP Margin (%)
50%
918
871 872
5,473
5,281 768
40% 738
4,539 4,579
4,147
30%
20%
10%
0%
1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22
Metals: Strong margin growth CCP: Volume growth and margin Outlook: Qinghai volumes
reflecting underlying price rise growth in all regions expected to boost global metals
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0.0%
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Metals: Strong margin growth reflecting underlying price rise

5

Magontec Qinghai magnesium alloy cast house

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Revenue and profit Currently operating Cast house impact
Delayed SOP
opportunity at low levels
2021 Target
Mg production tons/year 7k 56k
Revenue A$ $30m $400m+ est
Cast house
Contribution Loss Profit
SOP Timetable
Production restart 2/3Q 2022
Initial volumes ~1k mt/month
Full production 2 years ?
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6

• assumes pure magnesium price of A$7,000 per tonne

Cathodic Corrosion Protection (CCP)

Every water tank in every house requires corrosion protection

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CCP
Magnesium Electronic
anodes anodes
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New
Buildings
20%
80%
Replacement
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Industry drivers Urbanisation (water heater installation) 80% replacement (5 to 10 year cycle)

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Climate change Switch from oil/gas to electric heat pump Accelerated replacement of installed appliances

7

Gross Profit and Cash Flow – 5 quarters to 1Q 2022

Gross Profit ($M) GP Margin (%) Underlying operating cashflow* ($M)

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26.6%
$10.6m
$13.8m
19.8%
16.1%
15.2%
14.2%
$6.0m
$7.6m
$3.6m $4.1m $4.0m $1.7m $1.8m
$0.9m
1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22
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• Underlying Operating Cashflow = Operating cashflow excluding working capital movements, interest and tax paid

8

Net Debt reflects higher profits

Working Capital reflects higher prices

Net debt ($M)

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Working Capital
Equity Net debt $42.9m
$11.9
12%
$36.3m
$10.2
$32.9m $33.2m
$31.5m 19%
31% 21%
36%
$6.9
$6.6
88%
$5.0
81%
79%
69%
64%
1Q21 2Q21 3Q21 4Q21 1Q22 1Q211Q20 2Q202Q21 3Q203Q21 4Q204Q21 1Q221Q21
Net Debt down to $5m Shareholders equity funds 88% of working capital Debt reduces as Mg prices decline
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9

Capital Management

➢ 2020

Buy back of un-marketable share parcels

• Reduce legacy shareholdings

• Small parcels quit register at no cost

➢ 2022

Determination to pay a dividend

• 0.6 cents per share expected to be declared upon release of 2022 Interim Result

• Dividend Reinvestment Plan (DRP) at a discount to be announced

➢ 2021

Consolidation of shares in the ratio 1 for 15

• Reduce volatility

Corporate Un-marketable parcel buyback actions:

Further 0.6 cents per share dividend to be considered by the Board with respect to the 2022 Full Year Result

Share register consolidation

Dividend

10

Magontec Limited - ASX Code: MGL

Shareholder Structure 31 March 2022

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Qinghai Salt Lake
ASX Code: MGL Total Per Share Magnesium Co Ltd
Retail 28.7%
30.7%
Ordinary shares on issue
76,729,210
following consolidation
Market capitalisation $29.2 million 38.0 cents/share
Book value of net assets
$41.5 million 54.0 cents/share
– 31 March 2022
Net debt – 31 March 2022 $4.9 million
Directors &
Associates
9.5%
Enterprise value $46.4 million
Institutional
31.1%
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• Based on share price of $0.38 as of 23 May 2022

11

2022

Annual General Meeting

Magontec Limited ASX:MGL

QUESTIONS

Nicholas Andrews Executive Chairman & CEO

25 May 2022