MAGONTEC LIMITED — AGM Information 2023

May 10, 2023

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MAGONTEC Limited ABN 51 010 441 666

Registered office Suite 1.03, 46A Macleay Street Potts Point, Sydney NSW 2011 T: +612 8084 7813

11 May 2023

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

Dear Sir/Madam,

Magontec Limited – 2023 Annual General Meeting Wednesday 11 May 2022 10:00am Executive Chairman’s Address

Attached is the address of Mr Nicholas Andrews, Executive Chairman of Magontec Limited, to be delivered at the Company’s 2023 AGM today.

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

Yours sincerely,

Dean Taylor Company Secretary Magontec Limited

Dean Taylor, Company Secretary of Magontec Limited has authorised the release of this document to the market on 11 May 2023.

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ADDRESS BY EXECUTIVE CHAIRMAN MAGONTEC LIMITED

TO ANNUAL GENERAL MEETING 11 MAY 2023

SLIDE 1 & 2

Good morning, ladies and gentlemen.

In my presentation to shareholders this morning I will address four issues:

1. The performance of Magontec in the financial year ended 31 December 2022.

2. The financial performance of Magontec’s businesses as at the end of the first quarter of 2023.

3. The financial outlook for the balance of 2023, and

4. The operational status of the Qinghai project and the likely timeline to delivery of metal to Magontec’s magnesium alloy cast house.

As usual, at the end of my presentation, I am happy to take questions from shareholders on my comments today and on other aspects of Magontec.

The returns the Company enjoyed in 2022 reflect a series of events that were unusual and collectively positive for Magontec’s magnesium metal and magnesium anode businesses. The period presented an opportunity to capitalise on a unique set of circumstances and deliver superior returns to shareholders. I have discussed these events in the Annual Report and in investor briefings over recent months, but the key points bear repetition.

SLIDE 3

The coincidence of Chinese environmental authority actions to reduce CO2 emissions in the coal and magnesium industries, and the declaration of ‘force majeure’ by US Magnesium in Utah in the USA, caused the price of magnesium to rise precipitously through the 3rd quarter of 2021.

For suppliers of magnesium and magnesium alloys, such as Magontec, our key challenges were to manage a very volatile market, to fund a rapid rise in working capital and to manage a series of sharp price changes in customer supply agreements.

Our sales and management teams in Europe and Asia were able to navigate this process as well as we could have hoped. But it is also the case that our key customer base is still absorbing the shock of a tripling of prices.

For Magontec the price change in the 12-month period, from the third quarter of 2021, changed the profitability of our business. In the ordinary course of our business, the cost of recycling magnesium scrap is governed by the quality and cost of input material and the sales price of the finished product. When magnesium prices rise to unusually high levels, the volume of accessible scrap material also rises.

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This is because the rising price of the underlying raw material provides the opportunity for lower grade scrap to be accessed and recycled at what, in a normal market, would be an uneconomic processing cost.

Through the period of higher prices, Magontec’s recycling businesses were able to access lower grade scrap material and generate higher than normal levels of cash, particularly in the US which also experienced a severe supply shortfall.

While the environmental constraints in China eased in early 2022, in April this year new Chinese environmental constraints have caused prices to rise again. Meanwhile US Magnesium has yet to re-commence supply and prices for magnesium alloys in the United States remained at high levels until very recently.

SLIDE 4

So, to recap on the highlights of the year to 31 December 2022, revenues rose to $158.6 million, largely driven by a change in underlying raw material prices, while EBITDA, NPAT and Earnings Per Share were two to three times higher than in the previous corresponding period.

An important feature of the 2022 result was cash flow of $28 million from underlying operations*.

*Cashflow from underlying operations is defined as Reported Operating Cashflow Excluding Working Capital Movements, Interest and Tax Paid

Of this $28 million, around $14 million was used to fund higher working capital and $3 million was used to fund tax and interest payments, leaving almost $11 million to be applied to the Company’s capital expenditure, debt and other funding commitments.

The strength of the result and the positive impact on Magontec’s balance sheet meant that the company was able to pay a dividend for both the Interim and Full Year periods of a cumulative 1.2 cents per share (unfranked) for 2022.

Well, so much for 2022. As interest rates rose sharply, consumer confidence began to wane, and the global economy entered less certain times, Magontec finds itself in a strong position after a year of exceptional earnings growth and able to consider opportunities for expansion should they arise.

SLIDE 5

In the first quarter of 2023 some of the momentum of 2022 has continued. Earnings in the magnesium alloys and magnesium anodes businesses in Europe and China have performed well, although not at the same level as in the prior corresponding period. Please note that all numbers presented with respect to the first quarter of 2023 are unaudited.

Underlying Operating Cash* generation from the business has been strong, particularly compared with the last two quarters of 2022, increasing cash reserves and reducing gearing to negative 16.7%.

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A salient feature of the period has been the return to the company of some of the cashflow that was diverted into working capital in 2022. In the first quarter of 2023, a net $2.0 million of additional cash has come back from working capital as contracts roll over, reflecting lower average magnesium prices, and this trend is expected to continue through 2023. The company now has net cash of $8.5 million as at the end of 1Q23, another positive echo from 2022.

It seems likely that this first quarter will be the strongest trading period in the 2023 financial year. A rapid rise in interest rates in all key economies has brought tighter markets, particularly to our magnesium alloys businesses where volumes in the current period are lower and pricing more competitive. High inventories and uncertain consumer demand is having a dampening effect in the early part of this second quarter.

SLIDE 6

Two more charts that I think underline the strength of the first quarter of 2023 and reflect the improvement in the underlying value of the company.

On the left is quarterly Gross Profit over the period from the first quarter of 2021. It shows the metals profit in light blue and the anodes profit in dark blue.

The first observation is that the anodes businesses have steadily grown their contribution to profitability over a long period of time and we expect that to continue. It is a very valuable and consistent business that is often overlooked in our Company.

The second observation is that earnings from the metals businesses were exceptional in the first two quarters of 2022 but have been less so in the period since. As I shall discuss in a later slide, for metals business profitability to achieve a higher level of consistency we need supply of primary metal from our Qinghai factory.

The slide on the right shows the steady rise in Net Tangible Assets per share reflecting a measurable uplift in the underlying value of the company.

SLIDE 7

As longer-term shareholders will know, Magontec’s principal customer group is the automotive industry. While industry forecasters expect automotive sales to stage a steady recovery through the coming three years, 2023 volumes are expected to be flat to slightly up on 2022, mostly driven by a post COVID recovery in Chinese demand.

The automotive industry is highly sensitive to changes in interest rates and consumer confidence. I think it’s fair to say that the direction of travel for this sector is extremely difficult to forecast at this point in time

SLIDE 8

We see a similar picture in the hot water industry where interest rates are depressing home construction in Europe, the US and more particularly in China. Although up to 80% of anode

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demand from the hot water appliance industry comes from the replacement cycle, the drop in new homes is likely to see global volumes remain flat or decline in 2023.

A bright spot for Magontec in this market is the switch to heat pumps, particularly in developed markets. This is, in part, being driven by government subsidies in many countries to meet national climate change abatement targets.

A ‘heat pump’ device has a lower environmental footprint than gas, oil, or older technology mains electric home heating systems. A ‘heat pump’ is an expensive appliance and manufacturers are reluctant to install a magnesium anode, despite its price advantage, when a more intelligent and longer lasting powered anode system is available.

Magontec is the global leader in the manufacture of powered anodes. Our German engineering team developed a market-leading device some 30 years ago and throughout the intervening years have consistently upgraded the product to incorporate additional functions. The latest iteration for our European and US OEM customers was released earlier this year.

Magontec’s powered anode products go directly to manufacturers for incorporation into their new hot water systems and are widely sold to plumbers as replacement devices for magnesium anodes in systems that are already installed.

Sales have grown steadily over recent years and 2023 will likely see a stronger performance from this product driven by a secular change in underlying industry dynamics that is relatively immune to the economic cycle.

We also see plenty of opportunity for our magnesium anodes. Last month I made my first visit to our Chinese factories since the end of COVID restrictions. In Xi’an our anode factory has been completely remodelled and has grown capacity for magnesium and aluminium anodes to 4,500 metric tonnes per annum. This is close to 30% of global demand and makes Magontec Xi’an the world’s largest and likely most efficient magnesium anode manufacturer. This expansion is targeted at new opportunities in the US as well as China and other Asia Pacific markets where we continue to win and grow our market shares.

SLIDE 9

Before I make some concluding remarks, I want to address the issue that has caused such a long delay to Magontec’s central magnesium alloys strategy, the supply of liquid pure magnesium to our Qinghai magnesium alloy cast house.

Qinghai is a key element of our global metals strategy. Without a high-volume primary magnesium alloy production unit, our ability to supply our customers all over the world, is heavily constrained.

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A temporary constraining issue is that the economics of our Qinghai cast house facility were not designed to rely on solid ingot raw material sourced from Chinese Pidgeon magnesium producers. So we currently run that facility at low volumes and at low levels of profitability.

More impactfully, the absence of primary magnesium alloys from China constrains our recycling volumes in Europe and our ability to grow that product into other markets.

I won’t address all the history of the Qinghai project here; suffice to say we have not received any magnesium raw material from our Qinghai partner, Qinghai Salt Lake Magnesium Co Ltd (QSLM) since the first quarter of 2019.

I am pleased to say that, under new direction, our Qinghai partner, Qinghai Salt Lake Magnesium Co Ltd (QSLM) is moving towards a recommencement of production of pure magnesium. Mr Xing Cai Li, the General Manager of QSLM’s parent company, was appointed to take charge of this project in early 2022 and in September last year he joined the Board of Magontec.

Mr Li tells me that the critical issues regarding the dehydration facility have been resolved while issues concerning the efficiency of the electrolysis process and the production of chlorine gas are being addressed. I understand that they have identified a resolution for the key issue of chlorine production efficiency that requires a change to the electrolysis process in each cell. This is expected to be completed for a small number of cells by the end of this year with a production commencement date in the first quarter of 2024, starting at lower volumes and building through the year a s more remediated cells come on-line.

This is not a date set in concrete and Mr Li’s team have cautioned that other issues may arise as the remediation process progresses.

I am very hopeful that 2024 will be the year when our investment in primary magnesium alloy production at Qinghai will start to deliver returns to shareholders.

SLIDE 10

In closing I want to make the following points

• Magontec is well placed to weather the economic uncertainties and high interest rates of the current period. We have no net debt and a net cash position of more than $8 million.

• The first quarter has delivered a solid start to 2023 but conditions are soft or deteriorating in all markets and we are likely to see negative comparisons with prior year corresponding periods in the months ahead.

• When it comes on stream, the Qinghai project is expected to deliver a very strong boost to our primary magnesium alloy production volumes and Group profitability. The benefits of the Qinghai project will also meaningfully impact our recycling activities in Europe and our magnesium anode manufacturing businesses in Europe and China that currently supply around 25% of global CCP markets.

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• Over the last 18 months we have sought new opportunities for the company in the magnesium and the hot water appliance markets that we know well. We are considering a small number of opportunities that either mirror or are adjacent to the operations that we currently manage in terms of process, material and manufacturing complexity.

• In each of our businesses we continue to pursue incremental improvement projects that lower costs, increase profitability, and widen the scope of our businesses. These include a near doubling of the size of our Chinese anode manufacturing facility in Xi’an, the launch of a new powered anode systems for European and US OEMs and the development of a reprocessing technology that now recovers around 60% of the material that we previously sent to landfill sites.

While the economic cycle will test every business in 2023, Magontec has the benefit of a strong balance sheet and a team of experienced and motivated employees in four factories and other sales offices around the world. Throughout the COVID lockdown period, and now through an economic downswing, I remain confident that we can address each new challenge with the same enthusiasm and experience.

That concludes my presentation and I am now happy to answer shareholder questions on operational and strategy matters.

Magontec Limited ASX:MGL

2023 Annual General Meeting Executive Chairman’s Address

11 May 2023

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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 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

PRC coal price / environmental initiatives driving Mg price

Chinese Coal and Magnesium prices (1 Jan 2020 – 6 May 2023)

Coal RMB/mt

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Mg
RMB/mt
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3000 ¥70,000
US Magnesium declares
‘force majeure’, remains closed ¥60,000
2500
¥50,000
2000
Tighter Chinese environmental controls for
¥40,000
coal mines and Mg plants
1500
¥30,000
1000
¥20,000
500
¥10,000
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0 ¥0 3

2022 financial year overview

Dashboard

	REVENUE $158.6 mil ↑ 37.7%	EBITDA $27.3 mil ↑ 170.5%	NPAT $16.5 mil ↑ 229.8%	EPS 21.5 cents ↑ 230%
	GROSS PROFIT MARGIN 24.3% CY21 16.7%	CASH FLOW FROM UNDERLYING OPERATIONS $28 mil ↑ 167%*	NET DEBT -$2 m CASH ON HAND $11.3m	FULL YEAR DIVIDEND / SHARE (UNFRANKED) 1.2 cents CY21 0 cents

2022 Result Highlights

• $28 million of underlying cash* generation

• Full Year Dividend of 1.2 cents per share (unfranked)

• repays debt

• funds higher working capital

4

• Cash from underlying operations = reported operating cashflow less working capital movements, interest and income tax payments

Strong quarter for Underlying Operating Cashflow($M)*

1Q 2023 (unaudited)

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$10.6 $10.7
$6.0
$5.1
$3.7
$3.1
$1.8
3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Total Net Working Capital ($M) to decline as prices fall
*----- End of picture text -----

A strong start to the current financial year.

Falling Net Debt ($M) and Gearing (%)**

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16.9%
16.0% $3.7
$3.1
10.7% $1.8
$6.6 $6.9
$5.0
3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Total Net Working Capital ($M) to decline as prices fall
-$1.2 -$2.0
-$2.2
-2.3% $49.4 $50.7 $49.9
-4.3% $46.6
$42.9
-3.6%
$36.3
-$8.5 $31.5
-16.7%
3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
Operating cashflow excluding working capital movements, interest and tax payments 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
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• Operating cashflow excluding working capital movements, interest and tax payments **Gearing = net debt / (net debt + equity) *** Net working capital = receivables + inventory + prepayments - payables

5

1Q 2023 (unaudited)

A strong start to the current financial year.

Higher Gross Profit in Q123, consistent anodes

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$16.00
Metal GP Anodes GP
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
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Net Tangible Assets per Share* rises to 72.3 cents

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80
NTA/Share MGL Share Price
70
60
50
40
30
20
10
0
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23
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• Net tangible assets excludes Right of Use Assets arising from AASB 16 Leases **Average Quarterly Price

1

Global automotive trends

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GLOBAL LIGHT VEHICLE SALES (2000 to 2023e) Magnesium alloys
Chinese growth underpins global expansion Automotive = key customer
100m
90m
Automotive 80%
80m
70m
Other 5%
60m
50m End Market
Exposure
40m
Power Tool
30m
15%
20m
10m
0m
7
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Global anode markets (cathodic corrosion protection)

$0 $50 $100 $150 $200 $250 2016 2017 2018 2019 2020 2021 2022 A$ mil Global anode revenues (Mg and powered) Global anode revenues excl MGL share MGL global anode revenues	- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2016 2017 2018 2019 2020 2021 2022 (Tonnes) MGL volumes Global volumes ex-MGL Global Magnesium anode volumes
$0 $50 $100 $150 $200 $250 2016 2017 2018 2019 2020 2021 2022 A$ mil Global anode revenues (Mg and powered) Global anode revenues excl MGL share MGL global anode revenues

8

Qinghai electrolytic magnesium smelter complex

100,000 tonnes per annum > ~ 10% of global production

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Cast house impact
Revenue and profit Currently operating 2022 Target
Delayed SOP
opportunity at low levels
Mg production mtpa 5k 56k
Revenue A$ $37m $200m+
Contribution Loss Profit
Dehydration Electrolysis Cast house [#]
Industry CO [2] output High Low
SOP Timetable
Production restart 2023/24
Initial volumes ~1k mt/month
Full production 2+ years
*QSLM assets  # Cast House shared by QSLM & Magontec
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*QSLM assets  # Cast House shared by QSLM & Magontec ** Assumes pure Magnesium price of A$4,000

Summary

• Strong financial position

• No net debt. Net cash >$8m

• Solid start to 2023, uncertain outlook

• Qinghai in the next 12 months

• Qinghai positive for all Mg activities

• Advisory group engaged

• Growing market shares and efficiency

10

Magontec Limited ASX:MGL

2023 Annual General Meeting Executive Chairman’s Address

11 May 2023

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