MAGONTEC LIMITED — Board/Management Information 2022

Sep 28, 2022

MAGONTEC Limited ABN 51 010 441 666

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

ASX Announcement 29 September 2022

Operational Update and Board Appointment

Magontec Limited (ASX: MGL, ‘Magontec’ or ‘the Company’), a global manufacturer of specialist magnesium products, today provided an update on the recommencement of supply of pure magnesium to the Company’s Qinghai Magnesium Alloy Cast House.

It is now expected that remediation work at the Qinghai electrolytic magnesium smelter complex, including a program of upgrade to electrolysis cells to co-produce chlorine gas, will culminate in a restart of production towards the end of 2023.

Qinghai Huixin Asset Management Co Ltd (QHAM) – the owner of Qinghai Salt Lake Magnesium Co Ltd (QSLM) – believed that this restart would be possible in the 2022 calendar year. However, based on its latest review of operations, QHAM has advised Magontec that technical issues have emerged in the electrolysis process that are anticipated to take another 12 months to resolve.

Executive Chairman Mr Nicholas Andrews commented: “It is constructive to have further clarity on our partner’s plans to restart production of pure magnesium in Qinghai.

“While any delay is disappointing, Magontec is proud to collaborate with a facility that has the highest environmental standards in the global magnesium industry, and any efforts to upgrade systems and maximise production capabilities are welcomed as part of that undertaking.”

The return of liquid pure magnesium supply to Magontec’s Qinghai cast house will set a new benchmark in terms of low-carbon magnesium manufacturing, creating high volumes within a modern and highly automated facility to the highest environmental standards found anywhere in the world.

Mr Andrews continued: “This will delay an uplift in profitability from our Qinghai Magnesium Alloy Cast House but will have no impact on profitability from current operating businesses in China, other Asia, Europe and North America.

“Through continued disciplined execution of our strategy, favourable commodity prices and market conditions, our business is in a net cash position; we recorded a significant uplift in net profit after tax (NPAT) of $13.8 million for the six months to 30 June 2022 (compared to $1.1m in the previous corresponding period), and we declared a maiden unfranked interim dividend of 0.6 cents per share.”

Board refresh

The Company today also announced a Board refresh with the appointment of Mr Xingcai Li as Non-Executive Director. Mr Robert Kaye, who has served as an Independent Director since 2013, will take on new responsibilities as the Lead Independent Director, and Mr Andre Labuschagne, who has served as a NonExecutive Director since 2014, becomes an Independent Director following the sale of all shares previously held by Straits Mine Management.

Xingcai Li is General Manager of Qinghai Huixin Asset Management Co Ltd (QHAM), the owner of Qinghai Salt Lake Magnesium Co Ltd (QSLM), which operates the Qinghai electrolytic magnesium smelter complex in which Magontec’s Magnesium Alloy Cast House is based.

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Mr Li has held previous positions as the Deputy Director of Finance at the Shanghai and Hong Kong listed Aluminium Corporation of China (Chalco), one of the world’s largest producers of alumina and aluminium. Prior to that Mr Li was Vice President at Western Mining Co Ltd, responsible for overall financial management, fund raising and investment management as well as being secretary to the Board. Western Mining is a ¥23 billion company listed on the Shanghai Stock Exchange engaged in the mining, smelting, and trading of metal minerals, including copper, lead, zinc, iron, gold and silver.

Mr Li was appointed to his current role of General Manager at Qinghai Huixin Asset Management in January 2022. He has oversight of and responsibility for all activities at the Qinghai project including the magnesium and associated chemical production units.

Mr Li’s extensive experience in the metals industry, particularly in the aluminium industry that has considerable overlap with magnesium production technologies, brings new skills and experience to the Magontec Board that are central to Magontec’s long-term strategic vision to deliver a steady, competitive and significant new supply of magnesium alloys into global markets through the harnessing of revolutionary low-carbon manufacturing processes.

Mr Robert Kaye was appointed to the Board of Magontec Limited as an Independent Director in July 2013. Mr Kaye is a Senior Counsel and currently serves as the Chairman of Collins Foods Limited. He is also a Director of FAR Limited and EOS Limited and has held other listed company directorships for over 10 years.

Mr Kaye has agreed to step up to the role of Lead Independent Director at Magontec to provide additional support to the Executive Chairman. Mr Kaye is also Chair of the Remuneration and Appointments Committee and serves on the Finance, Audit and Compliance Committee.

Mr Andre Labuschagne was appointed to the Board of Magontec Limited as a Non-Executive Director in January 2014. Mr Labuschagne is the Executive Chairman of Aeris Resources Limited and has an extensive background in the metals and mining industry.

In February 2022 Aeris sold its entire 12.94% holding in Magontec Limited. Subsequent to that event Mr Labuschagne agreed to continue to serve as an Independent Director of Magontec Limited. He also serves on the Finance, Audit and Compliance Committee and the Business Risk Committee.

Mr Andrews commented: “These appointments are part of our ongoing process of Board renewal.

“I am delighted that Xingcai Li has agreed to join the Board. As a representative of Magontec’s largest shareholder and an important project partner, Mr Li’s participation at Board level is a critical appointment for the company. Together we can now pursue the restart of operations within Magontec’s Magnesium Alloy Cast House – the keystone in our program of diversification and technical innovation, enhancing our reputation as a pioneering presence within the metals sector.”

ENDS

Nicholas Andrews, Executive Chairman and Chief Executive Officer of Magontec Limited, has authorised the release of this document to the market on 29 September 2022

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