MAGONTEC LIMITED — Capital/Financing Update 2009

Jun 29, 2009

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Suite 5 Level 4 350 George St Sydney NSW 2000 Australia Ph: 61 2 9221 3274 Fax: 61 2 9233 7265

The Manager Company Announcements ASX Limited 20 Bridge Street Sydney 2000

29 June 2009

Notice under Section 708AA(2)(f) of the Corporations Act 2001 (the Act)

The board of Advanced Magnesium Limited ACN 010 441 666 (the Company ) has announced that it will be offering eligible shareholders the opportunity to acquire additional fully paid ordinary shares in the capital of the Company. The offer will be in the form of a non-renounceable rights issue ( Rights Issue ) on the basis of one (1) share for every one (1) share held on the record date of 27 July 2009.

Up to 105,974,953 new ordinary shares ( New Shares ) will be offered under the rights issue at an issue price of 4 cents per share to raise up to $4,238,998.12 before costs. An offer document will be mailed to eligible shareholders together with entitlement and acceptance forms on 31 July 2009.

The Company hereby confirms pursuant to section 708AA (2)(f) of the Act that:

• a. the Company will offer the New Shares for issue without disclosure to investors under Part 6D.2 of the Act;

• b. the Company is providing this notice under section 708AA(2)(f) of the Act;

• c. as at the date of this notice, the Company has complied with the provisions of Chapter 2M of the Act as they apply to the Company;

• d. as at the date of this notice, the Company has complied with section 674 of the Act; and

• e. as at the date of this notice, there is no information:

  • i. that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

  • ii. that investors and their professional advisors would reasonably require for the purposes of making an informed assessment of:

    • A. the assets and liabilities, financial position and performances, profits and losses of the Company; or

    • B. the rights and liabilities attaching to the new shares.

• f. Information is set out below with respect to the effect that the issue of the New Shares may have on the control of the Company and the consequences of the effect.

• g. Certain major shareholders of the Company have irrevocably committed to the underwriters to take up their entitlements under the Rights Issue in full representing in aggregate 38,251,858 New Shares.

• h. The Rights Issue is underwritten up to $2,708,923.80 (representing the balance of 67,723,095 New Shares to be offered under the Rights Issue) by KWE (HK) Investment Development Co Limited ( Underwriters ). If all eligible shareholders take up their entitlements under the Rights

AM-cover[™] Standard Commercial Licence

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Issue, the Underwriters will not be issued with any New Shares under the Rights Issue except to the extent that they take up their pro rata entitlements as shareholders of the Company.

• i. Given the commitments and underwriting arrangements described above, the potential effect of the Rights Issue is as follows:

  • i. if all Eligible Shareholders take up their entitlements under the Rights Issue, then the Rights Issue will have no significant effect on the control of the Company;

  • ii. if particular Eligible Shareholders do not take up all of their entitlements under the Rights Issue, then the shareholding interests of those Eligible Shareholders in the Company will be diluted; and

  • iii. the interests of shareholders with registered addresses outside Australia and New Zealand may be diluted because (unless the Company determines otherwise) such shareholders are not entitled to participate in the Rights Issue.

  • iv. The table below shows the interest the Underwriters will have in AML at various rates of take up under their underwriting obligation.

Proportion ofUnderwritingActivated	Interest ofUnderwritersIn AML
0%	9.83%
25%	17.82%
50%	25.80%
75%	3379%
	.
100%	41.78%

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John Talbot Company Secretary