MAGONTEC LIMITED — Capital/Financing Update 2012

Nov 25, 2012

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Office 10 Level 8 139 Macquarie St Sydney NSW 2000 Australia Ph: 61 2 8231 7085 Fax: 61 2 9252 8960

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

Dear Sirs,

26 November 2012

Magontec Limited – Partially Underwritten Renounceable Rights Issue Announced 23 November 2012

The letter from the Executive Chairman of Magontec Limited attached to this header will shortly be received in the mail by all shareholders who are not eligible to participate in the renounceable right issue announced on 23 November 2012.

Yours sincerely,

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Mr John Talbot Company Secretary MAGONTEC LIMITED

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Office 10 Level 8 139 Macquarie St Sydney NSW 2000 Australia Ph: 61 2 8231 7085 Fax: 61 2 9252 8960

26 November 2012

Magontec Limited (Company) – Renounceable Rights Issue

Dear Shareholder

On 23 November 2012 the Company announced a renounceable rights issue to raise up to $11.8 million (before costs). The rights issue offers eligible shareholders the opportunity to acquire additional fully paid ordinary shares in the capital of the Company ( New Shares ) on the basis of 5 New Shares at an issue price of $0.05 per New Share for every 9 existing fully paid ordinary shares held as at 5:00pm (Sydney time) on 3 December 2012 ( Rights Issue ). Each New Share will come with 2 free attaching options. The options will be convertible into shares at an exercise price of 2 cents and will have a life of 12 months from issue.

The Company has decided that it is unreasonable to make offers under the Rights Issue to shareholders with a registered address outside Australia, New Zealand, Switzerland or the People’s Republic of China ( Ineligible Foreign Shareholders ), having regard to the small number of such shareholders, their holdings and the compliance costs required to offer the New Shares under the Rights Issue to those shareholders.

Unfortunately, since you are an Ineligible Foreign Shareholder, no offer is being made to you and the prospectus prepared by the Company in relation to the Rights Issue will not be sent to you.

The Company has appointed Patersons Securities Limited ( Patersons ) as nominee to sell all Ineligible Foreign Shareholders' rights. Any such sale will be at a price and be conducted in a manner that Patersons will determine in its absolute discretion.

The proceeds of sale (in Australian dollars) will be distributed to the Ineligible Foreign Shareholders in proportion to their shareholdings as at the record date (net of expenses).

This letter is not an offer to issue New Shares to you, nor an invitation for you to apply for New Shares. You do not have to take any further action in relation to the Rights Issue.

The prospectus has been lodged with both the Australian Securities and Investments Commission and the Australian Securities Exchange (ASX). The prospectus can be accessed electronically at both the ASX and Company web sites. Should you have any questions regarding the Rights Issue you may contact the Company on +61 2 8231 7085.

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Yours sincerely Mr Nicholas Andrews CHAIRMAN MAGONTEC LIMITED