MAGONTEC LIMITED — Capital/Financing Update 2013

Jan 3, 2013

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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,

4 January 2013

Magontec Limited (Company) – Appendix 3B Partially Underwritten Renounceable Rights Issue

Shares and options have been allotted today to those shareholders who participated in the Company's Renounceable Rights Issue. Holding Statements showing those allotments have been dispatched today to participating shareholders.

The attached Appendix 3B records the detail of additional securities to be listed and other information as required by ASX Listing Rules.

The two Appendices immediately following this covering letter address the requirements at Items 35 and 36 in the attached Appendix 3B.

Yours Sincerely

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John Talbot Company Secretary

Appendix 1

Information Required at Item 35 in the following Appendix 3B

Names of the 20 largest holders of the additional securities, and the number and percentage of additional securities held by those holders

Fully Paid Ordinary Shares

Top 20 Holdings as at 04-01-2013

Holder Name	Balance at 04-01-2013	%
QINGHAI SALT LAKE MAGNESIUM
INDUSTRY LTD	180,535,784	27.834
KWE (HK) INVESTMENT DEVELOPMENT
CO LIMITED	55,797,298	8.603
CITICORP NOMINEES PTY LIMITED	43,221,715	6.664
STRAITS MINE MANAGEMENT PTY
LIMITED	40,499,167	6.244
J P MORGAN NOMINEES AUSTRALIA
LIMITED	29,729,832	4.584
NATIONAL NOMINEES LIMITED	27,915,207	4.304
OPTIMIST INTERNATIONAL INVESTMENTS
LIMITED	21,738,810	3.352
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED	12,597,269	1.942
MR NICHOLAS WILLIAM ANDREWS	11,079,542	1.708
MRS DAWN PATRICIA DAVIS	7,657,465	1.181
MR DAVID PARHAM	4,830,331	0.745
JP MORGAN NOMINEES AUSTRALIA
LIMITED	4,163,104	0.642
MR JOHN DAVID TALBOT	4,000,767	0.617
JOHN STUART HAMER FITTON	3,747,070	0.578
MR PETER FABIAN HELLINGS & MRS
JACQUELINE KIM GUN HELLINGS <BOX	3,050,000	0.470
MRS PAMELA ELIZABETH DRABSCH	2,800,000	0.432
MR IANAKI SEMERDZIEV	2,770,000	0.427
MR DAVID ALOYSIUS DRABSCH	2,644,445	0.408
MR HOWARD LEONARD PATRICK & MS
CAROL FRANCIS PATRICK <HL & CF	2,400,000	0.370
DALSIZ PTY LTD <MORRISON FAMILY S/F
A/C>	2,228,667	0.344
Total		71.447
Issued Capital		648,605,845

Appendix 3B New issue announcement

Options $0.02 Expiring 3 January 2014

Top 20 Holdings as at 04-01-2013

Holder Name	Balance at 04-01-2013	%
QINGHAI SALT LAKE MAGNESIUM
INDUSTRY LTD	250,200,000	56.733
J P MORGAN NOMINEES AUSTRALIA
LIMITED	38,144,214	8.649
NATIONAL NOMINEES LIMITED	24,104,796	5.466
CITICORP NOMINEES PTY LIMITED	21,842,108	4.953
OPTIMIST INTERNATIONAL INVESTMENTS
LIMITED	15,527,722	3.521
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED	9,462,722	2.146
MR NICHOLAS WILLIAM ANDREWS	7,913,960	1.794
MRS DAWN PATRICIA DAVIS	5,469,618	1.240
MR MATTHEW BURFORD	2,996,000	0.679
JP MORGAN NOMINEES AUSTRALIA
LIMITED	2,565,554	0.582
AG & GK PTY LTD <AMC
SUPERANNUATION FUND A/C>	2,400,000	0.544
MR PETER FABIAN HELLINGS & MRS
JACQUELINE KIM GUN HELLINGS <BOX	2,180,000	0.494
MRS PAMELA ELIZABETH DRABSCH	2,000,000	0.453
MR DAVID ALOYSIUS DRABSCH	1,888,890	0.428
DALSIZ PTY LTD <MORRISON FAMILY S/F
A/C>	1,771,334	0.402
DR GILLIAN KATRIN MACLAINE-CROSS &
DR ANDREW DUNCAN MACLAINE-CROSS	1,600,000	0.363
DR ANDREW DUNCAN MACLAINE-CROSS	1,600,000	0.363
MRS KATRINA LOVERIDGE	1,509,328	0.342
MR DAVID ALOYSIUS DRABSCH & MRS
PAMELA ELIZABETH DRABSCH <ALEX &	1,444,446	0.328
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED - A/C 2	1,174,634	0.266
Total	395,795,326	89.746
Issued Capital		441,016,570

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Mago ntec Li mi teOp tio ns $0. 02Top 2 0 H o ld in gs as at 04-01 E xpi ri ng 3 Jad -2nua013ry 2 014
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QI N GH A I SA LT LA KE MAGNE S IU M I N DU ST R Y LTD Ho ld er N ame J P MOR GAN N OMIN E ES A US TR ALNA TI ON A L N OMIN E ES LCI TI C OR P N OMIN EE S P TY LI MI TEDOP TI MI ST I NT ER N ATI ONA L IN V ES TMEN T S LI MIT ED HS BC CU ST ODY N OMIN E ES (A US TR ALMR NI C HOLA S WI LLMRS D AWMR MATT H EW BU R FOR DJP MORGA N NOMI NE E S AU ST RA LI A LI MIT EDIN C OME A /C >AG & GK PT Y LTD MR PE TE R FA BI A N H ELLKI M GU N H ELMRS P AME LA ELMR DA VI D A LOYS IU S D R AB SC HDA LS IZ P TY LT D DRAN DR E W D U NC A N MAC LA IN E -C R OS S <MA CLDR A N DR EWMRS K AT RI N A LOVE RI D GEMR DA VI D A LOYS IU S D R AB SC H & MR S PA MELELI ZA BE TH DR A BS CH < ALE X & C H RI S D RA BS C H HS BCA/ C 2GI LLCU ST ODY N OMIN E ES (A US TR ALIA N KA TR I N MAC LA IN E -C R OS S & D RN PA TR IC I A DA VI S D U NC AN MAC LA IN E-C R OS SLIN GS IZ AB ET H D RA BS C HIA M A ND R EWSIMI TE DIN GS & MR S JAC QU ELI N E IA L IMI TE DIA ) LI MI TE D - Is IA ) LI MI TE D sued Cap ita <C A SHAAI NE - To ta ll B al anc e at 04 392524, 104, 7921, 842, 1015, 527, 7238, 144, 217, 913, 9605, 469, 6182, 996, 0002, 565, 5542, 400, 0001, 888, 8901, 509, 3281, 174, 6345, 795, 321, 600, 0002, 000, 0001, 600, 0009, 462, 7221, 771, 3341, 444, 4460, 200, 002, 180, 000 -01-201 6826 3 40 441 ,01 56. 73389. 7461. 7941. 2400. 6790. 5820. 5440. 4280. 3420. 2665. 4664. 9533. 5210. 363 6, 570 0. 4530. 3638. 6492. 1460. 4020. 3280. 494 %
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• See chapter 19 for defined terms.

Appendix 3B Page 3

01/08/2012

Appendix 3B New issue announcement

Appendix 2

Information Required at Item 36 in the following Appendix 3B

If the securities are equity securities, a distribution schedule of the additional securities setting out the number of holders in the categories

1 - 1,000

1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

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• See chapter 19 for defined terms.

Appendix 3B Page 4

01/08/2012

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12

Name of entity

Magontec Limited

ABN

510 1044 1666

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to • Fully paid ordinary shares ( Shares ) be issued • Listed options to acquire fully paid ordinary shares ( Options )

• 2 Number of[+] securities issued or 220,508,285 Shares to be issued (if known) or 441,016,570 Options maximum number which may be issued

• See chapter 19 for defined terms.

Appendix 3B Page 5

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Appendix 3B New issue announcement

3 Principal terms of the +securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Shares and Options will be issued on the terms set out in the renounceable Rights Issue prospectus dated 23 November 2012 and lodged with ASX and ASIC on the same date (Prospectus).

• Shares – terms of the Shares are summarised in section 4.1 of the Prospectus

• Options are exercisable at 2 cents each at any time on or before 3 January 2014. Option terms are printed on the reverse of the Holding Statements dispatched to participating shareholders on 4 January 2013.

• See chapter 19 for defined terms.

Appendix 3B Page 6

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Appendix 3B New issue announcement

4 Do the[+] securities rank equally • Shares – Yes in all respects from the date of • Options – No. The Options are a new allotment with an existing[+] class class of options. Options are exercisable of quoted[+] securities? in accordance with the terms summarised in section 4.2 of the If the additional securities do Prospectus and upon conversion of the not rank equally, please state: • the date from which they do Options, the shares will rank equally • the extent to which they with existing shares. participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration Shares - $0.05 per share Options – Nil 6 Purpose of the issue Pro-rata renounceable Rights Issue to raise (If issued as consideration for up to approximately $11,805,769 (before the acquisition of assets, clearly costs) to be applied as described in section identify those assets) 2.1 of the Prospectus. 6a Is the entity an[+] eligible entity No that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the[+] securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder NA resolution under rule 7.1A was passed 6c Number of[+] securities issued NA without security holder approval under rule 7.1

• See chapter 19 for defined terms.

Appendix 3B Page 7

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Appendix 3B New issue announcement

6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of securities issued under an exception in rule 7.2 6g If securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the issue date and both values. Include the source of the VWAP calculation. 6h If securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 Dates of entering +securities into uncertificated holdings or despatch of certificates 8 Number and +class of all +securities quoted on ASX (including the securities in section 2 if applicable)	NA
	NA
	NA
	NA
	NA
	NA
	4 January 2013
	Number	+Class
	648,605, 845 441,016,570	Fully paid ordinary shares Options exercisable at 2 cents each at any time on or before 3 January 2014.

• See chapter 19 for defined terms.

Appendix 3B Page 8

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Appendix 3B New issue announcement

9 Number and +class of all +securities not quoted on ASX (including the securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	Number	+Class
	1,300,000	Options having an exercise price of $0.10 expiring on 16 August 2013
	No policy exists

Part 2 - Bonus issue or pro rata issue

11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions	No
	Renounceable
	5 new fully paid ordinary shares and 10 free attaching listed options for every 9 existing fully paid ordinary shares held as at the Record Date
	Fully paid ordinary shares Listed options exercisable at 2 cents each at any time on or before 3 January 2014.
	3 December 2012
	No
	Fractional Entitlements have been rounded up to the nearest whole number. Refer section 1.3 of the Prospectus.

• See chapter 19 for defined terms.

Appendix 3B Page 9

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Appendix 3B New issue announcement

18 Names of countries in which the All countries other than Australia, New entity has[+] security holders who Zealand, Switzerland and the People’s will not be sent new issue Republic of China. Refer to sections 1.9 – documents 1.11 of the Prospectus. Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of 24 December 2012 acceptances or renunciations

• See chapter 19 for defined terms.

Appendix 3B Page 10

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Appendix 3B New issue announcement

20	Names of any underwriters	Patersons Securities Limited (Patersons)
21	Amount of any underwriting fee	Underwriting fee of 1% of the amount
	or commission	underwritten, being a fee of $88,378.
		Refer to section 6.2 of the Prospectus.
22	Names of any brokers to the	Patersons Securities Limited
	issue
23	Fee or commission payable to the	$60,000
	broker to the issue
24	Amount of any handling fee	NA
	payable to brokers who lodge
	acceptances or renunciations on
	behalf of+security holders
25	If the issue is contingent on	NA
	+security holders’ approval, the
	date of the meeting
26	Date entitlement and acceptance	7 December 2012
	form and prospectus or Product
	Disclosure Statement will be sent
	to persons entitled
27	If the entity has issued options,	23 November 2012
	and the terms entitle option
	holders to participate on
	exercise, the date on which
	notices will be sent to option
	holders
28	Date rights trading will begin (if	27 November 2012
	applicable)
29	Date rights trading will end (if	14 December 2012
	applicable)
30	How do+security holders sell	By contacting their broker verbally or
	their entitlementsin fullthrough	completing the section marked
	a broker?	“Instructions to Stockbroker” on the
		Entitlement and Acceptance Form and
		lodging the Form with their broker. Refer
		to section 3.4 of the Prospectus.

• See chapter 19 for defined terms.

Appendix 3B Page 11

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Appendix 3B New issue announcement

31 How do+security holders sell part of their entitlements through a broker and accept for the balance? 32 How do+security holders dispose of their entitlements (except by sale through a broker)? 33 +Despatch date	By completing the Entitlement and Acceptance Form in accordance with the instructions set out in the Form. Indicate the number of new shares and new options the Shareholder wishes to accept (being less than their entitlement as specified on the Entitlement and Acceptance Form) and complete the section marked “Instructions to Stockbroker” on the Form in respect of that part of the entitlement the Shareholder wishes to sell. Return the completed Entitlement and Acceptance Form together with payment for the total amount payable in respect of the shares and new options accepted by 5.00pm (EDST) on 24 December 2012. Refer to section 3.5 of the Prospectus.
	Complete a renunciation form (obtainable through your stockbroker or the Company’s share registrar). Refer to section 3.6 of the Prospectus.
	4 January 2013

• See chapter 19 for defined terms.

Appendix 3B Page 12

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Appendix 3B New issue announcement

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities (tick one)

• (a) √ Securities described in Part 1

• (b) All other securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 √ If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

Refer Appendix 1 to the covering letter.

• 36 √ If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000

• 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• Refer Appendix 2 to the covering letter.

• 37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

Appendix 3B Page 13

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Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of securities for which NA +quotation is sought 39 Class of +securities for which NA quotation is sought 40 Do the[+] securities rank equally in NA all respects from the date of allotment with an existing[+] class of quoted[+] securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation NA now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security) Number +Class 42 Number and +class of all NA NA +securities quoted on ASX (including the securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 14

01/08/2012

Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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Date: 4 January 2013

John Talbot Company Secretary

• See chapter 19 for defined terms.

Appendix 3B Page 15

01/08/2012

Appendix 3B New issue announcement

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• See chapter 19 for defined terms.

Appendix 3B Page 16

01/08/2012