MAGONTEC LIMITED — Capital/Financing Update 2014

May 27, 2014

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The Manager Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street NSW 2000

28 May 2014

Magontec and Qinghai Salt Lake Magnesium Conclude Three Agreements

Magontec (the Company) has today concluded three Agreements that provide the economic and operating basis for its future endeavours at Golmud in Qinghai Province, China.

These Agreements are the basis upon which Magontec will invest US$11m in the Magnesium Alloy Cast House equipment adjacent to the Qinghai electrolytic magnesium smelter.

Magontec raised the capital required for this investment through a Rights Issue concluded in January 2014.

The Agreements provide:

• Exclusive rights to manufacture magnesium alloy from liquid pure magnesium produced at this facility with these rights having a 10-year duration.

• A guaranteed supply of liquid pure magnesium under a pricing formula that would generate a strong profit under current magnesium pricing conditions.

• A detailed roadmap for future cooperation for Magontec and its partner, Qinghai Salt Lake Magnesium Co. Ltd. (QSLM)

The QSLM smelter, when completed, will be the largest electrolytic magnesium facility ever constructed. It will use renewable energy for over 75% of its total requirements.

Nic Andrews, Executive Chairman of Magontec Limited said “This new project in Qinghai is the largest and most important investment by Magontec for many years. It will re-establish Magontec as a leading magnesium alloy manufacturer and recycler and is expected to deliver a significant boost to group profitability when fully operational. These Agreements represent the foundations on which both Magontec and QSLM will work together and build future prosperity for shareholders of both companies”.

The magnesium project in Qinghai is currently under construction and the Magnesium Alloy Cast House is expected to be completed and ready for the installation of Magontec’s plant and equipment in the fourth quarter of 2014.

A summary of these Agreements is attached.

Magontec Limited, L8,139 Macquarie Street Sydney NSW 2000 AUSTRALIA

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Summary of Agreements

Magontec Qinghai Limited (MAQ), a wholly owned subsidiary of Magontec Limited (MGL), and the Qinghai Salt Lake Magnesium Co. Ltd (QSLM), a subsidiary of the Qinghai Salt Lake Industries Co. Ltd (QSLI), have signed three Agreements defining the future economic and operational relations between the two companies at the site of the Golmud electrolytic magnesium smelter in Qinghai Province PRC.

– - Magnesium Alloy Cast House Operating Agreement (MACH OA)

The MACH-OA agreement defines the working relationship between the two parties and establishes MAQ as the owner, manager and operator of the Magnesium Alloy Cast House (MACH) equipment within the Golmud Cast House building.

It defines operational responsibilities, access to common facilities and responsibilities for licences and permits.

Off-Take Price Agreement (OTPA)

The OTPA defines the economic relationship between the two parties including (and) the pricing formula under which MAQ will acquire liquid pure magnesium from QSLM.

The principal financial benefits that Magontec will enjoy in Qinghai include:

• The ability to take liquid pure magnesium directly from the electrolytic smelter avoiding costs associated with pure magnesium ingot manufacturing and remelting

• A flexible pricing formula that will offer a competitive market position

• A guaranteed volume of supply

Lease Agreement (LA)

The LA specifies the terms under which Magontec will lease and occupy part of the Golmud Cast House building and sets the term of the lease at 10 years with an option to extend for a further 10 years.

Summary

These Agreements provide Magontec with a high level of comfort that it will be able to profitably operate this major new facility. QSLM, as the largest investor in Magontec, will enjoy access via Magontec to an experienced and established global magnesium alloy manufacturer and recycler and a global sales and distribution network.

Magontec Limited, L8,139 Macquarie Street Sydney NSW 2000 AUSTRALIA

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In the coming years QSLM plan to expand the Qinghai facility in a second stage to 150,000 metric tonnes per annum and finally to 450,000 metric tonnes per annum. When completed QSLM’s Golmud facility will become the largest electrolytic magnesium plant in the world.

Magontec’s close association with QSLM through the agreements signed today, the shareholding that QSLM holds in Magontec and the strong relationship between the two companies offers shareholders a clear strategy for future growth.

Magontec Limited is a leading global magnesium alloy manufacturing and recycling business with downstream activities in magnesium anode production. The Company’s principal customers include the World’s largest automotive, mobile phone and computer manufacturers among others. Magontec has manufacturing operations in Germany, Romania and China with over 450 employees. The Company’s Head Office is in Sydney, Australia.

Magontec Limited is listed on the Australian Securities exchange under ASX Code MGL

For further information please contact Nic Andrews or John Talbot on +61 2 8231 7085 or visit www.magontec.com

Magontec Limited, L8,139 Macquarie Street Sydney NSW 2000 AUSTRALIA