MAGONTEC LIMITED — Capital/Financing Update 2014

Jan 9, 2014

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10[th] January
2014

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

Dear
Sirs,

**Option

exercise
raises
A$6.566
million,
Net
Debt
to
Equity
drops
to
19.5%**

Following
the
expiry
of
the
2012
Rights
Issue
options
on
3
January
2014 Magontec
is
pleased
to
report
that
a
total
of
328.3 million
options
were
exercised raising
$6.566
million.

Option
holders
other
than
Magontec’s
largest
shareholder,
Qinghai
Salt
Lake Magnesium
Co
Ltd
(QSLM),
exercised
93.45%
of
available
options.
QSLM
are limited
by
shareholder
and
FIRB
approval
to
a
maximum
shareholding
in
MGL
of 30%.
QSLM
exercised
150
million
of
their
option
entitlement
to
take
them
to
a shareholding
in
MGL
of
29.65%.
(See
table
below).

On
3[rd] January
2014,
at
the
same
time
as
the
listed
options
were
exercised, Straits
Mine
Management
(SMM)
converted
its
remaining
Convertible
Loan Notes
(CLN)
and
was
issued
a
further
21
million
shares.
On
or
before
17[th] of January,
as
announced
to
the
ASX
in
November
2013,
Magontec
will
repay
the final
debt
installment
of
A$2.1
million
to
SMM.

The
option
exercise,
CLN
conversion
and
debt
repayment
restore
Magontec
to very
low
levels
of
debt,
all
of
which
is
currently
engaged
as
working
capital
for the
company’s
magnesium
alloy
and
anode
manufacturing
and
sales
operations.

Magontec
now
presents
a
very
strong
balance
sheet
in
advance
of
its
major investment
in
a
new
magnesium
alloy
cast
house
at
the
Qinghai
electrolytic magnesium
smelter
(announced
in
June
2012).
The
company
is
close
to
resolving the
final
operating,
pricing
and
leasing
agreements
for
the
cast
house
and expects
to
announce
these
in
the
next
few
weeks.

Based
on
the
pro
forma
balance
sheet
in
the
Attachment,
Magontec
will
show
net debt
(interest
bearing
debt
less
cash
at
hand)
of
$6.534
million
and
shareholders funds
(less
intangibles)
of
$33.357
million.
Based
on
the
pro
forma
balance
sheet the
company’s
net
debt
to
equity
ratio
is
expected
to
be
19.5%
and
Net
Tangible Assets
per
share
is
expected
to
be
3.0
cents.
(Pro-­‐Forma
Balance
Sheet
attached).

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

		Shares held Immediately after Rights Issue on 4 January 2013 Shares issued for Other than Conversion of Listed Options Conversion of Listed Options to 3 January 2014 % of Listed Options Converted Conversion of Convertible Loan Notes on 3 January 2014 Ordinary Shares Held 3 January 2014 Ownership Stake Col 1 Col 2 Col 3 Col 4 Col1 + Col2 + Col3 + Col4 246,420,026 4,819,762 75,012,714 85.73% 326,252,502 29.26% 55,797,298 0 55,797,298 5.01% 180,535,784 150,000,000 59.95% 330,535,784 29.65% 114,274,028 95,400,000 100.00% 209,674,028 18.81% 11,079,542 7,913,960 100.00% 18,993,502 1.70% 40,499,167 112,037,218(1) 21,032,819(2) 173,569,204 15.57% 648,605,845 116,856,980 328,326,674 74.45% 21,032,819 1,114,822,318 100.00%
	Shareholder General shareholder base KWE (HK) Investment Development Co. Limited Qinghai Salt Lake Magnesium Industry Ltd Funds under management of Allan Gray Australia Nicholas Andrews Straits Mine Management Pty Limited Total	Shares held Immediately after Rights Issue on 4 January 2013 Shares issued for Other than Conversion of Listed Options Conversion of Listed Options to 3 January 2014 % of Listed Options Converted Conversion of Convertible Loan Notes on 3 January 2014 Ordinary Shares Held 3 January 2014 Ownership Stake Col 1 Col 2 Col 3 Col 4 Col1 + Col2 + Col3 + Col4 246,420,026 4,819,762 75,012,714 85.73% 326,252,502 29.26% 55,797,298 0 55,797,298 5.01% 180,535,784 150,000,000 59.95% 330,535,784 29.65% 114,274,028 95,400,000 100.00% 209,674,028 18.81% 11,079,542 7,913,960 100.00% 18,993,502 1.70% 40,499,167 112,037,218(1) 21,032,819(2) 173,569,204 15.57%
		648,605,845 116,856,980 328,326,674 74.45% 21,032,819 1,114,822,318 100.00%

Notes

1.
Full
conversion
of
Convertible
Loan
Note
No.
1
held
by
Straits
Mine
Management
Pty Limited
(SMM)
and
part
conversion
of
CLN
No.
2
held
by
SMM.
Refer
announcement
to
ASX dated
25
November
2013.

2.
Residual
(and
full)
conversion
on
3
January
2014
of
CLN
No.
2
held
by
SMM.

Yours
sincerely

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Nicholas
Andrews Executive
Chairman Magontec
Limited

For
more
information
please
contact Nicholas
Andrews,
on
0402
220
077 John
Talbot
(CFO)
on
0405
317
594

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

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ATTACHMENT

–
Pro
Forma
Balance
Sheet

		Listed Option	Conversion Of	Repayment	Pro Forma
	30-Nov	Converted Since	Convertible Loan Notes	of Debt to	Balance Sheet
	2013	30-Nov-13	By Straits Mine Mngt	Straits Mine Mngt	3-Jan-14
	$'000	$'000	$'000	$'000	$'000
Current assets
Cash and cash equivalents	5,854	6,509		-2,100	10,263
Trade & other receivables	28,803				28,803
Inventory	22,331				22,331
Other	186				186
Total current assets	57,174	6,509		-2,100	61,583
Non-current assets
Other receivables	387				387
Property, plant & equipment	16,726				16,726
Future income tax benefit	1,263				1,263
Intangibles	3,154				3,154
Total non-current assets	21,530	0	0	0	21,530
TOTAL ASSETS	78,706	6,509	0	-2,100	83,115
Current liabilities
Trade & other payables	19,921				19,921
Borrowings	16,797				16,797
Provisions	1,564				1,564
Total current liabilities	**38,282 **	-	-	-	38,282
Non-current liabilities
Owing to Straits Mine Managem	8,968		-6,868	-2,100
					-
Provisions	8,322				8,322
Total non-current liabilities	17,290	0	-6,868	-2,100	8,322
TOTAL LIABILITIES	55,572	0	-6,868	-2,100	46,604
NET ASSETS	23,134	6,509	6,868	0	36,511

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