MAGONTEC LIMITED — Interim / Quarterly Report 2011

Jul 24, 2011

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Office No.10 Level 8 139 Macquarie St Sydney NSW 2000 Australia Ph: 61 2 8231 7085 FAX: 61 2 9252 8960

25 July 2011

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

Dear Sirs,

Appendix 4C – Quarter Ended 30 June 2011

The above quarterly report is attached.

The quarterly report for the period to 30 June 2011 shows net operating cash inflow for the period of $2,003,160. The company to which HNKWE is contracted to supply alloy through to end September 2011 (refer Company announcement 8 April 2011) requested that contracted volumes of delivery for the month of June 2011 be reduced. Overall volumes to be delivered under the contract remain unaffected but the delivery period has been extended to end October 2011.

As a result, material purchase costs for the quarter reduced and at the same time debtor collections for prior sales caused a build up in cash. Normal production schedules have resumed in July and the surplus cash will be consumed in higher volumes of materials purchases.

Yours Sincerely

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Nicholas Andrews Executive Chairman Advanced Magnesium Limited

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QUARTERLY CASHFLOW - APPENDIX 4C

for the Period Ended 30 June 2011

Advanced Magnesium Limited

ABN: 51 010 441 666 Registered & Principal Office: Office 10, Level 8, 139 Macquarie Street, Sydney, NSW 2000 Australia

Tel: +61 2 8231 7085 Fax: +61 2 9252 8960 Website: www.am-technologies.com.au Email: corporate@amtechnologies.com.au

Independent Directors (as at 30 June 2011)

Zhongjun Li Non-Executive Director

Issued Capital (as at 30 June 2011)

Ordinary Shares (ASX Code ANM) 269,994,448 fully paid Ordinary shares on issue

Unlisted Securities

Unlisted Options	**Number **	Grant Date	Expiry Date	Exercise Price $
Employee Share Option Plan	1,380,000	16 Aug 2010	16 Aug 2013	$0.10

Substantial Shareholders

Major Shareholders	No. of shares	Percent
KWE(HK)Investment Development CoLimited	55,797,298	20.66
CiticorpNomineesPtyLimited	18,956,706	7.021

Share Registry Services

Michael Brown Non-Executive Director

Robert Shaw Non-Executive Director

Boardroom Pty Limited Level 7, 207 Kent St Sydney NSW 2000

Postal:

Management Team

Nicholas Andrews Executive Chairman

John Talbot Chief Financial Officer

Company Secretary John Talbot

GPO Box 3993 Sydney NSW 2001

Tel: 1300 737 760 or International: +61 2 9290 9600 Fax: 1300 653 459 Website: http://www.boardroomlimited.com.au

The current share price can be obtained from the ASX Website

Appendix 4C Advanced Magnesium Limited 30 June 2011 Quarterly Report Rule 4.7B

Appendix 4C Quarterly Report

Introduced 31/3/2000. Amended 30/9/2001.

Name of entity

Advanced Magnesium Limited

Quarter ended (“current quarter”)

ABN		Qua	rter ended (“current quarter”)
51 010 441 666			30-Jun-11
1.1 Operating Activities aReceipts from sales and related debtors excl. GST bMarketing & Sales cMaterials purchases and other direct production costs dFinance, accounting and regulatory ePatents and licence protection fPremises, telecoms & other administration gPrior year incurred expenses hRetrenchments and termination iInterest and other items of a similar nature received jTaxes and other imposts & GST/VAT effects kSublet rental income lForeign Exchange differences mOther Operating Cash Flows Total Operating Cash Flows			Quarter Ended 31 March 2011 Year to date (12 months) $A $A $5,218,970 $21,571,850 ($159,600) ($827,539) ($1,489,565) ($21,074,379) ($237,010) ($814,925) ($43,048) ($139,350) ($1,029,072) ($1,298,037) $0 $0 $0 $0 $530 $13,971 ($236,635) ($428,296) $0 $13,945 ($6,508) ($49,569) ($14,902) ($56,999) $2,003,160 ($3,089,328)
			Quarter Ended 31 March 2011 $A	Year to date (12 months) $A
			$5,218,970 ($159,600) ($1,489,565) ($237,010) ($43,048) ($1,029,072) $0 $0 $530 ($236,635) $0 ($6,508) ($14,902)	$21,571,850 ($827,539) ($21,074,379) ($814,925) ($139,350) ($1,298,037) $0 $0 $13,971 ($428,296) $13,945 ($49,569) ($56,999)
			$2,003,160	($3,089,328)

+ See chapter 19 for defined terms

Appendix 4C Page 1

30 June 2011

Appendix 4C Advanced Magnesium Limited 30 June 2011 Quarterly Report

1.2 Financing Activities a.Proceeds from Capital Raising net of costs b.Other Financing Activities Total financingcash flows	Current quarter $A $0 $874,451	Year to date (9 months) $A $1,815,447 $5,740,663
	$874,451	$7,556,110
Investing Activities 1.3 a.Loan to Related Parties b.Exchange rate difference on inter company loans c.Equity investment in HNKWE e.Investment In Fixed Assets Total investingcash flows	$241,674 $0 $0 ($120,234)	($1,573,639) $0 $0 ($570,277)
	$121,439	($2,143,915)
Net increase (decrease) in cash held 1.4 Cash at beginning of quarter /year to date 1.5 Cash at end ofquarter /year to date	$2,999,051 $525,672(1)	$2,322,867 $1,201,856
	$3,524,723	$3,524,723
Note 1 Closing cash at end of 31 March 2011reported in Appendix 4C as $527,696

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.6	Aggregate amount of payments to the relevant parties	Current quarter $A
		Nil
1.7	Aggregate amount of loans to the relevant parties	Nil
1.8	Explanation necessary for an understanding of the transactions
	This Cash Flow report includes the cash flow effects of AML’s 53% owned subsidiary Henan Keweier Alloy Materials Co Ltd. (HNKWE) This Appendix 4C is required to be completed on the principles of AASB 107. However, that standard addresses a cash flow statement in the context of one incorporating the total cash flow of a subsidiary. The standard then requires the cash flow statement to be reconciled against the profit and loss statement adjusted for minority interests. No such adjustment for minority interests is made in a stand alone cash flow statement.

• See chapter 19 for defined terms

Appendix 4C Page 2

30 June 2011

Appendix 4C Advanced Magnesium Limited 30 June 2011 Quarterly Report

Non-cash financing and investing activities

2.1 Details of financing and investing transactions in the quarter which have had a material effect on consolidated assets and liabilities but did not involve cash flows.

2.2	Details of outlays made by other entities to establish or increase their	share in businesses in which the	share in businesses in which the
	reporting entity has an interest.
	NIL
Financing facilities available
		Amount	Amount used
		available
		$A	$A
3.1	Loan facilities	$8,000,000	$8,000,000
3.2	Credit standby arrangements	NIL	NIL
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of		Current	Previous
cash flows) to the related items in the accounts is as follows.		quarter	quarter
		$A	$A
4.1	Cash on hand and at bank	$3,524,723	$525,672
4.2	Deposits at call	—	—
4.3	Bank overdraft	—	—
4.4	Other – Bank bills & Term deposits	—	—
	Total: cash at end of quarter(item 1.5)	$3,524,723	$525,672
Acquisitions and disposals of business entities
		Acquisitions	Disposals
5.1	Name of entity	Nil	NIL
5.2	Place of incorporation or registration	Nil	NIL
5.3	Consideration for acquisition or disposal	Nil	NIL
5.4	Total net assets	Nil	NIL
5.5	Nature of business	Nil	NIL

• See chapter 19 for defined terms 30 June 2011 Appendix 4C Page 3

Advanced Magnesium Limited 30 June 2011 Quarterly Report

Appendix 4C

Compliance statement

1

This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act 2001 (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2

This statement does give a true and fair view of the matters disclosed.

Sign here:

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Date: 25 July 2011 Executive Chairman Advanced Magnesium Limited

Print

name: Mr Nicholas Andrews

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2

The definitions in, and provisions of, AASB 107: Cash Flow Statements apply to this report except for the paragraphs of the Standard set out below.

• Aus20.1 - reconciliation of cash flows arising from operating activities to operating profit or loss

• 39 - 42 - itemised disclosure relating to acquisitions and disposals

• • 48 - 52 - disclosure of restrictions on use of cash

• 3

Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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• See chapter 19 for defined terms

30 June 2011

Appendix 4C Page 4