MAGONTEC LIMITED — Interim / Quarterly Report 2010

Jan 30, 2011

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QUARTERLY CASHFLOW - APPENDIX 4C

for the Period Ended 31 December 2010

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 31 December 2010)

Zhongjun Li Non-Executive Director

Issued Capital (as at 31 December 2010)

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	1,680,000	16 Aug 2010	16 Aug 2013	$0.10

Substantial Shareholders

Major Shareholders	No. of shares	Percent
KWE(HK)Investment Development CoLimited	55,797,298	20.666
CiticorpNomineesPtyLimited	18,956,706	7.021

Share Registry Services

Michael Brown Non-Executive Director

Registries Limited Level 7, 207 Kent St Sydney NSW 2000

Management Team

Postal:

Nicholas Andrews Executive Chairman

John Talbot Chief Financial Officer

Company Secretary

PO Box R67 Royal Exchange Sydney NSW 1223

Tel: 1300 737 760 or International: +61 2 8280 7111 Fax: Website:

John Talbot

The current share price can be obtained from the ASX Website

Appendix 4C Advanced Magnesium Limited 31 December 2010 Quarterly Report Rule 4.7B

Appendix 4C Quarterly Report

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

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Name of entity
Advanced Magnesium Limited
ABN Quarter ended (“current quarter”)
51 010 441 666 31-Dec -10
Quarter Ended
31 December Year to date
2010 (6 months)
$A $A
1.1 Operating Activities
a Receipts from sales and related debtors excl. GST $4,575,904 $7,834,361
b Marketing & Sales ($209,060) ($399,150)
c Materials purchases and other direct production costs ($4,557,035) ($9,068,758)
d Finance, accounting and regulatory ($158,236) ($353,498)
e Patents and licence protection ($23,577) ($78,604)
f Premises, telecoms & other administration ($87,119) ($200,834)
g Prior year incurred expenses $0 $0
h Retrenchments and termination $0 $0
i Interest and other items of a similar nature received $1,479 $13,441
j Taxes and other imposts & GST/VAT effects ($19,987) ($154,232)
k Sublet rental income $5,185 $10,567
l Foreign Exchange differences ($29,496) ($33,390)
m Other Operating Costs ($32,479) ($60,720)
Total Operating Cash Flows ($534,423) ($2,490,818)
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+ See chapter 19 for defined terms

Appendix 4C Advanced Magnesium Limited

Appendix 4C Page 1

31 December 2010

31 December 2010 Quarterly Report

1.2 Financing Activities a.Proceeds from Capital Raising net of costs b.Other Financing Activities Total financingcash flows	Current quarter $A $301,942 $0	Year to date (6 months) $A $4,272,596 ($486,145)
	$301,942	$3,786,451
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	$0 $0 $0 ($43,630)	($1,816,600) $0 $0 ($396,088)
	($43,630)	($2,212,688)
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	($261,211) $1,196,367	(902,156) $1,196,367
	$294,211	$294,211

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
		$24,524
1.7	Aggregate amount of loans to the relevant parties
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. HNKWE has embarked upon a capital raising plan to assist in funding its working capital needs. The capital raising plan is designed to provide sufficient working capital for the company’s current sales programme. The raisng of a RMB10m described in the company’s release to the market on 21 January 2011 is the first tranche of this plan. HNKWE has also agreed to make loan repayments to AML which will be sufficient to meet AML’s cash flow needs.

• See chapter 19 for defined terms

Appendix 4C Page 2

31 December 2010

Appendix 4C

Advanced Magnesium Limited 31 December 2010 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 reporting entity has an interest.

NIL

Financing facilities available

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A	Amount used $A
	$1,500,000	$1,500,000
	NIL	NIL

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A	Previous quarter $A
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other – Bank bills & Term deposits	$294,211	$557,229
	—	—
	—	—
	—	—
Total: cash at end of quarter(item 1.5)	$294,211	$557,229

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions	Disposals
	NIL	NIL
	NIL	NIL
	NIL	NIL
	NIL	NIL
	NIL	NIL

• See chapter 19 for defined terms

31 December 2010

Appendix 4C Page 3

Advanced Magnesium Limited 31 December 2010 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: 31 January 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.

• See chapter 19 for defined terms

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Appendix 4C Page 4

31 December 2010