MAGONTEC LIMITED — Interim / Quarterly Report 2012

Jul 30, 2012

Limited

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

31 July 2012

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

Dear Sirs,

Appendix 4C – Quarter Ended 30 June 2012

The above quarterly cash flow report is attached.

Yours Sincerely

==> picture [153 x 58] intentionally omitted <==

John Talbot Company Secretary. Magontec Limited

Limited

QUARTERLY CASHFLOW - APPENDIX 4C

for the Period Ended 30 June 2012

Magontec 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.magontec.com Email: Corporate@magontec.com

Issued Capital (as at 30 June 2012)

Ordinary Shares (ASX Code MGL) 425,007,674 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

Independent Directors (as at 30 June 2012)

Zhongjun Li Non-Executive Director

Robert Shaw Non-Executive Director

Major Shareholders	No. of shares	Percent
KWE(HK)Investment Development CoLimited	55,797,298	15.10
Qinghai Salt Lake Magnesium IndustryLimited	55,435,784	15.00
Straits Mine Management Pty Limited	40,499,167	10.96

Share Registry Services

Management Team

Nicholas Andrews Executive Chairman

Guenter Franke Executive Director and Chief Operating Officer)

John Talbot Chief Financial Officer

Company Secretary John Talbot

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

Postal:

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 Magontec Limited 30 June 2012 Quarterly Report Rule 4.7B

Appendix 4C

Quarterly Report

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

Name of entity

Magontec Limited

ABN 51 010 441 666

1.1 Operating Activities

• a Sales

• b Materials purchase

• c Marketing

• d Other income

• e Corporate

• f Office expense

• g Personnel

• h Net interest & borrowing expenses

• i GST

• j Taxes

• k Other operating expense

Total Operating Cash Flows

Quarter ended (“current quarter”)

30-Jun-12

Quarter Ended 30 Jun 2012 $A	Year to date (12 months) $A
$24,466,782 ($23,586,431) ($60,366) $337,649 $222,777 ($891,854) ($3,363,717) ($453,745) ($734) ($3,248) ($11,322)	$112,722,894 ($101,937,895) ($772,001) $3,359,540 ($2,238,957) ($2,779,398) ($6,570,855) ($2,219,968) ($1,783) $163,480 ($750,225)
($3,344,208)	($1,025,169)

+ See chapter 19 for defined terms

Appendix 4C Page 1

30 June 2012

Appendix 4C Magontec Limited 30 June 2012 Quarterly Report

1.2 Financing Activities aProceeds from Capital Raising net of costs bReduction of loan to Straits Mine Management Pty Limited cOther Financing Activities Total financingcash flows	Current quarter $A $2,028,000 $0 $3,445,228	Year to date (12 months) $A $4,935,216 ($640,405) $9,282,028
	$5,473,228	$13,576,839
Investing Activities 1.3 a.Loan to Related Parties b.Cash acquired upon acquisition of Magontec group of companies c.Investment In Fixed Assets Total investingcash flows	$0 $0 ($140,651)	$69,919 $2,761,411 ($8,154,005)
	($140,651)	($5,322,676)
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	$1,988,369 $8,766,293	$7,228,994 $3,525,668
	$10,754,662	$10,754,662

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 (aggregate fees paid to directors)	Current quarter $A
		$26,478
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 Magontec’s 53% owned subsidiary Henan Keweier Alloy Materials Co Ltd. (HNKWE) and of Magontec’s 100% interest in the Magontec group of companies – the latter since 4 July 2011 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 its subsidiaries. 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. Approximately $3,3m of the cash held by the Company is committed to Banks who have a charge over that amount to support Bank accepted bills issued to suppliers to enable the Company to purchase supplies on a credit basis. Trade Debtors who owe an aggregate of approximately $2.6m to HNKWE are under financial stress. Additionally one is under investigation by authorities for possible infringement of customs duty law. Whilst HNKWE has successfully obtained judgement against one debtor for approximately $800,000 the company believes that recovery will be difficult and protracted. Given, the doubts surrounding recovery of the $2.6m, the Company believes provision for loss as at 30 June 2012 for this amount will be necessary. On 11 May 2012 Magontec announced its intention to dispose of its interest in HNKWE. Formal contractual arrangements regarding disposal were announced on 12 July 2012. The contractual arrangements for disposal are subject to approval bythe shareholders of Magontec.

• See chapter 19 for defined terms

Appendix 4C Page 2

30 June 2012

Appendix 4C Magontec Limited 30 June 2012 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 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. 4.1 Cash on hand and at bank 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) 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

Amount available Amount used $A $A $25.1m $23.3m $3.7m $3.7m Current quarter Previous quarter $A $A $10,754,662 $8,166,293 — — — — — $600,000

$10,754,662 $8,766,293 Acquisitions Disposals

• See chapter 19 for defined terms 30 June 2012 Appendix 4C Page 3

Appendix 4C Magontec Limited 30 June 2012 Quarterly Report

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:

==> picture [112 x 42] intentionally omitted <==

Date: 31 July 2012 Executive Chairman Magontec 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

Appendix 4C Page 4

30 June 2012