MAGONTEC LIMITED — Interim / Quarterly Report 2016

Oct 30, 2016

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Suite 1.03, Level 1 46 Macleay St Potts Point NSW 2011 Australia Ph: +61 2 8005 4109 Fax: +61 2 9252 8960

31 October 2016

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

Dear Sirs,

Appendix 4C – Quarter Ended 30 September 2016

In this letter are –

• Attachment 1 – Executive Chairman’s Commentary

• Attachment 2 - Unaudited Comprehensive Income Statement for the 9 months to 30 September 2016

• Attachment 3 – Unaudited Balance Sheet at 30 September 2016

• Attachment 4 – Unaudited Cash Flow Statement for the 9 months to 30 September 2016

• Attachment 5 – Appendix 4C cash flow report for the quarter ended 30 September 2016

Attachments 1 to 4 are presented in the formats that appear in the Company’s half year and annual reports and prepared on a basis consistent with the requirements of accounting standards.

Attachment 5 is presented in the format required by Paragraph 4.7B of Chapter 4 of the ASX listing rules.

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Rounding Errors

The tables in this report may indicate apparent errors to the extent of one unit (being $1,000) in:

• the addition of items comprising total and sub totals; and

• the comparative balances of items from the financial accounts.

Such differences arise from the process of:

• converting foreign currency amounts to two decimal places in AUD; and

• subsequent rounding of the AUD amounts to one thousand dollars.

Yours Sincerely

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John Talbot Company Secretary

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Attachment 1

Executive Chairman’s Commentary Magontec Limited (ASX: MGL)

Quarterly Update for 9 months to 30 September 2016 (Unaudited)

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Headline numbers
9 months to 9 months to
30 Sept 2016 30 Sept 2015 $ change % change
Underlying Operational Cash flow $4.208 m $2.914 m $1.294 m 44.4%
Gross Profit $11.195 m $9.725 m $1.470 m 15.1%
Gross Profit Margin (%) 11.4% 9.2%
Underlying EBITDA $4.144 m $2.205 m $1.938 m 87.9%
Underlying EBIT $2.845 m $0.813 m $2.032 m 249.9%
Underlying NPAT $1.336 m ($0.317 m) $1.653 m -
Excludes unrealised foreign exchange effects of:
Unrealised FX gains/(losses) ($0.956 m) $1.774 m
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• Magontec reports a strong uplift in profitability for the first 9 months of 2016 compared with the previous corresponding period

• Primary magnesium alloy and recycling activities have achieved further reductions in production costs on slightly lower global volumes

• The anode division has achieved sharp improvements in competitiveness on higher volumes and a growing global market share

• Magontec’s Qinghai magnesium alloy cast house is expected to be fully commissioned by 31 December 2016 and start of production for Qinghai Salt Lake Magnesium’s (QSLM) electrolytic plant (supply of liquid pure magnesium) is forecast for 1Q 2017

ABOUT MAGONTEC

Magontec is a leading manufacturer of magnesium alloys and Cathodic Corrosion Protection (anode) products made from magnesium and titanium The company

• Buys pure Mg and converts it into Mg alloy ingots for sale into global markets

• Acquires Mg alloy scrap from customers for recycling into Mg alloy ingots for re-sale

• Casts and extrudes Mg alloys into anodes for supply to the global water heater industry

Magontec is the only western Mg alloy producer with

• Its own Chinese primary Mg alloy manufacturing base and Mg alloy recycling facilities in Europe and Asia

• • A global sales and logistics capability

• A comprehensive portfolio of proprietary magnesium alloys and an active Research & Development program

Magontec

• Is a pioneer in the field of magnesium alloys and anode products with vast experience in production and development of new alloy and anode applications.

• Has installed cast house equipment in the Magontec Qinghai magnesium alloy cast house in preparation for first commercial supply of pure magnesium from Qinghai Salt Lake Magnesium Co Ltd in Q1 2017

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COMMENTARY

Qinghai Cast House Project

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Magontec Qinghai primary magnesium alloy production facility

As at the end of October 2016, the Magontec Qinghai magnesium alloy cast house is fully installed with four casting lines, two packing lines and the associated furnaces and operating software. In June this year the cast house was provided with access to utilities and in the intervening period the first ingot casting line has been undergoing hot commissioning.

Our current schedule will see all four ingot casting lines fully hot commissioned by the end of December this year and ready to receive liquid pure magnesium from the Qinghai Salt Lake Magnesium Co Ltd (QSLM) electrolytic magnesium plant.

The QSLM operations, brine purification, dehydration and electrolytic reduction processes, are expected to complete hot commissioning in the next few months. While this phase is always an uncertain process Magontec currently expects to receive supply of liquid pure magnesium from QSLM in the first quarter of 2017.

As we have discussed in previous commentaries we expect product from Magontec Qinghai to be competitively priced and provide our business with the opportunity to re-enter many international and domestic Chinese markets that have not been accessible under our current production structure.

Under the 2013 supply and price agreements between Magontec and QSLM we expect to receive at least 56% of the production of liquid pure magnesium from QSLM’s reduction cell house. Under these agreements Magontec is also secured as the exclusive producer of magnesium alloys from this electrolytic magnesium plant, the first electrolytic plant to be built anywhere in the world in this century.

Magontec sales representatives are beginning the process of collecting pre-qualification information for customers together with documentation on the manufacturing process and the environmental attributes of Magontec Qinghai magnesium alloys.

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Magontec is extremely proud to be able to offer magnesium alloy consumers a product that will have a lower embedded CO2 than any comparable material and will also use a harmless cover gas in its manufacture. The Magontec Qinghai cast house will be the first major primary magnesium alloy manufacturing operation to use HFC134a in place of SO2 or the highly toxic SF6, both in common use in China (which produces 85% of global magnesium production) and elsewhere around the world.

Magnesium alloys

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Magontec Romania magnesium alloy recycling and magnesium anode manufacturing

In Europe this year our Romanian magnesium alloy recycling operation has enjoyed steady conditions and the full benefit of new process technologies installed in 2015. While volumes have been on budget, conversion costs and other operating metrics have improved through the year and the financial result from this business is expected to be slightly ahead of budget. At the gross profit level as at the end of September 2016 it is 150% ahead of the previous corresponding period. Magontec’s Romanian magnesium alloy recycling operation is now operating at a very high efficiency level. With a continued trend among our customers to locating automotive manufacturing operations in the eastern regions of Europe we can expect to see this business continue to build volume and enjoy improving economies of scale.

In Germany our facility at Bottrop is both a recycling operation and increasingly a specialist metal manufacturing business. The former has enjoyed a stronger than forecast third quarter and is also well ahead of its budget for 2016. While the flow of unprocessed scrap of Chinese origin from Europe to the USA continues, reducing available volumes for Magontec and other magnesium alloy recycling operations in Europe, Magontec remains a robust competitor in Western Europe with sales and profitability ahead of expectations, particularly in recent months.

Specialist alloy manufacturing in Europe includes both high volume products, such as Magontec’s proprietary AE family of magnesium alloys, as well as lower volume products targeted at defence and aerospace industries. A part of our longer-term strategy has been to diversify production to reduce reliance on high volume products and to raise the company’s overall margins and profitability. Research and development programs, often in partnership with our customers, are responsible for driving many of these new products, some of which will begin production in 2017 and 2018. Other products are derived from magnesium technologies that Magontec inherited from Norsk Hydro and Australian Magnesium Corporation, the two magnesium companies that were combined to form our business.

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In China our primary magnesium alloy manufacturing business has performed in line with budget, albeit on lower than forecast volumes, but boosted by a further reduction in operating costs. While we have at times struggled in export markets to compete with integrated Chinese pure and alloy producers, and cannot replicate the tax structures that many Chinese traders adopt, we continue to remain competitive in many markets from our current primary magnesium alloy plant in Shanxi and look forward to the opportunities that will present themselves when we commence production in Qinghai. Magontec’s export volumes in the first 9 months of 2016 have held up well, however we are cautious for the immediate period ahead.

Anode products (cathodic corrosion protection)

Magontec’s anode businesses continue to enjoy a considerably better year in 2016. In China sales have risen by more than 7% in a business where profitability is extremely sensitive to volumes and where unit prices continue to fall year-on-year. At the gross profit level the Chinese anodes business is currently well ahead of its 2016 budget and around 35% ahead of the previous corresponding period. Much of this improvement has been driven by capital investment. In Xian we have installed new casting machines, new CNC machines and have completed an upgrade to our extruded product at both the raw material and processing stages. In the fourth quarter of 2016 we will make a further capital investment in anode processing equipment to improve competitiveness, win new sales contracts and further reduce unit costs.

The European anodes business has also benefitted from a strong improvement in unit costs. Our plant in Romania is one of the most efficient manufacturers of magnesium anodes in the world and, having regained market share lost in 2013 and 2014, is starting to win new customers and supply into new markets with a highly competitive product. Over the next few months we will introduce new automated processing equipment that will further enhance competitiveness and profitability.

In both China and Europe we have moved aggressively to reduce manufacturing costs in the last three years. We are now in a much stronger competitive position and will be seeking to increase market share and profitability to new levels in 2017. In addition to magnesium anodes Magontec is also the world leader in electronic anodes. This market segment has been confined to water heater applications in the past but is moving into new products and new applications. In 2016 the electronic anodes division has made a significant contribution to group profitability driven by a talented technical team who have risen to the challenge of developing new products and new software for increasingly complex application.

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Summary

As we enter the last quarter of 2016 we can begin to see a little more clearly our prospects for 2017 and the years ahead. Much of our focus in the last three years has been on the design, installation and commissioning of our new cast house in Qinghai Province PRC. As we have described at length in previous commentaries, this will be a new step for Magontec and for our customers. In 2017 Magontec will be able to offer a competitively priced magnesium alloy with the lowest embedded CO2 of any magnesium production unit in the World. Under our agreements with QSLM we will also be able to offer longer-term contracts. All of these characteristics make Magontec’s future product attractive to automotive and other customers who have had to rely on short-term price and supply agreements from high-CO2 emitting Pidgeon Process magnesium plants. Material provenance, particularly for the automotive industry that faces many environmental challenges, has become a critical metric. While price will continue to be a primary metric the environment impacts of production together with a robust supply chain offering and a material recycling service will be among the many factors working in Magontec’s favour as the Qinghai facility comes on stream.

In our other businesses we have delivered steady improvements over recent years. Our teams in China, Romania and Germany have successfully delivered a flow of new production innovations that have allowed Magontec to regain its leadership position in magnesium anodes and magnesium alloy recycling and to sustain a credible share in the face of strong competition in primary magnesium alloy markets.

As we come to the end of the capital expenditure program in Qinghai our attention will turn to funding the future working capital required for this project. We have been fortunate in our banking relationships in Europe and China where we enjoy strong support from global banking groups. In particular, we have benefitted from a working capital facility provided by Commerzbank that covers our global trading activities. With production volumes forecast to grow significantly in China we will rely on those banking relationships as well as our growing ability to generate strong cash flows from our existing operations.

Nic Andrews Executive Chairman 31 October 2016

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Attachment 2

UNAUDITED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME

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Unaudited Consolidated Comprehensive Income Statement
Source: Magontec Limited Management Accounts
9 months to 9 months to
$000 30-Sep-16 30-Sep-15
Sale of goods 97,883 105,695
Cost of sales (86,688) (95,970)
Gross profit 11,195 9,725
Other income 302 346
Interest expense (888) (978)
Impairment of inventory, receivables & other financial assets (401) (485)
Travel accommodation and meals (500) (532)
Research, development, licensing and patent costs (253) (327)
Promotional activity (34) (26)
Information technology (227) (268)
Personnel (4,704) (4,841)
Depreciation & Amortisation (370) (364)
Office expenses (263) (200)
Corporate (2,197) (2,275)
Foreign exchange gain/(loss) (577) 1,838
Other Operating Expenses (83) (3)
Profit/(Loss) before tax 1,001 1,609
Income tax (expense)/benefit (621) (152)
Profit/(Loss) after tax 380 1,456
Other comprehensive income
Exchange differences taken to reserves in equity (1,313) 1,682
Movement in actuarial assessments (550) -
Total comprehensive income (1,483) 3,138
Reconciliation of reported NPAT to underlying NPAT (unaudited)
9 months to 9 months to
$000 30-Sep-16 30-Sep-15
Profit/(Loss) after tax (reported) 380 1,456
Adjustment for unrealised FX (gains)/losses 956 (1,774)
Profit/Loss after tax excluding unrealised FX ("Underlying NPAT") 1,336 (317)
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Attachment 3

UNAUDITED BALANCE SHEET

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Unaudited Consolidated Balance Sheet
Source: Magontec Limited Management Accounts
As at As at
$000 30-Sep-16 31-Dec-15
Cash & cash equivalents 3,892 8,490
Trade & other receivables 23,472 22,163
Inventory 21,339 26,316
Other 422 220
Total Current Assets 49,124 57,188
Property, plant & equipment 20,351 19,567
Intangible assets 2,899 3,028
Deferred tax assets 1,467 1,653
Other 1,005 1,092
Total Non-Current Assets 25,722 25,339
Total Assets 74,846 82,528
Trade & other payables 14,332 16,276
Bank borrowings 15,237 20,272
Provisions 848 497
Total Current Liabilities 30,418 37,045
Other payables 190 149
Bank borrowings - 235
Provisions 10,377 9,937
Total Non-Current Liabilities 10,567 10,322
Total Liabilities 40,985 47,367
Net Assets 33,861 35,161
Equity attributable to members of MGL
Share capital 58,616 58,433
Reserves 5,082 5,618
Accumulated (losses)/profits (30,300) (29,353)
Share capital 463 463
Reserves - -
- -
Accumulated (losses)/profits
Total equity 33,861 35,161
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Attachment 4

UNAUDITED STATEMENT OF CASH FLOWS

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Unaudited Consolidated Cash Flow Statement
Source: Magontec Limited Management Accounts
Quarter 9 months 6 months
Ended to to
$000 30-Sep-16 30-Sep-16 30-Jun-16
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from/ (utilised in) underlying operating activities 1,855 4,208 2,353
Net working capital assets
- Trade and Other Receivables 1,540 (3,725) (5,265)
- Inventory 4,197 4,179 (18)
- Trade and Other Payables (2,429) (593) 1,835
- Other - - -
Cash generated from/ (utilised in) net working capital asset 3,309 (139) (3,448)
Other operating activities
- Net Interest paid (261) (857) (596)
- Income tax paid (2) (56) (53)
Cash generated from/ (utilised in) other operating activities (263) (913) (650)
Net Cash generated from/ (utilised in) all operating activities 4,900 3,156 (1,744)
CASH FLOW FROM INVESTING ACTIVITIES
Net cash out on purchase/disposal of property, plant & equipment (1,300) (2,694) (1,394)
Group Information Technology (6) (12) (6)
-
Security deposit (36) (36)
Other - - -
Net cash provided by / (used in) investing activities (1,342) (2,742) (1,399)
CASH FLOW FROM FINANCING ACTIVITIES
Bank Debt (5,739) (4,729) 1,010
- - -
Net capital raised from issue of securities
Other - - -
Net cash provided by / (used in) financing activities (5,739) (4,729) 1,010
Net increase / (decrease) in cash and cash equivalents (2,181) (4,315) (2,133)
Foreign exchange effects on total cash flow movement (119) (284) (165)
Cash and cash equivalents at the beginning of the period 6,192 8,490 8,490
Cash and cash equivalents at the end of the period 3,892 3,892 6,192
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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Attachment 5

APPENDIX 4C

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Limited

QUARTERLY UNAUDITED CASHFLOW APPENDIX 4C

for the Period Ended 30 September 2016

• See chapter 19 for defined terms Quarterly report for 30 September 2016

Page 1

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Magontec Limited

ABN: 51 010 441 666 Registered & Principal Office: Suite 1.03, Level 1 46 Macleay St, Potts Point, NSW 2011 Australia

Tel: +61 2 8005 4109 Fax: +61 2 92528960

Website: www.magontec.com

Email: Corporate@magontec.com

Non-Executive Directors (as at 30 September 2016)

Zhongjun Li Kangmin Xie Andre Labuschagne

Independent Directors (as at 30 September 2016)

Robert Shaw Robert Kaye

Management Team

Nicholas Andrews Executive Chairman

John Talbot Company Secretary

Derryn Chin Chief Financial Officer

Issued Capital (as at 30 September 2016)

Ordinary Shares (ASX Code MGL) 1,132,209,291 fully paid Ordinary shares on issue

Options: Nil

Substantial Shareholders

Major Shareholders	No. of shares	Percent
Qinghai Salt Lake Magnesium Industry Limited	330,535,784	29.19
Straits Mine Management Pty Limited	148,874,507	13.15
J P Morgan Nominees Australia Limited	101,444,586	8.96
Citicorp Nominees Pty Limited	89,181,423	7.88

Share Registry Services

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

• See chapter 19 for defined terms Quarterly report for 30 September 2016

Page 2

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

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Magontec Limited
ABN Quarter ended (“current quarter”)
51 010 441 666 30 September 2016
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Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
1. Cash flows from operating activities
1.1 Receipts from customers 33,143 94,460
1.2 Payments for
(a) research and development (119) (253)
(b) product manufacturing and operating
costs (25,934) (83,102)
(c) advertising and marketing (4) (34)
(d) leased assets - -
(e) staff costs (1,435) (4,704)
(f) administration and corporate costs (589) (2,409)
1.3 Dividends received (see note 3) - -
1.4 Interest received 11 32
1.5 Interest and other costs of finance paid (271) (888)
1.6 Income taxes paid (2) (56)
1.7 Government grants and tax incentives 101 111
1.8 Other (provide details if material)
1.9 Net cash from / (used in) operating
activities 4,900 3,156
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• See chapter 19 for defined terms Quarterly report for 30 September 2016

Page 3

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment [1] (1,300) (2,712)
(b) businesses (see item 10)
(c) investments
(d) intellectual property (6) (12)
(e) other non-current assets
2.2 Proceeds from disposal of:
(a) property, plant and equipment [1] - 19
(b) businesses (see item 10)
(c) investments
(d) intellectual property
(e) other non-current assets
2.3 Cash flows from loans to other entities
2.4 Dividends received (see note 3)
2.5 Other (provide details if material) (36) (36)
2.6 Net cash from / (used in) investing
activities (1,342) (2,742)
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1 Previously disclosed on a net basis. Proceeds from disposal/ (payments to acquire) property, plant and equipment for the quarters ended June 2016 and March 2016 were $9,000 / ($367,000) and $9,000 / ($1,046,000) respectively.

• See chapter 19 for defined terms Quarterly report for 30 September 2016

Page 4

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

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Consolidated statement of cash flows Current quarter Year to date
$A’000 (9 months)
$A’000
3. Cash flows from financing activities
3.1 Proceeds from issues of shares
3.2 Proceeds from issue of convertible notes
3.3 Proceeds from exercise of share options
3.4 Transaction costs related to issues of
shares, convertible notes or options
3.5 Proceeds from borrowings [2] 805 5,489
3.6 Repayment of borrowings [2] (6,545) (10,218)
3.7 Transaction costs related to loans and
borrowings
3.8 Dividends paid
3.9 Other (provide details if material)
3.10 Net cash from / (used in) financing
activities (5,739) (4,729)
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning
of quarter/year to date 6,192 8,490
4.2 Net cash from / (used in) operating
activities (item 1.9 above) 4,900 3,156
4.3 Net cash from / (used in) investing activities
(item 2.6 above) (1,342) (2,742)
4.4 Net cash from / (used in) financing activities
(item 3.10 above) (5,739) (4,729)
4.5 Effect of movement in exchange rates on
cash held (119) (284)
4.6 Cash and cash equivalents at end of
3,892 3,892
quarter
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2 Previously disclosed on a net basis. Proceeds/(repayments) from borrowings for the quarters ended June 2016 and March 2016 were $2,614,000 / ($2,625,000) and $2,070,000 / ($1,048,000) respectively.

• See chapter 19 for defined terms Quarterly report for 30 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

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5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
5.1 Bank balances 3,892 6,192
5.2 Call deposits
5.3 Bank overdrafts
5.4 Other (provide details)
5.5 Cash and cash equivalents at end of
quarter (should equal item 4.6 above) 3,892 6,192
6. Payments to directors of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to these parties included in item 1.2 35
6.2 Aggregate amount of cash flow from loans to these parties included
in item 2.3 -
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6.2	Aggregate amount of cash flow from loans to these parties included in item 2.3 -
6.3	Include below any explanation necessary to understand the transactions included in
	items 6.1 and 6.2

Not applicable

7.	Payments to related entities of the entity and their associates		Current quarter $A'000
7.1	Aggregate amount of payments to these parties included in item 1.2		-
7.2	Aggregate amount of cash flow from loans to these parties included in item 2.3		-
7.3	Include below any explanation necessary to understand the transactions		included in
	items 7.1 and 7.2

Not applicable

• See chapter 19 for defined terms Quarterly report for 30 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

8. Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 23,817 16,518

• 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

Borrowings facilities as at 30 September 2016
	Interest rate	Limit	Drawn
Lender	%	$A 000	**$A 000 **	Security status
Commerzbank Germany	2.15%	8,149	5,887	Secured
Commerzbank Germany	2.50%	790	527	Secured
ING Romania	3.15%	3,916	3,182	Secured
ING Romania	2.70%	637	579	Secured
Bank of Communications China	4.52%	3,911	3,911	Secured
Commerzbank Bank China	5.50%	4,888	1,152	Secured
Total facilities classified as borrowings on balance	sheet	22,290	15,237
Postbank(factoring)		1,527	1,280
Total facilities as at 30 September 2016		23,817	16,518

No additional facilities entered into or proposed to be entered into after quarter end.

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9. Estimated cash outflows for next quarter $A’000
9.1 Research and development (84)
9.2 Product manufacturing and operating costs (27,701)
9.3 Advertising and marketing (11)
9.4 Leased assets -
9.5 Staff costs (1,568)
9.6 Administration and corporate costs (803)
9.7 Other (provide details if material) -
9.8 Total estimated cash outflows (30,168)
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• See chapter 19 for defined terms Quarterly report for 30 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

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10. Acquisitions and disposals of Acquisitions Disposals
business entities
(items 2.1(b) and 2.2(b) above)
10.1 Name of entity Not applicable Not applicable
10.2 Place of incorporation or
Not applicable Not applicable
registration
10.3 Consideration for acquisition or
Not applicable Not applicable
disposal
10.4 Total net assets
Not applicable Not applicable
10.5 Nature of business
Not applicable Not applicable
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Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here:

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Date: 31 October 2016

(Executive Chairman)

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 that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms Quarterly report for 30 September 2016

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