MAGONTEC LIMITED — Interim / Quarterly Report 2017

Jan 30, 2017

==> picture [592 x 110] intentionally omitted <==

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

31 January 2017

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

Dear Sirs,

Appendix 4C – Quarter Ended 31 December 2016

Attached to this letter are –

• Attachment 1 – Unaudited Cash Flow Statement for the 12 months to 31 December 2016

• Attachment 2 – Appendix 4C Cash Flow Report for the quarter ended 31 December 2016

Attachment 1 is presented in the format that appears in the Company’s Half Year and Annual Reports and prepared on a basis consistent with the requirements of accounting standards.

Attachment 2 is presented in the format required by Paragraph 4.7B of Chapter 4 of the ASX listing rules.

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.

==> picture [592 x 110] intentionally omitted <==

Given that the Company’s Annual Report for the year ended 31 December 2016 will be released to the market on or prior to 28 February 2017, no supplementary accounting data and Executive Chairman’s Report are included in this report.

It is reiterated that all data presented in this report, including the supplementary cash flow statement in Attachment 1 is subject to change, including but not limited to changes resulting from completion of the audit of the annual result to 31 December 2016.

Yours Sincerely

==> picture [170 x 73] intentionally omitted <==

John Talbot Company Secretary

==> picture [595 x 109] intentionally omitted <==

Attachment 1

UNAUDITED STATEMENT OF CASH FLOWS

Unaudited Consolidated Cash Flow Statement
Source: Magontec Limited Consolidated Management Accounts
	Quarter	12 months	9 months
	Ended	to	to
$000	31-Dec-16	31-Dec-16	30-Sep-16
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from/ (utilised in) underlying operating activities	741	4,949	4,208
Net working capital assets
- Trade and other receivables	2,567	(1,158)	(3,725)
- Inventory	(1,016)	3,163	4,179
- Trade and other payables	161	(432)	(593)
- Other	0	-	(0)
Cash generated from/ (utilised in) net working capital asset	1,712	1,573	(139)
Other operating activities
- Net Interest paid	(188)	(1,045)	(857)
- Income tax paid	(29)	(85)	(56)
Cash generated from/ (utilised in) other operating activities	(217)	(1,129)	(913)
Net Cash generated from/ (utilised in) all operating activities	2,236	5,393	3,156
CASH FLOW FROM INVESTING ACTIVITIES
Net cash out on purchase/disposal of property, plant & equipment	(1,212)	(3,906)	(2,694)
Group information technology	0	(12)	(12)
Security deposit	35	(1)	(36)
Other	-	-	-
Net cash provided by / (used in) investing activities	(1,177)	(3,919)	(2,742)
CASH FLOW FROM FINANCING ACTIVITIES
Bank Debt	(489)	(5,218)	(4,729)
Net capital raised from issue of securities	-	-	-
Other	-	-	-
Net cash provided by / (used in) financing activities	(489)	(5,218)	(4,729)
Net increase / (decrease) in cash and cash equivalents	570	(3,744)	(4,315)
Foreign exchange effects on total cash flow movement	131	(153)	(284)
Cash and cash equivalents at the beginning of the period	3,892	8,490	8,490
Cash and cash equivalents at the end of theperiod	4,593	4,593	3,892

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

Attachment 2

APPENDIX 4C

==> picture [131 x 32] intentionally omitted <==

Limited

QUARTERLY UNAUDITED CASHFLOW APPENDIX 4C

for the Period Ended 31 December 2016

Quarterly Report for 31 December 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 46A Macleay St, Potts Point, NSW 2011 Australia

Tel: +61 2 8005 4109 Fax: +61 2 9252 8960

Website: www.magontec.com

Email: corporate@magontec.com

Non-Executive Directors (as at 31 December 2016)

Zhongjun Li Kangmin Xie Andre Labuschagne

Independent Directors (as at 31 December 2016)

Robert Shaw Robert Kaye

Management Team

Nicholas Andrews Executive Chairman

John Talbot Company Secretary

Derryn Chin Chief Financial Officer

Issued Capital (as at 31 December 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 Address:

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 – www.asx.com.au

Quarterly Report for 31 December 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

Magontec Limited ABN Quarter ended (“current quarter”) 51 010 441 666 31 December 2016

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
1. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8	Cash flows from operating activities Receipts from customers Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs Dividends received (see note 3) Interest received Interest and other costs of finance paid Income taxes paid Government grants and tax incentives Other (provide details if material)	33,322 (165) (27,837) (33) - (1,270) (1,603) - 23 (211) (29) 39 -	127,782 (418) (110,939) (67) - (5,975) (4,012) - 54 (1,099) (85) 150 -
1.9	Net cash from / (used in) operating activities	2,236	5,393

Quarterly Report for 31 December 2016

Page 3

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

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment	(1,212)	(3,924)
(b) businesses (see item 10)	-	-
(c) investments	-	-
(d) intellectual property	0	(12)
(e) other non-current assets	-	-
2.2 Proceeds from disposal of:
(a) property, plant and equipment	-	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)	35	(1)
2.6 Net cash from / (used in) investing activities	(1,177)	(3,919)

Quarterly Report for 31 December 2016

Page 4

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

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	6,259	11,748
3.6 Repayment of borrowings	(6,748)	(16,966)
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	(489)	(5,218)
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	3,892	8,490
4.2 Net cash from / (used in) operating activities (item 1.9 above)	2,236	5,393
4.3 Net cash from / (used in) investing activities (item 2.6 above)	(1,177)	(3,919)
4.4 Net cash from / (used in) financing activities (item 3.10 above)	(489)	(5,218)
4.5 Effect of movement in exchange rates on cash held	131	(153)
4.6 Cash and cash equivalents at end of quarter	4,593	4,593
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 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)	4,593 - - -	3,892 - - -
	4,593	3,892

Quarterly Report for 31 December 2016

Page 5

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

6. Payments to directors of the entity and their associates 6.1 Aggregate amount of payments to these parties included in item 1.2 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3	Current quarter $A'000
	35
	-

• 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 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	Current quarter $A'000
	-
	-

• 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

Not applicable

Total facility amount	Amount drawn at quarter
at quarter end	end
$A’000	$A’000
25,342	15,524

8. Financing facilities available

• Add notes as necessary for an at quarter end end understanding of the position $A’000 $A’000

• 8.1 Loan facilities 25,342 15,524 8.2 Credit standby arrangements 8.3 Other (please specify) 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 31 December 2016
	**Maturiy **	Interest rate	Limit	Drawn	Security
Lender	%	%	$A 000	$A 000	status
Commerzbank Germany	30-Jun-17	2.15%	9,251	6,443	Secured
Commerzbank Germany	31-Dec-18	2.50%	472	472	Secured
ING Romania	Open	3.15%	4,577	3,237	Secured
ING Romania	28-Apr-17	2.70%	634	577	Secured
Bank of Communications China	25-Apr-17	4.52%	3,999	3,999	Secured
Commerzbank Bank China	NA	5.65%	4,999	-	Secured
Total borrowings on balance sheet			23,932	14,728
Postbank(factoring)			1,410	796
Total facilities as at 31 Dec 2016			25,342	15,524

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

Quarterly Report for 31 December 2016

Page 6

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

9. Estimated cash outflows for next quarter	$A’000
9.1 Research and development 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing 9.4 Leased assets 9.5 Staff costs 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	(104) (27,735) (17) - (1,494) (1,003) -
	(30,353)

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

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:

==> picture [142 x 53] intentionally omitted <==

Date: 31 January 2017

(Executive Chairman)

Print name: Mr Nicholas Andrews

Quarterly Report for 31 December 2016

Page 7