MAGONTEC LIMITED — Interim / Quarterly Report 2019

Jan 30, 2020

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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 2020

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

Dear Sirs,

Appendix 4C – Quarter Ended 31 December 2019

In this letter are –

• Attachment 1 – Unaudited Cash Flow Statement for the 12 months to 31 December 2019

• Attachment 2 – Unaudited Appendix 4C cash flow report for the quarter ended 31 December 2019

Attachment 1 is presented in the format that appears in the Company’s half year and annual reports and is 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.

It is reiterated that all data presented in this report is unaudited.

Yours sincerely

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Nicholas Andrews, Executive Chairman of Magontec Limited has authorised the release of this document to the market on 31 January 2020

Rounding

The data in this report may indicate apparent errors to the extent of one unit (being $1,000) in the addition of items comprising totals 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.

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Attachment 1

UNAUDITED STATEMENT OF CASH FLOWS

Unaudited Consolidated Cash Flow Statement
Source: Magontec Limited Consolidated Management Accounts
9 months to 3 months to 12 months to
$000 30-Sep-19 31-Dec-19 31-Dec-19
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from/ (utilised in) underlying operating activities 2,205 1,086 3,291*
Net working capital assets
- Trade and other receivables (5,330) (461) (5,791)
- Inventory** 4,036 (5,462) (1,425)
- Trade and other payables (5,888) 3,354 (2,534)
- Other 126 (74) 52
Cash generated from/ (utilised in) net working capital assets (7,055) (2,643) (9,699)
Other operating activities
- Net Interest paid (389) (115) (504)
- Income tax paid (587) (111) (697)
Cash generated from/ (utilised in) other operating activities (976) (226) (1,201)
Net Cash generated from/ (utilised in) all operating activities (5,827) (1,782) (7,609)
CASH FLOW FROM INVESTING ACTIVITIES
Net cash out on purchase/disposal of property, plant & equipment (1,111) (614) (1,725)
Group information technology (133) (66) (200)
Security deposit 160 (200) (41)
Other* (231) (696) (927)
Net cash provided by / (used in) investing activities (1,316) (1,576) (2,892)
CASH FLOW FROM FINANCING ACTIVITIES
Bank Debt 2,685 (778) 1,907
Net capital raised from issue of securities - - -
Other* - (16) (16)
Net cash provided by / (used in) financing activities 2,685 (794) 1,891
Net increase / (decrease) in cash and cash equivalents (4,458) (4,152) (8,610)
Foreign exchange effects on total cash flow movement 124 (100) 24
Cash and cash equivalents at the beginning of the period 12,889 8,555 12,889
Cash and cash equivalents at the end of theperiod 8,555 4,303 4,303

*Includes preliminary upward adjustment of A$395k due to IFRS 16 Leases in the December 2019 quarter, with equal and offsetting adjustments in investing and financing activities. No net cash impact, subject to audit review.

** Driven by inventory build-up in lead up to Chinese New Year in the December 2019 quarter

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

Attachment 2

APPENDIX 4C

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Limited

QUARTERLY UNAUDITED CASH FLOW APPENDIX 4C

for the Period Ended 31 December 2019

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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 2019

Zhongjun Li Kangmin Xie Andre Labuschagne

Independent Directors

As at 31 December 2019

Robert Kaye Atul Malhotra

Issued Capital (as at 31 December 2019)

Ordinary Shares (ASX Code MGL) 1,140,073,483 fully paid Ordinary shares on issue

Options: Nil

Performance Rights[(1) ] (as at 31 December 2019) :

erformance Rights(1)(as	at 31 December	2019):
Performance Period	Granted	Number
1 Jan 2018 to 31 Dec 2020	10 May 2018	17,181,612
1 Jan 2019 to 31 Dec 2021	24 Jan 2019	18,967,955
Total		36,149,567

Note:

(1) For terms of issue refer to the heading “Vesting of Performance Rights as Magontec Ordinary Shares” in paragraphs (o) to (t) of Resolution 5 of the 2017 AGM.

Substantial Shareholders

Shareholder	No. of shares(2)	Percent (3)
Qinghai Salt Lake Magnesium Industry Limited	330,535,784	28.99
Allan Gray Australia Pty Limited	176,858,972	15.51
Straits Mine Management Pty Limited	148,874,507	13.06

Notes:

(2) As per last “Notice of change of interests of substantial holder” lodged with ASX by shareholder.

(3) “No. of Shares” divided by fully paid Ordinary shares on issue as at the date of this report.

Management Team

Nicholas Andrews Executive Chairman

John Talbot Company Secretary

Derryn Chin Chief Financial Officer

Share Registry Services

Boardroom Pty Limited Level 12, 225 George 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

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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

Name of entity

Magontec Limited ABN Quarter ended (“current quarter”) 51 010 441 666 31 December 2019

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)	32,095 (134) (30,600) (3) - (2,032) (938) - 27 (142) (110) 55	135,166 (422) (127,255) (87) - (7,925) (5,982) - 78 (581) (697) 97
1.9	Net cash from / (used in) operating activities	(1,782)	(7,609)

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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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	(614)	(1,725)
(b) businesses (see item 10)
(c) investments
(d) intellectual property	(66)	(200)
(e) other non-current assets
2.2 Proceeds from disposal of:
(a) property, plant and equipment	-	-
(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 (IFRS 16 Leases and security deposits)	(896)	(967)
2.6 Net cash from / (used in) investing activities	(1,576)	(2,892)
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	2,198	14,585
3.6 Repayment of borrowings	(2,976)	(12,678)
3.7 Transaction costs related to loans and borrowings
3.8 Dividends paid
3.9 Other (provide details if material)	(16)	(16)
3.10 Net cash from / (used in) financing activities	(794)	1,891

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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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
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	8,555	12,889
4.2 Net cash from / (used in) operating activities (item 1.9 above)	(1,782)	(7,609)
4.3 Net cash from / (used in) investing activities (item 2.6 above)	(1,576)	(2,892)
4.4 Net cash from / (used in) financing activities (item 3.10 above)	(794)	1,891
4.5 Effect of movement in exchange rates on cash held	(100)	24
4.6 Cash and cash equivalents at end of quarter	4,303	4,303
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)	4,303	8,555
	4,303	8,555
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 60 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
		Current quarter $A'000
		60
		-
Director fees

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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

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
	583
	-

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

Payments to Qinghai Salt Lake Magnesium Company for pure Magnesium supply.

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
23,485	20,542

• 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 2019	Borrowings facilities as at 31 December 2019
		Interest	Limit	Drawn	Security
Lender	Maturity	%	$A 000	$A 000	status
Commerzbank Germany	30-Sep-20	1.55%	13,015	11,008	Secured
ING Romania	Open	5.04%	4,678	4,523	Secured
Bank of Communications China	28-Apr-20	4.79%	4,086	4,086	Secured
Total borrowings on balance sheet			21,779	19,616
Postbank(factoring)	30-Nov-20	1.06%	1,706	925
Total facilities			23,485	20,542

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

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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

9. Estimated cash outflows for next quarter	9. Estimated cash outflows for next quarter	$A’000	$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		(106) (31,776) (22) - (1,981) (1,495) -
		(35,379)
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

• See Chapter 19 for defined terms Quarterly report for 31 December 2019

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

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.

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Nicholas Andrews, Executive Chairman of Magontec Limited has authorised the release of this document to the market on 31 January 2020

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 31 December 2019

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