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1 Mission: - To become the world s leading low cost, vertically-integrated producer of pure magnesium and magnesium alloy AGM Presentation November 2012

2 Disclaimer This presentation has been prepared by and issued by China Magnesium Corporation Limited ( CMC ) to assist it in informing interested parties about the Company and its progress. It should not be considered as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation. You should not act or refrain from acting in reliance on this presentation material. This overview of CMC does not purport to be all inclusive or to contain all information which its recipients may require in order to make an informed assessment of the Company s prospects. You should conduct your own investigation and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation and making any investment decision. Neither the Company nor its advisers have verified the accuracy or completeness of the information, statements and opinions contained in this presentation. Accordingly, to the maximum extent permitted by law, the Company and its officers, employees, advisers and agents make no representation and give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility and assume no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this presentation. Reports and Announcements can be accessed via the CMC website Forward-Looking Statements: This presentation includes certain Forward-Looking Statements. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding forecast cash flows, future expansion plans and development objectives of CMC are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. 2

3 Key developments since FY2012 Practical completion of 20,000 tpa plant (Dec11) Commenced production of magnesium/alloy (Oct12) Further land rights secured (Oct12), available for second phase expansion or possible further value-adding downstream processing Acquired dolomite (magnesium ore) quarry (Apr12) and commenced dolomite production (Jun12) Agreement to acquire established, profitable ferrosilicon producer (Nov11) awaiting change of business licence from the Industrial and Commercial Bureau of Zhongwei $5.3m capital raisings at a premium to market (up to 62%) (Nov11, Jun12) Strong cash position - $5.1m as at end of Sep

4 Magnesium 21 st century structural metal Stronger and lighter structural metal 33% lighter than aluminium and 75% lighter than steel Used in Mg alloy die casting (auto/aircraft & electronics) for its light weight Also used for producing aluminium alloys, steel and titanium Roskill (Aug 2010) forecast consumption to grow at ~6%pa on average, particularly in the automotive sector (~10%pa) Chinese government's 12 th 5 year plan targets magnesium as a key metal 4

5 Expected increase in Mg content per vehicle Engineers and scientists at General Motors Co believe that they are making major strides toward lighter vehicles by developing a way to expand the use of magnesium in auto parts. * By 2020, magnesium will be able to take out 15% of the weight of a vehicle, leading to fuel savings of 9% to 12%, according to the US Automotive Partnership * * From GM test magnesium sheet metal to make cars lighter, Reuters, 23 Oct

6 China: Growing demand, restricted supply China accounts for: around 85% of global primary supply around 30% of global consumption (and growing consumption) Dominated world production using the pidgeon process a simple, cheap thermal process at the expense of capital intensive electrolytic processes used in the West The Chinese government is rationalising the Mg industry: 15,000 tpa minimum capacity for existing plants 50,000 minimum tpa capacity for new permits (not applicable to CMC) CMC set to benefit because it already has a permit to 105,000tpa 6

7 CMC s early mover advantage Pingyao magnesium project (91.25% CMC) Located in Shanxi Province of Northern China One of the largest Mg producing regions in the world with access to highly skilled labour, low-cost feedstock and infrastructure CMC already has key permits to expand to 105,000 tpa Already awarded ISO GB/T quality certification 7

8 Plant locations Location of magnesium plant in Pingyao (B) (dolomite quarry located 30km from Pinyao operations) and ferrosilicon plant in Zhongwei (C) northern China - all accessible via sealed road and/or rail 8

9 Pidgeon process for Mg production Dolomite (similar to limestone) is heated to remove carbon and leave magnesium and calcium oxides Ferrosilicon is added and, under high temperature, reduces magnesium oxide to pure magnesium vapour, which is condensed to solid magnesium crown. The crown is melted and cast into pure magnesium ingots. Small amounts of other metals (mainly aluminium and zinc) can be added to the molten magnesium to form alloys Furnace in production 9

10 Mg Production Process Discharging Crowns Mg Ingot Briquettes 10

11 Mg Plant Facilities Coal-Gas Facility Rotary Kiln Waste Heat Recovery Boiler & Dust Collector Jet Vacuum System 11

12 Mg Plant Facilities Ball Mill Water Cooling Towers Reduction Ovens Retorts 12

13 Mg Plant Facilities Refinery furnaces Casting Machine 13

14 Vertical integration and expansion strategy Downstream... First phase expansion brings higher-value alloying capacity at minimal additional marginal cost Use of additional land may include further downstream processing Upstream (two of the three primary upstream components)... Acquired dolomite quarry raw magnesium ore supply Proposed acquisition of ferrosilicon business main cost input CMC may also consider acquisition of suitable coal suppliers 14

15 Vertical integration and expansion strategy Expansion Key environmental permits in place to expand production to 105,000tpa Preferred Project status from Shanxi provincial government Further expansion intended to proceed subject to optimum use and availability of CMC s resources in light of other opportunities Water rights secured to enable expansion to 105,000tpa 90mu (~60,000m 2 ) of land secured, earmarked for either next expansion phase or further downstream processing 15

16 Quarry acquisition and dolomite production Located approximately 30km from magnesium plant Dolomite is the magnesium bearing ore the largest raw input by volume Current and previous dolomite requirements were supplied by the quarry and expected to supply expanded production From quarry level Looking down on quarry 16

17 Dolomite Quarry Blast drilling Loading Delivering to crushers Sizing products 17

18 Ferrosilicon business Main cost input for magnesium production Attractive acquisition terms Stand-alone producer - 55,000 tpa capacity of FeSi will be sufficient to meet CMC s FeSi needs through to completion of phase two Currently supplies FeSi to end users (including CMC) and currently exports most of its production to the steel industry in Japan & Korea Replacement cost of the ferrosilicon production facility has been estimated at approximately CNY100m (A$15m) Opportunity brought to the attention of CMC s executive director as a result of long-term relationships and contacts within China 18

19 Tianda Ferrosilicon Plant Office Building 110KV Substation Pouring Final Products 19

20 Strong backers and balance sheet $5.3m capital raisings at a premium to market from Australian and Asianbased investment groups ($ per share) Included $4 million (in June 2012) at significant premiums of up to 62% in historically difficult stock market conditions Impressed by what we have achieved to date, they have backed our team to deliver substantial returns into the future Strong cash position - $5.1m as at end of Sep

21 Team has delivered in tough conditions Acquired and renewed the mining license for the dolomite quarry CMC mining licence was renewed at a time when quarries in the area were being rationalised. CMC has preferred project status and the mine licence was acknowledged as critical to venture success. The result of the rationalisation has seen the number of quarries reduced from 22 to 5, including the CMC quarry Secured an agreement and key approvals to acquire the ferrosilicon business from a state-owned power company Completed the upgrade and first phase expansion of the magnesium project at bare minimum cost to CMC Raised new capital at a significant premium to prevailing market price 21

22 Summary: Significant progress since FY2011 Completed upgrade and first phase capacity expansion (20,000tpa) Commenced magnesium/alloy production Acquired dolomite quarry and commenced production Agreement to acquire established ferrosilicon producer Additional land-use and water rights secured Raised new capital at significant premiums to market Positioned to exploit growing demand for a light weight, 21 st century structural metal magnesium 22