Magnesita Refratarios : Notice to Shareholders - Dividends and Interest on Equity interim

MAGNESITA REFRATÁRIOS S.A.

Publicly-Held Company

CNPJ/MF no. (Corporate Taxpayer Registration) 08.684.547/0001-65 NIRE (Commercial Registration) 31.300.026.485

NOTICE TO SHAREHOLDERS

São Paulo, August 11th, 2017 - Magnesita Refratários S.A. (Novo Mercado: MAGG3) ("Company") hereby informs its shareholders and the market in general that the Board of Director approved the distribution of interim interest on equity and dividends, from the retained earnings account based on the quarterly financial information as of June 30th, 2017, in the total gross amount of R$42,949,493 (forty two million, nine hundred and forty-nine thousand, four hundred and ninety three reais), corresponding to R$ 0,858294975 per share (excluding shares held in treasury). The total net amount to be distributed shall be deducted from the mandatory minimum dividend for the 2017 fiscal year, if applicable. The distribution shall take place as follows:

1. the gross amount of R$37,029,956 (thirty-seven million, twenty-nine thousand, nine hundred fifty six reais) as interest on equity, equivalent to R$ 0.740000000 (gross) per share (excluding shares held in treasury), with retention of withholding Income Tax, in the form of applicable legislation, except for shareholders who are proven to be immune or exempt;

2. the net amount of R$ 5,919,537 (five million, nine hundred and nineteen thousand, five hundred and thirty seven reais) as interim dividends, equivalent to R$ 0,118294975 per share (excluding shares held in treasury);

3. The shareholders included in the Company's shareholders' basis of August 17th, 2017

   will be entitled to the aforementioned payment. As of August 18th, 2017 (including), the shares issued by the Company shall be negotiated under the condition "ex interest on equity" and "ex interim dividends" and will not be entitled to the aforementioned payment;

4. The interest on net equity and dividends owed to the Company's shareholders as set forth above shall be paid in national currency (Brazilian real) without monetary adjustment, in the proportion of each shareholder in the Company' capital stock, under the terms set forth in article 205, §3º of Law 6,404/76. The payment will be carried out on August 28th, 2017.

The payment shall be conducted by the depositary institution of shares - Banco Itaú Unibanco

S.A. ("Depositary Institution"), by means of automatic credit for shareholders who hold bank accounts thereof and shareholders who hold an up-to-date registration with the Depositary Institution. The shareholders holding an outdated registration shall approach the agencies of the Depositary Institution in order to update their registration data. We inform that shareholders

who hold custody shares in BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros, shall receive the dividends through their custody agents.

Lastly, for the purpose of payment of the interest on equity, the Company requires that shareholders immune or exempt from Income Tax, pursuant to the applicable law, provide a copy of the documents proving its respective immunity or exemption no later than August 18th, 2017, to the Company's offices at Rua Dr. Eduardo de Souza Aranha, no. 387 - 5th floor, Vila Nova Conceição, City and State of São Paulo, Zip Code 04543-121, in the care of the Investors' Relations Officer signing below, subject to the withholding of the referred tax.

Otávio Augusto Castro Lustosa Nogueira CFO and Investor Relations Officer Magnesita Refratários S.A.