Magnesium alloy with 5 wt% Al, 0.35 wt% Mn and 5 wt% rare earth elements (RE) was prepared and gravity cast into a sand mould. Microstructure investigations were conducted. Analyses of the Mg-Al-RE alloy microstructure were carried out by light microscopy, scanning electron microscopy and the XRD technique. In the as-cast condition, the alloy was composed of α-Mg, Al11RE3 and Al10RE2Mn7 intermetallic phases. Additionally, due to non-equilibrium solidification conditions, an Al2RE intermetallic phase was revealed.