John Cutajar put Malta ahead on the 9th but the Algerian side turned the score in their favour with goals on the 16th and 19th minute despite a five-star performance by Malta goalkeeper Matthew Mifsud.
Malta now plays Syria on Monday. Syria had placed fourh in Group A and lost 14-9 to Turkey on Saturday.
MALTA: Matthew Mifsud, John Cutajar, Chris Brincat, Jeanbert Gatt, Nicola Del Re, Melvin Borg, Michael Ellul, David Smith, Carlo Scicluna, Bjorn Vassallo, Alan Galea, Xavier Saliba.