Gemfields : Posting of response circular

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

27 June 2017

Posting of response circular in relation to the Unsolicited Pallinghurst Offer

On 19 May 2017, Pallinghurst announced an unsolicited all-share firm offer to acquire the entire issued and to be issued ordinary share capital of Gemfields plc ('Gemfields' or the 'Company') not already held by Pallinghurst Resources Limited ('Pallinghurst') (the 'Unsolicited Pallinghurst Offer').

Further to the posting of the offer document setting out the terms of the Unsolicited Pallinghurst Offer on 13 June 2017, Pallinghurst declared the Unsolicited Pallinghurst Offer unconditional as to acceptances on 20 June 2017. On 26 June 2017, having received the requisite approvals from Pallinghurst shareholders at the Pallinghurst general meeting held on the same date, Pallinghurst declared the Unsolicited Pallinghurst Offer wholly unconditional, with the offer to remain open for acceptances until 1:00 p.m. (London time) on 18 July 2017.

As previously communicated, the Independent Committee of the board of Gemfields believe that the Unsolicited Pallinghurst Offer significantly undervalues Gemfields and its prospects as a leading player in the coloured gemstone sector and denies Gemfields shareholders the ability to realise the material future upside potential of the Company on a standalone basis.

Notwithstanding the above, following confirmation on 26 June 2017 that Pallinghurst have secured sufficient acceptances to procure the making of an application by Gemfields for cancellation of the admission of Gemfields shares to trading on AIM, the Independent Committee has concluded that Independent Shareholders should seriously consider whether to accept the Unsolicited Pallinghurst Offer despite the Independent Committee's firm view that the Unsolicited Pallinghurst Offer significantly undervalues Gemfields. Gemfields Shareholders who anticipate greater value in their Gemfields Shares whilst recognising and being willing to accept the risks associated with remaining as an investor in an unquoted company controlled by Pallinghurst may wish to remain as shareholders in Gemfields.

The Independent Committee has today published a circular setting out in further detail the views of the Independent Committee on the Unsolicited Pallinghurst Offer (the 'Response Circular'). The Response Circular is published in accordance with Rule 25.1 of the City Code on Takeovers and Mergers and a copy will be posted or otherwise made available to Gemfields shareholders today.

Graham Mascall, Chairman of the Independent Committee, commented: 'Despite the Independent Committee and our advisers' best efforts to provide minority shareholders with a more attractive materially higher cash offer from Fosun Gold, that offer lapsed yesterday as a result of the Pallinghurst offer going wholly unconditional.

We continue to maintain that the unsolicited Pallinghurst Offer significantly undervalues Gemfields. However, in light of Pallinghurst's current holding and acceptances exceeding 75%, largely as a result of Pallinghurst concert parties accepting the offer, we are now of the view that Gemfields shareholders should seriously consider whether to accept Pallinghurst's all share offer. The alternative is to hold shares in what is likely to become an unquoted Gemfields.'

Copies of the Response Circular will be available, subject to certain restrictions to persons resident in restricted jurisdictions, on the Company's website at www.gemfields.co.uk.

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Enquiries

J.P. Morgan Cazenove +44 20 7742 4000

Jamie Riddell / James Robinson

Grant Thornton UK LLP (Nominated Adviser) +44 20 7383 5100

Philip Secrett / Richard Tonthat

BMO Capital Markets Limited +44 20 7236 1010

Jeff Couch / Neil Haycock Macquarie Capital (Europe) Limited +44 20 3037 2000

Raj Khatri / Nick Stamp

Tavistock (PR Adviser) +44 20 7920 3150

Jos Simson / Emily Fenton

Further information

J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ('J.P. Morgan Cazenove'), BMO Capital Markets Limited and Macquarie Capital (Europe) Limited are authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Cazenove, BMO Capital Markets Limited and Macquarie Capital (Europe) Limited are acting as financial advisers exclusively for Gemfields and no one else in connection with the Unsolicited Pallinghurst Offer and will not regard any other person as its client in relation to the Unsolicited Pallinghurst Offer and will not be responsible to anyone other than Gemfields for providing the protections afforded to clients of J.P. Morgan Cazenove, BMO Capital Markets Limited and Macquarie Capital (Europe) Limited or their affiliates, or for providing advice in relation to the Unsolicited Pallinghurst Offer, the contents of this announcement or any matter referred to herein.

Grant Thornton UK LLP is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting as nominated adviser for Gemfields and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than Gemfields for providing the protections afforded to clients of Grant Thornton UK LLP or for providing advice in relation to any matter referred to herein.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in restricted jurisdictions, on Gemfields' website at www.gemfields.co.uk by no later than 12 noon London time the day following this announcement.

The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.