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Gemfields considers Fosun Gold bid to purchase unfair and unreasonable

The independent committee of the board of Gemfields notes an announcement by Fosun Gold with respect to a firm offer for the entire company at 45 pence per share in

cash.
The independent committee of Gemfields, who have been so advised by J.P. Morgan Cazenove as to the financial terms of the Fosun Gold 0ffer, consider that the financial

terms of the Fosun Gold offer are not fair or reasonable.
In providing its advice, J.P. Morgan Cazenove has taken into account the commercial assessments of the independent committee.
The independent committee are of the belief that the certain cash exit on offer from Fosun Gold is materially more attractive than the unsolicited all-share nil-

premium offer from Pallinghurst Resources announced on 19 May 2017, and note that the Fosun Gold offer is at an 18.2% premium to the implied value of the unsolicited

Pallinghurst Resources offer.
The independent committee also reiterate their belief that the unsolicited Pallinghurst Resources offer would dilute Gemfields shareholders with inferior assets that

offer exposure to more volatile commodities and with less attractive prospects.
Pallinghurst Resources has announced that it has secured irrevocable undertakings that require certain Gemfields shareholders to accept the unsolicited Pallinghurst

Resources offer which, when taken together with Pallinghurst Resources’ current holding in Gemfields, would result in Pallinghurst Resources exceeding their 75%

acceptance condition.
In this event, the unsolicited Pallinghurst Resources offer would become unconditional as to acceptances and, in the event that the offer was to become unconditional

in all respects, Pallinghurst Resources have stated that they intend to delist the Company from AIM.
Consequently, given the challenges that the unsolicited Pallinghurst Resources offer poses to the independent future of Gemfields, and given the derisory nature of the

unsolicited Pallinghurst Resources offer, the independent committee intend to recommend that shareholders accept the Fosun Gold offer so as to secure a relatively more

attractive outcome for their investment, as the independent committee, Ian Harebottle (CEO of Gemfields) and Janet Boyce (CFO of Gemfields) have irrevocably undertaken

to do in respect of their own shares and/or, as applicable, share options, absent a higher offer for Gemfields emerging.
As outlined in the Fosun Gold offer, Fosun Gold has agreed management co-investment arrangements with Ian Harebottle, with an agreement in principle also reached with

Janet Boyce, subject to the approval of the independent shareholders of Gemfields at a general meeting.
J.P. Morgan Cazenove consider the terms of the management co-investment arrangements to be fair and reasonable so far as the independent shareholders of Gemfields are

concerned.
Given the management co-investment arrangements concerning Ian Harebottle and Janet Boyce referred to above, the independent committee now comprises Graham Mascall

(chairman of the independent committee), Clive Newall and Finn Behnken, each of whom the board of Gemfields considers to be free from conflicts of interest in respect

of both the Fosun Gold offer and the unsolicited Pallinghurst Resources offer.
Given the circumstances, Gemfields has agreed to pay a break fee to Fosun Gold by way of compensation if a competing proposal becomes or is declared wholly

unconditional.
For these purposes, “competing proposal” means any firm offer for the company in accordance with and pursuant to Rule 2.7 of the Takeover Code and that is made or

announced by a third party which is not acting in concert.
In addition, the company will provide Fosun Gold with all relevant information and assistance reasonably necessary or requested to identify and/or satisfy any

regulatory or competition conditions to the Fosun Gold offer.


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