Gemfields Grou. Regulatory News (GEM)

28 Nov 2005 09:58

Gemfields Resources PLC28 November 2005 28 November 2005 Admission to trading on AIM after £12.5 million placing • Developing emerald assets in Zambia Gemfields Resources PLC ("Gemfields" or "the Company", Ticker "GEM"), thegemstone mine development and gemstone prospecting company mainly focused onemeralds in Zambia, today announces the commencement of trading on AIM after aplacing by Canaccord Capital (Europe) Ltd raising £12.5 million, beforeexpenses. The Company has issued 26,666,667 placing shares, representing 28.2per cent of the enlarged issued share capital of the Company, at 45p perordinary share. This equates to approximately 25.2 percent of the fully dilutedshare capital, assuming the exercise of all the options. In addition, one of theexisting shareholders has sold 1,111,111 shares as part of the placing at 45pper ordinary share. The placing raised £12.5 million (before expenses), of which£12 million will be receivable by the company. Canaccord Capital (Europe) Ltd isacting as the Company's nominated adviser and broker. The Company currently owns three Zambian emerald mines, namely Kamakanga, Mbuvaand Chibolele and has entered into a conditional option agreement in relation toa fourth, Arinus, and also owns a series of prospecting licences covering asubstantial part of the prospective emerald areas in the Zambian Ndola RuralEmerald Restricted Area ("NRERA"). The Company also owns a 50 per cent interestin Kariba Minerals which operates a Zambian amethyst mine. Jeremy Clarke, CEO,said "Gemfields can significantly improve profitability through the operationalconsolidation of these projects and the application of modern open-pit miningtechniques already in use in the wider mining industry. The Company intends toconstruct a modern emerald recovery plant and to install advanced securitysystems for all its operations". The current business and strategy of the Company originated in 2000 when RajivGupta, the Founder and Executive Vice-Chairman identified a significantopportunity in the gemstone industry and has since pursued the primary objectiveof acquiring and developing coloured gemstone mines. The Company has activelysought to acquire interests in Zambian gemstone mines and mining and prospectinglicences, particularly within the emerald mining sector, due to the high qualityand value of Zambian emeralds. The Company will focus on developing existingmining interests in the NRERA and acquiring and progressing further gemstoneinterests in Zambia. The Directors believe that opportunities exist to acquireadditional emerald mines and to develop the Company's existing licences and tofurther enhance profitability through economies of scale. Gemfields also believes that it is possible to further enhance profitability viadownstream integration into gemstone cutting, polishing and distributionutilising the existing connections of Rajiv Gupta. The Directors intend that theCompany's proposed emerald mining operations be supported by a wholly ownedgemstone cutting and polishing business, based in Jaipur, India, which willprocess a proportion of the emeralds produced by the mines operated by theCompany. The balance will be sold as rough emeralds to dealers. The quality of Zambian emeralds (facet grade, fine colour) is almost on a parwith Colombian emeralds. In Zambia, deep green and valuable emeralds arecurrently sourced only from the NRERA. The fields at NRERA are believed topotentially represent the single largest source of easily mined, high qualityemeralds in the world and have been known to produce approximately US$100million worth of emeralds annually. Commenting today, Graham Mascall, Chairman of Gemfields said "Following today'ssuccessful fundraising and listing our principle focus will be to initiateemerald production by the third quarter of 2006. High priority will be given tosecuring necessary contractors and plant construction during the coming monthsto achieve this objective. Once the Company has successfully developed roughemerald production, it will assess the opportunities presented for cutting andpolishing to enhance the value of the Company's mined products". For more information Richard James, Gemfields Resources Plc +44 (0)20 7016 9416/+44 (0) 7958 714 056richard.james@gemhouseonline.com Leesa Peters/Laurence Read, Conduit PR +44(0)20 7618 8760/+44 (0) 7979 955 923laurence@conduitpr.com This information is provided by RNS The company news service from the London Stock Exchange