Shefa Gems Regulatory News (SEFA)

B"H

9 July 2019

Shefa Gems Ltd.

("Shefa Gems" or the "Company")

Warrants, Loan Conversion and Total Voting Rights

Shefa Gems (LSE: SEFA), a company focused on advanced exploration and development of multi-gemstone projects in Northern Israel, is pleased to announce a number of actions designed to strengthen its balance sheet and provide access to possible future funding for the Company at a significant premium to its current share price.

· Life of certain warrants created at time of IPO extended by six months

· New vendor warrants for 600,000 shares issued

· Conversion of loans totalling £253,053 to ordinary shares at 5.00p

· Issue of further warrants at 10.00p per share to loan providers

Extension of IPO Warrants

At the time of the Company's IPO in December 2017, warrants over 65,893,310 ordinary shares were granted to certain investors who converted loans into ordinary shares at the IPO. These warrants had various expiry dates ranging from 18 June 2019 to 18 December 2020. At the request of the warrant holders, it has been agreed to extend all the expiry dates by six months. Accordingly, the warrants are now exercisable as follows:

· 20,544,640 warrants exercisable at 9.35p expiring on 18 December 2019

· 4,259,380 warrants exercisable at 11.00p expiring on 18 December 2019

· 20,544,640 warrants exercisable at 11.00p expiring on 18 June 2020

· 20,544,650 warrants exercisable at 13.75p expiring on 18 June 2021

Notes

1. Michael Rosenberg (Chairman) and James Campbell (Non-Executive Director), each hold 227,280 of the warrants at 11.00p expiring on 18 December 2019

2. One Hundred and One Gold Holdings, of which David Nachshon (Independent Non-Executive Director) is a director, holds the following of the warrants:

o 2,470,590 at 9.35p expiring on 18 December 2019;

o 2,470,590 at 11.00p expiring on 18 June 2020; and

o 2,470,590 at 13.75p expiring on 18 June 2021.

3. Eight-O-Eight Global Corp., of which David Nachshon is a director, holds the following of the warrants:

o 737,970 at 9.35p expiring on 18 December 2019;

o 737,970 at 11.00p expiring on 18 June 2020; and

o 737,970 at 13.75p expiring on 18 June 2021.

New Vendor Warrants

In order to conserve cash for operational programmes and to align their objectives with shareholders, one of the Company's service providers has agreed to receive new warrants in exchange for a lower cash fee. Accordingly, the Company has agreed to issue 600,000 new warrants to the service provider, valid for exercising until 31 December 2020. The warrants are exercisable at 5.00p per share, divided into three portions of 200,000 warrants each, but only vest (become valid for exercise) - subject to compliance with the terms and conditions as determined between the Company and the service providers at prices ranging from 10.00p to 20.00p.

Loan Conversion

The Company has been in discussions with certain shareholders ("Lenders") who have previously assisted in funding the activities of the Company through the provision of loans. In particular, as set out in Note 13 of the 2018 Report and Accounts, the total amount of the loans made as at 31 December 2018 was £160,291 with a further £427,910 having been provided since that date with repayment terms remaining to be finalised.

In view of the positive trajectory of the Company over the last 2-3 months, the Company is pleased to announce that the Lenders in respect of £253,053 have agreed with the Company to convert all their loan notes into 5,061,055 new ordinary shares ("New Ordinary Shares") at a conversion price of 5.00p per share (the "Loan Conversion"). The Company has also agreed to grant new warrants to the Lenders based on one warrant for each share, at an exercise price of 10.00p per share and valid until 30 June 2021. The Loan Conversion price represents a 25% premium to the recent placing and subscription price.

Total Voting Rights

Application will be made for 5,061,055 New Ordinary Shares to be issued and admitted to trading on the London Stock Exchange. Trading of these New Ordinary Shares is expected to be effective from 15 July 2019.

On completion of the Loan Conversion, the Company's enlarged issued share capital will consist of 172,425,315 Ordinary Shares. Each Ordinary Share carries one vote. Therefore, the total number of voting rights in the Company is 172,425,315. The above figure may be used by shareholders as a denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the Transparency (Directive 2004/109/EC) Regulations 2007.

Avi Taub, CEO of Shefa Gems, said: "Through the continued support of our long-term shareholders, Shefa Gems has strengthened its balance sheet which will support an acceleration of our operational activities. The Company is well placed to progress towards its target of starting trial mining in Kishon Mid-Reach Zone 1 in 2020, while also expanding our exploration activities in Zone 2 and Zone 3. In addition, we will continue to progress our 'Mine to Market' strategy following the launch of Yossi Harari's unique 'Heaven on Earth' jewellery collection using Shefa Gems gemstones."

- Ends -

Enquiries

Notes to Editors

About Shefa Gems Ltd

Shefa Gems Ltd (LSE: SEFA) is a multi-commodity explorer of precious stones operating in Northern Israel. Exploration activity is managed by professionally skilled and technically competent personnel and is accompanied by an international team of geological experts with decades of proven experience in their fields.

All exploration activities are conducted under international standards and the internationally recognised SAMREC 2016 Code. Furthermore, its permits, granted to it by the Commissioner of Mines, extend over an area of approximately 600,000 Dunam (60,000 hectares) that includes the Kishon River, the volcanic bodies on Mount Carmel, the Zevulun and Yizre'el valleys and their margins - Menashe Hills, Tivon-Alonim Hills, and Nazareth range. The Company upholds environmental values and protects the nature in the areas where it operates, cooperating fully with all authorities.

Alongside its exploration activities, the Company is building on the launch of the "Heaven on Earth" jewellery collection, created by world-renowned designer Yossi Harari, and developing the Company's "Mine to Market" strategy to promote unique jewellery collections utilising Shefa Gems' suite of precious gemstones.

The exclusive "Heaven on Earth" collection is now available to view online on the website of the designer Yossi Harari at: www.yossiharari.com/collections/heaven-on-earth

For further information please visit the website at www.shefayamim.com