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Gemfields Resources THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or about what action you should take you should immediately seek your own personal advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. This document comprises an admission document for the purposes of the AIM Rules and has been drawn up in accordance with the AIM Rules. This document does not constitute a prospectus for the purposes of the Prospectus Rules. Application has been made for the whole of the ordinary share capital of Gemfields Resources Plc in issue immediately following the Placing to be admitted to AIM. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Neither the United Kingdom Listing Authority nor the London Stock Exchange plc has examined or approved the contents of this document. It is expected that Admission will become effective and that trading in the Ordinary Shares on AIM will commence on 28 November 2005. The Company and the Directors, whose names are set out on page 7 of this document, accept individual and collective responsibility for the information contained in this document and compliance with the AIM Rules. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. The whole of this document should be read. An investment in the Company involves a significant degree of risk, may result in the loss of the entire investment and may not be suitable for all recipients of this document. Investors should consider carefully the risk factors which are set out in Part 3 of this document. GEMFIELDS RESOURCES PLC (Incorporated and Registered in England and Wales under the Companies Act 1985 with registered number 05129023) Placing of 26,666,667 New Ordinary Shares and 1,111,111 Existing Ordinary Shares at a price of 45p per share and Admission to trading on AIM NOMINATED ADVISER AND BROKER CANACCORD CAPITAL (EUROPE) LIMITED Share Capital immediately following the Placing and Admission Authorised Issued and fully paid Number Amount Number Amount 200,000,000 £2,000,000 Ordinary shares of 1p each 94,637,398 £946,373.98 This document does not constitute an offer to sell, or a solicitation of an offer to buy, any of the Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. In particular, this document is not for public distribution in Canada, or distribution in or into Australia, South Africa, the Republic of Ireland or Japan. The Ordinary Shares have not been and will not be registered under the securities legislation of any province or territory of Canada, Australia, South Africa, the Republic of Ireland or Japan or in any country, territory or jurisdiction where to do so may contravene local securities law or regulations. Accordingly, the Ordinary Shares may not, subject to certain exemptions, be offered or sold directly or indirectly in or into, or to any national, citizen or resident of Canada, Australia, South Africa, the Republic of Ireland or Japan. The Ordinary Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and, subject to certain exceptions, may not be offered or sold within the United States, or for the account or benefit of, or to U.S. persons (as defined in Regulation S under the Securities Act (“Regulation S”)). The Ordinary Shares are being offered and sold outside the United States to non-U.S. persons in reliance on Regulation S and within the United States in transactions exempt from registration requirements of the Securities Act. Canaccord Capital (Europe) Limited (“Canaccord”), which is regulated by the Financial Services Authority, is acting solely as nominated adviser and broker to the Company for the purposes of the AIM Rules in connection with the Admission and is acting exclusively for the Company and CA Fiduciary Services Limited in relation to the Placing. Canaccord is not acting for, and will not be responsible to, any person other than the Company and CA Fiduciary Services Limited for providing the protections afforded to the customers of Canaccord or for advising any other person on the contents of this document or on any transaction or arrangement referred to in this document. Canaccord’s responsibilities as the nominated adviser are owed solely to the London Stock Exchange plc. No representation or warranty, express or implied, is made by Canaccord as to any of the contents of this document for which the Directors and the Company are solely responsible. Canaccord has not authorised the content of, or any part of, this document and (without limiting the statutory rights of any person to whom this document is issued) no liability whatsoever is accepted by Canaccord for the accuracy of any information or opinions contained in this document or for the omission of any material information, for which the Company and its Directors are solely responsible. Copies of this document will be available free of charge during normal business hours on any weekday (except Saturday, Sunday and public holidays) at the offices of Richards Butler at Beaufort House, 15 St Botolph Street, London EC3A 7EE and at the offices of Canaccord at 1st Floor, Brook House, 27 Upper Brook Street, London, W1K 7QF from the date of this document for the period of one month from Admission. CONTENTS Page Definitions 3 Key Information 6 Directors, Secretary and Advisers 7 Expected Timetable of Principal Events 8 Placing Statistics 8 PART 1 Information on the Group 9 PART 2 Expert’s Report 23 PART 3 Risk Factors 60 PART 4 Accountant’s report on the Group and financial information on the Group 65 PART 5 Additional information 86 2 DEFINITIONS The following definitions apply throughout this document unless otherwise stated or the context otherwise requires: “Act” the Companies Act 1985 (as amended) “Admission” admission of the Ordinary Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules “Admission Document” this document “AGM” the annual general meeting of the Company held on 8 April 2005 “AIM” a market operated by the London Stock Exchange “AIM Rules” the AIM Rules for companies as published from time to time by the London Stock Exchange “Amalgamation Agreement” the agreement dated 9 June 2004 between Gemhouse, Gemfields (Canada) Inc. and the Company relating to the amalgamation of Gemhouse and Gemfields (Canada) Inc. and the share for share acquisition of Gemfields Canada Inc. by the Company “Articles” the Company’s articles of association “Audit Committee” a committee of the Board consisting of certain Non-Executive Directors, further details of which are set out in paragraph 14 of Part 1 of this document “Beryl” the mineral Beryllium aluminum silicate, the gemstone family of which emeralds and aquamarine form part “Board” or “Directors” the directors of the Company whose names are set out on page 7 of this document “Combined Code” the Combined Code on Corporate Governance adopted on 1 November 2003 (as subsequently amended from time to time) “Company” or “Gemfields” Gemfields Resources Plc “Chibolele” Plot No 11A/1 located in the NRERA “CREST” the relevant system (as defined in the Uncertificated Securities Regulations 2001) for holding of shares in paperless settlement of share transfers in uncertificated form which is administered by CRESTCo Limited “Emerald” a variety of the mineral beryl, coloured green by trace amounts of chromium (and possibly vanadium and iron) “Escrow Agreement” the Escrow Agreement dated 2 November 2005 entered into between the Company and Rajiv Gupta further details of which are set out in paragraph 10(n) of Part 5 “Executive Directors” Jeremy Clarke, Rajiv Gupta and Richard James “Exploration Licences” the mining exploration licenses referred to in paragraph 7.1(d) of Part 1 “Gemfields Canada Inc.” Gemfields Canada Inc, a company amalgamated pursuant to the provisions of the Business Corporations Act (New Brunswick) with registered number 511331 “Gemhouse” Gemhouse Inc. which amalgamated with Gemfields (Canada) Inc pursuant to the Amalgamation Agreement to form Gemfields Canada Inc. 3 “Geological Survey” the British Geological Survey which is the world’s longest established national geological survey and the UK’s premier centre for earth science information and expertise “Group” the Company and its subsidiaries and associated undertakings from time to time (or any of them, as the context requires) “Kafubu” Kafubu being the colloquial name for the area covered by prospecting licence No PLLS 126 in the NRERA “Kafubu emerald area” the emerald area in the Lufwanyama District of the Copperbelt Province of Zambia which derives its name from the Kafubu stream which is a tributary of
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