Gemfields plc

A leading supplier of responsibly sourced coloured gemstones

INTERIM OBSERVATIONS UPDATE

Gemfields plc

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IMPORTANT NOTICE & DISCLAIMER

This document, which has been compiled by Gemfields plc (the “Company”), comprises the written materials/slides for a

presentation concerning the Company, including its business, results of operations and prospects. This document does not

constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any

shares in the Company, its shareholders or affiliates, including Pallinghurst Resources Limited (together the “Group”) in the

United Kingdom, the United States nor any other country, nor may it or any part of it nor the fact of its distribution form the

basis of, or be relied on in connection with, any contract or investment decision in relation thereto, nor does it constitute a

recommendation regarding the shares of any Group member

No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, or

lack thereof. In particular, any data or figures presented in this document may not have been audited and should therefore be

treated with due caution. No representation or warranty, express or implied, is given by or on behalf of the Company, the Group

their respective advisors or representatives as to the accuracy or completeness of the information or opinions contained in this

presentation. None of the Company, the Group, their advisors or representatives shall have any liability whatsoever (in negligence

or otherwise) for any loss whatsoever arising from any use of this document, or its contents, or otherwise arising in connection

with this document. This document and its contents are confidential and may not be reproduced, redistributed or passed on,

directly or indirectly, to any other person or published, in whole or in part, for any purpose.

Certain statements in this presentation, or given in response to questions, may constitute forward-looking statements. These

statements relate to future events or future performance and reflect the Company’s assumptions regarding the growth, results of

operations, performance and business prospects and opportunities of the Company. In particular, statements regarding the

Company’s objectives, plans and goals involve forward-looking statements. We caution you that any forward-looking statements

are just estimates. They are not guarantees of future performance and involve manifold risks and uncertainties. A number of

factors could cause actual events, performance or results to differ materially from what is indicated in the forward-looking

statements. There can be no assurance that actual events, performance or results will be consistent with these forward-looking

statements, and the Company’s assumptions may prove to be incorrect. The Company does not intend, and, subject to any legal

or regulatory requirements, does not assume any obligation, to update or revise forward-looking statements to reflect new events

or circumstances.

Gemfields plc

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75%

FABERGÉ

Kagem Mining

Ltd

(EMERALD)

ZAMBIA

Montepuez Ruby

Mining Lda

(RUBY)

MOZAMBIQUE

Other Gem

Licences for

Exploration &

Development

75-100%75%75%

GEMFIELDS PLC• The world’s leading miner of responsibly sourced precious coloured gemstones.

• Africa-focussed, with three principal activities: mining, grading and marketing.

• USD 158 million of revenue for year ending 30 June 2017 (vs USD 193 million prior year)

• 100% owned by Pallinghurst Resources Ltd (JSE:PGL)

Web Gemstone

Mining plc

(EMERALD)

ETHIOPIA

100%

Megaruma

Mining Lda

(RUBY)

MOZAMBIQUE

75%

• World’s largest

emerald mine.

• Acquired by

Gemfields in 2008.

• Zambian

Government, a

25% shareholder,

has received more

than USD 100

million since 2008.

• >USD 2 million

invested to date.

• Initial exploration

(pits, trenches and

drilling) completed.

• Bulk sampling

commenced

August 2017.

• Key infrastructure

in place.

• World’s largest ruby

mine.

• Licence granted

2012. First ruby

auction June 2014.

• Mozambican

Government’s

royalties and

corporation tax to

date exceed USD

70 million (to 30

June 2017).

• Bulk sampling to

commence

calendar Q4 2017.

• Adjacent to

Montepuez Ruby

Mining Licences.

• Exploration

licences in

Madagascar,

Mozambique and

Zambia.

• World-famous

brand first founded

in 1842.

• Promotes the

positioning and

perception of

precious coloured

gemstones by

producing

jewellery,

timepieces and

objects.

Gemfields plc

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Gemfields’ Typical Model for Gemstone Deposit Development

(Kagem is a good example)

GEMFIELDS

GOVERNMENT

(and/or other local partners)

ProjectCo(Licence Holder &

Mine Operator)

Key Points:1. Gemfields provides all investment funding

required. None required from partner (i.e. partner

has a free carry on its 20-25% stake and does not

get diluted).

2. Gemfields, with operational and management

control, appoints 3 persons to the ProjectCo

board of directors, and the partner appoints 1.

3. Gemfields does not engage in “offshoring” on the

sale of gems: ProjectCo receives all revenues

arising from the project, and at international

market prices via competitive Gemfields auctions

(for which a marketing and auction fee is payable).

4. Irrespective of the partner, representatives of

government are invited to attend and monitor

each auction in order to ensure transparency.

For example, this model could be used in relation to sapphire deposits in Ethiopia.

75-80% 20-25%

Gemfields plc

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REVISED TEAM STRUCTURE

1. 5 of 7 board directors are long-standing Gemfields employees – more than 50 years of operating Gemfields experience between them.

2. No more “department heads by expertise” (e.g. operations, geology). Rather, MD’s responsible for each country as a business unit.

3. Headcount reduced by >20 people across New York, London and Mumbai (figure excludes former board).

4. Three regional heads of marketing & communications will be replaced by one new head in London.

Gemfields plc

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(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

-

10.0

20.0

30.0

40.0

50.0

30 Jun 09 30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13 30 Jun 14 30 Jun 15 30 Jun 16 30 Jun 17 30 Jun 18

Gemfields plc Annual Net Profit (USD million)

Gemfields plc

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Gemfields plc

8

-

20.0

40.0

60.0

80.0

100.0

120.0

30 Jun 09 30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13 30 Jun 14 30 Jun 15 30 Jun 16 30 Jun 17 30 Jun 18

Kagem's Annual Revenues (USD million)

Average revenue over last 7 years is USD 65 million.

Average revenue over last 6 years is USD 71 million.Past average used to indicate one

possible outcome

Gemfields plc

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-100,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

30 Jun 09 30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13 30 Jun 14 30 Jun 15 30 Jun 16 30 Jun 17 30 Jun 18

Kagem's Annual Premium Emerald Production (Carats)

E

Six year historic average used to

indicate one possible outcomeOLD grading system, therefore

not a like-for-like comparison

Gemfields plc

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0.00

0.50

1.00

1.50

2.00

2.50

3.00

Kagem Unit Operating Costs (Actual Cash Cost Basis)USD/carat (Emerald+Beryl)

Gemfields plc

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0

400,000

800,000

1,200,000

1,600,000

Jan

05

May

05

Sep

05

Jan

06

May

06

Sep

06

Jan

07

May

07

Sep

07

Jan

08

May

08

Sep

08

Jan

09

May

09

Sep

09

Jan

10

May

10

Sep

10

Jan

11

May

11

Sep

11

Jan

12

May

12

Sep

12

Jan

13

May

13

Sep

13

Jan

14

May

14

Sep

14

Jan

15

May

15

Sep

15

Jan

16

May

16

Sep

16

Jan

17

May

17

Kagem Monthly Total Rock Handling (tonnes)

It would appear that the pursuit of:

• a hands-off approach;

• big mining and processing scale;

• chasing down unit costs and hitting rock moving and ore mining targets

has had an undesired effect on gemstone retrieval.

So, we have SLOWED DOWN.

Gemfields plc

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KAGEM CHANGES

1. Revenues fell 53% to US$ 47.5 million in financial year ending 30 June 2017 (versus

USD 101.4 million in the prior year).

2. Ore grade in its financial year ending 30 June 2017 fell to 158 carats per tonne, down

34% from 241 carats per tonne in the prior year.

3. GM has been changed.

4. New security management team in place. PPP being implemented.

5. SLOWING DOWN from chasing “mining efficiency” to “romancing the reaction

zone”.

• Less mining rush to mine TMS, waste, etc - geos to focus on contacts

• Overall “carats” focus shifted to “premium carats”

• Increased number of chiselmen - extensive chiselling of the contacts

• Dedicated jack-hammer crew reintroduced – a practice from the past

• Lower intensity blasts to retain crystals

• More care for, and incorporation, of chiselmen

• Return of previous experience for on-the-ground insights

• Overhaul of practices in wash-plant, especially waste belts.

6. Improved communication across the chain of custody with more raising of concerns.

Efforts already being rewarded – a little hard to tell how much is due to our efforts and how much is geological luck!

Gemfields plc

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Kagem Washing Plant – SLOW DOWN!

(RHS)

(RHS)

(LHS)

Gemfields plc

Key Assets…Fabergé – A life in colour

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Fabergé, the world’s most iconic artist jeweller, creates extraordinary

jewellery, timepieces and objets d’art, as well as bespoke commissions for a

discerning international clientele.

Founded in 1842, Fabergé has been the most revered name in jewellery ever

since Peter Carl Fabergé became official goldsmith to the Russian Imperial

Court; the house created exquisite jewels and objects, including the legendary

series of lavish and ingenious Imperial Easter Eggs.

Today, Fabergé takes inspiration from its storied past to introduce a new era

of spectacular and contemporary collections. By painting with the world’s

finest coloured gemstones and a vibrant enamel palette, Fabergé explores a

life in colour through creations which are destined to become future

heirlooms.

Current collections are available at Fabergé boutiques in London and

Houston, as well as at Harrods in London and other exclusive international

retailers. Select items are also available via Fabergé’s online boutique at

faberge.com.Fabergé Fine Jewellery & Watch Campaign FY 2017/18

Gemfields plc

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Luxury Sector Pulse

Signals are very mixed:

A GOOD TIME FOR:

1. Hermes: sales up 7.5% with record revenues, profits and margins for 2016. “Business in the UK is booming”

2. LVMH: Q1 2017 results show 15% revenue growth

3. Kering: 29% like-for-like sales growth (48% at Gucci and 33% at Yves Saint Laurent)

4. Breitling: bought out by CVC for EUR 800 million

A ROUGH TIME FOR:

1. Theo Fennell: gone into administration (and saved)

2. Tiffany: six straight quarters of declining sales

3. Signet (owner of Zales, Ernest Jones, H. Samuel and Kay): sales fell 12% globally (3.5% in the UK) in the most recent quarter

4. Michael Kors: will close 100-125 stores after 14.1% slump in same-store sales in most recent quarter

5. Burberry: pre-tax profit down 21%. Cost-cutting underway. Same-store sales up 1%

6. Ralph Lauren: USD 370 million cost-cutting and store closures, including Fifth Avenue

7. Prada: double-digit decline in sales and profits for year ending January 2017

8. Macy’s: sales down 7.5% in most recent quarter

Gemfields plc

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Fabergé Cash Draws from Gemfields

0

2

4

6

8

10

12

14

16

18

20

FY 15 FY 16 FY 17

Faberge Cash Draw from Gemfields*Full Financial Years (USD million)

USD 9.5 million improvement

Gemfields plc

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FABERGÉ

1. Results for the year are mixed: revenues up 16%, cash consumption down 50% (but still USD 9 million)

2. Overall (multi-year) EBITDA loss remains flat due to write-downs and sale of Zaavy items at a loss.

3. Houston opening marred by Hurricane Harvey!

4. Dubai mono-brand opening with Damas in Dubai Mall in October 2017.

5. Opex cost: seeking a reduction from USD 16 million to USD 12 million.

6. Possible sale of Fabergé?

Gemfields plc

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Fabergé Points-of-Sale

-

5

10

15

20

25

30

35

40

45

Jul-

11

Oct

-11

Jan

-12

Ap

r-12

Jul-

12

Oct

-12

Jan

-13

Ap

r-13

Jul-

13

Oct

-13

Jan

-14

Ap

r-14

Jul-

14

Oct

-14

Jan

-15

Ap

r-15

Jul-

15

Oct

-15

Jan

-16

Ap

r-16

Jul-

16

Oct

-16

Jan

-17

Ap

r-17

Fabergé Total Points of Sale

0

2

4

6

8

10

12

14

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017

Total Points of Sale Opened Each Financial Year

NOTES:

a. Fabergé currently operates only two of its own points of sale, being Grafton Street and Harrods. Fabergé will add the Houston Galleria to this in

October 2017 (one month delay after Hurricane Harvey)

b. A Fabergé mono-brand store, operated by Damas, will open in Dubai Mall in November 2017

Gemfields plc

• Community investment strategies developed in

collaboration with local communities to identify

projects that are most needed, with the best chance of

longevity & success.

• Primary objective to enhance socio-economic

standards of those living close to the projects

• Key focus on health, education & agriculture

• Highlights include; construction and upgrade of

schools, funding & development of farming

cooperatives that supply food products to our

projects, funding of mobile health clinics, and

upgrades to existing medical centres.

• Projects funded by revenue generated by each mine

• Mining performed with minimum environmental

impact, including back-filling, 0% toxic chemicals

and on-site nurseries for indigenous plants

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Social Impact – Community Investment

Gemfields plc

Contact Us

Gemfields plc

1 New Burlington Place

London

W1S 2HR

United Kingdom

Tel: +44 (0)20 7659 4952

gemfields.co.uk