TIDMGEM 
 
Gemfields Resources Plc 
 
("Gemfields" or the "Company") 
 
Market Update and AGM 2009 Results 
 
3 February 2009 
 
With the current economic climate and deteriorating markets for diamonds and 
other gemstones in mind, Gemfields announces a reduction in the scale of its 
mining activity at the Kagem emerald mine. In addition, and until the prospects 
for a recovery in the gemstone market become clearer, Gemfields will minimise 
all non-essential capital, project development and exploration expenditure. 
 
The current global financial crisis and the sharp falls in gemstone prices 
experienced since October 2008 have resulted in significant uncertainty about 
emerald prices and demand for the remainder of 2009. Given the weakening 
markets and the associated uncertainty, Gemfields' performance for 2009 will be 
significantly lower than projected during 2008, at the time of readmission to 
AIM, and will result in a loss for the financial year ending 30 June 2009. 
 
Gemfields presently has USD 16 million in cash and Gemfields' management 
estimate the value of current inventory (comprising both rough and polished 
emeralds) at USD 18 million. 
 
Gemfields has to date not made significant sales of either rough or polished 
stones, having favoured a policy of building sufficient inventory to provide 
customers with a reliable and consistent source of supply. The sale of polished 
stones will commence officially in Q2 2009, with some rough sales expected 
during Q1 2009. 
 
KAGEM PRODUCTION UPDATE 
 
The Kagem emerald mine in Zambia is Gemfields' key production asset. Having 
entered into a contract to manage Kagem in November 2007, Gemfields acquired a 
75% stake in Kagem Mining Ltd on 6 June 2008. Accordingly Gemfields is now able 
to give an update on Kagem's performance during the first half (July 2008 
through December 2008) of the financial year ending 30 June 2009 (the 
"Period"). All figures are unaudited. 
 
During the Period, Kagem: 
 
  * produced 14.7 million gemstone carats (comprising emerald and beryl), an 
    average of 2.4 million carats per month. For the same period in 2007, 
    production totalled 3.7 million carats and, in 2006, 5.5 million carats (an 
    average of 0.6 and 0.9 million carats per month respectively). 
 
  * produced 40,122 tonnes of gemstone-bearing ore (known as "Reaction Zone"), 
    an average of 6,687 tonnes of ore per month. For the same period in 2007, 
    ore production totalled 17,713 tonnes and, in 2006, 7,264 tonnes (an 
    average of 2,952 and 1,211 tonnes per month respectively). The implied ore 
    grade during the Period was 367 carats per tonne which compares favourably 
    with the average grade over 4 years (from January 2005 to December 2008) of 
    340 carats per tonne. 
 
  * moved 2.8 million tonnes of waste. For the same period in 2007, waste 
    moving totalled 1.2 million tonnes and in 2006, 1.5 million tonnes. 
    Accordingly, Kagem's stripping ratio during the Period averaged 69:1 
    (compared with 70:1 for the same period in 2007 and 210:1 in the same 
    period in 2006). 
 
During the Period, Kagem's unaudited operating cost per tonne of ore was USD 
346 per tonne. This equates to USD 0.94 per carat. Mining efficiencies and 
operating costs have shown an improving trend during the Period. 
 
In the present market circumstances, and in the absence of significant sales to 
date allowing realisable prices to be confidently estimated, Gemfields' 
management is assuming an unaudited value of USD 0.75 per carat (for rough 
gemstones). This value is an assumed average value across the range of gemstone 
production. Values can vary widely from low grade to top grade material where, 
for example, top grade production can exceed USD 500 per carat on a rough value 
basis (but makes up only a small fraction of production). The historic realised 
average values per rough carat are tabulated below: 
 
KAGEM Annual              Year Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Dec-07 Dec-08 
Summary                Ending: 
 
Carats produced     carats       13.5    6.4    9.1   10.5    9.5    5.9   20.9 
(emerald+beryl)     million 
 
Revenue             USD           4.4    4.5    6.4    9.5   12.7    8.5   15.7 
                    million 
 
Revenue per carat   USD per      0.33   0.70   0.71   0.91   1.33   1.43   0.75 
                    carat 
 
Notes: 
 
  * Due to a change in year-end, the period ending December 2007 is a nine 
    month period 
 
  * Revenue for the year ending December 2008 is estimated by assuming a value 
    of USD 0.75 per carat 
 
Note that these values do not account for any value-uplift derived from cutting 
and polishing which may be derived from Gemfields' facility in Jaipur, India. 
 
The scaled-down mining plan presently being implemented at Kagem aims to 
continue the current trend of improving mining efficiency, a further reduction 
in operating costs and a focus on higher grade areas in pursuit of optimising 
financial performance based on the aforementioned revenue assumption. The 
reduced scale of the mining plan will be re-assessed as and when market 
conditions improve. 
 
During the Period, Gemfields' unaudited worldwide monthly operating costs 
averaged about USD 2.5 million, 90% of which relate to Kagem. 
 
A graphical production update can be downloaded from Gemfields' website at 
www.gemfields.co.uk/jan08update.asp. 
 
POLISHED EMERALD COLLECTION 
 
Gemfields opened its own state-of-the-art cutting and processing facility in 
Jaipur, India in August 2008. A small proportion of Kagem's rough production is 
selected for cutting and polishing at the Jaipur facility and results to date 
suggest encouraging potential for value-addition. 
 
As a result, Gemfields was able to unveil its new collection of cut and 
polished emeralds at the Jaipur Jewellery Show (JJS) in December 2008. In so 
doing, the Company became the first mining company to present a significant 
emerald collection directly from mine to market. The display showcased emeralds 
ranging from 5 carats up to 100 carats, all from the Kagem mine. The collection 
includes a 1,000 carat bead necklace priced at over USD 1 million. Official 
sales of Gemfields' polished emerald collection will commence in Q2 2009. 
 
A selection of the stones can be viewed at www.gemfields.co.uk/ 
image_gallery7.asp. 
 
ANNUAL GENERAL MEETING 
 
At the Company's annual general meeting held at 9:00 am on 30 January 2009, all 
resolutions were duly passed save for the resolution proposing the re-election 
of Mr Rajiv Gupta as a director of the Company. Mr Gupta withdrew his consent 
to be re-elected as a director prior to the meeting and steps down as a 
director on the board of Gemfields with effect from 30 January 2009. This 
change reflects Mr Gupta's focus on Gemfields' Indian operations where he will 
continue as "Vice Chairman". 
 
For more information: 
 
Richard James, CFO richard.james@gemfields.co.uk 
 
Gemfields Resources Plc Tel: +44 (0)20 7016 9416 
 
Mike Jones/Tarica Mpinga Tel: +44 (0)20 7050 6500 
 
Canaccord Adams Limited 
 
Charlie Geller/Ed Portman Tel: +44 (0)20 7429 6666/ +44 (0) 7528 233 383 
 
Conduit PR 
 
 
 
END
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