Gemfields plc

('Gemfields' or the 'Company')

Gemfields plc (AIM: GEM) is pleased to present an operational update for the three month period ending 31 March 2016, the third quarter of the financial year 2016. All figures are approximate and unaudited. Unless otherwise stated, the term 'carats' includes both emerald and beryl in relation to the Kagem emerald mine, and both ruby and corundum in relation to the Montepuez ruby mine.

Highlights

Emeralds

· Production summary for 75%-owned Kagem Mining Limited ('Kagem') in Zambia for the quarterending 31 March 2016:

§ Production of 7.1 million carats of emerald and beryl (versus 9.9 million carats in the quarter ending 31 March 2015 with the difference being attributable to the fluid nature of the mineralisation and a higher-grade zone having been encountered during the previous comparative period);

§ Average grade of 297 carats per tonne (versus 355 carats per tonne in the quarter ending 31 March 2015 with the difference being attributable to the fluid nature of the mineralisation and a higher-grade zone having been encountered during the previous comparative period);

§ Total operating costs of USD 10.3 million (versus USD 9.8 million in the quarter ending 31 March 2015);

§ Unit operating costs of USD 1.45 per carat (versus USD 0.99 per carat in the quarter ending 31 March 2015), while on a cash basis unit operating costs were USD 0.99 per carat (versus USD 1.15 per carat in the quarter ending 31 March 2015); and

§ Cash rock handling unit costs of USD 2.69 per tonne (versus USD 2.85 per tonne in the quarter ending 31 March 2015).

· Auction of predominantly higher quality rough emerald held in Lusaka, Zambia from 30 March to 3 April 2016 generated revenues of USD 33.1 million at an average value of USD 70.68 per carat, delivering record average price for higher quality emerald auctions to date; and

· Gemfields' next auction of predominantly lower quality rough emerald and beryl extracted from Kagem is scheduled to take place in May 2016 in Jaipur, India.

Rubies

· Production summary for 75%-owned Montepuez Ruby Mining Limitada ('Montepuez') in Mozambique for the quarterending 31 March 2016:

§ Production of2.0 million carats of ruby and corundum (versus 1.4 million carats in the quarter ending 31 March 2015) partially supported by processing of the higher grade, but lower value, amphibolite resources, but offset by prolonged and heavy rainfall during the period;

§ Average grade of 30 carats per tonne (versus 18 carats per tonne in the quarter ending 31 March 2015), attributable to a greater proportion of higher grade amphibolite ore being processed during the quarter;

§ Total operating costs of USD 5.8 million (versus USD 4.6 million in the quarter ending 31 March 2015), attributable to the increase in headcount and fleet size in anticipation of a continued increase in the scale of operations;

§ Unit operating costs of USD 2.90 per carat (versus USD 3.29 per carat in the quarter ending 31 March 2015) as a direct result of the increase in carats produced. On a cash basis, unit operating costs were USD 2.40 per carat (versus USD 2.64 per carat in the quarter ending 31 March 2015); and

§ Cash rock handling unit costs of USD 10.18 per tonne (versus USD 7.10 per tonne in the quarter ending 31 March 2015) due to higher cash costs in preparation for an increase in the scale of mining operations and a reduction in overall volumes due to the prolonged and heavy rains.

· Gemfields' next auction of mixed qualities of rough ruby extracted from Montepuez ruby mine is expected to take place in June 2016 in Singapore.

Fabergé

· Sales orders agreed during the quarter ending 31 March 2016 fell by 26% when compared to the quarter ending 31 March 2015 due largely to the sale of the high value Pearl Egg in February 2015, and the timing differences on orders agreed at BaselWorld;

· The number of sales transactions during the quarter ending 31 March 2016 increased by 17% when compared to the quarter ending 31 March 2015 while the average selling price per piece increased by 32% over the same period;

· Total operating costs for the quarter ending 31 March 2016 increased by 10% when compared to the quarter ending 31 March 2015, largely on account of an increase in advertising spend; and

· Unveiling of innovative new timepieces and refreshed core and entry jewellery collections at BaselWorld 2016.

Ian Harebottle, CEO of Gemfields, commented:

'Gemfields has had another pleasing quarter of solid production across its emerald and ruby operations with both Kagem and MRM having maintained the momentum seen over the previous calendar year and well on track to meet their annual guidance. At Kagem this has been aided by an increase in both its processing efficiency and capacity following upgrades to the wash plant, while a shift in mining focus has supported MRM's results as it begins to implement some of its longer term capacity building initiatives.

'The coloured gemstone market remains robust, as is evident from Gemfields auction results, and is further supported by improving consumer demand within the US. To date the Company has generated over US$116 million in revenue from auctions held in the 2016 financial year and we look forward to two additional auctions, firstly a lower quality emerald auction in May and another ruby auction in June, prior to the year end.'

Explanatory Notes:

(a) Total operating costs include mining and production costs, selling, general and administrative expenses, depreciation and amortisation, but exclude capitalised costs and mineral royalties.

(b) Unit operating costs are calculated as total operating costs divided by the total gemstone production during the period.

(c) Cash operating costs include mining and production costs, capitalised costs, selling, general and administrative expenses, and exclude PPE-related capital expenditure, depreciation, amortisation and mineral royalties.

(d) Sales orders agreed are sales that Fabergé has agreed and confirmed with customers during the reporting period. Payment and/or delivery may take place later.

KAGEM EMERALDS

Production and OperationsUpdate

The 75%-owned Kagem emerald mine remains the single largest producing emerald mine in the world. The key production parameters by quarter are summarised below:

(a) Cash operating costs include mining and production costs, capitalised costs, selling, general and administrative expenses, and exclude PPE-related capital expenditure, depreciation, amortisation and mineral royalties.

(b) Total operating costs include mining and production costs, selling, general and administrative expenses, depreciation and amortisation, but exclude capitalised waste stripping costs and mineral royalties.

(c) As at 31 March 2016, a total of approximately USD 64.4 million of waste moving costs has been capitalised and is being amortised as and when the associated ore is mined. The balance of capitalised waste moving costs, net of amortisation, as at 31 March 2016 amounted to USD 19.9 million.

Waste stripping and ore mining of the Chama pit continues to be advanced by our in-house mining team. Total rock handling during the quarter ending 31 March 2016 was 2.6 million tonnes and production was solid at 7.1 million carats. Increasing the strike length at the Chama pit operation and optimising production scheduling assisted in further improved mining efficiencies and productivity. Exploration and bulk sampling activities at the Fibolele and Libwente sectors are progressing well and continue to indicate promising results.

Kagem has also increased its processing efficiency and capacity with successful commissioning of an upgrade and extension to the existing washing plant facility during previous quarter. This is further supplemented by the installation of state-of-the-art digital security and surveillance technology across the production infrastructure within the licence area.

Kagem continues to maintain an excellent safety record, with no reportable lost time injuries having occurred since taking over mining operations and a high-level commitment to the safety and wellbeing of our employees.

Kagem has embarked on an inclusive community strategy and is currently engaging local stakeholders to assist in delineating the project plans. The new Chapula Secondary School and Nkana Clinic are nearing completion with plans underway for them to be handed over to the government during the following quarter.

Emerald Auction Update

The April 2016 auction of predominantly higher quality rough emerald held in Lusaka, Zambia, saw 0.47 million carats being sold. This represented 94% of the value and 84% of the weight offered and generated a higher quality auction revenue of USD 33.1 million. The auction yielded an overall average value of USD 70.68 per carat, a record average price achieved to date for higher quality auctions.

The auction results are summarised below:

Gemfields' next auction will be of predominantly lower quality rough emerald and beryl and is scheduled to take place in May 2016 in Jaipur, India.

MONTEPUEZ RUBIES

Production and Operations Update

The ongoing mining and bulk sampling operations at the Montepuez ruby deposit in Mozambique, in which Gemfields has a 75% interest, was injury free with no major incidents reported during the period. The EIA plan for Montepuez has been approved by the Mozambican authorities and forms part of the ongoing DUAT process.

Throughput at the existing semi-mobile processing plant saw an approximate 14% decrease in tonnes processed when compared to the same quarter in the prior year, with the reduction largely on account of delayed, yet unseasonably high, rainfalls making the clay-rich head feed difficult to process. This was compensated for by way of a partial shift in focus to processing both higher grade, yet relatively lower value, primary amphibolite ore along with the higher value clay-rich Mugloto ore.

The key production parameters by quarter are summarised below:

(a) Cash operating costs include mining and production costs, capitalised costs, selling, general and administrative expenses, and excludePPE-relatedcapital expenditure, depreciation, amortisationand mineral royalties.

(b) For the period to 30 June 2014, mining and production costs were capitalised. The total operating costs included security costs, selling, general and administrative expenses and depreciation, but exclude mineral royalties and capitalised mining and production costs. Following the reclassification of the Montepuez Ruby Mine from intangible unevaluated asset under IFRS 6 to evaluated mining property, mining and production costs are recognised in the income statement from 1 July 2014. From 1 July 2014, the total operating costs include mining and production costs (including security costs), selling, general and administrative expenses, depreciationand amortisation, but exclude capitalised costs and mineral royalties.

(c) Total operating costs in the quarter ending September 2014 have been restated due to a change in accounting treatment of mining and processing costs as stated above.

In the quarter ending 31 March 2016 a total of 65.1 thousand tonnes of ore was mined (versus 79.4 thousand tonnes for the quarter ending 31 March 2015) with 67.6 thousand tonnes being processed (versus 78.6 thousand tonnes for the quarter to 31 March 2015). Average grade during the quarter increased by 67% to 30 carats per tonne (compared to 18 carats per tonne in the comparative period during the prior year) producing a total of 2 million carats of ruby and corundum (versus 1.4 million carats in the quarter to 31 March 2015).

The construction of the new Montepuez camp is proceeding to plan and on track for completion and handover for the end of June 2016.

Given the size and nature of the Montepuez ruby licence, unlicensed mining activity and asset loss remain key challenges. Montepuez continued with its planned implementation of new infrastructure, facilities and technological interventions to drive further improvements.

An extensive and dynamic security plan has been formulated and is being implemented at site level. A dedicated training programme for security personnel incorporating human rights and soft skill development has been provided.

Various social initiatives are currently underway within the local communities, including the preparation of farmlands, installation of street lighting in a nearby village, an HIV awareness programme and an animal farming project.

Montepuez is currently engaging various local stakeholders with a view to specifying the project plans to best suit broader community needs. A farming association was created in February 2016 and is now producing beans, okra and other vegetables, with the first harvest occurring during April 2016.

Ruby Auction Update

Gemfields' next auction of mixed qualities of rough ruby extracted from Montepuez ruby mine is expected to take place in June 2016 in Singapore.

FABERGÉ

Faberge' saw a 26% fall in sales orders agreed during the quarter ending 31 March 2016 when compared to the quarter ending 31 March 2015, largely due to the sale of the high value Pearl Egg in February 2015 boosting that period's results and the timing differences on sales orders arising from the Baselworld fair. However, the number of sales transactions during the quarter ending 31 March 2016 increased by 17%, when compared to the quarter ending 31 March 2015, while the average selling price per piece increased by 32% over the same period.

Total operating costs increased by 10%, when compared to the quarter ending 31 March 2015, largely due to an increase in advertising spend, with Fabergé's first significant print advertising campaign since 2013 continuing in to 2016 and focused on the key jewellery and new timepiece collections.

COLOMBIA

In preparation for completion of the Coscuez transaction and as part of the base level arrangements for future operations, Gemfields continued with its pre-emptive exploration and mine planning exercises. These included topographical survey, mapping of underground tunnels, surface mapping, sampling, chemical analysis, testing of mining equipment and further planning of the underground engineering solutions supported by initial recommendations by SRK, UK.

A project team has been created to finalise the takeover of administrative and legal control of the ISAM licenses portfolio. Gemfields carried out field visits and preliminary geological activities in selected ISAM licenses.

During the period, Gemfields conducted a series of voluntary community collaboration workshops within the local population to introduce them to Gemfields' operations and build community relations by way of discussing the communities' social investment needs, and to launch the 'Suna Verde Digital Communications Platform' that will better enable direct communication between Gemfields and the local population. The workshops were attended by over 1,500 local residents while the 'Suna Verde Digital Communications Platform' has already attracted over 2,100 subscribers.

Gemfields continued to engage with key Colombian ministries, agencies and leading press to present its plans for the Colombian projects.

Sri Lanka

Following the establishment of necessary infrastructure and completion of regulatory compliance with respect to gemstone trading, Gemfields has initiated early stage market evaluation and the appraisal of suitable partners for the supply of gemstones.

Gemfields will continue its evaluation of some of the exploration licences, covering diverse minerals, throughout the remainder of the year.

ETHIOPIA

Following completion of a trenching exercise within the promising northern part of the licence, named Dogogo Hill, exploratory pits have been excavated in potential contact zones that were exposed within the trenches. Each of these pits will have a dimension of 1.5 metres by 1.5 metres with depth ranging from 1 to 1.5 metres. Samples of beryl and other indicator minerals were recovered from some of the pits, which is most encouraging. Preliminary ground work, including contractor selection, has been completed with a view to commencing exploratory drilling in this block in due course.

A detailed geological mapping exercise has been initiated on the Funkoftu block, located to the south of the Dogogo block. The block measures 2.5 sq km in area and covers 2.25 km of prospective strike length for emerald mineralisation.

CORPORATE & CASH

Chopard, the Official Partner of the Cannes Film Festival since 1998, will announce a new milestone in its Journey to Sustainable Luxury at this year's festival in May. The luxury jewellery and watch company, will officially launch its new collaboration with Gemfields, at the festival.

To mark the occasion, Chopard will unveil a new capsule collection of Green Carpet High Jewellery within its Red Carpet Collection, showcasing Gemfields emeralds. Chopard will work with Gemfields to set the agenda for a new global standard for coloured gemstones.

In the Quarter, Gemfields was also awarded the 2015 FIRST Responsible Capitalism Award for advancing responsible capitalism in emerging markets. FIRST is a multi-disciplinary international affairs organisation that works to enhance communications between leaders in industry, finance and government worldwide, and to promote dialogue at the strategic level through publishing of relevant material, events and awards as such as the FIRST Responsible Capitalism.

At 31 March 2016, Gemfields had cash and cash equivalents of USD 5.6 million (excluding the USD 33.1 million in auction revenues which were received post 31 March 2016). The total debt outstanding at 31 March 2016 was USD 49 million, which includes Kagem's outstanding debt balance of USD 30 million with Barclays Bank, a USD 10 million loan from Macquarie Corporate Holdings Pty Limited (UK Branch) and a USD 9 million loan from Pallinghurst Resources Limited. In the quarter to 31 March 2016, Gemfields had total sales, general and administrative expenses of USD 14.6 million.

ENQUIRIES:

Notes to Editors:

Gemfields plc is a leading supplier of responsibly sourced coloured gemstones and is quoted on the AIM market of the London Stock Exchange (ticker: GEM) where it is a constituent of the AIM50 index.

Gemfields is the operator and 75 per cent. owner of both the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby deposit in Mozambique (one of the most significant recently discovered ruby deposits in the world). In addition Gemfields also holds a 50 per cent.

interest in the Kariba amethyst mine in Zambia, as well as controlling interests in various other gemstone mining and prospecting licenses in Zambia, Mozambique, Colombia, Ethiopia, Madagascar and Sri Lanka.

Gemfields' outright ownership of the Fabergé brand - an iconic and prestigious brand of exceptional heritage - enables Gemfields to optimise positioning, perception and consumer awareness of coloured gemstones, advancing the Group's 'mine and market' vision.

Gemfields has developed a proprietary grading system and a pioneering auction and trading platform to provide a consistent supply of quality coloured gemstones to the global downstream markets. This is a key component of the Company's business model which the Directors believe has played an important role in the appropriate distribution and associated resurgence of the global coloured gemstone sector.

www.gemfields.co.uk