KAGEM MINING LTD

A GEMFIELDS Group Company

NEWS RELEASE KAGEM MINE INVESTS US$1M IN COMMUNITY PROJECTS

LUSAKA, ZAMBIA, February 21, 2014 Kagem Mining Limited, Zambias largest emerald producer, has announced a US$1 million programme of social investment that includes upgrading of a clinic to hospital status, and the construction of a new secondary school in Lufwanyama District. The company - which is pioneering the concept of ethical gemstone mining is also stepping up its tree planting initiative and is investing heavily in the back-filling of mine excavation works in order to protect the environment. Kagem Mining is committed to working with all our stakeholders to improve the livelihoods of people in the communities in which we work. Education and health are key components of that vision, along with the conservation of our shared environment, said Kagem chairman William B. Nyirenda, speaking at a stakeholders consultative meeting at Lufwanyama Council Chamber today (Mo nday February 3, 2014). Under the two-year social investment scheme, which was approved by the Kagem board last month, the company will fund and construct a four-ward building at Nkana Clinic and add three nurses accommodation blocks, turning the facility into a mini-hospital US$250,000. Kagem has also pledged to construct a complete US$700,000 new higher secondary school at Chapula and provide sports equipment to the existing primary school there. The companys motivation is to benefit the people of Luf wanyama, and by extension improve the well-being of its workers, their families and the wider community in which the emerald mine is located. The extension of the clinic will give people improved access to more advanced healthcare facilities at local level, lessening the need to travel farther afield for more complicated medical attention. It will provide dedicated male, female and childrens wards, as well as a maternity unit, and will allow for 24 -hour patient care. Meanwhile, Kagems support for education has numerous benefits. It develops literacy levels, enhances productivity and good health, and enhancing the contribution of young people to society. Kagem aims to improve the learning environment for both pupils and teaching staff, thus also providing a pool of educated workers for future employment at the mine. The companys approach to its community development projects aims to ensure maximum impact through a long-term sustainable strategy which listens to the needs of local people and works hand-in-hand with community leaders, central and local government, non-governmental organisations and local residents. The focus is on alleviating poverty and is aligned with government policies, objectives and targets as well as the Millennium Development Goals (MDGs) and Vision 2030. To date Kagem has spent some K2.8 million on CSR projects, including provision of a ZESCO powerline, new buildings at Chapula Basic School, teachers accommodation at Kapila Community School, improvements to Chief Nkana and Chief Lumpumas Palaces, the Nkana Clinic, and the Blessings and Green Farm projects. The company has also paid for road upgrading and maintenance. On the environmental side, Kagem has initiated a zero-carbon project to offset the carbon generated by its operations globally. A tree nursery has been established, tending some 100,000 tree saplings, and Kagem is working closely with the Forestry Department under the Ministry of Lands, Natural Resources and Environmental Protection on this. Maintaining the environment is an on-going process for Kagem and its mining operations adopt an in-pit dumping method by which excavated rock and soil are used to back-fill previously mined sites, ensuring the mine footprint and environmental impact are minimised. 1/2

The ethical approach is all part of Kagems strategy to be at the forefront of developing the international market for Zambian emeralds by investing in exploration, mining, sales and marketing in order to develop a competitive, reliable and trusted source of ethically produced gemstones that buyers can rely on. Ian Harebottle, CEO of Kagem and Gemfields, said: Kagem is the flag-bearer of the Zambian gemstone sector, and one of the finest examples of what can be achieved in partnerships between government and foreign investors in the mining sphere. Our triple bottom line approach is a vital part of that, as we work to ensure maximum returns for all stakeholders in terms of financial, economic, social and environmental returns. -EndsAbout Kagem Kagem Mining Ltd in Lufwanyama is part of the Gemfields group of companies, a leading gemstone miner listed on the Alternative Investment Market (AIM) of the London Stock Exchange (ticker: GEM). Gemfields owns 75 percent of the Kagem mine, in partnership with the Zambian government. In July 2009 Gemfields commenced a formal auction programme for its Zambian emeralds. To date, Gemfields has held 14 auctions which have generated revenues totalling US$224 million. In addition to the Kagem emerald mine, Gemfields has a 50 percent interest in the Kariba amethyst mine in Zambia. The company also owns controlling stakes in highly prospective ruby deposits in Mozambique and various licenses in Madagascar including ruby, emerald and sapphires deposits. Gemfields is the worlds foremost coloured gemstone producer, and is found at the intersection of exploration, mining and marketing. Natural gems are at the heart of the operation. Its focus reliable and ethically-produced Zambian emeralds upholds fair-trade practices while remaining in accordance with the highest level of environmental, social and safety standards. This mission holds true for every gemstone in its portfolio. Gemfields unprecedented mine-to-market strategy through transparent partnerships with the world's leading coloured gemstones dealers and manufacturers allows it to guarantee the provenance of every gem: Its promise to both the trade and the consumer.

For more information please contact: Gillian Langmead at Langmead & Baker Ltd Tel: +260 979 060705 Email: info@langmead.com Or visit www.gemfields.co.uk

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