Gemfields Resources (GEM) – Open Letter

Gemfields Resources (GEM) has today issued an open letter to all Tanzanite one shareholders. The letter states that;

• Gemfields had received an overwhelming positive response to its tender offer to purchase up to 30,754,970 Tanzanite One common shares at 42.75p. As of 6.59 on 27 October 2008, the Tender Offer was oversubscribed by 5,448,249 T1 Shares with 36,203,219 T1 Shares having been tendered in aggregate. The offer remains open.

• The letter notes that the directors of Tanzanite One have issued themselves nil paid issued and unlisted B shares in Tanzanite One representing 50.2 per cent. of the enlarged issued voting share capital. This action disenfranchises half the shareholders through the loss of over 50% of their voting rights. This means the shareholders can no longer appoint or remove T1 Directors (this power now rests solely with the T1 Directors themselves). Gemfields regards the B Share Scheme as a gross violation of the principles of good corporate governance, and were implemented without consulting shareholders.

• Gemfields has also stated that the rationale for these actions – stated as being to protect the interests of all Tanzanite One shareholders – is ironic, given that the B Share Scheme takes control from the shareholders and hands it to the Tanzanite One Directors.

• Gemfields also notes that Tanzanite One has not explained the recent resignation of its Chairman, Michael Adams, and suggests he may have resigned in order to tender his shares pursuant to Gemfields’ offer.

• Gemfields finds it unusual that the Tanzanite One Directors would knowingly implement a scheme seeking to derail the Tender Offer given that this would deprive many Tanzanite One Shareholders from realising a significant premium for their Tanzanite One Shares and would also likely reduce the value of T1 Shares.

• Gemfields notes that T1 is in breach of AIM Rule 26 given that a copy of T1’s latest bye-laws are not available for download from the Tanzanite One website.

• In contrast to the apparent intentions of Tanzanite One Directors, Gemfields is interested in establishing the views of Tanzanite One Shareholders.