Updated 'G-Factor for Natural Resources' figures

Share code on JSE: GML / AIM: GEM

("Gemfields" or the "Company")

Gemfields releases updated 'G-Factor for Natural Resources' figures to 31 December 2023

LONDON, 24 APRIL 2024

In July 2021, Gemfields announced the 'G-Factor for Natural Resources', a measure promoting greater transparency regarding the level of natural resource wealth shared with the governments of host countries, whether from the mining, oil, gas, timber or fishing sectors.

Today, Gemfields announces updated figures to 31 December 2023 and again invites governance bodies, extractive companies, industry observers and host governments to adopt the G-Factor for Natural Resources in order to improve transparency and accountability regarding the share of natural resource wealth paid to a host country's government.

The G-Factor for Natural Resources is intended to be an uncomplicated indicator of the percentage of a natural resource company's revenue that is paid to the host country's government in primary and direct taxes (plus, where the host government is a shareholder, dividends). As such, it is an indicator of the share of natural resource wealth paid to a host country's government. It is also an indicator of the efficiency of natural resources companies in converting those natural resources into funds for the host government. The G-Factor for Natural Resources takes its name from the "g's" in "government", "governance" and "good practice".

"Given the desire by governments to increase their participation in their country's natural resources, a practical measure allowing a direct comparison of the sharing of natural resource wealth assists greatly in identifying responsible custodians of host nations' resources. The G-Factor for Natural Resources provides a simple 'school score' allowing observers to assess the relative efficiency of extractives companies in converting natural resources into wealth for host-nations. In order to better align with practices in other countries in our region, we have this year added export duties and levies as an additional parameter in the calculation. We hope the G-Factor for Natural Resources will be voluntarily adopted by other companies, insisted upon by host governments and incorporated into projects such as Extractive Industries Transparency Initiative ("EITI")." said Sean Gilbertson, Gemfields CEO.

G-Factor for Natural Resources computations for Gemfields' two key mining subsidiaries (the Kagem emerald mine in Zambia and the Montepuez ruby mine in Mozambique) are set out below:

The 'G-Factor for Natural Resources'

The G-Factor for Natural Resourceswould typically be calculated by each standalone company engaged primarily in the extraction and sale of natural resources, whether in the mining, oil, gas, timber or fishing sectors. Accordingly, multi-national natural resource companies would publish the G-Factor for Natural Resourcesfor each operating subsidiary engaged primarily in the extraction and sale of natural resources.

The G-Factor for Natural Resourcesis expressed as a percentage and is calculated as:

A p + B p + C p + D p

E p

where:

• A = the total mineral royalty (tax on revenue) paid by the reporting company to the host country government during the period
• B = the total corporation tax (tax on profit) paid reporting company to the host country government during the period
• C = the dividends paid by the reporting company to the host country government during the period (where the host country government is a shareholder in the reporting company)
• D = the total export taxes or export levies paid by the reporting company to the host country government during the period
• E = the total revenues of the reporting company during the period
• p = the relevant period, typically calculated for each of (i) the prior year; (ii) the preceding 5 years and (iii) the preceding 10 years
• The sums actually paid during the period (rather than the sums accrued or falling due during the period) are used for the purposes of A, B, C and D.

No measure of this type is perfect and it is recognised that:

• the G-Factor for Natural Resources is a "rule-of-thumb" - while it has broad application and is a practical indicator, it is not suited to every situation;
• there are numerous additional and indirect taxes which are not included in the G-Factor for Natural Resources and which further increase the contribution made to host nations by natural resource companies. Such taxes include but are not limited to area/surface charges, social security contributions, taxation on the salaries of employees, import and export duties, VAT, etc; and
• the variety and variations in natural resource deposits, types and occurrences lessens the ability to make direct comparisons between companies.

GEMFIELDS

KAGEM MINING LINKEDIN

MONTEPUEZ RUBY MINING LINKEDIN