Conversion of £1.25 Million of Loans into Equity

B"H

19 May 2020

Shefa Gems Ltd.

("Shefa Gems" or the "Company")

Conversion of £1.25 Million of Loans into Equity

Shefa Gems (LSE: SEFA), a company focused on advanced exploration and development of multi-gemstone projects in Northern Israel, is pleased to announce that it reached agreement with a number of the holders of convertible loans to the Company ("Loan Holders") to convert their loans amounting to £1,117,765 at a substantial premium to the current share price. In addition, on 25 May 2020 David Ben David and Gershon Fraenkel, the remaining loan note holders, intend to convert their convertible loan notes into ordinary shares of the Company. Mr. Ben David intends to convert his convertible loan notes over a total amount of £79,480 into 1,589,590 ordinary shares of NIS0.1 in the capital of the Company. Mr. Fraenkel intends to convert his convertible loan notes over a total amount of £52,934 into 1,058,671 ordinary shares of NIS0.1 in the capital of the Company. David Ben David is the Chief Financial Officer of the Company and Gershon Fraenkel is a Director of the Company. Both are prohibited from dealing currently, as the Company is currently in a closed period until the publication of its annual accounts, which is expected to be on Friday, 22 May 2020. Following this conversion, the total amount to be converted will be £1,250,179.

Under the terms of the convertible loans, the Loan Holders will be issued with 25,447,303 ordinary shares of NIS0.1 each in the capital of the Company, amounting to 14.47 per cent. of the Company's issued share capital.

Application will be made for these Ordinary Shares to be admitted to the Main Market of the London Stock Exchange with dealings expected to commence on 30 June 2020.

Following the issue of the 25,447,303 new Ordinary Shares to the Loan Holders, the Company's enlarged issued share capital will be 201,284,238 Ordinary Shares. This figure of 201,284,238 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

On 30 June 2020, the Company will grant the Loan Holders one unlisted warrant for every share received on conversion, exercisable for a period of 24 months from the date of the conversion, at a price of 10 pence per warrant. In the event that the Company's share price before 30 June 2022 does not at any time reach 10 pence per share, the Loan Holders will receive additional shares at that date in such an amount as to make the total number of shares issued to the Loan Holders have a value, based on the market price at that time, of double their individual investments.

Following conversion of the loans, the Company will not have any convertible loans outstanding.

Director Shareholding

Gershon Fraenkel is a Director of the Company and is currently interested in 60,000 ordinary shares (representing 0.03% of the current issued share capital). Following the conversion of his convertible loan notes, he will be interested in 1,118,671 ordinary shares (representing 0.56% of the enlarged share capital).

Vered Toledo, CEO of Shefa Gems, said: "We are incredibly grateful to our loan holders for their confidence in our Company and our mission. The conversion of the loans into ordinary shares during the current global crisis is the most profound demonstration of confidence by our shareholders. Following the award of the Certificate of Discovery in March 2020, the path for mine development in Zones 1 and 2 of the Kishon Mid-Reach area is opened. The award of the Certificate in combination with the continued support of our shareholders and Loan Holders takes us a significant step closer, with God's help, to establishing the first and only precious gemstone mine in Northern Israel."

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Notes to Editors

About Shefa Gems Ltd

Shefa Gems Ltd (LSE: SEFA) is an explorer and developer of precious stones deposits operating in Northern Israel. Exploration activity is managed by professionally skilled and technically competent personnel and is accompanied by an international team of geological experts with decades of proven experience in their fields. It has two flagship projects, Mount Carmel and the Kishon Reach.

With its international geological consultant team, Shefa Gems has established a "Source to Sink" geological model and the presence of a Target Mineral Assemblage of gemstones ("TMA Suite") in both primary volcanic sources and in secondary alluvial deposits lying within the Kishon catchment, on Mount Carmel and in the Zevulun and Yizre'el valleys and their margins. The TMA suite comprises Precious Stones (Diamond, rare natural moissanite, sapphire, ruby, Carmel Sapphire™, garnet, hibonite, spinel, ilmenite) and heavy minerals including zircon and rutile.

All exploration activities are conducted under international standards and the internationally recognised SAMREC 2016 Code. Its three permits, granted to it by the Commissioner of Mines at the Ministry of Energy, Natural Resources Administration, Israel, extend over an area of approximately 488,366 Dunams (48,836 hectares) that includes the Kishon River, the volcanic bodies on Mount Carmel, the Zevulun and Yizre'el valleys and their margins. 

Alongside its exploration activities, the Company is building on the launch of the "Heaven on Earth" jewellery collection and developing the Company's "Mine to Market" strategy to promote unique jewellery collections utilising Shefa Gems' suite of precious gemstones.

The Company upholds environmental values and protects the nature in the areas where it operates, cooperating fully with all authorities.  

The exclusive "Heaven on Earth" collection is now available to view online on the website of the designer Yossi Harari at: https://www.yossiharari.com/collections/heaven-on-earth-1

For further information please visit the website at www.shefagems.com