Placing and Notice of EGM

19 December 2011

GEM BIOFUELS PLC

("GEM BioFuels" or the "Company")

Notice of EGM and Placing of Ordinary Shares

The Company announces that following consent from shareholders representing more than 95% of the nominal value of the ordinary shares and in accordance with its Articles of Association, the Company has called an Extraordinary General Meeting ("EGM") at short notice for 20th December 2011. The Company also confirms its intention to raise up to £350,000 through a placing of up to 35,000,000 new ordinary shares of 1p each (the "Placing Shares") at a price of 1 pence per share (the "Placing").

The Company is seeking approval from shareholders to disapply existing pre-emption rights to facilitate the Placing. The net proceeds of the Placing will be used to strengthen the Company's balance sheet and provide additional working capital for the Group.

Details of the Placing

The Company is seeking authority to issue up to 35,000,000 ordinary shares of which 33,000,000 ordinary shares would be placed with RAB Special Situations (Master) Fund Limited ("RAB"). The Placing is subject to shareholder approval and certain conditions including, inter alia, the:

·; conversion of the £200,000 convertible loan note dated March 2011 into 13,333,333 new Ordinary Shares at a price of 1.5p per share;

·; conversion of the £212,500 convertible loan note dated March 2011 held by Paul Benetti, Chief Executive Officer, into 8,480,000 new Ordinary Shares at a price of 2.5p per share; and

·; issue of 1,000,000 new Ordinary Shares at a price of 2.5p per share to Cornerstone Capital Limited, a company wholly owned by Simon Hunt, Non-Executive Chairman, in connection with the capitalisation of outstanding fees.

Assuming all of the Placing Shares and the new Ordinary Shares are issued as described above, the Company will have 93,164,834 Ordinary Shares in issue.

RAB will hold 50,926,000 Ordinary Shares, representing approximately 54.66 per cent. of the Company's enlarged share capital and voting rights.

Paul Benetti will hold 9,256,000 Ordinary Shares, representing approximately 9.94 per cent. of the Company's enlarged share capital and voting rights.

Simon Hunt will hold 1,000,000 Ordinary Shares, representing approximately 1.07 per cent. of the Company's enlarged share capital and voting rights.

The Placing Shares will rank pari passu in all respects with the existing ordinary shares in the capital of the Company ('Ordinary Shares'), including the right to receive all dividends and other distributions hereafter declared, made or paid.

RAB is a substantial shareholder as defined by the AIM Rules and its participation in the Placing as well the conversion of the convertible loan note by Paul Benetti are considered related party transactions. The directors of the Company, having consulted with Shore Capital and Corporate Limited, the Company's nominated advisor, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Notice of EGM

The EGM will be held at 22 Railway Road, Subiaco, WA 6000, Australia on 20 December 2011 at 5.00 pm.

A copy of the Notice of the EGM will be available for inspection on the Company's website at www.gembiofuels.com.

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