Placing of Ordinary Shares

GEM BIOFUELS PLC

("GEM BioFuels" or the "Company")

Placing of Ordinary Shares

GEM BioFuels (AIM: GBF) is pleased to announce the raising of £300,000 through a placing of 3,750,000 ordinary shares of 1p each at 8 pence per share ("Placing Shares") (the "Placing"). The proceeds of the Placing will be used to strengthen the Company's balance sheet and provide additional working capital for the Group to enable it to further deliver on its strategy.

Details of the Placing

The Company intends, pursuant to the authorities granted to it at the recently held EGM, to issue 3,750,000 ordinary shares to institutional and other investors. Institutional investors that have participated in the Placing include, but are not limited to, RAB Special Situations (Master) Fund Limited ("RAB") which has subscribed £150,000 in cash for 1,875,000 Placing Shares. RAB is a substantial shareholder as defined by the AIM Rules and therefore its participation in the Placing is a related party transaction. The Company's directors consider, having consulted with its nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

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.

The Placing Shares represent approximately 10.6 per cent of the issued share capital of the Company as enlarged by the Placing. On admission of the Placing Shares, RAB will hold in aggregate 17,926,500 Ordinary Shares representing approximately 50.7 per cent. of the issued share capital of the Company.

Application will be made for the Placing Shares to be admitted to trading on the AIM Market of the London Stock Exchange ("AIM"). Post the Placing the Company will have 35,351,501 Ordinary Shares of 1p each in issue. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of GEM BioFuels.

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