B"H

1 June 2021

Shefa Gems Ltd.

("Shefa Gems" or the "Company")

Proposed Combined Transaction that includes:

(a)  Proposed disposal of Mining Business to shareholders

(b)  Proposed Changes of the Board

(c)   Creation of a cash shell and Subscription to raise new capital

(d)  Future Acquisition Strategy, Share Consolidation and Proposed Change of Name

Shefa Gems (LSE: SEFA), a company focused on advanced exploration and development of multi-gemstone mining projects in Northern Israel, is pleased to announce that it has entered into an Agreement ("Agreement") with a group of investors (the "Shany Group") to distribute  the Company's current mining business to all of the Company's existing shareholders via a dividend in specie ("Proposed Distribution"), undertake a share consolidation, raise new funds for the Company, change the Company's name, make certain changes to the board and change the Company's focus of activity   as a cash shell by seeking an acquisition in the web technology and software space (together "the Proposals").

Since the Proposed Distribution and all other Proposals under this announcement depend in part on each other - they will be defined hereinafter together as "the Proposed Combined Transaction".

As the Proposed Combined Transaction will constitute a fundamental change of business in the Company under Israeli law, it will require the approval of shareholders at a Special General Meeting ("SGM"). The Company intends to publish a circular to Shareholders ("Circular") for the SGM in the next few days.

Conditional upon the Proposed Combined Transaction being approved by Shareholders at the SGM, and upon completion of the Proposed Distribution, the Company proposes:

a)    To undertake a share consolidation on the basis of 100 ordinary shares of NIS 0.1 each ("Ordinary Shares") for 1 Ordinary Consolidated Share of NIS 10.0 each ("Ordinary Consolidated Share") (the "Share Consolidation") and after the consolidation above, to approve the increase of the registered capital of the Company to 1,000,000,000 ordinary shares of NIS 10 each;

b)    To approve the cancelation of the 'par value' of the Ordinary Shares of the Company in the Israeli Registrar of Companies.

c)    To appoint new directors and to terminate the tenure of some of the current directors of the Board;

d)    After the completion of all the actions described above, to undertake an equity subscription of New Ordinary Consolidated Shares at a price of 0.0353 GBP per New Ordinary Consolidated Share to raise a total of USD 1,050,000 (GBP: ~756,000) from members of the Shany Group and other unrelated parties ("the Subscription").

e)    to change the name of the Company to Alef Bet Advanced Technologies (2021) Limited; and

f)     After performing the above steps, which will provide the Company with cash but no other assets - to advance the change in the Company's focus of activity by seeking acquisition opportunities in the web technology and software space.

Further details of the Proposals are set out below and will be outlined in the Circular which is expected to be sent to shareholders in the next few days and will also be made available for download from the Company's website at www.shefagems.com. The Circular containing a notice of SGM (the "Notice"), will seek approval from Shareholders to the Proposed Combined Transaction.

Tali Shalem, CEO of Shefa Gems, commented:

"This combined transaction we are asking shareholders to approve (as detailed in this RNS and which will be outlined in more detail in the Circular of the SGM), is the result of lengthy negotiations, which were carried out under a number of key objectives, including both the benefits for the Company and its Shareholders (including, promoting profitability and new opportunities in a rising sector using the Israeli innovation opportunities, closing burdensome liabilities, cutting costs, and also preserving the shareholders' holdings in the gem mining in Israel (the Company's original field of activity)."

The Proposed Distribution of the Company's Mining Business

The Company currently operates multiple exploration sites located across the Kishon River catchment area of Haifa and Mt Carmel in Northern Israel, covering a total area of 615 km², some 85 km north of Tel Aviv.

Since the Company's financial results show a significant increase in exploration expenses and in light of new information on the complexity of the regulatory procedures in relation to licensing of the commercial gem mining in Israel, which became clearer to the Company through the promotion of the regulatory procedures for the mining license in the Kishon area - the Company commenced an internal strategic review of its business activities.

Following this review, the board commissioned an independent review of the value of the mining assets carried in the financial statements. Since it is now apparent that due to recent regulatory changes the exploitation of these assets is likely to take longer than previously anticipated and in addition may require further funding as a result .  While in the longer term it is hoped that the eventual value of the mining assets will prove to be attractive the present day value of these assets needs to be impaired to reflect the current uncertainties on the timing of eventual exploitation and accordingly it is proposed to imper that value to a more adjusted level.  

The Company also re-examined the share trading capacity when it is based solely on gemstone exploration activity (pre-profitable mining), both by observing the Company's stock trading in recent years, , and also by observing the stock trading of other exploration companies in the world - showing that the development of the mining projects does not justify the additional costs of a listed company and that any future funds raised on the basis of these mining prospects, should be entirely focussed on the development of these further mining opportunities.

Accordingly, it was first decided to transfer all the Company's exploration and mining assets to the Company's fully owned (100%) subsidiary, Shefa in Israel (G.M.) Ltd. (a private company registered in Israel - the "Subsidiary") - with the intention that, following Shareholder approval, the Company will distribute the ownership of the Subsidiary from the Company to all of the Company's existing Shareholders via a dividend in specie.  Each Shareholder, holding Ordinary Shares in the Company at the date of this announcement (the "Record Date"), will receive their proportionate consideration in the Subsidiary shares in accordance with their current percentage holding in the Company. The shares in the Subsidiary will be unlisted but the Company will use its reasonable endeavours to enable those shareholders wishing to dispose of their holdings to find suitable purchasers.

Since the Subsidiary is an Israeli private company, the registration of the Subsidiary shares in the name of each shareholder will be formally registered, as required by Israeli Companies Law.

Details of the Subsidiary's Management, plans for further development and financing of the gem exploration operations in Israel will be detailed in the Circular.

It should be clarified that the existing warrants, and all additional rights arising from investment agreements entered into by the Company to date (before the current transaction) - remain as they were and without change (i.e. do not pass to the subsidiary) - and the public company remains committed to them also after the approval of this combined transaction.

It should also be emphasized that all the financing costs and the ongoing costs of the subsidiary as well as all the costs of the procedures that will be required for the purpose of distributing via a dividend in specie, will be at the expense of the subsidiary.

Share consolidation, increase in the registered capital and cancelation of the par value

The Company proposes to undertake a share consolidation on the basis of 100 Ordinary Shares for 1 Ordinary Consolidated Share. 

Shareholders should divide their existing ordinary shares by 100 to get their number of Ordinary Consolidated Shares.  As all ordinary shareholdings in the Company will be consolidated, the number of Ordinary Shares held by each Shareholder will reduce, but the proportion of the total issued share capital of the Company held by each Shareholder immediately before and following the Share Consolidation will remain unchanged.  Apart from having a different nominal value, each Ordinary Consolidate Share will carry the same rights as set out in the Company's Articles of Association that currently attach to the Existing Ordinary Shares.

Subsequent to the Share Consolidation, the Board further proposes to increase the registered share capital of the Company to 1 billion Ordinary Consolidated Shares in the capital of the Company and to cancel the par value of the Ordinary Shares. Shareholder approval will also be sought to approve an amendment of the Company's Articles of Association in accordance with the updated composition of the share capital of the Company.

The Share Consolidation will become effective after the approval of Shareholders at the SGM, and trading in the New Ordinary Consolidated Shares will commence shortly thereafter as detailed in the Circular. 

Technical changes such as ISINs, CREST Accounts and new share certificates, will be detailed in the Circular.

Subscription

As part of the Proposals, the Company intends to undertake an equity subscription of New Ordinary Consolidated Shares at a price of 0.0445 per New Ordinary Consolidated Share ("Subscription Shares") to raise a total of USD 1,050,000 (GBP: ~756,000) from the Shany Group and other unrelated parties.

The Subscription Shares will, in aggregate, represent approximately 85% of the Company's issued share capital. The Subscription Shares will be fully paid and rank pari passu in all respects with the Company's Existing Ordinary Shares.

Following the Subscription, existing Shareholders will be diluted by 85% and will hold approximately 15% of the Enlarged Issued Share Capital of the Company. Members of the Shany Group will hold approximately no more than 70% of the Enlarged Issued Share Capital.  The free float of the Company is expected to be approximately 30%. 

The issue of the Subscription Shares will trigger the requirement for a prospectus to be published in respect of those shares. In implementing the Proposals, and specifically the Subscription, the Company intends at all times to comply with Listing Rule 14.  Specifically:

a)    the free float distributed to the public will remain above 25% (LR 14.2.2); and

b)    following allotment of the Subscription Shares, a prospectus will be prepared to enable those shares to be admitted to trading on the Main Market of the London Stock Exchange (LR 14.3.4).  

Use of Proceeds

The gross proceeds receivable by the Company pursuant to the Subscription will be USD 1,050,000 (GBP ~756,000), before expenses.

Funds raised will be used to close all of the Company's outstanding financial liabilities at the date of signing of the Agreement.

The remaining balance will be used for general working capital purposes by the Company in pursuance of its new acquisition strategy as outlined in more detail below. 

As a result of commitments made by the Shany Group to support the Company, and taking in to account the Subscription proceeds under the Combined Transaction, the Directors are confident that, following the Subscription, the Company will have sufficient working capital for its present requirements, that is for at least the next 12 months following completion of the Proposals.

Proposed Board Changes

As part of the Proposals, the Company wishes to announce a number of changes to its Board composition: Michael Rosenberg OBE, will be stepping down as the Company's Chairman and the Existing Directors, David Nachshon, Gershon Frenkel, Zvi Nemeth and James Campbell will be stepping down as Independent Non-Executive Directors immediately after Shareholders' approval at the SGM. Ms. Nathalie Schwarz (Independent Non-Executive Director) will continue in her current position. Mr. Yosef Taub (Executive Director) will continue in his current position until the completion of the Proposed Disposal, after which he will also be stepping down from the Company's Board of Directors.

The New Directors: Mr. Alon Shany will join the Board as Executive Director at the date of signing the Agreement and after the approval of the General Meeting he will be appointed as Chairman. Mr. Jacques Abitbol will join the Board as Non-Executive Director after the approval of the SGM. Ms. Eva Abittan will join the Board as Non-Executive Director after the approval of the SGM.

Following full completion of the Proposals, the Board will comprise of:

·    Mr. Alon Shany - Executive Chairman

·    Mr. Jacques Abitbol - Non-Executive Director

·    Ms. Eva Abittan - Non-Executive Director

·    Ms. Nathalie Schwarz - Independent Non-Executive Director.

In accordance with the development plans (as detailed below under 'future strategy') and in particular increasing the Company's focus of activity on the web technology and software space - the Company intends to appoint another independent non-executive director, with sufficient professional expertise in the field.

Additional information on the New Directors

Mr. Alon Shany, age 28

Mr. Alon Shany has a BA in Sustainability and Governance from IDC Herzliya in Israel, he currently lives in Israel. Mr. Shany is an investor and a director of Kaman Capital (Since 2017) which is in the process of merging blockchain technology companies. Moreover, Mr. Shany also invested in two other technology companies- Credit 24 Ltd., a company that provides loans using a unique AI technology and ARTsys360 Ltd., a company that develops technologies to monitor and locate drones and other similar threats. Mr. Shany is also an Executive Vice President of Bio&En Holdings. Kaman Capital is a public company traded on the Tel Aviv Stock Exchange, Bio&En Holdings is a public company traded on the OTC (over the counter) trading platforms, Credit 24 Ltd. and ARTsys360 Ltd. are in the process of an IPO on the Tel Aviv Stock Exchange.

Mr. Shany specializes in areas of sustainability and good governance, including development and advanced technologies for sustainability, broad vision and finding the required balance between development needs, efficient management of resources and social needs. Mr. Shany also specializes in developing entrepreneurship in the field of advanced technologies.

Mr. Jacques Abitbol, age 32

Mr. Jacques Abitbol is a businessman that owns a chain of optic stores in Europe and acts as a director in several private companies, including: Optical Partners, Chateau d'optique, La lunetterie de Paris, Custoptic, and Led partners.

Eva Abittan, age 21

Ms. Eva Abittan has a BA in Communication from the IDC Herzliya in Israeli and she specialises in entrepreneurship.

Ms. Abittan specialized in the development of content and products for digital communication, and is experienced in the development of high-tech applications and ventures and in innovative marketing for a variety of companies, organizations and associations, including marketing communication (advertising, PR and digital), interactive communication or influence and digital awareness.

Further information regarding Mr. Shany, Mr. Abitbol and Ms. Abittan will be detailed in the Circular.

The Company confirms that its current Article of Association provide a reasonable basis for the Directors to make proper judgments as to the financial position and prospects of the Company, its operational and financial reporting procedures and corporate governance, as it continues to grow through the implementation of its business strategy.

Future Strategy and Proposed Change of Name

Following the completion of the Proposed Distribution of the mining business, the Company will retain its listing on the London Stock Exchange as a special purpose acquisition company ("SPAC" or "cash shell") with only cash remaining as its sole asset. As a result of the fundraising to be entered into as outlined above, the Directors expect the net cash position after the Proposed Distribution and Subscription will be sufficient working capital for its present requirements, that is for at least the next 12 months following completion of the Proposals.

Future Strategy

Following the Proposed Disposal, as outlined above, the Company will remain listed as a cash shell on the Main Market of the London Stock Exchange and will look to make an acquisition of a suitable company in the technology software space. Should an acquisition be completed it would constitute a Reverse Takeover under the Listing Rules and the Company would apply for the readmission of its shares to the Official List and the Main Market of the London Stock Exchange.

Although the Company has currently not identified a suitable acquisition target, the Directors and New Directors will look for an acquisition target in the web technology and software space.  The Company will particularly focus on the key areas of high growth delivering digital services to consumers in areas such as leisure, financials, e-commerce, gaming, as well as disruptive technologies such as blockchain and crypto currencies.

In addition, the Company will also look at potential targets in the software space. The Directors and New Directors believe that the areas of B2B software, Customer Relationship Management software and corporate risk management software present a good opportunity for the Company to create shareholder value.

Should the Company identify a suitable target, it will, in accordance with the Listing Rules, publish a prospectus containing all information required for the approval of a reverse takeover. At present, there can be no assurance that the Company will be able to identify a suitable acquisition target or that it will be able to complete any contemplated transaction and as a consequence, the Company's admission to the Standard Listing segment of the Official List and trading on the London Stock Exchange's Main Market for listed securities may be cancelled.

Proposed Change of Name

The Company proposes, as part of broadening its field of activity, to change its name to Alef Bet Advanced Technologies (2021) Limited. The purpose of the name change is to more closely reflect the Company's strategy to develop its business across the web technology and software space.

In addition, the Company proposes to make application to the London Stock Exchange to change its TDIM symbol from "SEFA" to "ALEF".

Shareholders should note that their shareholdings will be unaffected by the change of name, although new share certificates will be issued to Shareholders following the name change and completion of the Proposed Combined Transaction.

Condition Precedent

It is a condition to completion of the Proposed Combined Transaction that trading in the Company's shares is not suspended for any reason until the date of the SGM.  In the event that trading in the Company's shares is suspended, the Company will have a period of 45 days to resume trading on the London Stock Exchange. If there is no resumption of trading in the Company's shares within 45 days, the Proposed Combined Transaction will not proceed, and the funds raised under the Subscription, will be returned to investors.

In the event that the 45-day period extends beyond the date of the SGM, the Proposed Distribution will not be performed until such time as the trading suspension is lifted.  If there is no resumption of trading in the Company's shares within 45 days, the Proposed Combined Transaction will not proceed, and the funds raised under the Subscription, will be returned to investors.

It is clarified that as long as the trade suspension is not enforced until the date of the SGM - and the shareholders approve this combined transaction - the transaction will take full effect, immediately after the shareholders' approval, and the Shani Group will no longer have the right of cancellation as a result of a trade suspension.

Irrevocable undertakings and Letter of Intent

The Directors and persons connected with them have agreed in respect of their beneficial holdings of ordinary shares, amounting in aggregate to approx. 16,000,000 Ordinary Shares in the Company, representing approx. 8% of the Issued Ordinary Share Capital of the Company, to vote (or where applicable, to procure that the registered holder of such ordinary shares votes), in favour of the Proposals at the SGM.

Action to be taken

Shareholders will be sent a Circular with a Notice of General Meeting with a Form of Proxy which will enable them to vote at the SGM.

Whilst, in normal circumstances, the Board values very highly the opportunity to meet shareholders in person, due to the ongoing COVID-19 pandemic and the related legal and other requirements, the General Meeting will be held as a closed meeting with a minimum number of Directors present, such the legal requirement to hold a quorate meeting will be satisfied, and no other shareholders will be permitted to access, attend or participate in person.

Shareholders are accordingly strongly urged to appoint the Chairman of the General Meeting (rather than their own choice of person) as their proxy as this is the only way to ensure their vote is counted.

The Company is taking these precautionary measures to safeguard shareholders' and its employees' health and to enable the General Meeting to comply with current law. The Board will review these arrangements and any additional and/or alternative measures in advance of the General Meeting and will update shareholders, as necessary, via a regulatory information service.

If you are in any doubt about the Proposed Disposal, the subscription, changes to the board, the share consolidation or the change of name or the contents of this announcement or the action you should take, you are recommended to seek your own independent financial, tax and legal advice immediately from your independent financial adviser duly authorised under the Financial Services and markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser in the relevant jurisdiction.

Recommendation

The Board, having reviewed the terms and the benefits of the Agreement and the Proposals and having ensured it to be free of conflict of interests, consider the Proposals to be proposed at the Company's SGM, to be in the best interest of the Company and Shareholders as a whole. Accordingly, the Board will unanimously recommend that Shareholders should vote in favour of the Proposals to be proposed at the SGM as they, and persons connected with them, have undertaken to do in respect of their own holdings.

As stated above, a notice of the Company's General Meeting and a Circular containing further information to all proposals set out in this announcement are expected to be sent to Shareholders in a few days and will also be made available for download from the Company's website at www.shefagems.com .

- Ends -

Enquiries

Notes to Editors

 About Shefa Gems Ltd

Shefa Gems Ltd (LSE: SEFA) is an explorer and developer of precious gems 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. All exploration activities are conducted under international standards and the internationally recognized SAMREC 2016 Code.

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.

On March 2020, the Quarries and Mines Branch of the Ministry of National Infrastructures of the State of Israel has awarded a Certificate of Discovery to the Company covering the projected gemstone mine development in the Kishon Mid Reach, Zones 1 and 2. The Certificate of Discovery is the culmination of the Company's successful exploration activities and market analysis; and signals the beginning of the process towards future commercial mining. 20 years of exploration in the Kishon valley have brought the Company one step closer in the establishing Israel's first and only future precious gemstone mine, originally identified and progressed by the founder of the company, the late and much missed Abraham (Avi) Taub.

Alongside its exploration activities, the Company is developing a "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. 

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