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Gem International Resources Inc (2)
Symbol C : GI
Shares Issued 58,265,539
Close 2018-01-11 C$ 0.015
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Gem Int'l dissidents requisition shareholder meeting

2018-01-11 13:18 ET - News Release

Mr. John Barr, a concerned shareholder, reports

CONCERNED SHAREHOLDER OF GEM INTERNATIONAL RESOURCES INC. REQUESTED SHAREHOLDERS' MEETING CALLING FOR MANAGEMENT CHANGE

On Oct. 13, 2017, a group of concerned shareholders of Gem International Resources Inc. led by Mosman Oil & Gas Ltd. (the concerned shareholder) formally requisitioned a meeting of the shareholders of Gem, which meeting has been scheduled for Feb. 9, 2018. The concerned shareholder owns approximately 9.6 million shares of Gem or approximately 17 per cent of the issued and outstanding shares. Other shareholders of Gem owning or exercising direction and control over an additional approximately 21 million shares, or 36 per cent of the issued and outstanding shares have expressed similar concerns with management and have indicated support for the efforts of the concerned shareholder. According to publicly filed information, the current management of Gem only own in the aggregate just over one million shares, or approximately 1.7 per cent of the issued and outstanding shares of Gem.

The purpose of the requisitioned meeting is to remove from office all of the current directors of Gem and to replace them with three highly qualified nominees: John W. Barr, Michael Ballanger and Campbell Smyth. The concerned shareholder believes that the current board of directors and management of Gem have consistently failed to act in the best interests of the company and its shareholders. Now is the time for the company to have the management that is aligned with shareholders to ensure the preservation of value for its shareholders.

The concerned shareholder has attempted, on numerous occasions, to engage with the board of directors of Gem to discuss the resolution of its concerns. For example, the concerned shareholders sent a letter to the board of directors of Gem on Sept. 27, 2017, outlining various concerns regarding the management of Gem. The letter is provided as follows.

"Current management has demonstrated a complete inability to execute on Gem's arrangements in respect to the Dala project in Angola, what was the main and only prospective asset of the company. Moreover, and even more concerning, it the complete failure to keep shareholders and the market informed of material information regarding developments in the Dala project transaction and the associated financing. It is apparent that the current management of Gem failed to raise and make the $2.7-million (U.S.) payment required to be made by May 31, 2017, although there was no announcement of this material breach of the terms of the agreement. No meaningful information regarding the status of the agreement, progress on the funding required by May 31, 2017, or status of TSX Venture Exchange approval of the transaction was disclosed to shareholders or the public between the announcement of the amended terms of the transaction on Jan. 24, 2017, until the announcement on July 13, 2017, that the transaction agreement had been terminated. Given the terms of the transaction, there was clearly material information in the interim period that was required to be publicly disclosed. The company repeatedly disclosed that it was close to obtaining the financing required to complete the Dala project transaction but failed to make any disclosure when it became apparent that the financing was not forthcoming or at least that the ability of obtaining the financing was in question.

"After Gem lost the Dala project opportunity, it has failed to provide any information to shareholders regarding the business plan of the company going forward. In addition to being required by applicable corporate and securities laws and the rules of the TSX-V, shareholders of a publicly traded company such as Gem have expectations when it comes to management, disclosure of material information and proper investor communication generally. Simply put, they expect to know how the companies they invest in are being managed. Indeed, the company's website is totally outdated and no shareholder communications have recently occurred.

"Management has completely failed in its responsibilities to Gem, its stakeholders and to the public markets in Canada. Management has made repeated promises, including repeated unfounded, unrealistic or patently false representations about obtaining funding, that never materialized and that were not updated in a timely manner, if at all.

"Mosman believes that the action or inaction of management clearly demonstrates that the situation must change immediately. Mosman has endeavoured several times to communicate with the board of directors of Gem but has failed to receive any response.

"We request that management abide by its responsibility to act in the interests of the Gem and its shareholders and contact to the undersigned to discuss the changes to management required to move the company forward.

"Until there is resolution regarding the management of the company, the board of directors of Gem should desist from any actions that would dilute existing shareholders and entrench current management."

Notwithstanding the letter of Sept. 27, 2017, and prior and subsequent attempts to discuss its concerns with Gem, management of Gem has failed to engage any constructive manner and has continued to be evasive. This behaviour, together with the announcements by Gem regarding a proposed share consolidation and highly dilutive private placement, clearly demonstrates that it is the intention of management to entrench themselves against the wishes of a majority of the shareholders of Gem.

Additional information and disclaimers

The head office and registered address of Gem International is 3467 Commercial St., Vancouver, B.C., V5N 4E8. The information contained in this news release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate or securities laws or otherwise.

Gem shareholders are not being asked to execute a proxy in favour of the nominees, although Mosman may file a dissident information circular in due course in connection with the meeting and in compliance with applicable securities laws.

Notwithstanding the foregoing, Mosman is voluntarily providing the disclosure required under Section 9.2(4) of National Instrument 51-102, Continuous Disclosure Obligations, in accordance with securities laws applicable to public broadcast solicitations.

This news release and any solicitation made by Mosman in advance of the meeting is, or will be, as applicable, made by Mosman and not by or on behalf of the management of Gem. All costs incurred for any solicitation will be borne by Mosman.

Mosman is not soliciting proxies in connection with a meeting of Gem shareholders at this time and shareholders are not being asked at this time to execute proxies in favour of the nominees. Any proxies solicited by Mosman will be solicited pursuant to a dissident circular sent to shareholders of Gem, after which solicitations may be made by or on behalf of Mosman by mail, telephone, fax, e-mail or other electronic means, and in person by directors, officers and employees of Rea Holdings or its proxy adviser or by the nominees, or otherwise solicited in accordance with applicable securities laws.

Any proxies solicited by Mosman in connection with the meeting may be revoked by instrument in writing by the shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law.

Nominee information

The attached table sets out, in respect of each nominee, his or her name, province, country of residence, his or her principal occupation, business or employment within the five preceding years, and the number of Gem common shares beneficially owned, or controlled or directed, directly or indirectly, by such nominee. None of the nominees are currently serving as a director of Gem.

Name, province or state,             Present principal occupation,         Number of common shares
and country of residence               and business or employment            beneficially owned or 
                                         over the past five years           controlled or directed 
                                                                           (indirectly or directly)

John W. Barr                           Chartered accountant, also                           Nil (1)
Western Australia, Australia                executive chairman of 
                                           Mosman Oil and Gas Ltd.
                                                since April, 2013 
           
Michael John Ballanger                    Director of Bonaventure                           Nil (2)
Ontario, Canada                 Explorations Ltd. and Bonaventure 
                                Capital Corp. since October, 2014; 
                                     wealth manager at Richardson 
                                      GMP Ltd. from October, 2012, 
                                    to September, 2014; financial 
                                 adviser at Union Securities from 
                                    April, 2004, to October, 2012  
          
John Campbell Smyth              Director of Clariden Capital Ltd.                    1,035,000 (3)
Western Australia, Australia   since 2007; adviser to the Phoenix 
                                      Gold Fund from 2007 to 2014        

Notes:
(1) Mr. Barr is the executive chairman of Mosman Oil and Gas, which owns 9.6 million 
common shares of the company.
(2) Bonaventure Explorations, a company partly owned by Mr. Ballanger, owns one million
options to acquire common shares of the company.
(3) These shares are held by Clariden Capital Ltd., a company controlled by Mr. Smyth.

To the knowledge of Mosman, at the date hereof, none of the nominees are, or have been within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company that: (i) was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, in any case that was in effect for more than 30 consecutive days that was issued while the nominee was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an order that was issued after the nominee ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

To the knowledge of Mosman, at the date hereof, none of the nominees are, or have been within the 10 years before the date hereof: (i) a director or executive officer of any company that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the nominee.

To the knowledge of Mosman, at the date hereof, none of the nominees have been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory authority that would likely be considered important to a reasonable security holder in deciding whether to vote for nominee.

Certain of the nominees are presently on the boards of other public companies as shown in the attached table.

           
Name                                  Issuer (exchange)
                
John W. Barr                Mosman Oil & Gas Ltd. (AIM)
Michael John Ballanger                             n/a
John Campbell Smyth                                n/a

None of Mosman or, to its knowledge, any of its associates or affiliates have any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at a coming meeting of Gem shareholders, other than the removal and election of directors.

We seek Safe Harbor.

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