REMARKABLE TENDER OF LETŠENG DIAMONDS

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01 Jul 2008

Gem Diamonds (LSE: GEMD), the FTSE 250 diamond company, is pleased to announce exceptional results from a recent tender of large rough diamonds recovered from the Letšeng mine in Lesotho.

In total ten diamonds totalling 261.4 carats were recovered from the Letšeng mine's Main and Satellite Pipes during the early part of June and were sold on tender in Antwerp for an average of US$42 000 per carat. This compares to the world average price for a rough diamonds of US$91 per carat.

The recovery of these top quality white diamonds, which varied in size from 11.8 to 70.7 carats and in colour from D through F supports management's confidence in the ability of the Letšeng mine's to produce remarkable diamonds.

Letšeng's reputation as a producer of unique diamonds is well established with three of the world's largest diamonds having been recovered here. The 493 carat Letšeng Legacy, recovered in September 2007, was the world's 18th largest rough diamond which sold for US$10.4 million.

Recovered almost a year earlier, 603 carat Lesotho Promise, the 15th largest rough diamond, sold in October 2006 for US$12.4 million. Lastly the 601 carat Lesotho Brown diamond ranked as the world's 16th largest diamond and was recovered when mining first started at Letšeng in 1961. In addition to these historic diamonds, Letšeng regularly produces top quality white diamonds of over 100 carats – five during the course of 2007 alone.

Gem Diamonds CEO Clifford Elphick commented:

"The premium price per carat of achieved for this tender reinforces Letšeng's status as one of the most remarkable diamond mines in the world and shows that demand for exceptional stones continues unabated. The recovery of these large high quality stones from Letšeng ore of mixed source confirms the mine's ability to deliver into this continued demand to the benefit of all shareholders."

For further information:
Gem Diamond Technical Services
Angela Parr
Tel: +27 11 560 9600

Pelham PR

Candice Sgroi
Tel: +44 207 743 6376

James Henderson
Tel: +44 207 743 6673

About Gem Diamonds:

Gem Diamonds Limited (LSE: GEMD) is a global leading diamond company that is pursuing an accelerated growth strategy through targeted acquisitions and the development of existing assets. Gem Diamonds portfolio comprises producing kimberlite, lamproite and alluvial mines, development projects and exploration assets. Operations are situated in Angola, Australia, Botswana, the Central African Republic, the Democratic Republic of Congo, Lesotho and Indonesia. Gem Diamonds produces some of the world's most remarkable white diamonds from its Letšeng Mine and rare fancy yellow diamonds from its Ellendale Mine and an array of coloured diamonds from its Cempaka Mine.

Established in July 2005, Gem Diamonds listed on the main board of the London Stock Exchange in February 2007 raising US$635 million. It is currently capitalised at approximately US$1.3 billion and had US$184 million of cash on its balance sheet at 2007 year end.