Termination of preliminary discussions with Lucara

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04 May 2011

Gem Diamonds confirms that, further to the announcement on 21 March 2011, no agreement has been reached in its preliminary discussions with Lucara Diamond Corp and these discussions are no longer on going.

As stated in the Company's full year results announcement on 15 March 2011, Gem Diamonds continues to monitor potential value enhancing opportunities outside of its current asset portfolio.

For further information:
Gem Diamonds Limited

Clifford Elphick, Chief Executive Officer
Glenn Turner, Chief Commercial and Legal Officer
Tel: +44 (0) 203 043 0280

J.P. Morgan Cazenove – Financial Adviser
Ian Hannam / Barry Weir / Neil Passmore
Tel: +44 (0) 20 7588 2828

Pelham Bell Pottinger – PR

James Henderson / Charles Vivian
Tel: +44 (0) 20 7861 3160 / 26

Notes to Editors
  • Gem Diamonds is listed on the Main Market of the London Stock Exchange and is a constituent of the FTSE 250 Index. The trading symbol is GEMD.
  • Gem Diamonds is a leading global diamond producer with diamond mining operations in Africa and Australia and other development projects throughout the world and headquartered in London. Gem Diamonds has a specific focus towards higher value diamonds; a segment of the market that its management believes will deliver superior long-term returns.
  • Gem Diamonds is a majority shareholder in the Letšeng mine in Lesotho, a long-life, producing kimberlite mine renowned for its high quality diamonds. It also has a 100% interest in the Ellendale lamproite mine in Western Australia, the only reliable producer of highly sought after fancy yellow diamonds. Currently the Company is developing its 100% owned Gope kimberlite project in Botswana into a world-class producing mine.
  • For further information please refer to our website, www.gemdiamonds.com

This press release is not for distribution to United States Newswire Services or for dissemination in the United States.

Forward looking information

Except for statements of historical fact, all statements in this news release – including, without limitation, statements regarding production estimates and future plans and objectives of Gem Diamonds – constitute forward-looking information that involve various risks and uncertainties.

There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of reserves and recoveries; production and operating cost assumptions; development risks and costs; the risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties as disclosed under the heading "Risk Factors" in its Prospectus and elsewhere in Gem Diamonds documents filed from time-to-time with the London Stock Exchange and other regulatory authorities. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.