493 CARAT WHITE DIAMOND NAMED THE "LETŠENG LEGACY"

05 Nov 2007

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds") and the Government of the Kingdom of Lesotho are delighted to announce the 493 carat white diamond recovered from the Letšeng mine has been named "Letšeng Legacy".

The Letšeng Legacy ranks as the world's 18th largest rough diamond and was recovered from the Letšeng le Terai Mine in Lesotho on the 7th of September.

The name reflects growing legacy that the Letšeng le Terai Mine is creating as a producer of remarkable diamonds. Letšeng Diamonds, which is 70% owned by Gem Diamonds and 30% owned by the Government of the Kingdom of Lesotho, has now produced three of the world's top 20 diamonds. Two of these were recovered by Gem Diamonds in the last 13 months - the 603 carat Lesotho Promise recovered in August 2006 and this 493 carat diamond.

The 493 carat Letšeng Legacy will be sold on tender in Antwerp by WWW International Diamond Consultants on Wednesday the 14th of November at a ceremony attended by the Lesotho Minister of Natural Resources, the Honourable Minister Monyane Moleleki, and the Gem Diamonds directors.

The Lesotho Promise, which was the 15th largest rough diamond, was sold on tender in October 2006 for US$12.4 million to Graff Jewellers. The collection of polished diamonds from the Lesotho Promise is expected to sell for between US$25-30 million. The Lesotho Brown diamond was recovered in 1961 and ranks as the world's 16th largest diamond. It yielded 18 polished diamonds, the largest of which was recently re-acquired by the original buyer, jewellers Harry Winston.

In January 2007, Letšeng Diamonds also produced a 215 carat D-colour flawless diamond which subsequently sold on tender for US$8.3 million.

The Letšeng Mine hosts two kimberlites, the Main and Satellite Pipes, that have a combined diamond resource value of US$4.7 billion. It is renowned for producing some of the world's largest diamonds which attract the highest average price per carat of any kimberlite mine. As reported in Gem Diamonds' Interim Results to end June 2007 released on the 13th September, the average price per carat achieved from the Letšeng Satellite Pipe was US$1894 and US$1128 from the Main Pipe. This compares with the world average price of approximately US$81 per carat.

For further information:
Gem Diamonds Limited

Clifford Elphick
Tel: +44 203 043 0280

Gem Diamond Technical Services (Pty) Limited

Angela Parr
Tel: +27 83 578 3885

Pelham PR

Candice Sgroi
Tel: +44 207 743 6376

About Gem Diamonds:

Gem Diamonds is a diamond mining company with a balanced portfolio of a producing kimberlite mine, two producing alluvial mines, development projects and long-term prospects. Established in July 2005, Gem Diamonds is pursuing an accelerated growth strategy and aims to become one of the world's leading diamond companies. Gem Diamonds currently has one producing kimberlite mine, Letšeng, in Lesotho, two producing alluvial mines - Cempaka in Indonesia and Mbelenge in the Democratic Republic of Congo (DRC), a kimberlite development project in Botswana, two development projects in the DRC, one in the Central African Republic and an option to develop the Chiri kimberlite concession in Angola.

The Company recently made an offer to Kimberley Diamond Company's shareholders to acquire their shares in this company, which owns the Ellendale Mine in north Western Australia, and which was approved by Gem Diamonds' shareholders at an Extraordinary General Meeting on 16 October 2007.

Gem Diamonds currently has a specific focus towards higher value diamonds, a segment of the market that its management believes will deliver superior long term returns.

For further information about Gem Diamonds visit www.gemdiamonds.com .