LETŠENG DIAMONDS SELLS 215 CARAT WHITE DIAMOND FOR US$8.3 MILLION

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07 Mar 2007

  • US$38,418 per carat price achieved for 215 carat * D colour white diamond
  • Forms part of a tender that reached a total price of US$18.4 million
  • Follows the sale of the 603ct Lesotho Promise last year for US$12.4 million

Gem Diamonds Limited (Gem Diamonds), which joined the Main Board of the London Stock Exchange last month (LSE: GEMD) and its partner the Government of the Kingdom of Lesotho (Lesotho Government), the owners and operators of the Letšeng Diamond Mine in Lesotho, are pleased to announce the sale of a 215 carat white D colour diamond in Antwerp on 28 February 2007 for US$8.3 million (US$38,418 per carat).. The diamond was recovered at the Letšeng mine on 26 January 2007 and was sold in a tender including two other exceptional white D colour flawless stones of 66 and 54 carats which sold for US$1.2 million and US$1.4 million respectively. The result for the whole of this recent tender where a total of 7 092 carats were sold was US$18.4 million. At an average price per carat of US$2,598 this is the highest average price per tender for the Letšeng mine to date.

The 215 white carat diamond was bought by Omega Diamonds.

The Letšeng mine is building a reputation for producing exceptional quality stones, after the recovery last year of the Lesotho Promise, the 15th largest diamond ever found, which was sold in Antwerp to SAFDICO, the cutting and polishing business of Graff Jewellers, for US$12.4million. The mine is situated in the Maloti Mountains in Lesotho, renowned for the quality and size of its diamonds and for a revenue per carat currently unsurpassed in kimberlite diamond mining.

Lesotho's newly appointed Minister of Natural Resources, Honourable Monyane Moleleke said:

"The diamonds that Letšeng produces form part of Lesotho's unique heritage and as such we are extremely pleased that the market continues to appreciate them for their remarkable value"

Clifford Elphick, CEO of Gem Diamonds said:

"Letšeng continues to produce diamonds of the highest quality and we are very pleased with the prices achieved at this tender. As Gem Diamonds enters its next phase of development as a quoted company, we believe that Letšeng will continue to provide a solid foundation for the Group."

* The diamond which weighed in at 216 carats on recovery, was correctly determined to be 215 carats following the boiling process which all diamonds undergo before they are sold.

For further information
Gem Diamonds Limited

Angela Parr
Tel: +27 83 578 3885

Merlin

David Simonson
Bridget Fury
Tel: +44 20 7653 6620

About Gem Diamonds Limited (Gem Diamonds)

Gem Diamonds is a specialist diamond mining group with assets concentrated in Africa. The Group was founded in July 2005 by Clifford Elphick, a highly experienced diamond mining executive, who was previously Managing Director of E Oppenheimer & Son. Gem Diamonds has a balanced portfolio of assets, including early stage exploration projects right through to Letšeng, a producing diamond mine with strong, positive cash flow. It is the operator of and owner of a majority stake in the successful Letšeng diamond mine in Lesotho, with the remainder being held by the Government of Lesotho. It also has interests in exploration projects in the Longatshimo and Tshumbe-Lubembe regions of the Democratic Republic of Congo and the Mambéré River region in the Central African Republic and has recently concluded a significant co-operation agreement and option to invest in the Chiri kimberlite in Angola.

The directorate comprises Clifford Elphick as Chairman and Chief Executive Officer, Kevin Burford as Chief Financial Officer and Graham Wheelock as Mineral Resources Manager. Senior management includes Terry Stewart as Chief Operating Officer and Glenn Turner as Chief Commercial and Legal Officer.

Gem Diamonds is listed on the Main Market of the London Stock Exchange and trades under the code GEMD. At the time of this announcement the market capitalization of the company is [£634 million].

Letšeng Diamonds (Pty) Ltd (Letšeng Diamonds)

Letšeng Diamonds was incorporated in Lesotho in 1995 with the intention of seeking a mining lease from the Government of Lesotho to re-open the Letšeng Diamond Mine on the high plateaux of the Maloti Mountains.

The mine was previously operated by De Beers from 1977 to 1982 and was closed with less than 10% of the open pit mineable ore having been treated. An initial application by JCI Ltd was made to the Government of Lesotho in September of 1996 followed by a second revised application in 1998 which subsequently led to the signing of the Concession Agreement and the granting of the Mining Lease in November 1999 to JCI. Mining operations commenced in April 2004. In July of 2006, Gem Diamonds acquired JCI's 76% stake in Letšeng Diamonds, subsequently transferring 6% of this stake to its partners the Government of the Kingdom of Lesotho who now hold 30%.

Ninety percent of the diamonds recovered are gem quality and a significant proportion graded as D colour. Since Letšeng recommenced production in April 2004, to September 2006, approximately 14.3% of production has been large diamonds (those in excess of 10.8 carats). Letšeng is the highest diamond mine in the world and produces diamonds which currently sell for highest per carat price of any kimberlite mine.