07 Sep 2010

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds") and the Government of the Kingdom of Lesotho are delighted to announce that an exceptional 196 carat rough white diamond has been recovered from the Letšeng mine in Lesotho on 24 August 2010.

This remarkable rough diamond is expected to achieve a substantial price per carat as preliminary examinations indicate that it is expected to produce top colour and top clarity polished diamonds.

Since Gem Diamonds' acquisition of the Letšeng mine in mid 2006, it has produced three of the world's twenty largest recorded diamonds, namely, the 603 carat Lesotho Promise, recovered in August 2006, which sold for US$12.4 million; the 493 carat Letšeng Legacy, recovered in September 2007 which sold for US$10.4 million; and the 478 carat Light of Letšeng, recovered in September 2008, which sold for US$18.4 million.

Gem Diamonds' CEO, Clifford Elphick commented:

"Letšeng continues to live up to its reputation as a unique producer of exceptional diamonds and the recovery of this remarkable 196 carat white diamond reinforces its position as one of the great mines in the diamond industry. In order to increase the returns from this world class asset, management is focused on a number of workstreams which aim to substantially expand production and increase value at Letšeng."

For further information:
Gem Diamonds Limited

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

Richard Chetwode, Investor Relations
Tel: +44 (0) 203 043 0280
Mob: +44 (0) 759 0064 883

Gem Diamond Technical Services (Pty) Ltd

Sherryn Tedder, Media
Tel: +27 (0) 11 560 9618
Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

James MacFarlane
Tel: +44 (0) 207 861 3864 / +44 (0) 7841 672 831

James Henderson
Tel: +44 (0) 207 861 3160 / +44 (0) 7774 444 163

Charles Vivian
Tel: +44 (0) 207 861 3126 / +44 (0) 7977 297 903

About Gem Diamonds:

Gem Diamonds is an international diamond mining company that has pursued a long term growth strategy through targeted acquisitions and the development of its existing assets. Due to the recovery in diamond prices in 2010 the Company's focus has been to place itself in a position to take advantage of long term growth opportunities.

The Company's mining portfolio comprises producing kimberlite and lamproite mines in Lesotho and Australia, as well as development projects in Angola and Botswana. The Company also owns a diamond cutting technology company.

With Letšeng's production of the world's most sought after remarkable white diamonds and Ellendale's production of rare fancy yellow diamonds, Gem Diamonds remains focused on higher value diamonds. This segment of the market is likely to deliver attractive long term returns.