09 Sep 2008

Gem Diamonds is pleased to announce that subsequent to negotiations with the local provincial authorities, mining at the Cempaka mine in South Kalimantan, Indonesia, has recommenced.

Approval to recommence mining was given by the Government of the South Kalimantan Province after the revised environmental impact assessment, environmental management plan and feasibility study were approved by local authorities as well as by the Central Mines Department in Jakarta. The approval is for an initial six month probationary period subject to certain environmental monitoring.

The Government has stated that the Cempaka mine currently provides proper water treatment facilities which are in accordance with prevailing regulations.

The ongoing treatment of water through these facilities will not materially increase mining costs at the Cempaka mine.

In line with Gem Diamond's commitment to best practice environmental issues management, the Company elected to temporarily suspend mining in April 2008 after issues with regards to waste water discharge were raised by the regional Government of the South Kalimantan Province. In total mining was suspended for four months.

For further information:
Gem Diamonds Limited

Richard Chetwode
Tel: +44 203 043 0290

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 producer 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$1.1 billion and had US$184 million of cash on its balance sheet at 2007 year end.