RARE 603 CARAT WHITE DIAMOND SOLD FOR US$12.36 MILLION

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09 Oct 2006

The Lesotho Promise is the largest diamond found this century and the 15th largest ever.

Antwerp, 9th October 2006 - Gem Diamond Mining Company of Africa Ltd. (Gem Diamonds) and the Government of the Kingdom of Lesotho are pleased to announce the sale of its 603 carat white diamond, the Lesotho Promise, in Antwerp for US$12.36 million.

The uncut diamond, which has been named The Lesotho Promise, is the largest gem-quality diamond found this century and ranks as the 15th largest diamond ever found.

The stone was recovered at Letšeng Diamond Mine in Lesotho, southern Africa, a mine renowned for the quality and size of its diamonds and its industry-leading revenue per carat. The Letšeng Mine is owned and operated by Gem Diamond Mining Company of Africa Ltd, with its 30% partner the Government of the Kingdom of Lesotho.

The tender included the world's leading diamond experts.

Following the opening of the tender offers, the winning bid of US$12.36 million was announced by Lesotho's Minister of Natural Resources, Dr. Khaketla at the Antwerp World Diamond Centre, the HRD.

Dr Khaketla, Lesotho's Minister said:

"This has been a fantastic day for the Letšeng Diamond Mine and for the people of Lesotho. To have achieved such a high price and to have attracted the interest of all the diamond industry in one of our country's diamonds is very gratifying. We look forward to continued success at Letseng in the future."

Clifford Elphick, CEO of Gem Diamonds said:

"We are delighted with the price achieved for this historically significant stone. We hope that today marks the beginning of great things for Gem Diamonds, not only for the recovery of exceptional stones like this, but also for consistent production of quality diamonds from Letseng and at our other projects."

Yves Alexis, a representative of SAFDICO, the manufacturing arm of Graff Jewelers, said:

"We are thrilled to have won the tender for this magnificent and historical jewel. Our experience with stones from Letšeng Diamond Mine has always been exceptional."

There were also strong bids from Alain Sternberg Bvba, Rosy Blue and Omega Diamonds.

For further information and photographs:
Maria Suleymanova

Tel: +44 207 653 6620

For requests for interviews:
David Simonson

Tel: + 44 7831 347222

Bridget Fury / Lachlan Johnston

Tel: +44 20 7653 6620

About Gem Diamond Mining Company of Africa Ltd (Gem Diamonds)

Gem Diamond Mining Company of Africa Ltd

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 cashflow. 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 Longtshimo and Tshumbe-Lubembe regions of the Democratic Republic of Congo and the Mambere River region in the Central African Republic.

Gem Diamonds has assembled an experienced team, with combined experience of 150 years in the mining industry. The directorate comprises Clifford Elphick as Chief Executive Officer, Terry Stewart as Chief Operating Officer, Kevin Burford as Chief Financial Officer and Glenn Turner as Commercial and Legal Director. Senior executives include Peter Heap, Nick Selby and Graham Wheelock.

Letšeng Diamonds

Letšeng Diamonds (Pty) Ltd 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 Maluti 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. Since then a total of 5.14 million tonnes of kimberlite has been treated to August 2006 for the recovery of 100 700 carats of which 1.5% exceed 100 carats. Ninety percent of the diamonds recovered are gem quality and a significant number graded as D colour.