SALE OF WOODLARK GOLD PROJECT

Back

10 Sep 2007

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds") is pleased to announce it has sold the Woodlark Gold Project for US$26.5 million to a company jointly owned by private equity fund Pacific Road Resources and resources financing and investment business RMB Resources Limited, a subsidiary of Rand Merchant Bank.

The purchase price will be settled in cash and the effective date is 1 July 2007.

The Woodlark Gold Project formed part of BDI Mining, which was acquired by Gem Diamonds in June 2007 for US$80.1 million. The divestment of the gold asset reduces the effective price of the remaining asset, the Cempaka alluvial diamond mine in Indonesia, to US$53.6 million.

Work at Cempaka is ongoing where the decision has been taken to invest US$16 million to improve mining efficiencies, infrastructure and plant and allow for an increased level of production to 80,000 bcm per month.

Gem Diamonds CEO Clifford Elphick commented:

"The sale of Woodlark was anticipated at the time of the acquisition of BDI Mining and the price achieved is pleasing. This disposal allows the new management of BDI Mining to focus exclusively on diamond production at Cempaka, in line with Gem Diamonds' strategy of becoming one of the world's leading diamond companies".

For further information:
Gem Diamonds Limited

Clifford Elphick
Tel: +44 203 043 0280

Gem Diamond Technical Services (Pty) Limited

Stephen Wetherall
Tel: +27 82 418 8735

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 worldʹs 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.