11 Apr 2008

Gem Diamonds is an 80% shareholder, in partnership with PT Aneka Tambang, a company controlled by the Government of Indonesia, in the Cempaka alluvial diamond mine. Cempaka is located in a low lying coastal swamp area of the South Kalimantan Province in Indonesia.

Gem Diamonds has temporarily suspended mining to investigate various concerns recently raised by the regional Government of the South Kalimantan Province on a number of environmental matters. The Company's' own environmental consultants have advised that they believe these concerns to be without merit. However, in line with the Company's commitment to best practice environmental issues management, a thorough investigation by both independent environmental consultants from the University of Lambung Mangkurat as well as the Provincial Environmental Monitoring Group for South Kalimantan has commenced.

Mining is expected to resume following these investigations and findings from both Provincial authorities and independent consultants.

Whilst the duration of the suspension cannot presently be determined, it is not anticipated to have a material impact on the financial performance of the Company, given Cempaka's relatively minor contribution to the forecast consolidated results for 2008.

Cempaka has operated as an alluvial mine in partnership with the Government of Indonesia since 2004, subsequent to being awarded a Contract of Work by the President in 1998 that runs for 35 years. It is the first commercial mine in the area where artisanal mining has been ongoing for over 1 000 years.

A further update will be provided in due course.

For further information:
Gem Diamond Technical Services

Angela Parr
Tel: +27 11 560 9600

Pelham PR

Candice Sgroi
Tel: +44 207 743 6376

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$175 million of cash on its balance sheet at 2007 year end.

For further information about Gem Diamonds visit www.gemdiamonds.com.