ELLENDALE POLISHED YELLOW DIAMONDS SPARKLE AT TENDER

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14 Jul 2008

Gem Diamonds (LSE: GEMD), the FTSE 250 diamond company, recently commenced successful cutting and polishing trials on a selection of its high quality white diamonds from the Letšeng Mine. The Company is now pleased to announce that beneficiation trials on the intense and vivid yellow diamonds produced by its Ellendale mine have been successfully completed with a recent tender of polished yellow diamonds in Antwerp.

Four intense and vivid polished yellow diamonds totalling 15.7 carats were sold on tender in Antwerp for an average price of US$28 860 per carat. The diamonds were cut and polished from 28.5 carats of rough by Matrix Diamond Technology using their proprietary diamond mapping and cutting technology. Among the collection was a 7.1 carat cushion cut vivid yellow diamond which sold for US$52 000 per carat and a 2.3 carat cushion cut vivid yellow diamond which sold for US$19 000 per carat.

According to coloured diamond expert Professor Eddy Elzas, the owner of the largest collection of coloured diamonds in the world, prices have increased more than 500% in the last twelve years.

Gem Diamonds CEO Clifford Elphick commented:

"The success of this beneficiation trial supports management's view of the significant additional margin that can be captured from the cutting and polishing of Ellendale's top diamonds and we are very encouraged by the results. Since Gem Diamonds acquired Kimberley Diamond Company late last year we have implemented an aggressive turnaround strategy that is yielding not only more of these spectacular diamonds, but also a real return on the Company's investment."

For further information:
Gem Diamond Technical Services

Angela Parr
Tel: +27 83 578 3885

Pelham PR

Candice Sgroi
Tel: +44 207 743 6376

About Gem Diamonds:

Gem Diamonds Limited (LSE: GEMD) is a global leading diamond company 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$636 million. It is currently capitalised at approximately US$1.3 billion and had US$184 million of cash on its balance sheet at 2007 year end.