GEM DIAMONDS AND TIFFANY SUBSIDIARY NEGOTIATE A 25 PERCENT PRICE INCREASE FOR ELLENDALE'S FANCY YELLOW DIAMONDS

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15 Sep 2010

Gem Diamonds Limited's (LSE: GEMD) (Gem Diamonds) wholly owned subsidiary, Kimberley Diamond Company NL (Kimberley Diamonds), is pleased to announce that in the recent periodic contractual price negotiations with Laurelton Diamonds, Inc. (Laurelton), the diamond sourcing and polishing subsidiary of global high-end jeweller, Tiffany & Co. (Tiffany), the parties agreed to a 25% price increase for the exclusive assortment of rare fancy yellow diamonds from Kimberley's Ellendale mine in Western Australia. This price increase will come into effect on 1 October 2010.

Tiffany launched its Yellow Diamond Collection in Japan in April 2010 and on Fashion's Night Out on 10 September 2010, launched the Yellow Diamond Collection to the US market at its flagship store on New York's 5th Avenue.

Gem Diamonds CEO, Clifford Elphick commented:

"The Ellendale Mine in Australia is the world's single largest producer of rare fancy yellow diamonds and we are very pleased to have concluded a 25% increase in price for these rare diamonds. The long term agreement with Tiffany & Co., spanning the econmic life of the Ellendale mine, continues to provide a sustainable platform for Kimberley Diamonds' mining operation. This shows the benefits of partnering with such a highly regarded brand and major player in the diamond jewellery and retail sector."

For further information:
Gem Diamonds Limited

Richard Chetwode, Investor Relations
Tel: +44 (0) 203 043 0280
Mob: +44 (0) 759 0064 883

Gem Diamond Technical Services (Pty) Ltd

Sherryn Tedder, Media
Tel: +27 (0) 11 560 9618
Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

James MacFarlane
Tel: +44 (0) 207 861 3864 / +44 (0) 7841 672 831

James Henderson
Tel: +44 (0) 207 861 3160 / +44 (0) 7774 444 163

Charles Vivian
Tel: +44 (0) 207 861 3126 / +44 (0) 7977 297 903

About Gem Diamonds:

Gem Diamonds is an international diamond mining company that has pursued a long term growth strategy through targeted acquisitions and the development of its existing assets. Due to the recovery in diamond prices in 2010 the Company's focus has been to place itself in a position to take advantage of long term growth opportunities.

The Company's mining portfolio comprises producing kimberlite and lamproite mines in Lesotho and Australia, as well as development projects in Angola and Botswana. The Company also owns a diamond cutting technology company.

With Letšeng's production of the world's most sought after remarkable white diamonds and Ellendale's production of rare fancy yellow diamonds, Gem Diamonds remains focused on higher value diamonds. This segment of the market is likely to deliver attractive long term returns.