GEM DIAMONDS CONFIRMS CO-OPERATION AGREEMENT ON ANGOLAN CHIRI CONCESSION

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20 Mar 2007

On 10 January 2007, Gem Diamonds Limited ('Gem Diamonds' or 'the Company'), which joined the Main Board of the London Stock Exchange on 14 February 2007 (LSE: GEMD) entered into a conditional Co-Operation Agreement and an Option Agreement with Avantis Angola Limited ("Avantis") (collectively 'the Parties'). In terms of these agreements the Company has an option to acquire an interest of up to 11.25% in the Chiri Concession in Angola by way of an investment in Avantis which currently holds a 25% interest in this concession.

Gem Diamonds today announces that all conditions precedent, including the completion of a due diligence by the Company over the Chiri Concession and of Avantis over the Company have been met and the Co-operation Agreement is now unconditional.

For further information
Gem Diamonds Limited

Graham Wheelock
Tel: +44 77 99 831 912

Merlin

Bridget Fury
Tel: +44 79 41 085 506