ANNOUNCEMENT OF EXERCISE OF OVER-ALLOTMENT OPTION

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23 Feb 2007

The information contained herein is restricted and is not for publication, release or distribution, directly or indirectly, in or into the United States, Australia, Canada or Japan or to residents or citizens of Australia, Canada or Japan.

The information contained herein does not amount to, nor should it be construed as, an "offer to the public" in relation to South African residents.

Gem Diamonds Limited

("Gem Diamonds" or the "Company")

Gem Diamonds announces that, in connection with its initial public offering of ordinary shares, (the "Global Offer"), JPMorgan Cazenove Limited, as stabilising manager and on behalf of the underwriter of the Global Offer, has today given notice to exercise in full the over-allotment option in respect of 4.1m new ordinary shares at the offer price of 950 pence per ordinary share, raising additional gross proceeds for the Company of approximately £39 million.

Including the exercise of the over-allotment option, the Company now has in issue 61,965,209 ordinary shares.

Enquiries
Gem Diamonds Limited

Graham Wheelock
Tel: +44 7799 831912
Kevin Burford
Tel: +27 83 308 5062
Angela Parr
Tel: +27 83 578 3885

JPMorgan Cazenove Limited

Ian Hannam
Neil Passmore
Tel: +44 207 588 2828

Merlin

David Simonson
Bridget Fury
Tel: +44 207 653 6620

This announcement has been prepared and issued by Gem Diamonds Limited and is the sole responsibility of Gem Diamonds Limited.

This announcement may not be distributed, directly or indirectly, in or into the United States, Canada, Australia or Japan. This announcement does not constitute or form part of an offer to sell or issue, or any solicitation of an offer to buy or subscribe for, any securities referred to herein in the United States or in any other jurisdiction. The Offer and the distribution of this announcement and other information in connection with the Offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not amount to, nor should it be construed as, an "offer to the public" in relation to South African residents.

The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933 as amended (the "Securities Act"), and may not be offered or sold in the United States (as such term is defined in Regulation S under the Securities Act) unless they are registered under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. No public offer of the Shares is being made in the United States or elsewhere.

JPMorgan Cazenove is acting exclusively for Gem Diamonds Limited and no one else in relation to the Global Offer and will not be responsible to any other person for providing the protections afforded to their respective clients or for providing advice in relation to the Global Offer.