OPERATIONAL UPDATE FROM KIMBERLEY DIAMOND MINES

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26 Feb 2009

Gem Diamonds (LSE: GEMD) announces that as part of an ongoing review of operations, and in light of recent market conditions, it will place the lower value E4 pipe at Kimberley Diamonds' Ellendale mine in Australia on care and maintenance with immediate effect.

Mining at the E9 pipe will continue at current levels.

For further information:
Gem Diamonds Limited

Clifford Elphick, Chief Executive Officer
Glenn Turner, Chief Commercial Officer
Tel: +44 (0) 203 043 0280

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

Gem Diamond Technical Services

Angela Parr, Media
Mob: +27 (0) 83 578 3885

Pelham PR

Candice Sgroi
Tel: +44 207 743 6376
James Henderson
Tel : +44 207 743 6673

About Gem Diamonds:

Gem Diamonds Limited (LSE: GEMD) is a leading diamond mining company. The Company's portfolio comprises two producing mines and a number of projects that under current market conditions have been placed on care and maintenance.

Gem Diamonds was formed with the aim of becoming a leading supplier of high quality diamonds. Principally through Letšeng and Ellendale, Gem Diamonds has moved a long way to realising that vision for rough diamonds. With the acquisition of polishing technologies and expertise, Gem Diamonds intends to achieve the same in relation to selected polished diamonds.

Gem Diamonds has a specific focus towards higher value diamonds, a segment of the market expected to deliver superior long term returns. The Company produces some of the world's most remarkable white diamonds from its Letšeng mine and rare fancy yellow diamonds from its Ellendale mine.

Established in July 2005, Gem Diamonds listed on the main board of the London Stock Exchange in February 2007 and is currently capitalised at approximately £100million.