494 Carat Diamond Recovery

Gem Diamonds Limited 13 September 2007 13TH September, 2007 GEM DIAMONDS LIMITED ('Gem Diamonds' or the 'Company') RECOVERY OF 494 CARAT WHITE DIAMOND Gem Diamonds Limited (LSE: GEMD) ('Gem Diamonds') is delighted to announce the recovery of a 494 carat diamond from its Letseng Mine in Lesotho. This remarkable diamond, which is yet to be named, is believed to rank as the 18th largest rough diamond. The diamond is an excellent colour and has high clarity. The Letseng mine which is 70% owned by Gem Diamonds and 30% owned by the Government of the Kingdom of Lesotho has now produced three of the world's top twenty diamonds. Two of these have been recovered by Gem Diamonds in the last 13 months - the 603 carat Lesotho Promise recovered in August 2006 and the 494 carat diamond announced today. The Lesotho Promise, which was sold on tender in October 2006 for US$12.4 million, is the 15th largest rough diamond and the Lesotho Brown diamond recovered in 1961 the 16th. Letseng Diamonds also produced a 215 carat D-colour flawless diamond in January 2007, which subsequently sold on tender for US$8.3 million. The Letseng Mine hosts two kimberlites; the Main and Satellite Pipes that have a combined diamond resource value of US$4.7 billion. It is renowned for producing some of the world's largest diamonds which attract the highest average price per carat of any kimberlite mine. As reported in Gem Diamonds' Interim Results to end June 2007 released today, the average price per carat achieved from the Lets eng Satellite Pipe was US$1 894 from and US$1 128 from Main Pipe. This compares with the world average price of approximately US$81 per carat. Gem Diamonds' CEO Clifford Elphick commented: 'We are delighted to have recovered two of the world's largest diamonds ever in the last thirteen months. This diamond is another remarkable find for the Lets eng Mine, barely a year after the recovery of the Lesotho Promise and confirms the Letseng Mine's reputation as the leading producer of large gem quality diamonds.' Gem Diamonds Limited Clifford Elphick Tel: +44 203 043 0280 Gem Diamond Technical Services (Pty) Limited Angela Parr Tel: +27 83 578 3885 Pelham PR Candice Sgroi Tel: +44 207 743 6376 About Gem Diamonds Gem Diamonds is a diamond mining company with a balanced portfolio of a producing kimberlite mine, two producing alluvial mines, development projects and long-term prospects. Established in July 2005, Gem Diamonds is pursuing an accelerated growth strategy and aims to become one of the world's leading diamond companies. Gem Diamonds currently has one producing kimberlite mine, Let seng, in Lesotho, two producing alluvial mines - Cempaka in Indonesia and Mbelenge in the Democratic Republic of Congo (DRC), a kimberlite development project in Botswana, two development projects in the DRC, one in the Central African Republic and an option to develop the Chiri kimberlite concession in Angola. The Company recently made an offer to Kimberley Diamond Company's shareholders to acquire their shares in this company, which owns the Ellendale Mine in north western Australia. Gem Diamonds has a specific focus towards higher value diamonds, a segment of the market that its management believes will deliver superior long term returns. In February 2007, Gem Diamonds listed on the London Stock Exchange and raised US$600 million (net of expenses) to fund development of its existing assets as well as to pursue acquisitive growth opportunities. Gem Diamonds trades under the code GEMD. At the time of this announcement the market capitalisation of the company is approximately US$1,2 billion. For further information about Gem Diamonds visit www.gemdiamonds.com. This information is provided by RNS The company news service from the London Stock Exchange