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: [phone]

Gem Diamond Technical Services (Pty) Limited
Angela Parr
Tel: [phone]

Pelham PR
Candice Sgroi
Tel: [phone]



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