Acquisition

Gem Diamonds Limited
29 May 2007





News Release

29 May 2007



                 GEM DIAMONDS ACQUIRES GOPE EXPLORATION COMPANY
                            FROM DE BEERS AND XSTRATA



• 100% of Gope Exploration Company acquired for US$34 million

• Opportunity to develop a long life mine with resource indicated at
  79mt

• Estimated diamond value of US$121/ carat

• Feasibility study to be updated as first step


Gem Diamonds Limited (Gem Diamonds or the Company), which joined the Main Board
of the London Stock Exchange in February of 2007 (LSE: GEMD) today announces the
acquisition of 100% of Gope Exploration Company (Pty) Ltd  (Gope) for a total
cash consideration of US$34 million.  Gope was set up as a joint venture by De
Beers Prospecting (Pty) Ltd (De Beers) and Falconbridge Exploration Botswana
(Pty) Ltd (Falconbridge, a subsidiary of Xstrata plc) to explore a known
kimberlite deposit in the Gope region of central Botswana

The kimberlite deposit at Gope represents a significant ore body with an
indicated resource of 79 million tonnes down to 400m below surface at a grade of
19cpht.  With the resource at an indicated level, Gem Diamonds' management
perceive the resource related risk to be low.  The relatively high value of the
diamonds (a parcel of 3400 carats recovered during sampling was recently valued
at US$121/ carat) is strategically attractive to Gem Diamonds.

Gem Diamonds will shortly begin work on updating the existing feasibility study
which was completed in 1998.  This updated feasibility study will include a
revised environmental impact assessment and environmental management plan.
Should the findings of this updated feasibility study prove positive an
application for a Mining License will be made.  As part of this application
process Gem Diamonds will enter into negotiations with the Government of
Botswana as to their equity participation in the potential mine. Simultaneously
the Company will continue its consultation process with the relevant communities
and other stakeholders.  The results of all these processes will determine the
development strategy for the Gope deposit.

Gem Diamonds has policies in place that govern its relationships with the
communities living in the areas in which it operates.  These policies are in
practice throughout its operations in other parts of Africa.  To this end Gem
Diamonds has already initiated a consultation process with all interested
parties on how to implement these policies to the sustained benefit of the
communities in the wider Gope area.  In addition, an Environmental Impact
Assessment (EIA) for Gope was completed in 1998, and Gem Diamonds has engaged
independent advisors to update this so as to ensure that the Company follows
environmental best practice as is its custom at its other operations.


Clifford Elphick, CEO of Gem Diamonds said:

'The acquisition of Gope fits our strategy of growing our portfolio of assets
that have known but undeveloped kimberlites and where our management team, which
has extensive experience in Botswana, can add value.  Gem Diamonds recognizes
the imperative of finding a sustainable resolution to the environmental and
community related issues in the Central Kalahari and embraces the opportunity to
work with the people of Botswana and other interested parties in achieving this
aim.'


ENDS


For further information:

Gem Diamonds Limited                    Tel: [phone]
Clifford Elphick
Angela Parr

Merlin                                  Tel: [phone]
David Simonson
Bridget Fury


About Gem Diamonds

Gem Diamonds is a diamond mining company with a balanced portfolio of a
producing kimberlite mine, a producing alluvial mine, 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 producers.  Gem Diamonds currently has one producing kimberlite mine,
Letseng, in Lesotho, a producing alluvial mine Cempaka in Indonesia, four
development projects in the Democratic Republic of Congo, one in the Central
African Republic and an option to develop the Chiri kimberlite concession in
Angola.  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 capitalization of
the company is £690 million.

For further information about Gem Diamonds visit www.gemdiamonds.com .


About Gope

Gope was formed in 1985 when exploration work over the area first commenced.
Work on Gope was subsequently suspended until the mid 1990's when a pre
feasibility study was undertaken.  A feasibility study was concluded thereafter.
Gope currently holds a suspended Retention License over the concession area
which is located in the Central Kalahari Game Reserve (CKGR) in central
Botswana.  The Gope license area is 35km2 relative to the size of the reserve
which is 55, 000km2.The Government of the Republic of Botswana have indicated
their intention to allow mining in the CKGR.

A recent ruling by the Botswana High Court in favour of the San applicants has
confirmed their right to live in the CKGR.  Gem Diamonds is committed to
engaging with the representatives of the San people in relation to the
development of the Gope mine.







                      This information is provided by RNS
            The company news service from the London Stock Exchange