Letseng sells white diamond

Gem Diamonds Limited
07 March 2007




7 March 2007


       LETSENG DIAMONDS SELLS 215 CARAT WHITE DIAMOND FOR US$8.3 MILLION


   •US$38,418 per carat price achieved for 215 carat * D colour white diamond
   •Forms part of a tender that reached a total price of US$18,4 million
   •Follows the sale of the 603ct Lesotho Promise last year for US$12.4
    million

Gem Diamonds Limited (Gem Diamonds), which joined the Main Board of the London
Stock Exchange last month (LSE: GEMD) and its partner the Government of the
Kingdom of Lesotho (Lesotho Government), the owners and operators of the Letseng
Diamond Mine in Lesotho, are pleased to announce the sale of a 215 carat white D
colour diamond in Antwerp on 28 February 2007 for US$8.3 million (US$38,418 per
carat).. The diamond was recovered at the Letseng mine on 26 January 2007 and
was sold in a tender including two other exceptional white D colour flawless
stones of 66 and 54 carats which sold for US$1.2 million and US$1.4 million
respectively. The result for the whole of this recent tender where a total of 7
092 carats were sold was US$18.4 million. At an average price per carat of
US$2,598 this is the highest average price per tender for the Letseng mine to
date.

The 215 white diamond was bought by Omega Diamonds.

The Letseng mine is building a reputation for producing exceptional quality
stones, after the recovery last year of the Lesotho Promise, the 15th largest
diamond ever found, which was sold in Antwerp to SAFDICO, the cutting and
polishing business of Graff Jewellers, for US$12.4million. The mine is situated
in the Maloti Mountains in Lesotho, renowned for the quality and size of its
diamonds and for a revenue per carat currently unsurpassed in kimberlite diamond
mining.

Lesotho's newly appointed Minister of Natural Resources, Honourable Monyane
Moleleke said:

'The diamonds that Letseng produces form part of Lesotho's unique heritage and
as such we are extremely pleased that the market continues to appreciate them
for their remarkable value'

Clifford Elphick, CEO of Gem Diamonds said:

'Letseng continues to produce diamonds of the highest quality and we are very
pleased with the prices achieved at this tender. As Gem Diamonds enters its next
phase of development as a quoted company, we believe that Letseng will continue
to provide a solid foundation for the Group.'

* The diamond which weighed in at 216 carats on recovery, was correctly
  determined to be 215 carats following the boiling process which all diamonds
  undergo before they are sold.


ENDS


For further information:

Gem Diamonds Limited                       Tel: [phone]
Angela Parr

Merlin                                     David Simonson
                                           Bridget Fury
                                           Tel: [phone]


About Gem Diamonds Limited (Gem Diamonds)

Gem Diamonds is a specialist diamond mining group with assets concentrated in
Africa. The Group was founded in July 2005 by Clifford Elphick, a highly
experienced diamond mining executive, who was previously Managing Director of E
Oppenheimer & Son. Gem Diamonds has a balanced portfolio of assets, including
early stage exploration projects right through to Letseng, a producing diamond
mine with strong, positive cash flow. It is the operator of and owner of a
majority stake in the successful Letseng diamond mine in Lesotho, with the
remainder being held by the Government of Lesotho. It also has interests in
exploration projects in the Longatshimo and Tshumbe-Lubembe regions of the
Democratic Republic of Congo and the Mambere River region in the Central African
Republic and has recently concluded a significant co-operation agreement and
option to invest in the Chiri kimberlite in Angola

The directorate comprises Clifford Elphick as Chairman and Chief Executive
Officer, Kevin Burford as Chief Financial Officer and Graham Wheelock as Mineral
Resources Manager. Senior management includes Terry Stewart as Chief Operating
Officer and Glenn Turner as Chief Commercial and Legal Officer.

Gem Diamonds is listed on the Main Market of the London Stock Exchange and
trades under the code GEMD. At the time of this announcement the market
capitalization of the company is (£634 million).


Letseng Diamonds (Pty) Ltd (Letseng Diamonds)

Letseng Diamonds was incorporated in Lesotho in 1995 with the intention of
seeking a mining lease from the Government of Lesotho to re-open the Letseng
Diamond Mine on the high plateaux of the Maloti Mountains.

The mine was previously operated by De Beers from 1977 to 1982 and was closed
with less than 10% of the open pit mineable ore having been treated. An initial
application by JCI Ltd was made to the Government of Lesotho in September of
1996 followed by a second revised application in 1998 which subsequently led to
the signing of the Concession Agreement and the granting of the Mining Lease in
November 1999 to JCI. Mining operations commenced in April 2004. In July of
2006, Gem Diamonds acquired JCI's 76% stake in Letseng Diamonds, subsequently
transferring 6% of this stake to its partners the Government of the Kingdom of
Lesotho who now hold 30%.

Ninety percent of the diamonds recovered are gem quality and a significant
proportion graded as D colour. Since Letseng recommenced production in April
2004, to September 2006, approximately 14.3% of production has been large
diamonds (those in excess of 10.8 carats). Letseng is the highest diamond mine
in the world and produces diamonds which currently sell for highest per carat
price of any kimberlite mine.



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