Takeover Bid Closes

Gem Diamonds Limited
18 December 2007



18th December 2007

                              GEM DIAMONDS LIMITED

                       ('Gem Diamonds' or the 'Company')



                      GEM DIAMONDS AUSTRALIA TAKEOVER BID
                              FOR KIMBERLEY CLOSES







Further to the announcement by Gem Diamonds on 3 December 2007 of Gem Diamonds
Australia Pty Limited's (Gem Diamonds Australia) relevant interest in 93.03% of
the issued share capital of Kimberley Diamond Company NL ('Kimberley'), the
Company can confirm that the Offer to acquire all issued shares in Kimberley
closed yesterday, 17 December 2007, at 5.00 pm (Western Summer Time, Australia)
with Gem Diamonds Australia having acquired a relevant interest in 95.96% of
Kimberley.



Gem Diamonds Australia has commenced the compulsory acquisition of the remaining
Kimberley shares and dispatched compulsory acquisition notices to the remaining
Kimberley shareholders on 10 December 2007.



Kimberley's shares were suspended from quotation on the ASX at the close of
business in Australia on 17 December 2007 and their admission to trading on AIM
will be cancelled on 21 December 2007.



Following the completion of the acquisition of Kimberley, Gem Diamonds now
controls four producing assets; the Letseng Mine in Lesotho, the Cempaka mine in
Indonesia, the  Mbelenge mine in the DRC and now the Ellendale Mine in Western
Australia, renowned for its production of fancy yellow diamonds.



Definitions used in this announcement shall have the meanings given to them in
the shareholder circular posted 28 September 2007, except where context requires
otherwise.



For further information:



Gem Diamonds Australia

Stephen Wetherall

Tel: [phone]



Pelham PR

James Henderson

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, Letseng, 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.



Pursuant to the Offer, Gem Diamonds has also recently acquired control of
Kimberley Diamond Company, which owns the Ellendale Mine in Western Australia.



Gem Diamonds currently has a specific focus towards higher value diamonds, a
segment of the market that its management believes will deliver superior long
term returns.



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        PEALAPFDSXFFE