Gem Diamonds Limited - Commissioning of Second Plant

RNS Number:1088R
Gem Diamonds Limited
31 March 2008

31st March, 2008

GEM DIAMONDS LIMITED

("Gem Diamonds" or the "Company")

FIRST ORE TREATED THROUGH LETSENG MINE SECOND PLANT

Gem Diamonds (LSE: GEMD) is pleased to announce that the construction of Letseng
Mine's second plant is now in its final stages of completion and that
commissioning has progressed well with the first ore treated through the plant
on 23 March 2008.

Final commissioning is continuing and full production from this gravity fed DMS
plant is expected to be reached during the second quarter of 2008. The existing
Recovery Plant will now service both treatment plants. The successful conclusion
of the commissioning will see the doubling of Letseng Mine's hard rock
processing capacity from 2.6mtpa to 5.2mtpa and making it the world's seventh
largest diamond mine by throughput.

The decision was taken to build the second plant in October 2006 halving the
life of the open pit kimberlite mine from 70 to 35 years and thereby
significantly enhancing its net asset value.

In 2007, 76 873 carats were sold from Letseng Mine, a 45% increase on the 52 998
carats sold the year before. In 2008, the mine is expected to produce
approximately 100 000 carats.

Letseng Mine is operated by Letseng Diamonds, which is 70% owned by Gem
Diamonds, a FTSE 250 listed company, and 30% owned by the Government of the
Kingdom of Lesotho. The Letseng Mine has produced three of the world's largest
diamonds. Two of these diamonds were recovered in the last 18 months - the 603
carat Lesotho Promise in August 2006 which sold for US$12.4 million and the 493
carat Letseng Legacy in September 2007 which sold for US$10.4 million.

The Letseng Mine is powered by electricity provided by the Lesotho Electrical
Corporation (LEC) which in turn sources the majority of this power from the
South African parastatal ESKOM. Once the second plant is at full production the
mine's demand for power will increase to eight megawatts. Letseng has
permission to increase its power demand from one of the LEC's key supply lines
to nine megawatts. To date, Letseng has experienced limited power outages on
this line as a result of the power supply problems with ESKOM in South Africa;
however, production levels have not been affected.

At present, work is ongoing to investigate if upgrades can be made to the other
of the LEC's key supply lines which also services Letseng and which is not
expected to experience power outages. In the shorter term, to mitigate risks to
forecast production levels, the installation of generator sets at the Letseng
Mine is being investigated. In addition, discussions are ongoing with the LEC
who remain positive on their ability to provide an uninterrupted power supply in
both the short and long term.

Gem Diamonds CEO, Clifford Elphick commented:

"The completion and commissioning of the second plant at Letseng is a critical
step in developing this world class asset to its full potential. As the global
demand for top class diamonds continues unabated, Gem Diamonds is increasingly
better positioned to meet it."

For further information:

Gem Diamond Technical Services

Clifford Elphick

Tel: +27 11 327 3162

Angela Parr

Tel: +27 11 560 9600

Pelham PR

Candice Sgroi

Tel: +44 207 743 6376

About Gem Diamonds

Gem Diamonds Limited (LSE: GEMD) is a global leading diamond producer that is
pursuing an accelerated growth strategy through targeted acquisitions and the
development of existing assets. Gem Diamonds portfolio comprises producing
kimberlite, lamproite and alluvial mines, development projects and exploration
assets. Operations are situated in Angola, Australia, Botswana, the Central
African Republic, the Democratic Republic of Congo, Lesotho and Indonesia. Gem
Diamonds produces some of the world's most remarkable white diamonds from its
Letseng Mine and rare fancy yellow diamonds from its Ellendale Mine and an array
of coloured diamonds from its Cempaka Mine.

Established in July 2005, Gem Diamonds listed on the main board of the London
Stock Exchange in February 2007 raising US$635 million. It is currently
capitalised at approximately US$1.1 billion and had US$175 million of cash on
its balance sheet at 2007 year end.

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
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