Gem Diamonds Di Regulatory News (GEMD)

2 November 2010

Gem Diamonds Limited

Letšeng Recovers A Further Exceptional White Diamond of 185 carats

Gem Diamonds Limited (LSE: GEMD) (Gem Diamonds) and the Government of the Kingdom of Lesotho are pleased to announce that a remarkable 185 carat rough white diamond was recovered from the Letšeng mine in Lesotho at the end of October 2010.

This exceptional rough diamond is the second of two large, top quality white diamonds to be recovered from the Letšeng mine in the last two months following the 196 carat white diamond which was recovered from Letšeng on 24 August 2010. Significantly, unlike Letšeng's other noteworthy diamonds which were recovered from the Satellite pipe, this diamond was recovered from Letšeng's larger Main pipe, demonstrating that the Main pipe is not to be underestimated for its ability to produce very large top quality diamonds.

Early examinations indicate that this rough diamond will yield top colour and top clarity polished diamonds and is thus expected to achieve a substantial price per carat.

Gem Diamonds' CEO, Clifford Elphick commented:

"Letšeng is one of the world's truly extraordinary diamond mines and its reputation is well deserved given the frequency with which it produces remarkable diamonds, including the latest two exceptional diamonds of 196 and 185 carats, as well as three of the world's twenty largest recorded diamonds since Gem Diamonds acquired the mine in 2006. Management remains focused on its strategy to substantially expand production at Letšeng in order to maximise value and increase the returns from this world class asset."

Clifford Elphick, Chief Executive OfficerGlenn Turner, Chief Commercial OfficerTel: +44 (0) 203 043 0280

Richard Chetwode, Investor RelationsTel: +44 (0) 203 043 0280Mob: +44 (0) 759 0064 883

Gem Diamond Technical Services Ltd

Sherryn Tedder, Media

Tel: +27 (0) 11 560 9618

Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

James MacFarlane

Tel: +44 (0) 207 861 3864 / +44 (0) 7841 672 831

James HendersonTel: +44 (0) 207 861 3160 / +44 (0) 7774 444 163

Charles Vivian

Tel: +44 (0) 207 861 3126 / +44 (0) 7977 297 903

Gem Diamonds Limited (LSE: GEMD) is a global diamond company that has been pursuing a long term growth strategy through targeted acquisitions and the development of its existing assets.

The Company's portfolio comprises producing kimberlite and lamproite mines and development projects. The Company also owns a diamond cutting technology company. Operations and projects are situated in Angola, Australia, Botswana, and Lesotho.

With Letšeng's production of the world's most remarkable white diamonds and Ellendale's production of rare fancy yellow diamonds, Gem Diamonds is focused towards higher value diamonds. This segment of the market is expected to deliver attractive returns.

www.gemdiamonds.com