Gem Diamonds Di Regulatory News (GEMD)

16th July 2014

GEM DIAMONDS LIMITED

("Gem Diamonds" or "the Company")

2014 REVISED RESOURCE AND RESERVE STATEMENT

Gem Diamonds Limited (LSE: GEMD) has released a revised Resource and Reserve statement, which is available on the Company's website www.gemdiamonds.com. Gem Diamonds has two Resource bases - the Letšeng diamond mine in Lesotho (ownership 70%) and the Ghaghoo development project in Botswana (ownership 100%).

The updated 2014 statement reflects a significant increase in the Letšeng Indicated Resource category which has been extended in depth from approximately 100 metres beneath the current pit bottoms (in previous statements) to a new depth classification of approximately 350 metres below the current mine pits on both Satellite and Main pipe orebodies.

This increase in the Indicated Resource base is a result of improved confidence in the Resource through infill drilling programmes, improved estimation techniques and detailed geological studies.

This extension has not only resulted in a significant increase in the Indicated Resource tonnage and contained carats but has also allowed for a significant increase in the Letšeng Probable Reserves, with the entire 22 year Life of Mine Plan now classified as Reserve.

Key comments on the 2014 Resource and Reserve Statement, which is effective 1st January 2014:

• SAMREC Compliant Resources and Reserves, independently verified by Venmyn Deloitte.

• Gross Resources (inclusive of Reserves) totaling 25.54 million carats with an average grade of 6.35 carats per hundred tonnes.

 • Letšeng Probable Reserves have increased in tonnage by 67%, to a total of 131.9 million tonnes, from a previous total of 78.9 million tonnes.

• Letšeng Probable Reserves have increased in carat terms by 64%, to a total of 2.26 million carats, from a previous total of 1.38 million carats.

• The average diamond price for the Letšeng Probable Reserves has increased by 19% to $2045/carat, from a previous average of $1715/carat. This improved average reserve price reflects increased market pricing and improved recovery of large high value Type II stones.

• Letšeng Indicated Resource base has increased in tonnage by 132%, to a total of 187.1 million tonnes, from a previous total of 80.8 million tonnes. This represents an addition of over 100 million tonnes to the Indicated Resource category.

• Letšeng Indicated Resource base has increased in carat terms by 127%, to a total of 3.23 million carats, from a previous total of 1.42 million carats.

• The average diamond price for the Ghaghoo Probable Reserve has increased by 9% in line with market price increases for these goods.

For further information:

Gem Diamonds Limited

Sherryn Tedder, Investor RelationsTel: +27 (0) 11 560 9600Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

Charles Vivian / James MacFarlane

Tel: +44 (0) 207 861 3232

About Gem Diamonds:

Gem Diamonds is a leading global diamond producer of high value diamonds. The company owns the Letšeng mine in Lesotho as well as the Ghaghoo mine, currently in development in Botswana. The Letšeng mine is famous for the production of large, top colour, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds' acquisition of Letšeng in 2006, the mine has produced four of the twenty largest white gem quality diamonds ever recorded.

Gem Diamonds has a growth strategy based on the expansion of the Letšeng mine and the development of the Ghaghoo mine, while maintaining its strong balance sheet. The Company seeks to maximise revenue and margin from its rough diamond production by pursuing cutting, polishing and sales and marketing initiatives further along the diamond value chain. With favourable supply/demand dynamics expected to benefit the industry over the medium to long term, particularly at the high end of the market supplied by Gem Diamonds, this strategy positions the Company well to generate attractive returns for shareholders in the coming years.

www.gemdiamonds.com