Gem Diamonds Di Regulatory News (GEMD)

29 May 2007 07:02

Gem Diamonds Limited29 May 2007 News Release 29 May 2007 GEM DIAMONDS ACQUIRES GOPE EXPLORATION COMPANY FROM DE BEERS AND XSTRATA • 100% of Gope Exploration Company acquired for US$34 million • Opportunity to develop a long life mine with resource indicated at 79mt • Estimated diamond value of US$121/ carat • Feasibility study to be updated as first step Gem Diamonds Limited (Gem Diamonds or the Company), which joined the Main Boardof the London Stock Exchange in February of 2007 (LSE: GEMD) today announces theacquisition of 100% of Gope Exploration Company (Pty) Ltd (Gope) for a totalcash consideration of US$34 million. Gope was set up as a joint venture by DeBeers Prospecting (Pty) Ltd (De Beers) and Falconbridge Exploration Botswana(Pty) Ltd (Falconbridge, a subsidiary of Xstrata plc) to explore a knownkimberlite deposit in the Gope region of central Botswana The kimberlite deposit at Gope represents a significant ore body with anindicated resource of 79 million tonnes down to 400m below surface at a grade of19cpht. With the resource at an indicated level, Gem Diamonds' managementperceive the resource related risk to be low. The relatively high value of thediamonds (a parcel of 3400 carats recovered during sampling was recently valuedat US$121/ carat) is strategically attractive to Gem Diamonds. Gem Diamonds will shortly begin work on updating the existing feasibility studywhich was completed in 1998. This updated feasibility study will include arevised environmental impact assessment and environmental management plan.Should the findings of this updated feasibility study prove positive anapplication for a Mining License will be made. As part of this applicationprocess Gem Diamonds will enter into negotiations with the Government ofBotswana as to their equity participation in the potential mine. Simultaneouslythe Company will continue its consultation process with the relevant communitiesand other stakeholders. The results of all these processes will determine thedevelopment strategy for the Gope deposit. Gem Diamonds has policies in place that govern its relationships with thecommunities living in the areas in which it operates. These policies are inpractice throughout its operations in other parts of Africa. To this end GemDiamonds has already initiated a consultation process with all interestedparties on how to implement these policies to the sustained benefit of thecommunities in the wider Gope area. In addition, an Environmental ImpactAssessment (EIA) for Gope was completed in 1998, and Gem Diamonds has engagedindependent advisors to update this so as to ensure that the Company followsenvironmental best practice as is its custom at its other operations. Clifford Elphick, CEO of Gem Diamonds said: "The acquisition of Gope fits our strategy of growing our portfolio of assetsthat have known but undeveloped kimberlites and where our management team, whichhas extensive experience in Botswana, can add value. Gem Diamonds recognizesthe imperative of finding a sustainable resolution to the environmental andcommunity related issues in the Central Kalahari and embraces the opportunity towork with the people of Botswana and other interested parties in achieving thisaim." ENDS For further information: Gem Diamonds Limited Tel: +27 11 325 7652Clifford ElphickAngela Parr Merlin Tel: +44 20 7653 6620David SimonsonBridget Fury About Gem Diamonds Gem Diamonds is a diamond mining company with a balanced portfolio of aproducing kimberlite mine, a producing alluvial mine, development projects andlong-term prospects. Established in July 2005, Gem Diamonds is pursuing anaccelerated growth strategy and aims to become one of the world's leadingdiamond producers. Gem Diamonds currently has one producing kimberlite mine,Letseng, in Lesotho, a producing alluvial mine Cempaka in Indonesia, fourdevelopment projects in the Democratic Republic of Congo, one in the CentralAfrican Republic and an option to develop the Chiri kimberlite concession inAngola. Gem Diamonds has a specific focus towards higher value diamonds, asegment of the market that its management believes will deliver superior longterm returns. In February 2007, Gem Diamonds listed on the London Stock Exchange and raisedUS$600 million (net of expenses) to fund development of its existing assets aswell as to pursue acquisitive growth opportunities. Gem Diamonds trades underthe code GEMD. At the time of this announcement the market capitalization ofthe company is £690 million. For further information about Gem Diamonds visit www.gemdiamonds.com . About Gope Gope was formed in 1985 when exploration work over the area first commenced.Work on Gope was subsequently suspended until the mid 1990's when a prefeasibility study was undertaken. A feasibility study was concluded thereafter.Gope currently holds a suspended Retention License over the concession areawhich is located in the Central Kalahari Game Reserve (CKGR) in centralBotswana. The Gope license area is 35km2 relative to the size of the reservewhich is 55, 000km2.The Government of the Republic of Botswana have indicatedtheir intention to allow mining in the CKGR. A recent ruling by the Botswana High Court in favour of the San applicants hasconfirmed their right to live in the CKGR. Gem Diamonds is committed toengaging with the representatives of the San people in relation to thedevelopment of the Gope mine. This information is provided by RNS The company news service from the London Stock Exchange