Gem Diamonds Di Regulatory News (GEMD)

31 Mar 2008 07:02

Gem Diamonds Limited31 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 LetsengMine's second plant is now in its final stages of completion and thatcommissioning has progressed well with the first ore treated through the planton 23 March 2008. Final commissioning is continuing and full production from this gravity fed DMSplant is expected to be reached during the second quarter of 2008. The existingRecovery Plant will now service both treatment plants. The successful conclusionof the commissioning will see the doubling of Letseng Mine's hard rockprocessing capacity from 2.6mtpa to 5.2mtpa and making it the world's seventhlargest diamond mine by throughput. The decision was taken to build the second plant in October 2006 halving thelife of the open pit kimberlite mine from 70 to 35 years and therebysignificantly enhancing its net asset value. In 2007, 76 873 carats were sold from Letseng Mine, a 45% increase on the 52 998carats sold the year before. In 2008, the mine is expected to produceapproximately 100 000 carats. Letseng Mine is operated by Letseng Diamonds, which is 70% owned by GemDiamonds, a FTSE 250 listed company, and 30% owned by the Government of theKingdom of Lesotho. The Letseng Mine has produced three of the world's largestdiamonds. Two of these diamonds were recovered in the last 18 months - the 603carat Lesotho Promise in August 2006 which sold for US$12.4 million and the 493carat Letseng Legacy in September 2007 which sold for US$10.4 million. The Letseng Mine is powered by electricity provided by the Lesotho ElectricalCorporation (LEC) which in turn sources the majority of this power from theSouth African parastatal ESKOM. Once the second plant is at full production themine's demand for power will increase to eight megawatts. Letseng haspermission to increase its power demand from one of the LEC's key supply linesto nine megawatts. To date, Letseng has experienced limited power outages onthis 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 otherof the LEC's key supply lines which also services Letseng and which is notexpected to experience power outages. In the shorter term, to mitigate risks toforecast production levels, the installation of generator sets at the LetsengMine is being investigated. In addition, discussions are ongoing with the LECwho remain positive on their ability to provide an uninterrupted power supply inboth the short and long term. Gem Diamonds CEO, Clifford Elphick commented: "The completion and commissioning of the second plant at Letseng is a criticalstep in developing this world class asset to its full potential. As the globaldemand for top class diamonds continues unabated, Gem Diamonds is increasinglybetter 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 ispursuing an accelerated growth strategy through targeted acquisitions and thedevelopment of existing assets. Gem Diamonds portfolio comprises producingkimberlite, lamproite and alluvial mines, development projects and explorationassets. Operations are situated in Angola, Australia, Botswana, the CentralAfrican Republic, the Democratic Republic of Congo, Lesotho and Indonesia. GemDiamonds produces some of the world's most remarkable white diamonds from itsLetseng Mine and rare fancy yellow diamonds from its Ellendale Mine and an arrayof coloured diamonds from its Cempaka Mine. Established in July 2005, Gem Diamonds listed on the main board of the LondonStock Exchange in February 2007 raising US$635 million. It is currentlycapitalised at approximately US$1.1 billion and had US$175 million of cash onits 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