GEMD Gem Diamonds Limited

TIDMGEMD

Gem Diamonds Limited

05 September 2014

5 September 2014

GEM DIAMONDS LIMITED

("Gem Diamonds" or "the Company")

Opening of Ghaghoo Mine

Gem Diamonds Limited (LSE: GEMD) is pleased to announce the opening of the Ghaghoo diamond mine in Botswana, which will be the first underground diamond mine in the country. This is a significant milestone for Gem Diamonds as the Company looks forward to operating its second major producing diamond mine, in addition to the Letšeng mine in Lesotho. Gem Diamonds is hosting an opening ceremony at the mine today. The President of Botswana, Lieutenant General Seretse Khama Ian Khama, will be attending the event and officially opening the mine.

The Ghaghoo diamond mine,will be the first underground diamond minein Botswana. Botswana is the world's leading diamond producer and home to some of the largest, most profitable diamond mines, making this an ideal country for Gem Diamonds to operate in. Through a phased development plan, Ghaghoo is expected to emerge aspart of a new generation of diamond mines in Botswana, with a core focus on ensuring that the highest benchmarks of excellence across health and safety and social and environmental impacts are achieved. The Company has undergone a series of extensive studies and assessments relating to the environment, local communities and broader social impacts of the Ghaghoo mine, which will provide a critical framework to ensure that the mine operates to the most stringent of international standards. This is a strategic priority for the Company in a rapidly changing environment for the global mining industry, and will contribute to the further to the modernisation of the diamond mining industry to ensure long term sustainability.

The mine has a unique foot print, as an underground diamond mine, significantly reducing environmental impacts. The mine has been built to very high specifications to ensure that the environment is protected as far as possible, with comprehensive rehabilitation plans in place. The Company has undergone a number of in-depth community consultations as part of a broader community and social engagement strategy and as a means to accurately understand potential social impacts. Gem Diamonds is committed to ensuring the well being of affected communities and bringing benefits to these communities, where this is possible. The Company has already collaborated with the NGO, VOX to assist in providing local communities with access to water. Additionally, the Company has established a Community Trust, which includes two trustees from the project affected communities. Funds have already been allocated to the Trust which has commissioned various community projects during the Period. Furthermore, the Company is expected to employ approximately 250 people in Botswana once full Phase 1 production is achieved in 2015 and will see the development of a skills base in the local area, providing economic opportunities for individuals, in the country's largest industry.

The objective of Phase 1 of the development is to confirm the grade, diamond prices and the recovery processes, including the use of autogenous milling, which is expected to increase diamond liberation. Results from Phase 1 will define the further development plans at Ghaghoo.

Clifford Elphick, CEO of Gem Diamonds commented:

"We are very pleased to be bringing the Ghaghoo mine into production. This is a significant step forward for Gem Diamonds as a Company as we add another mine to our portfolio of producing assets. The potential of this ore body and the economic benefits to shareholders, employees and the Botswana nation will soon become evident. We believe that our steadfast approach and commitment to being an excellent corporate citizen, and working to ensure we operate in an environmentally and socially responsible manner is key in determining the long term success of the Ghaghoo mine.

"The mine and our investment to date demonstrates our commitment to the country and to the people of Botswana. We see considerable opportunities inplaying an important role in the country's future and bringingjobs and economic opportunities to the surrounding communities."

Images of the opening ceremony along with a press pack are available on our website.

For further information:

Gem Diamonds Limited

Sherryn Tedder, Investor Relations

Tel: +27 (0) 11 560 9600

Mob: +27 (0) 83 943 4505

Bell Pottinger

Lydia Eades/Joanna Boon

Tel: +44 (0) 203 772 2500

www.gemdiamonds.com

About Ghaghoo

The development of the Ghaghoo mine is progressing well and on schedule with 2 400 carats having been recovered up to 30 June 2014 during the commissioning of the plant. Included in these first carats produced was a 20 carat and two 10 carat diamonds (during the exploration phase, the largest diamond recovered was 7 carats). Optimisation of the treatment plant process is ongoing during the commissioning phase. The production build-up to 60 000 tonnes per month is still anticipated to be reached by December 2014, barring any further major water ingress.

To date, three production tunnels are progressing within kimberlite on the first production level, Level 1 at 154 metres below surface, whilst an exploratory tunnel and training stope have been developed in the kimberlite on Level 0 at 130 metres below surface. High volumes of water from basalt fissures have recently been encountered in one area, and besides contributing to difficult mining conditions, necessitated the procurement of additional pumping capacity and the drilling of additional dewatering bore holes.

Drilling of the second ventilation hole is complete and holing in is imminent. The third and final hole has been drilled to a depth of 121 metres and was completed in July, well ahead of the actual requirement to have this ventilation capacity available. The rescue equipment for deployment in these shafts, in an emergency, has been delivered to the mine and is in the process of being commissioned.

The first tender for Ghaghoo's production is scheduled to take place before year end.

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.

This information is provided by RNS

The company news service from the London Stock Exchange

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