Interim Management Statement

Gem Diamonds Limited
23 April 2008


                              GEM DIAMONDS LIMITED
                       ('Gem Diamonds' or 'the Company')

                          INTERIM MANAGEMENT STATEMENT
                   FOR THE FIRST QUARTER ENDED 31 MARCH 2008

This Interim Management Statement is Gem Diamonds' first and reflects the
Company's performance in the first quarter of the 2008 financial year.

After a year of solid progress in 2007, Q108 has seen continued remarkable
diamond prices achieved across all its producing mines.

Highlights

-           Strong rough diamond sales across all three mines with record prices
            achieved
-           Q108 carats sold of 156 438
-           Q108 diamond sales revenue of US$56.1 million
-           Beneficiation trials successful with significant additional margin
            capture - average price per carat of US$74 000 achieved
-           Letseng second plant final commissioning commenced and first ore
            processed and diamonds recovered
-           Encouraging grades from new sample area in the CAR


1              Lesotho

Gem Diamonds holds a 70% shareholding in Letseng Diamonds (Pty) Ltd ('Letseng')
in partnership with the Government of the Kingdom of Lesotho which owns the
remaining 30%.

1.1          Production

Hard rock mining commenced in the Main Pipe in December 2007.  Accordingly in
Q108 ore was available from three sources - Main and Satellite Pipes as well as
Main Pipe stockpile.  To ensure optimal production levels, ore from all three
sources was blended and treated in Q108.

                                                           Q108           Q107        % Change
Ore mined and processed - Letseng Diamonds               699 456         677 208         3%
Carats produced - Letseng Diamonds                        13 268         15 956         -17%
Ore mined and processed - Alluvial Ventures              506 503         208 527        143%
Carats produced - Alluvial Ventures                       5 603           2 152         160%

1.2          Diamond Sales

                          Q108                            Q107                  %        %          %
                                                                             Change   Change    Change

               Cts       Total    Achieved    Cts       Total     Achieved     Cts      Total    Achieved
               sold     tender     US$/ct     sold     tender      US$/ct      sold     tender    US$/ct
                         value                          value                           value     
                          US$                            US$                             US$
                       millions                       millions                         millions

Letseng         8 190    20.50    2 502.71   16 841     39.0        2 315      -51%      -47%       8%
Diamonds

Alluvial        2 731    2.56        936      947        0.4         472       188%      540%       98%
Ventures

Total          10 921    23.05      2 111    17 788     39.4        2 217      -39%      -41%       -5%



In Q108 two tenders took place, versus three in the comparative period.  Prices
achieved for goods sold from the Main Pipe, Satellite Pipe and Main Pipe
stockpile are significantly ahead of forecast for run of mine production.

1.3          Beneficiation

Between July and November 2007, seven D colour diamonds were extracted from
production for polishing in Antwerp by Matrix Diamond Technology using their
proprietary diamond technology.  Six of these diamonds totalling 137 carats were
polished into 45.7 carats, of which 41.6 carats were sold for US$3.1 million at
an average price of US$74 000 per carat.  The seventh highly complex rough
diamond, weighing 129 carats has been polished into 34.5 carats and the polished
stones will be sold in Q208.

1.4          Expansion and Development

Final commissioning of the second plant began in late March with 700 tonnes of
ore treated and 12.8 carats recovered. The project is on track to achieve full
production by the end of the Q208.

1.5          Power Supply

Letseng  Diamonds is supplied with power by the Lesotho Electricity Corporation
('LEC') who in turn source some of this power from the South African parastatal
ESKOM.  Letseng Diamonds has received permission to draw more power in order to
run the second plant.  The line that will feed this increased demand has been,
and will continue to be, subjected to ESKOM load shedding.

To date there has been minimal impact to production caused by the load shedding
due to:

-          the short periods of load shedding;
-          the mine having managed to re-schedule maintenance periods to
           coincide with the load shedding; and
-          the second plant not yet running at full capacity.

To minimise the possible impact of load shedding, Letseng is making arrangements
to install standby generating capacity sufficient to run the whole mine.

Letseng will develop plans in conjunction with the LEC to upgrade an alternate
line from the LEC's hydro-electricity plant to secure an uninterrupted supply at
the increased demand level.

2              Australia

Gem Diamonds completed the compulsory acquisition process of all shares and
options in Kimberley Diamond Company ('Kimberley Diamonds') during Q108.  The
new Managing Director, Alistair Croll, took up his appointment at the end of
February and at the first Kimberley Diamonds Board meeting, held at the end of
March 2008, the Board was reconstituted accordingly.

2.1          Production

Mining into the wet season (three months from mid December through mid March)
continued in Q108 notwithstanding past practices of only processing ore
stockpiled during the year.

The tonnage throughputs for Q108 are reflected in the table below and show
(allowing for wet season vagaries) that the good progress achieved in late 2007
has continued in 2008.  High processing rates achieved in December and January
combined with limited waste stripping in the months leading up to Gem Diamonds
acquisition, has resulted in lower stockpile volumes and reduced stripped
reserves.  The combined impact is that with the lack of flexibility to mine to
average grade, lower average grades have been achieved.

                                   2007                                2008

                        Oct         Nov         Dec         Jan         Feb         Mar

Ore mined and          0.58        0.65        0.65        0.69        0.44        0.53
processed (mt)

Cts Produced          46 500      50 400      42 700      45 700      22 400      30 600

Grade cpht              8.0         7.7         6.5         6.6         5.1         5.8


2.2          Diamond Sales

            Q108                            Q107                    %         %          %
                                                                 Change    Change     Change

   Cts      Total   Achieved     Cts    Total tender Achieved     Cts      Total     Achieved
  sold     tender    US$/ct     sold       value      US$/ct     sold      tender     US$/ct
            value                                                          value      
             US$                        US$ millions                        US$
          millions                                                        millions  
                                                                 

  130 476   28.1       216     158 600      20.2        127      -18%       39%        70%



2.3          Expansion and Development

On acquisition, Ellendale had a processing capacity of 8mtpa but were mining at
60% of this capacity.  This processing capacity has subsequently been increased
to 8.5mtpa and will be further enhanced to 10.5mtpa.  Tonnes mined and processed
in 2008 and 2009 will increase accordingly.

Extended maintenance work was undertaken on the E4 South plant in February to
enable improved throughput volumes planned for the drier months.  Capital work
on the two main plants at E4 and E9 continued as part of the throughput
improvement programmes.

A third mining fleet has been commissioned to facilitate higher waste stripping
rates and maintain ore generating capacity at the required grade.

3              Indonesia

BDI Mining owns 80% of the Cempaka alluvial diamond mine in South Kalimantan,
Indonesia in partnership with the Government of Indonesia which owns the
remaining 20%.

3.1          Production

Mining in Q108 was predominantly in the Cempaka channel as opposed to the Danau
Seran channel in the comparative period.  Production for Q108 was as follows:

                                           Q108               Q107              % Change

Gravel mined and treated (mt)              0.54               0.13                315%
Overburden stripped  (mt)                  1.82               0.74                146%
Strip ratio                                3.35               5.88                  -
Carats recovered                          6 004               4 845                24%
Grade (cpht)                               1.10               3.83                -71%
Au/Pt conc produced (kg)                   4.5                 3.1                 45%

The build up of gravel treated continued in the first two months of Q108
culminating in the achievement for the first time of the targeted 216 000 tonnes
in February 2008.  The recovered grade was lower than expected but improved
grades are anticipated in the areas being mined for the balance of 2008.

Rainfall led to widespread flooding and adversely affected production in March
2008.  The mining block in Danau Seran channel was flooded and will take several
weeks to dewater.  The mining face in the Cempaka channel was less severely
affected and will be available earlier than the Danau Seran block.

3.2          Sales

            Q108                           Q107                   %          %          %
                                                                Change    Change      Change

   Cts      Total   Achieved     Cts       Total    Achieved     Cts       Total     Achieved
  sold     tender    US$/ct     sold      tender     US$/ct      sold      tender     US$/ct
           value                          value                           value      
             US$                            US$                             US$
          millions                       millions                         millions

   15 041    5.0       331      7 661       1.7        225       96%        194%       47%


3.3          Expansion and Development

A DMS plant has been procured for Cempaka and will be delivered in Q208.  This
will enhance the mine's recovery process.

The delivery of the mining fleet for the expanded production and conversion from
contactor to owner mining is largely complete.

4              Botswana

Subsequent to the submission of a Mining License Application in H207, the
Retention License was extended to the end of August 2008 to allow for the
Feasibility Study and the Social and Environmental Impact Assessment ('SEIA') to
be completed.

The SEIA continued with the holding of numerous Public Participation meetings
with interested and affected communities.  The meetings were positive with all
communities consulted indicating their support for the mine.  These studies
resulted in the Scoping Report being submitted to the Government in February.
The SEIA process is on target and the approval is expected in H208.

Thereafter the Section 51 negotiations with the Government of Botswana, which
will determine the awarding and key terms of a mining license, are expected to
commence.

5              DRC

Gem Diamonds has interests in three projects in the Democratic Republic of the
Congo ('DRC') at Mbelenge, Lubembe and Longatshimo.  These interests are held
via a number of companies in which Gem Diamonds has between an 80% and 100%
shareholding.

5.1          Mbelenge

With the low grades returned in the latter part of 2007 from the terrace
gravels, sample trenches transverse to the old river flow direction were
excavated to refine the geological model.  These transverse trenches have been
sampled and confirm the overall low grades in this area.

A programme has been designed to sample the gravel deposits of the modern river
system and dredges were transferred from Lubembe for this purpose.

5.1.1       Production and Sampling

Production and sampling results for Q108 were as follows:

River terraces                      Actual
Overburden stripped m3             278 048
Gravel mined : m3                   48 630
Gravel treated : m3                 49 328
Carats recovered                    6 208
Grade : cts/ m3                      0.13

River Dredging                      Actual
Gravel mined : tonnes               19.79
Gravel treated : tonnes             19.79
Carats recovered                    64.35
Grade : cts/ tonne                   3.25

5.1.2       Diamond Sales

Two parcels of Mbelenge diamonds totalling 10 699 carats were sold in Antwerp
for an average price of US$86 per carat in Q108.

5.1.3       Expansion and Development

Further sampling by way of dredging will continue into the dry season and will
provide an indication of river grades. The construction and sampling of paddocks
in the Kasai River will provide additional information and sampling of the
terraces in the north of the project area is also planned.

The further development of Mbelenge will be reviewed on receipt of the sampling
information.

5.2          Lubembe

Sampling at Lubembe in Q108 continued with the remaining dredges and was
predominantly resource development focused.

5.2.1       Sampling

Resource development through bathymetric mapping and sampling was undertaken
with 2 255 carats recovered at a grade of 13.43 cts/tonne recorded.  Seasonal
flood conditions delayed the treatment of other samples taken, which have been
stockpiled for treatment in early Q208.

                                    Actual
Gravel mined : (tonnes)             242.43
Gravel treated : (tonnes)           167.95
Carats recovered                   2 255.25
Grade : (cpt)                       13.43

5.2.2       Diamond Sales

In January 2008 a parcel of 4 608 carats was sold in Antwerp for US$82 per
carat, in line with expectations.

5.2.3       Expansion and development

5.2.3.1   Alluvial

Sporadic high grade gravel pockets were encountered at Lubembe and diamonds have
been successfully recovered.  Accordingly, an appropriate mining technique to
exploit this resource is being evaluated.  In the interim the dredging programme
at Lubembe will be suspended to allow the dredge units to be deployed at
Mbelenge.

5.2.3.2   Kimberlite

No kimberlite drilling took place in Q108. The portable drilling rig is being
tested after which the remaining 22 anomalies will be drilled.

5.3       Longatshimo

Sampling results during the latter part of 2007 were less encouraging than the
initial programme.  Plans for trial mining are under review.

Resource definition of river terraces and floodplain settings is ongoing in the
Longatshimo area through systematic field mapping, reconnaissance pitting and
limited sampling.

The geophysical anomalies that were generated by the helimag survey that was
conducted recently in the Longatshimo area are being investigated.  A further
four anomalies were drilled in Q108, with no kimberlites intersected.  Further
surveying has identified four anomalies, bringing the total outstanding
anomalies at Longatshimo to 14.

6              CAR

Gem Diamonds holds a 75% interest in Gem Diamonds Centrafrique SA, in
partnership with the Government of the CAR which holds the remaining 25%.  Gem
Diamond Centrafrique holds exclusive exploration and mining rights to the 800km2
Mambere Concession.

6.1          South Mambere: Sample Results

Bulk sampling of terrace gravels in the le Buckle area was completed in December
2007 and from January 2008 sampling and exploration work was in the modern day
Mambere River.

Grades of more than 70 cpht have been recovered from the bottom gravels.
However, the 'run of mine' recovered grades in February and March was 20 cpht.
The diamonds are estimated to be worth US$140 per carat.

Work to determine the extent of the resource will continue throughout 2008.

6.2          North Mambere: Exploration

Strong historical production and grades of 15 to 30 cpht are recorded from the
northern part of the concession from the Mambere River tributary gravels.
Quickbird satellite imagery will be used to direct the geological exploration
programme in this area during Q208.

Past and present mining activity in the area, undertaken by local artisans, is
being evaluated in terms of overburden thickness, grade, volume and stone size.

7              Angola

A Cooperation Agreement was signed in January 2007 between Gem Diamonds and
Avantis Angola Inc ('Avantis') with respect to a feasibility study to be
conducted on the known Chiri kimberlite in the Lunda Sul Province of Angola in
which Avantis have a 25% interest.  An Option Agreement whereby Gem Diamonds can
acquire an effective 11.25% interest in Chiri from Avantis was signed at the
same time.

Negotiations surrounding the Cooperation Agreement continued through most of
2007 with an addendum to the Cooperation Agreement being signed in December
providing for an acceleration of activities with defined milestones for
particular activities and an effective start date of January 2008.

A camp has been established and technical personnel are on site.  Final
procurement of equipment was completed in Q108.  The 10tph DMS sampling plant
and large diameter drilling are in transit to site and expected in Q208.
Contracts have been signed for the site preparation, civil engineering works and
erection of the sampling plant, management of field operations and for lease of
the earthmoving equipment for the bulk sampling programme.

For further information:

Gem Diamonds Limited                                  Pelham PR
Clifford Elphick                                      Candice Sgroi
Tel: [phone]                                 Tel: [phone]
                                                      James Henderson
Gem Diamond Technical Services                        Tel : [phone]
Angela Parr
Tel: [phone]

About Gem Diamonds:

Gem Diamonds Limited (LSE: GEMD) is a global diamond producer that is pursuing
an accelerated growth strategy through targeted acquisitions and the development
of existing assets.  Gem Diamonds portfolio comprises producing kimberlite,
lamproite and alluvial mines, development projects and exploration assets.
Operations are situated in Angola, Australia, Botswana, the Central African
Republic (CAR), the Democratic Republic of Congo (DRC), Lesotho and Indonesia.
Gem Diamonds produces some of the world's most remarkable white diamonds from
its Letseng Mine and rare fancy yellow diamonds from its Ellendale Mine and an
array of coloured diamonds from its Cempaka Mine.

Established in July 2005, Gem Diamonds listed on the main board of the London
Stock Exchange in February 2007 raising US$636 million.

Gem Diamonds issues this statement as an unaudited trading update for the three
months ended 31 March 2008.


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