Holding(s) in Company

TR-1: NOTIFICATION OF MAJOR INTEREST IN SHARES

1. Identity of the issuer or the underlying issuer of existing shares to which voting rights are attached: ii

Gem Diamonds Limited

2 Reason for the notification (please tick the appropriate box or boxes):

An acquisition or disposal of voting rights

X

An acquisition or disposal of qualifying financial instruments which may result in the acquisition of shares already issued to which voting rights are attached

An acquisition or disposal of instruments with similar economic effect to qualifying financial instruments

An event changing the breakdown of voting rights

Other (please specify):

3. Full name of person(s) subject to the notification obligation: iii

Mr.Laurence Graff and companies controlled by him.

4. Full name of shareholder(s)  (if different from 3.):iv

Hanover Nominees Limited

Brooks Macdonald Services Nominees Limited

5. Date of the transaction and date on which the threshold is crossed or reached: v

15 December 2009

6. Date on which issuer notified:

16 December 2009

7. Threshold(s) that is/are crossed or reached: vi, vii

10%

8. Notified details:

A: Voting rights attached to shares viii, ix

Class/type of shares

if possible using the ISIN CODE

Situation previous to the triggering transaction

Resulting situation after the triggering transaction

Number of Shares

Number of Voting Rights

Number of shares

Number of voting rights

% of voting rights x

Direct

Direct xi

Indirect xii

Direct

Indirect

13,826,718

13,826,718

13,979,575

13,979,575

10.1%

VGG379591065

Ords US$0.01 each

B: Qualifying Financial Instruments

Resulting situation after the triggering transaction

Type of financial instrument

Expiration date xiii

Exercise/ Conversion Period xiv

Number of voting rights that may be acquired if the instrument is exercised/ converted.

% of voting rights

C: Financial Instruments with similar economic effect to Qualifying Financial Instruments xv, xvi

Resulting situation after the triggering transaction

Type of financial instrument

Exercise price

Expiration date xvii

Exercise/ Conversion period xviii

Number of voting rights instrument refers to

% of voting rights xix, xx

Nominal

Delta

Total (A+B+C)

Number of voting rights

Percentage of voting rights

13,979,575

10.1%

9. Chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held, if applicable: xxi

13,934,807 shares are held by Hanover Nominees Limited. Shares are under the control of Graff Diamonds Limited, a wholly owned subsidiary of Graff Diamonds International Limited which is wholly owned by Mr. Laurence Graff.

44,768 shares are held by Brooks Macdonald Services Nominees Limited as part of a pension plan controlled by Mr. Laurence Graff.

Proxy Voting:

10. Name of the proxy holder:

11. Number of voting rights proxy holder will cease to hold:

12. Date on which proxy holder will cease to hold voting rights:

13. Additional information:

14. Contact name:

Andre Confavreux , Company Secretary, Gem Diamonds

15. Contact telephone number:

0203 043 0280