Work on the Kholo project will begin in January and will ramp up to full production by July 2014.

The project will increase the annual treatment capacity of the Letšeng mine to 10 million tonnes per annum (currently 5.6 million tonnes per annum) with carat output increasing to circa 200,000 carats per annum (currently 100,000 carats per annum).

CEO Clifford Elphick said: "Gem Diamonds is very pleased to announce that as a result of the approval given by the company's board to the expansion project at the Letseng mine, the number of carats of the remarkable diamonds which it produces will effectively be doubled.

"Given the industry consensus around the extremely positive supply/demand dynamics for high end diamonds, it is an investment which signals Gem Diamonds' confidence in its future growth."

At 9:00am: (LON:GEMD) share price was -4.35p at 196.75p

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