REX ANNOUNCES PROPOSED SALE OF
SOUTH AFRICAN SUBSIDIARIES
    

Symbol: RXD
Trading: Toronto Stock Exchange
Date: August 6, 2004

ANTWERP, Belgium – Rex Diamond Mining Corporation announces today the following developments:

Rex Diamond Mining Corporation ("Rex") is announcing today that it has entered into an agreement with African Gem Resources Ltd. (Afgem) by which it would sell its South African diamond mines to Afgem. Afgem is a company listed in the diamond sector of the Johannesburg Stock Exchange with 143,797,717 shares in issue. On closing of the transaction, Rex will acquire 50 million shares of Afgem. Rex will also receive a royalty on sales from the diamond mines sold to Afgem, and will continue to market diamonds produced from its former South African mines.

Afgem will acquire Rex's South African diamond mines by acquiring the entire issued share capital of Rex's subsidiaries that operate the South African mines: Loxton Exploration (Proprietary) Ltd., Rex Diamond Corp. (Proprietary) Ltd. (Rex Diamond) and Bellsbank Consolidated Diamond Mine (Proprietary) Ltd. The total consideration paid will be approximately 60 million rand consisting of:

• R2.5 million rand in cash, which will be offset against a loan from Afgem to a subsidiary of Rex;
• R25 million rand thereof through the issuance of 50 million Afgem shares to Rex at 50 cents each; and
• the balance by paying a subsidiary of Rex 4 per cent of the gross revenue on rough diamond sales of Loxton, Rex Diamond and Bellsbank for the period commencing on Jan. 1, 2006, and ending on Dec. 31, 2021, with a net present value of 32.5 million rand.

Afgem has also agreed to assume the operating liabilities of the acquired companies.The transaction is subject to conditions precedent including:

• obtaining the necessary regulatory approvals including from South African securities, exchange-control and antitrust authorities, as well as the Johannesburg Stock Exchange; and
• the approval by the shareholders of Afgem and the approval by the shareholders of Rex.

Afgem has also agreed to make adequate capital investments in the acquired South African mines in order to optimize production. Afgem has also made a non-interest-bearing loan of five million rand to a subsidiary of Rex.

Both the board and the controlling shareholder of Rex have provided Afgem with irrevocable undertakings to vote in favour of the transaction. Shareholders holding approximately 25 per cent of the issued share capital of Afgem have also provided Afgem and Rex with irrevocable undertakings to vote in favour of the transaction.

Rex intends to seek shareholder approval for the transaction at its shareholder meeting scheduled for Sept. 27, 2004. Additional details will be provided in advance of the meeting.

For more information please contact: Ben Holemans, CFO
Email: ben.holemans@rexmining.com
Tel: + 32 (0) 3 205 90 60

Websites: www.rexmining.com - www.rexdiamonds.com - www.rexgems.com