North American Gem Inc. Commences Operation of North American Gem Mine #1 in Whitley County, Kentucky

Last Update: 10/29/2009 1:41:07 PM

VANCOUVER, BC, Oct 29, 2009 (MARKETWIRE via COMTEX) -- North American Gem Inc. (NAG) (NAG) is pleased to announce the commencement of operation at North American Gem Mine #1 in Whitley County, Kentucky. The new mining permit number is #918-0420. At this time, equipment is being moved onto the site with the first task of upgrading the haulage road to the mine face. Since the area had been mined previously, an existing haul road is in place which will require an establishment of proper drainage and stone for the surface. The length of the road is less than 1/2 kilometer in length. The augering equipment set up has begun and North American Gem Inc. expects to have coal prepared for transport to market by Friday, November 6th, 2009.

The North American Gem Mine #1 is permitted for the use of augers to enter the coal seam from the exposed wall with minimal additional excavation and maximum cost effectiveness. This type of mining dramatically reduces the amount of surface disturbance and allows for recovery of coal without removal of overlying material. Engle Hollow Mining (EHM) has allocated 2 augers to work simultaneously on different work faces to ensure continuous production.

Based on the capabilities of the mining equipment being employed at the North American Gem Mine #1 coupled with the mining conditions that exist on the site, the production goal is 10,000 net tons per month of production, at this time.

There is currently a sale agreement with Blue Star Energy for up to 15,000 tons per month of production which ensures the sale of total production from the mine (See NAG October 21st, 2009 release). The coal sample taken by Blue Star from the North American Gem Mine #1 resulted in analysis of 8% ash, < 1% sulphur and 12,800 Btu.

The method of mining to be used at the North American Gem Mine #1 is known as contour mining. This type of mining is done on properties that were previously mined prior to the enactment of the Surface Mine Control and Reclamation act of 1977. This law requires that after any surface mining, the land must be restored to approximate original contour unless otherwise specified in the permit application and approved by the Kentucky Department of Natural Resources (KDNR). When "pre-law" mining was done, the general practice was to mine along the contour of a slope to the maximum profitable ratio and leave the resulting highwall and a wide, flat bench where the material covering the coal was removed and then graded somewhat flat as opposed to restoring the original slope.

All of North American Gem Inc.'s potential mining operations will incorporate sediment control methods that will keep ahead of the increased regulations and restrictions. Furthermore, in anticipation of increased regulations, NAG has, in all of its permitting applications, begun the sampling of receiving streams and groundwater wells utilizing the most stringent and extensive sampling parameters. This will allow NAG to comply with the regulatory requirements and will also result in a much shorter and smoother permitting application process.

North American Gem Inc. plans to have any coal requiring processing from the North American Gem Mine #1 to be the first coal to run through the North American Tippling Production Plant (See NAG September 22nd, 2009 release). Most of the coal produced, based on laboratory and exploration data gathered during the evaluation period, is expected to be of high enough quality to ship directly to the buyer.

The North American Gem Inc. mining operation establishes NAG as a coal producer with the ability to enter into supply contracts. The supply contracts established by production from the North American Gem Mine #1 are expected to be expanded upon as the Company increases operations in the area. The performance and capabilities of production from the North American Gem Mine #1 will determine the point at which further production from additional leases is commenced.

Mr. Dean Schafer is acting as operations manager of all the Company's Kentucky coal leases and is currently implementing an overall mine plan.

Mike Magrum, PEng, a qualified person under National Instrument 43-101, has approved the technical content of this news release.

North American Gem Inc. (NAG) is a Junior Exploration Company based in Western Canada. The Company's primary goal is to explore for Coal in North America, currently the focus is in Kentucky, Saskatchewan, and West Virginia. In addition to Coal exploration, the Company also has interests in Uranium, Copper, Gold, Molybdenum and other base metals in Canada.

On Behalf of the Board of Directors
NORTH AMERICAN GEM INC.
"Charles Desjardins"
Charles Desjardins
President and Director