N.A. Gem hires Durabo to drill Kentucky permits 3, 4

2009-11-03 10:51 ET - News Release

Mr. Charles Desjardins reports

NORTH AMERICAN GEM INC. PREPARES TO DRILL KENTUCKY PROPERTIES

North American Gem Inc. (NAG) has entered an agreement with Durabo Drilling of Corbin, Ky., for the drilling of the leases recently acquired from Lonesome Pine Leasing known as the North American Gem mining permit No. 3 and the North American Gem mining permit No. 4. The permitting process is currently under way for both North American Gem mining permit No. 3 and North American Gem mining permit No. 4 for the purpose of submitting an official permit application to the Kentucky Department of Natural Resources (KDNR).

The purpose of the program is to drill and prove the presence of minable coal seams that are known to exist below the Blue Gem seam. The drill core data collected will potentially allow NAG to prepare a certified engineering report with an accurate calculation of a minable coal reserve of the Blue Gem coal and also the coal seams known to exist below the Blue Gem seam. The specific seam being drilled for has been encountered in the process of oil and natural gas drilling in the area; it has been measured in thickness from 1.5 to two metres and is believed to be a low-sulphur, high-British-thermal-unit seam.

The drill program will provide the means to obtain a laboratory analysis, which will determine the actual quality and characteristics of the coal seams. The analysis of the data will also help NAG develop the most efficient mining plan for both North American Gem mining permit No. 3 and North American Gem mining permit No. 4.

In total, North American Gem has leased approximately 5,000 acres of coal reserves in Knox and Whitley counties in Kentucky. NAG is actively developing a total of seven leases for mining permits, the first of which -- North American Gem No. 1 mine -- is currently completing development and is expected to produce the first marketable coal within days.

All of North American Gem'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 using 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.

The North American Gem 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 No. 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 No. 1 will determine the point at which further production from additional leases is commenced.

North American Gem is expecting approval of the official permit application submitted for the North American Gem mining permit No. 2 from the Kentucky Department of Natural Resources (KDNR) shortly.

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.

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