North American Gem Inc. Mobilizes Second Auger into Position to Increase Coal Production on the North American Gem #1 Mine in Whitley County, Kentucky

December 3, 2009: North American Gem Inc. (NAG) (TSX-V symbol: NAG) is currently mobilizing a second auger to the North American Gem #1 Mine in Whitley County, Kentucky. Preparation of the second "mine face" site has been completed and production from the second auger is expected shortly. Auger #1 continues to produce coal as announced on November 23rd 2009.

Blue Star Energy LTD. (Blue Star) located in Hazard, Kentucky has agreed to purchase up to 15,000 clean tons of coal per month produced at the North American Gem Mine #1, Whitley County, Kentucky (as announced previously on October 21nd 2009). Blue Star is a coal production and brokerage company that caters mostly to specialty industrial coal users but also supplies coal to various electricity generators in the Appalachian region since 1996.

Blue Star has completed its analysis of the Jellico coal seam at the North American Gem Mine #1 and now expects delivery of coal immediately upon the commencement of production. 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 North American Gem #1 Mine 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 the recovery of any potential reserves that were previously believed not to be economically viable.

All of NAG'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, North American Gem Inc. 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 #1 Mine, to be the first coal to run through the North American Tipple Facility which is located centrally to the area being developed by NAG (as announced previously on October 28th, 2009). 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.

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. (TSX-V symbol: 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