North American Gem Inc. Begins Mining With Its Second Auger on the North American Gem #1 Mine in Whitley County, Kentucky

VANCOUVER, BRITISH COLUMBIA, Jan 06, 2010 (MARKETWIRE via COMTEX News Network) --

North American Gem Inc. (NAG) (TSX VENTURE: NAG) is pleased to announce that the second auger is now currently mining at the North American Gem #1 Mine in Whitley County, Kentucky. The initial start of coal production for the North American Gem #1 Mine was announced on November 23, 2009. The production from the second auger was initially delayed due to the unusually cold weather in southern Kentucky, but now both augers are producing.

Blue Star Energy LTD. (Blue Star) located in Hazard, Kentucky has approved the quality of coal that it has received from NAG, As a result, the coal purchased by Blue Star will command full market price.

Blue Star Energy LTD. has agreed to purchase up to 15,000 clean tons of coal per month produced at the North American Gem Mine #1, (as announced previously on October 21st, 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.

The decision of North American Gem to acquire and develop this permitted coal lease was made with consideration of the situation regarding the "mountaintop removal" and "valley fill" issues under scrutiny by the US Environmental Protection Agency. None of the leases currently held or being considered by NAG will be affected by this issue.

The method of mining to be used in the North American Gem Mine #1 is known as contour mining. All of the mining permits currently being pursued by NAG have been 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 the 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. NAG will at the very least return the mining permit locations to their current state, and in some instances return the mining permit location to a better environmental state due to the Surface Mine Control and Reclamation act of 1977.

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, 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.

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

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

North American Gem Inc. (TSX VENTURE: 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, President and Director