North American Gem Inc. is Considering Offers to Sell or Joint Venture the Louise Lake Copper Deposit and Focus Exclusively on Coal Production

NAG releases results of Increased Copper Recoverability through UBC Galvanox Study

August 18, 2010: North American Gem Inc. (NAG) (TSX-V symbol: NAG) reports that it is considering offers on its Louise Lake Copper Deposit, located 35 kilometers west of Smithers, British Columbia, Canada. The road-accessible property is near a full-service community with excellent access to highway, rail and electrical infrastructure. In total, 96 holes have been drilled at the Louise Lake property and approximately $3,500,000 dollars in exploration expenditures has been completed by NAG.

Louise Lake Concentrate Shows Copper Recoverability of 98%

NAG evaluated an environmentally friendly leaching process known as Galvanox (research carried out at the University of British Columbia), which has the potential to improve the economic viability and recoverability of the metals contained in the Louise Lake Copper Deposit. The Galvanox process enables copper producers to significantly reduce sulfur dioxide gas emissions, eliminate the cost of transportation to the smelter and treat certain copper ores high in arsenic (penalty element) content that other smelters charge significant fees to process. Galvanox, in general, is able to produce a virtually complete copper recovery (98% or higher) and eliminate all of the arsenic into an inert compound under atmospheric conditions (without using excessive heat (80°C), a very fine grind or chemical additives).

Inventor and UBC researcher Dr. David Dixon, along with co-inventor Dr. Alain Tshilombo (UBC PhD recipient) at the Material Engineering Department successfully carried out Galvanox leach tests on concentrate produced by G&T Metallurgical of Kamloops, from a representative composite sample of diamond drill core from the Company's Louise Lake copper-gold-molybdenum-silver deposit. The deposit hosts copper in roughly equal quantities of chalcopyrite (CuFeS2) and enargite (Cu3AsS4). The Galvanox process had previously only been used to extract copper from chalcopyrite successfully. This was the first time the Galvanox process attempted to extract copper from concentrate containing enargite.

The tests on the Louise Lake concentrate were very encouraging, indicating that more than 99% of the copper in the flotation concentrate can be recovered. Electro winning can then produce copper with high purity. Gold can be recovered from the leach solution and any impurities such as arsenic can be precipitated out and safely disposed of.

The economics of the process together with electro winning on site were assessed by Bateman Engineering of Australia and it appears to have substantial savings and other advantages compared to conventional smelting and other known leaching processes.

Louise Lake Resource Estimate as determined by SRK Consulting

The resource estimate released by the Company May 30, 2006 meets the requirements of National Instrument 43-101 and is the Company's current disclosed Louise Lake resource estimate. The estimates are included in the Company's July 14, 2006 technical report prepared by SRK Consulting entitled "Independent Technical Report and Resource Estimate for the Louise Lake Property, Omenica Mining Division". This report is filed on SEDAR.

Table 1 lists indicated and inferred resources calculated in 2006 by SRK Consulting for the Main Zone, calculated at a copper equivalent (CuEq) cut-off of 0.25% Cu:

Table 1 - SRK Classified Mineral Resources for the Louise Lake Deposit, B.C., Canada

*All resources quoted at a 0.25% CuEq cut-off.
**CuEq values calculated using the following metal prices: Cu $1.20/lb, Mo $8/lb, Au $450/oz, Ag $7/oz.
***The CuEq calculation does not take into account recoveries of individual metals.

Using resource estimates provided by SRK in Table 1, North American Gem has calculated the following contained metal figures:

Table 2: Contained Metal Amounts Calculated from Resource Estimates at 0.25% Copper Equivalent Cut-Off

*Actual yields may be lower than the numbers reported based on recoverability percentages.