October 7, 2009: North American Gem Inc. (TSX-V symbol: NAG) (NAG) is pleased to announce an agreement between Engle Hollow Mining LLC (as operator for NAG) and Kentucky Mine Power Inc. to provide mining and augering services for the North American Gem Mine #1 in Whitley County, Kentucky.

Kentucky Mine Power Inc. will immediately mobilize two augers to the North American Gem Mine #1 location. Mine development is on schedule to begin within the next 10 days with actual coal production beginning during the following week. The augers are capable of being fitted with various size boring heads to accommodate fluctuations in coal seam thickness and are capable of penetrating to a horizontal depth of more than 30 meters into the coal seam.

Both Engle Hollow Mining and Kentucky Mine Power have agreed to a fixed cost per ton of coal mined. This will allow North American Gem to control costs and more accurately project earnings. NAG expects to have a monthly coal production level of approximately 10,000 net tons, given each auger can produce 4,000-6,000 net tons per month. The production rate and mine-life projections have been made without support of a feasibility study, there is no certainty the proposed operations will be economically viable.

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