North American Gem Inc. Mobilizes Mining Equipment to North American Gem #2 Mine in Kentucky

VANCOUVER, BRITISH COLUMBIA, Apr 08, 2010 (MARKETWIRE via COMTEX News Network) --

North American Gem Inc. (NAG) (TSX VENTURE: NAG) has reached an agreement to enter into a partnership with Kentucky Mine Partners LLC (KMP), for the mining of NAG's surface mining operations at North American Gem #2 Mine and any newly permitted mines henceforth in the state of Kentucky. KMP has begun mobilizing mining equipment to the newly acquired North American Gem #2 Mine, in Knox County, Kentucky so that immediately upon completion of the permit transfer to NAG the mining equipment and infrastructure will be in place to begin production immediately.

The signing of a definitive agreement to acquire the fully operational surface coal mine (North American Gem #2 Mine) with both minable Blue Gem and Jellico coal seams was announced March 31st 2010. Drilling at the recently acquired mine site has been completed and NAG was pleased with the quality and the estimated tonnage of coal at the mine site.

North American Gem #2 Mine will produce from both the Blue Gem coal seam and the Jellico coal seam simultaneously once the permit is officially transferred from the current operator. The coal produced at the Gem #2 Mine location will be treated at the North American Tipple Facility.

The permit transfer is an administrative process that can typically be accomplished in approximately 3 weeks. Upon completion of the transfer, the mine will immediately resume production at a rate of 8-10,000 tons per month with the capability of doubling that production rate should favorable market conditions warrant. The North American Gem #2 Mine will be a surface mining and augering operation.

Operation Updates from Kentucky

Production continues at North American Gem #1 Mine with shipments of coal being sent to market daily. At the current rate of production NAG is currently on pace to produce and sell approximately 8,000 tons of coal per month with the ability to further increase production. NAG has steadily increased its production over time as the weather has slowly improved. Currently there are two augers producing and the third auger is expected to be activated in approximately one week's time.

Management at NAG has decided to refer to its Kentucky claims by the actual lease name until the individual leases are granted a successful mining permit at which point the lease will be named as a North American Gem Mine in sequential order. This will avoid future confusion as certain permits may be approved out of order or the possibility of a new lease acquisition by NAG in an advanced stage of permitting.

NAG has completed the drilling previously announced on December 8th 2009 on its Wynn Hollow lease (formerly referred to as North American Gem #3 Mine) and is now continuing the permitting process. The analysis of the data, combined with data from historical drilling of natural gas and oil wells at the Wynn Hollow location, will help NAG develop the most efficient mining plan. In particular one coal seam, below the Blue Gem seam, has been measured in thickness from 1.5-2 metres and is believed to be low sulfur, high btu seam.

NAG has now commenced drilling on the Swan Pond lease (formerly referred to as North American Gem #2 Mine) and once complete will immediately mobilize the drillers to the recently acquired Granny Rose lease (Refer to NAG February 2nd 2010 release). The Granny Rose lease contains the readily marketable Blue Gem coal throughout the entire lease with an average seem thickness of 2 feet. It has been estimated that approximately 250 acres of the planned permit will be mined using surface mining techniques with an additional approximate 100 acres that is to be mined by highwall and/or auger mining methods.

The permitting process being managed by Ms. Deborah Moses of Engineering Consulting Services Inc. and Mr. William Grable is proceeding well. One of the previously announced mining permits is currently in the final stage of the process and is expected to be approved in the near future. Currently all future mining permits have been designated to be highwall mining operations, which could allow production to be at least 25,000 tons per property per month.

The North American Tipple Facility will serve as the central operation and distribution point for coal produced by NAG's mining operations. The facility has equipment in place that is capable of crushing, screening, and washing coal. This gives North American Gem Inc. the added dimension to service a variety of customers by preparing coal to meet their specific requirements. North American Gem Inc. will also have the ability to purchase outside coal to produce custom blended products which will increase market potential. Specifically, plans are to service the industrial stoker markets, silicon metal producers, and electricity generators.

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.

Ms. Deborah Moses, PEng, PLS, REM, of Engineering Consulting Services Inc. (ECSI) is the qualified person for the Company's coal operations in Kentucky and West Virginia.