North American Gem Inc. Announces LOI to Acquire Coal Leases in Kentucky That Host Blue Gem High Grade Low Sulfur Coal
May 13 2009 - 6:44PM
Marketwired
North American Gem Inc. (TSX-V: NAG) (the "Company") is pleased to
announce a Letter of Intent ("LOI") to acquire certain coal leases
located in Knox County, Kentucky from Lonesome Pine Leasing LLC.
The leases are referred to as the "Swan Pond" property
(approximately 400 acres) and the "Possum Hollow" property
(approximately 671 acres). The acquisition is subject to the
execution of a definitive agreement and any necessary regulatory
approvals.
The Swan Pond property currently has a surface mining permit
application in process with the Department of Natural Resources
(the "DNR") offices in Frankfort, Kentucky and it is expected to be
approved within 60-75 days. The application covers 67 acres of the
total 400 acres and hosts the Jellico coal seam. In addition, there
is an application in place to add an additional 52 acres of the
Jellico and Blue Gem seams to the original surface mining permit
covering 67 acres. The revision to add the additional acreage is
expected to gain approval within 30 days from approval of the
original permit covering 67 acres.
Immediately upon approval of the surface mining permit for the
additional 52 acres, it is anticipated an application will be made
to include 4 additional contiguous leases within the Swan Pond
property. Upon approval, this will expand the mining permit to
approximately 400 acres. The amendment to the permit is expected to
be ready within 6 months of submittal. North American Gem has
received engineering maps and plans to determine a resource
estimate.
Currently there have been no surface mining permits initiated
for Possum Hollow. Over the past year, Quality Laboratories of
Pineville, Kentucky analysed both the Blue Gem and Jellico seams
from samples taken from the properties. Analysis of the Blue Gem
seam was very encouraging showing 3% ash, 0.65% sulfur and a range
of 14,200 - 15,200 btu. The Jellico seam averages 6.5% ash, 1%
sulfur and a range of 12,500 - 13,200 btu.
The Blue Gem Coal is a high carbon, low ash, low fusion and low
grind (very hard) coal that is found only in a small area along the
border of Tennessee and Kentucky in the Cumberland Mountains. The
coal seam, throughout the region, runs in thickness from 48-71
cm.
The Blue Gem Coal is one of three coal seams in the world that
are best suited for production of silicon metals. The other two are
found in West Virginia and Columbia, South America. Of the three,
the Blue Gem is the most sought after. For this reason, it is not
only consumed in the U.S., but also exported extensively to Canada,
Norway, Iceland, India, France, South Africa and Egypt.
With the ever increasing demand for silicon metals and silicon
products, mineable Blue Gem coal resources are becoming
increasingly more valuable. Historically, the Blue Gem coal can
bring an FOB (Freight On Board) mine price that is as much as 100%
higher than high quality steam coal and is typically the highest
priced of any grade of coal produced in the U.S.
The principal terms set forth in the Letter of Intent
include:
1. Lessor grants to the Lessee the right to acquire an exclusive and
undivided leasehold interest in the Kentucky Property, including coal
mining and extraction rights, from the Lessor, upon:
2. The Lessee making tonnage production royalty payments to the Lessor in
the amount of 8% of the selling price (FOB mine) on all coal mined and
extracted from the Kentucky Properties; and
3. The Lessee making tonnage production override royalty payments to
Lonesome Pine Leasing LLC in the amount of $1.00/net ton on all coal
mined and extracted from the Kentucky Properties; and
4. The Lessee making one time payments to the Lessor in the amount of:
a. $15,000 to purchase the original 67 acre surface mining permit
application currently in process with the DNR. The payment is
due within the term of due diligence period which commences upon
signing of the LOI. The amount is refundable within 30 days if
"any" misrepresentations of the property, lease, acreage,
tonnage, and/or permitting status have been made to North
American Gem and its representatives;
b. $12,000 payment to the Lonesome Pine Leasing LLC upon signature
of the definitive agreement;
North American Gem shall have a due diligence period expiring in
forty-five (45) days after the execution of the LOI.
Mr. Dean Schafer, contracted by the company April 16th, 2009,
will be acting as operations manager of the "Swan Pond" and "Possum
Hollow" properties and is currently implementing a 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: 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
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. The Company has advanced the
Louise Lake Copper-Gold-Molybdenum-Silver project, located in
British Columbia and has produced a NI 43-101 compliant resource
estimate (included in its NI 43-101 Technical Report dated July 14,
2006 and updated February 6, 2009, as filed on SEDAR). The Uranium
projects include the Whiskey Gap and Western Basin in Alberta, the
Mosquito Gulch property in the Northwest Territories and the Ranger
Lake Uranium property in Ontario.
On Behalf of the Board of Directors
NORTH AMERICAN GEM INC.
"Charles Desjardins"
Charles Desjardins
President and Director
"Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
Cautionary note:
This report contains forward-looking statements. Resource
estimates, unless specifically noted, are considered speculative.
Any and all other resource or reserve estimates are historical in
nature, and should not be relied upon. By their nature,
forward-looking statements involve risk and uncertainties because
they relate to events and depend on factors that will or may occur
in the future. Actual results may vary depending upon exploration
activities, industry production, commodity demand and pricing,
currency exchange rates, and, but not limited to, general economic
factors. Cautionary Note to US investors: The U.S. Securities and
Exchange Commission specifically prohibits the use of certain
terms, such as "reserves" unless such figures are based upon actual
production or formation tests and can be shown to be economically
and legally producible under existing economic and operating
conditions.
Contact: North American Gem Inc. 430 - 609 Granville Street
Vancouver, BC, Canada V7Y 1G5 Phone 604-683-5445 Facsimile
604-687-9631 info@northamericangem.com www.northamericangem.com
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