NAG North American Gem Inc.

North American Gem Inc. (TSX-V: NAG) (the "Company") is pleased to announce a Letter of Intent ("LOI") to acquire additional coal leases located in Knox County, Kentucky. The leases, referred to as the "ABGSC Leases" (approximately 410 acres), are currently being permitted for mining under permit #861-0502. The acquisition is subject to the execution of a Definitive Agreement and any necessary regulatory approvals.

The ABGSC Leases 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 60-90 days. The ABGSC Leases are contiguous with the recently announced Swan Pond and Possum Hollow Leases and host a continuation of the Blue Gem and Jellico seams. Analysis of the Blue Gem seam from the Swan Pond and Possum Hollow Leases are 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 (Previously announced in the May 13, 2009 release).

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 seam 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 Coal seam is the most sought after. For this reason, coal produced from this seam 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, 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 LOI include:

The Lessor grants to the Lessee the right to acquire an exclusive and undivided leasehold interest in the ABGSC Leases, including coal mining and extraction rights, from the Lessor, upon:

1. The Lessee making one time payments to the Lessor in the amount of:

a. $20,000 payment upon signature of the Letter of Intent;

b. $40,000 payment upon execution of the Definitive Agreement;

c. $40,000 upon technical acceptance of "the permit" by the Kentucky DNR.

2. The Lessee making tonnage production royalty payments to the Lessor in the amount of 1% of the gross sale price (FOB Mine) on all coal mined and extracted from the ABGSC Leases;

3. The Lessee making tonnage production override royalty payments to the Lessor in the amount of $1.50/net ton on all coal mined and extracted from the ABGSC Leases;

4. The Lessor shall be paid a recoupable minimum royalty payment of $10,000 per month beginning January 2010 and not to exceed 36 months. This payment can be credited against royalties when and if royalties from mining activities commence and to such an extent as such royalties exceed $10,000 per month paid to the Lessor.

5. The Lessor agrees to continue the permitting process for permit #861-0502 at its own cost, except for bonding and acerage fees, prior to final payment by the Lessee under 1c.

North American Gem shall have a due diligence period expiring in forty-five (45) days after the execution of the LOI.

Mr. Dean Schafer will be acting as operations manager of all the Company's Kentucky Leases 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.

Investors are invited to visit the NAG IR Hub at http://www.agoracom.com/IR/NorthAmericanGem where they can post questions and receive answers or review questions and answers already posted by other investors. Alternatively, investors are able to e-mail all questions and correspondence to NAG@agoracom.com where they can also request to be added to the investor e-mail list to receive all future press releases and updates in real time.

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, West Virginia and Kentucky. 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 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. 604-683-5445 info@northamericangem.com