NAG North American Gem Inc.

North American Gem Inc. (TSX-V: NAG) (the "Company") is pleased to announce an agreement to acquire two coal leases from Lonesome Pine Leasing LLC. The leases, known as the "Bay's Hollow" leases located in Whitley County, Kentucky, includes a mining permit ready for production. Production is expected to begin October 2009.

The terms of the agreement require North American Gem to purchase Kentucky State Mining Permit #918-0396 from Buried Sunshine Transport, Inc. The permit will be transferred to Engle Hollow Mining, LLC which will mine the leases under contract for a price of $40.00/net ton loaded into trucks to be transported to market. North American Gem will have sole and exclusive rights to market the coal produced at the Bay's Hollow Mine.

The "Bay's Hollow" mining permit is for the extraction of coal, using auger/highwall mining methods, in the Jellico coal seam which averages a thickness of 91cm. The permit is complete and ready for transfer pending the immediate posting of a bond. Based on the thickness of the coal seam, auger mining can produce 4,000-6,000 net tons per month with an increase to +20,000 net tons per month if highwall mining techniques are commenced. Production from the Bay's Hollow permit is expected to last 12-18 months. The Company continues to explore in the area for expansion potential.

Laboratory analysis of samples taken from the proposed mining area on August 26, 2009 and analyzed by SGS North America, Inc. showed a range of 2.27-4.67% ash, 0.79-1.1% sulphur, and 13,656-13,996 btu.

Initial offers for the sale of the coal are for $58.00/net ton at < 10% ash, < average 1% sulphur, and > 12,500 btu for up to 30,000 net tons per month beginning immediately. This price is approximately $6.00-$8.00/net ton higher than prices quoted earlier in the summer.

The Bay's Hollow mining operation establishes North American Gem as a coal producer with the ability to enter into supply contracts. The supply contracts established by production from the Bay's Hollow mine are expected to be expanded upon as the Company increases operations in the area. The performance and capabilities of production from Bay's Hollow will determine the point at which further production from additional leases is commenced.

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, 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.

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