NAG receives approval to mine at #2 mine

 July 27, 2010: North American Gem Inc. (NAG) (TSX-V symbol: NAG) through its subsidiary, North American Gem US, Inc. is pleased to announce that the Kentucky Department of Natural Resources (KDNR) has fully approved the mining application (Mine permit number #861-0513) which allows for immediate production to begin at North American Gem #2 Mine in Knox County, Kentucky.

North American Gem #2 Mine contains Blue Gem and Jellico coal seams and will be North American Gem's first opportunity to produce highly-valued Blue Gem Coal.

Blue Gem Coal commands a price as much as 200% higher than high-quality steam coal and is typically the highest priced grade of coal produced in the United States.

Kentucky Mine Partners LLC (KMP) has all of the equipment to perform the mining operations prepared and staged at the North American Gem #2 Mine. Initial production of the Blue Gem and Jellico coal is planned for a combined production rate of approximately 8,000 - 10,000 tons per month. The North American Gem #2 Mine will be a surface mining and augering operation. NAG has a buyer in place to purchase all of the coal produced from the North American Gem #2 Mine.

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.

The North American Gem Processing Facility (Mine Permit #861-8012) 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.

NAG has also completed production at the North American Gem Mine #1 site in Whitley County, Kentucky. The Jellico coal which averaged in quality <12% ash, <1.1% sulphur and >12,200 Btu was sold to four buyers over the course of the mine's operations. Since North American Gem Mine #1 was opened for the primary purpose of initiating and streamlining NAG's Kentucky mining operations, the decision to conclude mining at the North American Gem Mine #1 was based on profitability analysis of the remaining coal at the mine and the need to dedicate assets to more profitable mining operations. 

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