NAG North American Gem Inc.

North American Gem Inc. (NAG) (TSX VENTURE:NAG) is nearing full production 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 two weeks time.


NAG would also like to announce that 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 and it is expected that production will be at least 25,000
tons per property per month.


The decision of North American Gem to acquire and develop this permitted coal
lease was made with consideration of the situation regarding the "mountaintop
removal" and "valley fill" issues under scrutiny by the US Environmental
Protection Agency. None of the leases currently held or being considered by NAG
will be affected by this issue.


The method of mining to be used in the North American Gem Mine #1 is known as
contour mining. All of the mining permits currently being pursued by NAG have
been mined prior to the enactment of the Surface Mine Control and Reclamation
act of 1977. This law requires that after any surface mining, the land must be
restored to the approximate original contour unless otherwise specified in the
permit application and approved by the Kentucky Department of Natural Resources
(KDNR). When "pre-law" mining was done, the general practice was to mine along
the contour of a slope to the maximum profitable ratio and leave the resulting
highwall and a wide, flat bench where the material covering the coal was removed
and then graded somewhat flat as opposed to restoring the original slope. NAG
will at the very least return the mining permit locations to their current
state, and in some instances return the mining permit location to a better
environmental state due to the Surface Mine Control and Reclamation act of 1977.


The North American Gem #1 Mine is permitted for the use of augers to enter the
coal seam from the exposed wall with minimal additional excavation and maximum
cost effectiveness. This type of mining dramatically reduces the amount of
surface disturbance and allows for the recovery of any potential reserves that
were previously believed not to be economically viable. 


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.


North American Gem Inc. (TSX VENTURE: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 Kentucky, 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. 


On Behalf of the Board of Directors

NORTH AMERICAN GEM INC.

Charles Desjardins, President and Director

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. The
production rate and mine-life projections have been made without support of a
feasibility study, there is no certainty the proposed operations will be
economically viable. 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.

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