North American Gem Inc. Has Received Final State Permit Approvals on North American Gem Mine #1 in Whitley County, Kentucky

  North American Gem Inc. (NAG) (TSX-V: NAG) is
pleased to announce that the final bonds have been posted with the State of
Kentucky by North American Gem on Thursday, October 22. As a result of this
achievement, the completion of the permit transfer for the permit
#918-0396 to NAG, North American Gem has the right to begin mining at the
North American Gem Mine #1 immediately. Engle Hollow Mining, the contract
operator, has spent the past several weeks preparing and will begin
mobilizing and working immediately now that the bonds have been posted.

The method of mining to be used by NAG in the North American Gem Mine #1 is known as contour mining. This type of mining is done on properties that were previously 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 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.

The North American Gem Mine #1 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.

The first requirement for operating the mine is to upgrade the existing access road to a condition suitable for use as a haul road and construction of sedimentation controls. The favorable conditions possessed by this operation will result in minimal cost for the initial development.

Engle Hollow Mining has allocated 2 augers to work simultaneously on different work faces to ensure continuous production. The first coal is expected to be trucked to market before month end.

All of North American Gem Inc.'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 much shorter and smoother permitting application process.

North American Gem plans to have any coal requiring processing from the North American Gem Mine #1 to be the first coal to run through the Cobra Tippling Production Plant (See NAG September 22nd, 2009 release). Most of the coal produced, based on laboratory and exploration data gathered during the evaluation period, is expected to be of high enough quality to ship directly to the buyer.

The North American Gem mining operation will establish NAG as a coal producer with the ability to enter into supply contracts. The supply contracts established by production from the North American Gem Mine #1 are expected to be expanded upon as the Company increases operations in the area. The performance and capabilities of production from the North American Gem Mine #1 will determine the point at which further production from additional leases is commenced.

Mr. Dean Schafer is acting as operations manager of all the Company's Kentucky coal leases and is currently implementing an overall 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, 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.

North American Gem Inc. 430 - 609 Granville Street Vancouver, BC, Canada V7Y 1G5 Phone [phone] Facsimile 604-687-9631 [e-mail] www.northamericangem.com TSX-Venture: NAG