North American Gem Inc. Signs Its First Coal Purchase Contract for the North American Gem Mine #1

  North American Gem Inc. (TSX-V: NAG) (NAG) is
pleased to announce Blue Star Energy LTD. (Blue Star) intends to purchase
up to 15,000 clean tons of coal per month produced at the North American
Gem Mine #1, Whitley County, Kentucky. Blue Star is a coal production and
brokerage company that caters mostly to specialty industrial coal users but
also supplies coal to various electricity generators in the Appalachian
region since 1996.

Blue Star, located in Hazard, Kentucky, has completed its analysis of the Jellico coal seam at the North American Gem Mine #1 and now expects delivery of coal immediately upon the commencement of production, which is still on schedule to begin within the week.

The coal sample taken by Blue Star from the North American Gem Mine #1 resulted in analysis of 8% ash, < 1% sulphur and 12,800 Btu.

Production is Expected to Begin Shortly on North American Gem #1 Mine

Production is expected to begin shortly (See NAG October 7th 2009 release) on the leases known as the North American Gem #1 Mine Permit located in Whitley County, Kentucky.

NAG plans to have the coal from the Jellico seam extracted from the North American Gem #1 Mine, under Kentucky State Mining Permit #918-0396, to be the first coal to run through the Cobra Tippling Production Plant (See NAG September 15th 2009 release).

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 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"

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. 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.

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