VANCOUVER, BC -- 09/15/09 -- North American Gem Inc. (TSX-V: NAG) (NAG) is pleased to announce the execution of a Letter of Intent (LOI) to enter into an open ended lease with Safeco, Inc. of Corbin, Kentucky, to operate a coal preparation and rail loading facility in Knox County, Kentucky. The 19 acre facility is known in the area as the Cobra Facility (Cobra Tippling Production Plant) and is permitted by Safeco, Inc. under KDNR permit # 861-8012.
The Cobra Facility is located centrally to the area being developed by North American Gem Inc. and will serve as the central operation and distribution point. The facility has equipment in place that is capable of crushing, screening, and washing coal. This will give NAG the ability to service a variety of customers by preparing coal to meet specific requirements and will also give NAG the ability to purchase outside coal and produce custom blended products for increased market potential. Specifically, plans are to service the industrial stoker markets, silicon metals producers, and electricity generators.
The facility is serviced by the CSX railroad and currently has enough rail capacity to accommodate the loading of unit trains (110 railcars) which will allow for more favourable rates from the railroad.
North American Gem Inc. plans to have the coal from the Jellico seam extracted from the North American Gem #1 Mine (formerly referred to as "Bays Hollow" in the September 9th release), of Kentucky State Mining Permit #918-0396, to be the first coal to run through the newly acquired Cobra Facility.
The North American Gem #1 Mine Permit is for the extraction of coal, using auger/highwall mining methods, in the Jellico coal seam which averages a thickness of 91cm (3ft). The permit is complete and ready for transfer pending the 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 North American Gem #1 Mine Permit is expected to last 12-18 months.
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 USD$58.00/net ton at <> 12,500 btu for up to 30,000 net tons per month beginning immediately. This price is approximately USD$6.00-$8.00/net ton higher than prices quoted earlier in the summer.
The North American Gem #1 Mine operation has the potential to establish North American Gem Inc. as a coal producer with the ability to enter into supply contracts. The supply contracts established by production from the North American Gem #1 Mine Permit 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 #1 Mine Permit will determine the point at which further production from additional leases is commenced. 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.
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.
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