VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 5, 2011) - North American Gem Inc. (NAG) (News - Market indicators) through its subsidiary, North American Gem US, Inc. (NAG US) has sub-leased the North American Processing Facility (the "Facility") for a one year period to Kentucky Industrial Services (KIS) during which time they will become the exclusive operator. KIS will be responsible for managing operations and all of the cost associated with running the Facility. NAG US will benefit by collecting a net override royalty of $0.25/ton of coal that is shipped from the Facility. Coal produced by NAG US will have priority at the North American Processing Facility. 

NAG US continues to explore its current leases by stepping out beyond what the company already considers its minable coal and evaluating the quality of newly discovered coal. In particular, the exploration is ongoing at the 470 acre Brian Jones lease and the 560 acre Gilliam Hill South lease. Once exploration has completed a comprehensive engineering report will be compiled for evaluation.

NAG US has already received an access road permit for the Swan Pond lease; however the company needed to evaluate another option. An alternate access road was evaluated and it was determined to be a more cost efficient transportation route from the mine site. NAG US is currently waiting for the approval of this new access road permit in order to proceed with the establishment of mining operations at the Swan Pond leases (Mine #3).

NAG US is continuing to work on improving the production numbers at NAG Mine #2. Over the last 12 months, NAG US has experienced production inconsistencies at NAG Mine #2. Currently, NAG Mine #2 is being mined intermittently and the company is working to alleviate the legal issues which have been contributing to the production inconsistencies. An update will be provided when the company learns of any new developments.

North American Gem Inc. (News - Market indicators) 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.