Kentucky, the Bluegrass State, is well-known as one of the best coal producing locations in North America. With a rich history in coal mining that dates back to 19th century, Kentucky has some of the most prolific coal deposits in the world, a strong infrastructure and an experienced workforce.

Blue Gem Coal, a special seam of coal used for the production of silicon metals, is native to Eastern Kentucky and can be found near the border with Tennessee. The demand for silicon metals is expected to grow by 15% in 2010 and another 13% by 2011.

North American Gem Inc, recognizing this increasing demand for silicon metals for use in aluminum, solar energy, semi-conductors, and steel industries, has focused on Blue Gem Coal production as a distinct part of its long-term business outlook and strategy.




North American Gem Inc. currently has three fully-permitted mines in Kentucky.

• Mine #1, located in Whitley County, came into operation in November 2009. The mining is now complete and Mine #1 is currently in reclamation.
• Mine #2, located in Knox County, contains Blue Gem Coal and Jellico Coal. Production began August 4, 2010 and will be approximately 8,000 to 10,000 tons per month in total.
• Mine #3, located in Knox County, contains Blue Gem Coal and Jellico Coal. Mine is now fully-permitted and operations will begin as soon as bond is posted and operator is announced.

With Mine #2 and Mine #3, North American Gem Inc. now has a significant footing in the region en route to becoming a long-term producer and player in the Kentucky coal market. The company also has a strong foundation for future development in Kentucky with pending mining permits, additional leases currently being explored, and favourable infrastructure near the mine sites.

North American Gem's current portfolio of properties in Kentucky

The recently-upgraded North American Gem Processing Facility will serve as the central operation and distribution point for coal produced by NAG's mining operations. The facility is in close proximity to the mines and has equipment in place that is capable of crushing, screening, and washing coal. This gives North American Gem Inc. the added dimension to service a variety of customers by preparing coal to meet their specific requirements. North American Gem Inc. will also have the ability to purchase outside coal to produce custom blended products which will increase market potential. Specifically, plans are to service the industrial stoker markets, silicon metal producers, and electricity generators.

The North American Gem Processing 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 rail transportation rates.




The mine sites contain both Blue Gem and Jellico coal. While both are profitable for North American Gem Inc., Blue Gem Coal is of particular interest because it is one of three coal seams in the world that are best suited for production of silicon metals. The other two are found in West Virginia and Columbia, South America. Of the three, the Blue Gem is the most sought after. For this reason, it is not only consumed in the U.S., but also exported extensively to Canada, Norway, Iceland, India, France, South Africa and Egypt. With the ever increasing demand for silicon metals and silicon products, mineable Blue Gem coal resources are becoming increasingly more valuable. Historically, the Blue Gem coal can bring an FOB (Freight On Board) mine price that is as much as 200% higher than high quality steam coal and is typically the highest priced of any grade of coal produced in the U.S.




Permitting for coal mining in Kentucky is an extensive process designed to ensure that all established standards of operation are met and that the public and environment are protected.

The process has several stages that can take anywhere from 7-14 months to complete. On average, it takes about 12 months for a permit to be completed.

Each permit involves the following stages: property evaluation period, coal quality evaluation period, a title deed search, an extensive rock and water study on the property, an administrative review period, and a technical review period.