North American Gold Inc.: Option Completed, Drilling to Test Swedish Iron-Copper-Gold Targets.

VANCOUVER, British Columbia -- North American Gold Inc. (NAU) (TSX VENTURE:NAU) is pleased to announce that the TSX Venture Exchange has accepted the Company's agreement with a subsidiary of Anglo American Exploration plc, whereby the Company has been granted the right to acquire a 100% interest in Anglo's Pajala Properties in Sweden. In accordance with the terms of the option, the Company has issued 162,990 shares to Anglo's subsidiary, as well as 40,000 shares as a finder's fee in connection with the transaction. All of the above securities have a four-month hold period from the date of issuance.

The Swedish Geologic Survey (SGU) has identified eight iron (magnetite) deposits within North American Gold's Pajala project area. The largest and best understood is the Stora Sahavaara deposit, for which historic data from the SGU indicates a resource of 100 million tonnes of magnetite with associated copper values. The average grade of the iron (Fe) is 44.5% Fe, and the copper (Cu) is 0.30% Cu. The deposit was defined by the SGU from 47 drill holes (13,000m of drilling), and associated geophysics. The Stora Sahavaara deposit outcrops under glacial till for approximately 1200m with widths from 50m to 100m. At profile 900 North the deposit is known to reach a depth of 750m. Other profiles along strike indicate that the deposit is open at depth. An isometric projection of the Stora Sahavaara magnetite body, and a type drill section through the body are available on NAU's website (www.northamgold.com).

In addition to Stora Sahavaara there are three other deposits in the same area combining for an additional 90 million tons of magnetite with associated copper values. Those deposits as defined by the SGU are Palotiva, Tapuli, and Sodra Sahavaara.

North American Gold has selected the Stora Sahavaara deposit to initiate its upcoming drill program at Pajala. NAU will drill 10 large diameter core holes to confirm grade, to test for gold potential and for metallurgical test purposes. The results of this drill program will determine if Stora Sahavaara will be fast tracked to a production decision point.

The Pajala region was originally targeted by Anglo because of the potential for iron-oxide-copper-gold systems (IOCG). A series of copper-gold targets were identified on the licenses by Anglo and these will also be tested by NAU. Interestingly, the Geological Survey of Finland, in a report compiled for NAU, identified a series of magnetite bodies in the Pajala area as potentially belonging to the magnetite-rich end member of the IOCG type of deposit. These include the Stora Sahavaara, Sodra Sahavaara and Tapuli deposits plus a series of smaller bodies, all of which fall within concessions controlled by NAU.

Background

A number of economically mineable magnetite bodies are known in Sweden. The Kiruna mine currently produces approximately 20-25 million tonnes per year of magnetite at a grade of 48% Fe from workings that are up to 1,175m deep. Similarly, the Malmberget mine, also in Sweden, produces about 12 million tonnes of magnetite per year at a grade of roughly 43% Fe from depths of up to 1,000m. By comparison, Stora Sahavaara has an historic estimated grade of roughly 44.5% Fe and a depth extent of 750m from surface.

NI 43-101 Disclaimer

The resource estimates quoted in this news release were prepared prior to the implementation of National Instrument 43-101. North American Gold is relying on estimates prepared by the SGU and published in 1967, as a report titled "The Stora Sahavaara Iron Ore Deposit, Kaunisvaara, Northern Sweden" written by Bo Lundberg (Serie C Nr 620, Arsbok 61 Nr 5), and the report titled "Review of iron-oxide-copper-gold mineralization in northern Fennoscandia (Sweden and Finland)" prepared by the Geological Survey of Finland for NAU, dated February 2005.

None of the historical resource estimates in the SGU or Finnish Geological Survey reports use the resource categories stipulated in Section 1.3 of National Instrument 43-101, which are "inferred mineral resource", "indicated mineral resource" and "measured mineral resource". Rather, the historical resource estimate for the Stora Sahavaara deposit reported by the SGU refers to "100 million tonnes", which is not a category stipulated in National Instrument 43-101. The historical resource estimates for the deposits reported by the Geological Survey of Finland refer to "metal contents", which is not a category stipulated in National Instrument 43-101. The Company believes that term "resources" is used differently from the use of that term in NI 43-101. The Company does not have - and is not aware of - any more recent resource estimates which conform to the standards laid out in NI 43-101.

The Company advises that it has not done the work necessary to verify the classification of either of the mineral resource estimates and they have not been verified by a Qualified Person. The Company is not treating the historical resource estimate as a NI 43-101 defined resource or reserve, and the historical resource estimate should not be relied upon.

Vance V. Thornsberry, P.Geol., Vice President of Exploration for North American Gold, is the Qualified Person as defined in NI 43-101, and has verified that the information presented in this release has been accurately summarized from the reports quoted herein.

ON BEHALF OF THE BOARD

Buck Morrow, President

The TSX Venture Exchange has not reviewed and does not take responsibility for the accuracy of this release.

North American Gold Inc. (TSX VENTURE:NAU)