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Southland Colliery Update

ASX Announcement / Media Release

11 January 2001

Gympie Gold's wholly-owned subsidiary Southland Coal took full control and possession of its Southland Colliery site yesterday at around 1.30pm, having been advised at around 11.30am that the contract-operator Colrok Australia had been placed into voluntary administration by its directors. This was reported to the Stock Exchange at 2pm.

The rapid response by Southland succeeded in protecting the colliery. The mine workings and infrastructure have been secured by Southland personnel and the first potential replacement contract-operators will inspect the mine and Southland's plans within the next week.

Southland aims to restart production within about one month on a short-term contract basis while longer-term arrangements are negotiated with several contractors.

Southland is of the view that it has paid all of Colrok's entitlements during the period of its engagement from July 1998 to termination yesterday. Colrok was entitled to be paid only upon production of finished product.

Last night's mine inspections confirmed all roadways are clear, longwall panel SL2 has some 700,000 tonnes of recoverable coal ready for extraction and the 220 metre longwall face is in good condition. The longwall unit itself however requires some work at both ends, tail-gate and main-gate.

Notwithstanding this and other evident operational problems that need to be rectified, Southland believed there is no reason why longwall extraction should not achieve 6000 tonnes per day and development at least 7 metres per unit shift, which together underpin an annualised rate of 1.5mtpa. This rate was also the historical average during the first 15 years of the predecessor Ellalong colliery's operation, from 1982 to 1996.

Colrok's former site personnel conducted themselves in an exemplary manner during the termination yesterday of Colrok's contract. Southland is also appreciative of the support from the customers, the CFMEU, suppliers and other key stakeholders. It is our intention to encourage any new contract-operator to maximise re-employment of Colrok's workforce which we understand was terminated yesterday.

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Last Modified: Friday, 23-Aug-2002 08:55:16 EST