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Southland Coal Takes Control Of Cessnock Mine

ASX Announcement / Media Release

10 January 2001

Southland Coal (a wholly-owned subsidiary of Gympie Gold Limited) has taken control of its colliery at Cessnock in the Hunter Valley NSW after the appointment today of a voluntary administrator to the contract-operator of Southland Colliery, Colrok Australia Pty Ltd (a wholly-owned subsidiary of Thyssen Schachtbau).

Southland Coal terminated Colrok's mine operating contract effective immediately and is resuming possession of the site and installing a crew to maintain the mine.

Southland Coal has kept the CFMEU informed and will encourage any replacement operator to maximise security of employment of the existing Colrok workforce.

Colrok has been behind schedule, in particular since October 2000 when production-commissioning commenced of the refurbished longwall unit in newly developed panel SL2. A series of problems since then have severely restricted coal production to less than one third of scheduled output at the annualised rate of 1.5 million tonnes per annum.

Southland's view is that most of these problems result from the operator's conduct, and our first damages claim has been made against Colrok for loss of profits.

Southland has commenced discussions with potential replacement operators to continue production in the newly developed Bellbird South part of Southland's coal lease, which contains some 58 million tonnes of recoverable high fluidity and low ash semi-hard coking coal.

Customers have been very supportive of plans to re-establish Southland's Greta Seam coal as a most important long-term supply of premium semi-hard coking coal.


Gympie Eldorado had a successful first half of the financial year ending 30 June 2001. The Monkland Mine yielded above-budget production of about 20,000 oz gold at about 9.2 g/t, ahead-of-budget production of gemstone and discovery of additional bulk-mineable gold stockwork mineralisation.

The Lewis Mine development is on schedule to complete the first 1,300 metres of decline advance this month.

Gympie Eldorado's safety performance continues to improve as indicated by a "lost time injury frequency rate" of 31 for the past 12 months which is comparable with similar operations and which is about 10% of the rate inherited from the previous operator of the Monkland Mine when we took over operations about 5 years ago. Further improvement is expected as we increase the degree of mechanisation of mining activities.


Cash and finance facilities underpin the group until the restart of Southland production.

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