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Update on Current Activities

06 May 2003

Gympie Gold's Managing Director, Mr Harry Adams, plans to include the following information in a presentation to local shareholders this evening in Gympie, Queensland.

Equity Raising and General Meeting Update

A package of share issues raising $15.2 million is progressing as planned and is comprised of:

a private placement of 19.0 million shares, which has been completed;
an underwritten Share Purchase Plan of 19.0 million shares, which is scheduled to close on 9 May 2003; and
a placement to related parties of 7.3 million shares, subject to approval by shareholders on 19 May 2003.

A General Meeting has been convened for 10.30 am on 19 May 2003 at the Australian Stock Exchange, 10-18 Bridge Street, Sydney. The Company has been advised by the Australian Stock Exchange that Company will be able to hold the meeting on Level 8 of the Australian Stock Exchange, rather than the Exchange Square Auditorium as previously booked and advised to shareholders.

Southland Colliery Update

Gympie Gold's 90%-owned Southland Colliery continues to perform well under its new operating regime since the longwall unit was re-positioned back to the seam floor on 10 February 2003. Run-of-mine coal production of 247,000 tonnes for April was 10% more than the previous month's record production of 225,000 tonnes. The washery plant yield has consistently exceeded 90%. The current levels of production are well above the current budgeted rate of 150,000 tonnes per month, generating more than $3 million dollars of additional saleable coal each month.

The recent production levels have underpinned forecast sales to increase to more than 500,000 tonnes for the June quarter, compared to an average of 260,000 tonnes per quarter for the previous three quarters.

Strong production has also permitted the establishment of a washed coal stockpile of more than 200,000 tonnes. Southland intends to maintain this approximate stockpile level and to balance production with shipments. This stockpile should cover the production hiatus when the longwall unit is moved from longwall panel SL3 to SL4, which is expected to take around 6 weeks during September/October 2003.

The longwall upgrade project is on schedule as the purchase of the 90-metre Moonie Longwall unit has been completed. The Moonie Longwall is being prepared for installation and integration with sections of the current longwall unit during the longwall move to SL4.

Mine development continues on schedule with preparation of longwall panel SL4 nearing completion.

Gympie Eldorado Gold Update

Gold production has recently been about 4,000 ounces per month. This is less than budgeted production of 5,000 ounces per month (about $0.5 million per month less saleable gold) because of lower than budget grade from Stockwork Block 6A, currently the primary source of ore.

Exploration of the Inglewood Structure continues to yield good results along strike well north and also well south of the current mine zone, with the latest intercepts including 1.5 metres (true width) at 12.5g/t gold, 1.5 kilometres north of existing infrastructure.

The current mine area is part of a zone originally containing 2 million ounces within a 2 kilometre strike length of the Inglewood Structure. The recently discovered extensions of the Inglewood Structure present the opportunity to drill-test an unmined 6 kilometres of this structure, open along strike and at depth.



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    Last Modified: Tuesday, 06-May-2003 16:36:14 EST