2003 AGM - Chairman's Address

Address by Michael Darling, Chairman of Gympie Gold Limited

Welcome to the Annual General Meeting for the company. In this report I will cover the highlights of the past year and go into more detail on events since 1 July 2003. I also want to talk about the outlook for the current year and our corporate objectives beyond then.

Financial Year 2002/2003

In the Annual Report, I recounted how six months of production problems at Southland Coal had a major negative impact on both profitability and the balance sheet over the year. The net loss of $22.9 million reflects this. The episode cost the company about $25 million and in effect exhausted the company's cash and reserves.

As a result, a total of $15.2 million was raised in the June quarter by a combination of placement and share purchase plan. I reported then that further work on the balance sheet would be required and foreshadowed a restructuring of the loan facilities as part of that process.

The improvements at Southland Coal became evident, in a production sense, in March this year, but as you can see the financial implications are still with us. They also overshadowed some very real achievements at Gympie Eldorado, particularly in exploration.

Gold production at Gympie Eldorado was 55,368 oz, slightly below budget and near-mine exploration was disappointing in that it failed to find large unmined ore zones that could be brought into production quickly from the new main access tunnel, the Lewis Decline. We found that the miners of a century ago had beaten us to these zones.

But overall, exploration success was significant and added to the prospectivity of the whole field. Of particular importance was the identification of goldfield extensions to the prolific Inglewood Structure both to the north and south of current workings.

In our view, the evidence continues to build that the Gympie Goldfield has the potential to deliver more gold in the future than the 4 million ounces it has already produced. It is a major exploration project supplemented by a mining operation that will remain small until exploration results trigger expansion using the infrastructure that has already been established.

[Address continues...]