Report for December 2003 Quarter
30 January 2004
- A fire at the Southland Colliery over the Christmas period caused a rapid and substantial deterioration in Group's financial position and prospects. No injuries were sustained by any person.
- The Board of Gympie Gold Limited reluctantly appointed KPMG as Voluntary Administrators to the Group on 30 December 2003. The Company's lenders then appointed Ferrier Hodgson as Receivers and Managers to the Group.
- Personnel employed by the Group and its contractors have since been reduced by approximately 200 people.
- Trading in the Company's shares and convertible notes was suspended on 29 December 2003 and is likely to remain suspended for at least several months given that the Company is in Receivership and Administration.
- As a result of the initial operational and financial review by the Receivers and Managers, together with the continuing uncertainty associated with the recommencement of operations at the Southland Colliery, Gympie Eldorado Gold Mines Pty Ltd, or its assets, is being offered for sale by international tender, together with the Group's 25.3% shareholding in D'Aguilar Gold Limited.
- A placement announced in late November 2003 was to raise $25.0 million at $0.50 per share, comprised of:
- a first tranche of 28.5 million shares, which was completed in early December 2003; and
- a second tranche of 21.5 million shares, which was subject to approval of shareholders in January 2004 and did not proceed.
- Court approval has been received to extend the convening period for the second meeting of creditors to May 2004.
- The fire has been suppressed and the mine sealed in a manner which will allow flexibility as to re-entry or ultimately permanent closure, if such a course is dictated by safety or economic considerations.
- Significant effort and money has already been expended to assess the prospects of re-entering the mine and recommencement of mining operations. The time required to achieve this remains uncertain.
- The present situation is that gas monitoring at the coal mine indicates that the fire appears to have been contained. Bore holes are being drilled to lower monitoring instruments some 450 metres to target destinations adjacent to the postulated source of the fire and the longwall unit. The mine is being reventilated at very low volumes in an attempt to clear residual gases produced by the fire in the area of the longwall unit.
- Personnel numbers employed by site contractor Thiess and sub-contractors have been reduced by 150 people.
GYMPIE ELDORADO GOLD MINES
- Gold mining operations continue even though exploration and mine development has been curtailed. Mine development contractors have been demobilised. Personnel numbers have been reduced by 50 people.
- Gold production for the December 2003 quarter was 9,820 ounces due to a lower than forecast head grade as Stockwork ore was excessively diluted and Inglewood ore was sourced from development headings.
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