Home Home  Gympie Gold Limited
about usChairman's ReportGympie EldoradoGemstoneSouthland CoalFinancialReleasesInvestor CentreLibrary
Southland Coal

Southland Coal

Southland Location Plan
Southland Location Plan

A very serious underground fire occurred at the Southland Colliery during late December 2003. An emergency situation developed very quickly at Southland and culminated in the sealing of the mine. See our Releases page for announcements which contain further information on these disastrous events and their consequences.

The Southland Colliery is located near Cessnock in the Hunter Valley of New South Wales and 65 kilometres from Newcastle - the world's largest coal port.

Southland produces Australia's lowest ash high-fluidity coking coal from the well-known Greta Seam. Southland produces a superior coke blending coal that permits steel producers to reduce costs by substituting our coals for some of the more expensive hard coking coals. Southland's coal also has other attractive properties suitable for the steel industry and also to sized-coal and electricity generation markets.

The Greta Seam has been in almost continuous production for over 100 years and the Southland Colliery now exclusively holds all known reserves. The colliery currently has an infrastructure capacity of over 2 million tonnes per annum and Recoverable Coal Reserves of 41 million tonnes.

In early 2001, Gympie Gold and Thiess entered into a strategic alliance whereby Thiess invested $11 million to take a 10% joint venture interest in the Southland Colliery.

An alliancing contract between Gympie Gold and Thiess was triggered in November 2002 as part of the turnaround of the then-problematic production operations. This contract covers the entire operation and provides the following benefits to the project:

  • Full transparency in cost and performance measurement, through an open-book approach;
  • Integration of the management teams of owner and contractor with owner-leadership reinforced throughout;
  • Transparency of contractor's margin and administrative overheads; and
  • Integration of owner and contractor focus onto long-term planning.

Direction of the joint venture now flows from an alliance leadership team headed by Gympie Gold as the principal owner.

OPERATIONS

Longwall production for 2002-03 totalled an unsatisfactory 1.26 million tonnes of run-of-mine coal. Even though this was a 23% increase on the previous year, it was much less than the forecast production of 1.5 million tonnes.

Coal production was severely restricted from September 2002 to February 2003 due to:

  • Longwall face stability problems, primarily relating to a zone of poor ground conditions (low angle in-seam shearing); and
  • The longwall unit being moved to mine through this zone at a higher level in the seam, pending regulatory approval of improved ground support techniques which were introduced in January 2003.

The zone had been anticipated in the mining plan but its impact was under-estimated, as mining in plus-6 metre thick sections of the seam has been conducted for less than 18 months. Based on operational changes, experience gained and independent advice, Southland should now be able to efficiently mine through similar zones when encountered in the future. This was indeed found to be the case in May 2003.

The Southland Colliery has performed well under a new operating regime since the longwall unit was re-positioned back on the seam floor in mid-February 2003. An average of 192,000 tonnes per month was produced for the remainder of the year, well above budgeted rates.

Increased reliability of production flowed from the new operational regime which included the following:

  • Conversion of longwall operations from a 5-day roster to a continuous 7-day roster increased the annual production capacity of the operation, by approximately 20%;
  • Mechanical improvements to the longwall unit and upgraded maintenance systems which have enhanced operational reliability;
  • New rapid recovery strata fill techniques have been introduced; and
  • Bringing forward the alliance contract with Thiess, triggering an open-book approach and integration of our respective management teams.

The washery plant yield for 2002-03 exceeded 90%, reflecting the low ash of the Greta Seam coal.

Development of the SL4 longwall panel was completed in May 2003 as scheduled. This was achieved even though one continuous miner unit was utilised for most of the year, rather than the two planned units.

Longwall face equipment purchased during 2002-03 was used to upgrade the existing longwall unit in September 2003. This equipment is in near-new condition and will replace a 90 metre section of the 220 metre longwall. The overall cost of this major upgrade is approximately $10 million, substantially less than the cost of an entire new longwall unit. This project is expected to further increase the longwall's reliability and its ability to cope with varying ground conditions.

A pre-feasibility study was completed for a proposed 2 million tonne open-cut operation on an established mine lease. Final feasibility studies are being undertaken and will be followed by the regulatory approval process. In addition, long-term plans are being developed for Southland's large freehold land holdings in the Hunter Valley.

MARKETING

Southland produces Australia's lowest ash, high-fluidity coking coal from the Greta Seam in the Hunter Valley. Southland's product range includes Bellbird Premium Coking Coal, Southland Semi-Soft Coking Coal, Southland PCI Coal (Pulverised Coal Injection), Southland Sized Coal and to a lesser degree low-ash, high-energy thermal coal. Southland's coal is also in demand by other producers shipping coal from Newcastle in order to upgrade their export products. This diversified product mix provides the mine with a long-term strategic role as an exporter of high-quality coking coal.

As an independent coal company, Southland Coal is able to add value to its products by its flexibility and ability to service a wide range of worldwide markets, in particular North Asia, Europe, South America and the domestic market. Greta Seam coal retains its fluidity for an exceptionally long period, thereby facilitating penetration into Europe and South American market segments as an attractive coke-blend component.

A diversified customer base and product mix enables Southland to:

  • Protect its average pricing by managing the product mix as demand changes; and
  • Reduce the risk of over-exposure to a particular market segment or country.

Coal sales (including purchased coal) were 1.26 million tonnes for 2002-03 and sales increased to over to 1.1 million tonnes for the first half of the 2003-04 financial year.

The demand for coking coal remains firm due to the worldwide steel industry producing at full capacity, predominantly driven by China's booming economy. Strong coking coal demand combined with Southland's product mix and niche marketing strategy should continue to protect product pricing as sales increase substantially over the coming year.


View Southland Production Statistics and Reserve Statement (450KB) [ pdf ]

  Latest Releases
Announcements
11 October 2005:
Circular to stakeholders - 5 October 2005
26 September 2005:
Notice of Meeting
Quarterly Reports
30 January 2004:
Report for December 2003 Quarter
20 October 2003:
Report for September 2003 Quarter
Annual Reports
23 October 2003:
2003 Annual Report
01 October 2002:
2002 Annual Report
 
Profit Reports
28 August 2003:
Full-Year Results and Update
28 August 2003:
02-03 Preliminary Final Report
 
Presentations
25 November 2003:
2003 AGM - Managing Director's Presentation
05 November 2003:
Mining 2003 Conference Presentation
 




[ Home | About Us | Chairman's Report | Financial Summary | Releases | Investor Centre ]
[ Gympie Eldorado Gold Mine | Gemstone | Southland Coal ]
[ Media | Disclaimer ]
© Gympie Gold Limited
Email: info@gympiegold.com.au
ABN: 88 000 759 535

URL: http://gympiegold.com.au/slc/index.html
Last Modified: Wednesday, 31-Mar-2004 12:27:17 EST