Appointment of Receivers

RNS Number:8180T
Gympie Gold Limited
05 January 2004

A.B.N. 51 194 660 183
10 Shelley Street
Sydney NSW 2000
Australia
PO Box H67
Australia Square
Sydney NSW 1213
Australia
Telephone: [phone]
Facsimile: [phone]
DX 1056 Sydney
www.kpmg.com.au

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KPMG International network. KPMG International
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Gympie Gold Limited
ACN 000 759 535

(Receivers and Managers appointed)
(Administrators Appointed)

NOTICE TO SHAREHOLDERS

Following an underground fire at the Southland Colliery over the Christmas
period, the Board of Gympie Gold Limited appointed Joseph Hayes and Murray Smith
of KPMG as Voluntary Administrators to the Group on 30 December 2003. Later the 
same day, HSBC Precious Metals (Australia) Limited, acting as Agent for the 
company's corporate loan facility, appointed Andrew Love, Peter Geroff and Allan 
Lewis of Ferrier Hodgson variously as Receivers and Managers to the Group.

We advise that the general meeting of shareholders, which was scheduled for 8
January 2004 to approve the issue and placement of new shares and ratify the
November 2003 placement for the purposes of raising capital, has now been
cancelled.

I attach a letter from Mr Harry Adams, the Managing Director of Gympie Gold
Limited that provides further details. Shareholders should also refer to the
Company's website www.gympiegold.com.au which contains the series of
announcements made by the company.

In the first instance, shareholders should contact Mr Roger Howe at Gympie Gold
on 02 9251 2777.

Dated 5 January 2004

Murray C Smith

Administrator
KPMG
Joseph D Hayes

Administrator
KPMG

Under Receivership of Ferrier Hodgson and Administration of KPMG

5 January 2004

Dear Shareholder

As you will be aware, a very serious underground fire occurred at the Southland
Colliery over the Christmas period. The purpose of this letter is to inform
shareholders about the devastating consequences this disaster and to advise that
the General Meeting of shareholders scheduled for 8 January 2004 will not be
held.

On 23 December, elevated gas levels were detected and the mine was evacuated. On
24 December, the situation escalated into an emergency as a "heating" indicated
increased potential for spontaneous combustion of in-situ coal. On 25 December,
the heating worsened and a fire commenced underground, which was suppressed by
changes to mine ventilation. On 27 December, further containment was effected by
injection into the mine of suppression gases, which choked oxygen supply to the
fire. 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.

We are enormously relieved that not a single injury has been incurred. An expert
working group continues to evaluate the conditions in the underground mine and
how best to make the mine safe for re-entry. It may remain unsafe to re-enter
the mine for a protracted period. It will be necessary to physically inspect the
mine workings and equipment underground in order to reasonably estimate the cost
to potentially re-commence production.

The financial circumstances facing the Company were reviewed by your Directors.
The Board determined that the Company faced the possibility of not being able to
meet its debts as and when they fell due, given that a) Southland would be
incurring extra costs and not generating income for at least several months, b)
the second tranche of the recent $25 million placement would not proceed, and c)
additional funding could not be raised whilst there was uncertainty of resuming
production at Southland. In these circumstances, Corporations Law is very
precise about the duties of the Board. Your Directors immediately and
reluctantly appointed KPMG as Voluntary Administrators of the Company. The
Company's major lenders then appointed Ferrier Hodgson as Receivers and
Managers.

The Company is likely to remain in Receivership and Administration for at least
several months.

During this process, trading in the Company's shares will remain suspended. The
ultimate outcome of this process is for the Company's shares to either re-
commence trading or be delisted. In the meantime, Gympie Gold will strive to
continue to meet its reporting obligations to the ASX as a listed company and
post information on its website.

These events have been an enormous disappointment to the entire organisation.
The Board of Directors, Managing Director and staff of Gympie Gold are pro-
actively assisting the Voluntary Administrators and Receivers and Managers, with
a view to preserving as much value as possible for all stakeholders.

Yours sincerely

Harry Adams
Managing Director
Gympie Gold Limited
ABN 88 000 759 535








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