Shareholder Circular

RNS Number:0955T
Gympie Gold Limited
10 December 2003



GYMPIE GOLD LIMITED

                     CHAIRMAN'S ADDRESS - 25 NOVEMBER 2003



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.



Current Situation : Southland Coal

Since March this year with the introduction of new operational techniques to
mine thick-seam coal, production at Southland Coal has been solid and has passed
a number of important milestones.  Production from March to October was over
1.3m tonnes, some 200,000 tonnes above budget.  The very extensive improvements
made to equipment, techniques and practices to address the problems earlier in
the year have shown their effectiveness.  A further milestone was the longwall
move, over about 6 weeks, completed to plan in mid-October.  In the course of
this move, a modern 90 meter section was inserted into the 220 meter longwall to
replace the most troublesome area of supports, and the control systems were
upgraded to current technology.



Since the longwall move, production has recommenced strongly.  In November we
saw a record week of 72,000 tonnes and production Month to Date has been 208,000
tonnes.  We are on target to achieve over 2.1 million tonnes for the financial
year.  We hope to gradually improve the rate of production to nearer 2.5 million
tonnes per annum over the next 12 months or so.



Importantly, in considering future production we are much more confident we can
handle difficult ground conditions, if they occur.  In fact the longwall has
already been through ground that would have caused major problems a year ago
without substantial loss of production.



All this is happening against a general background of strong demand for coking
coal which is being driven by the phenomenal 20% per annum growth of the Chinese
steel industry.  This is an enormously influential and multi-year trend which is
very significant for all Australian coking coal producers.



Demand for Southland Coal is as strong as we have ever seen and we have
continued to diversify our customer base.  We have recently secured new
long-term contracts into North Asia and Europe and we have a full order book for
next year.  Southland retains its position as the seller of the lowest ash, high
fluidity coking coal.



In the immediate future, this strong coking coal market is likely to lead to
good price rises for the next coal year, beginning April 2004.  A typical
strengthening commodity market sees the value of the Australian dollar rising
faster than the commodity prices in the early part of the cycle, with prices
catching up as the cycle matures.  The current situation fits that pattern
fairly closely.



We have hedged the value of our production to early 2004 at 62.5 cents and have
caps in place beyond that at between 71.50 and 73.50 to July 2004.  The effect
of the new coal price, which is expected to be a good increase, starts in April
2004.



As the growth in coal production strengthens working capital requirements have
risen.  This is partly a function of higher volumes and partly due to some
current problems in the Hunter Valley rail and port systems.  Offsetting that,
to some degree, operating cash flows are growing fast and earnings before
interest tax and depreciation and amortisation for 2003-04 from Southland look
to be about $50 million.



Strategic Goals & Opportunities : Southland

Looking ahead at Southland, we have begun to focus on some opportunities to add
substantial value to the asset.



The first of these is an open cut project to mine about 2 million tonnes close
to existing infrastructure.  This would have a very small capital cost and
contribute coal at a low cost of production.



A larger opportunity is a feasibility under way with a major Chinese coal
company and an international engineering company to examine the applicability of
new thick seam extraction technology to Southland that has the potential to
double annual output and add substantially to the scale of reserves.  This
project could lead to a pilot program being introduced in 2005.



Current Situation : Gympie Eldorado

Production at Gympie Eldorado is expected to be about 50,000 oz in the coming
year with some 12,600 oz having been produced to the end of October, and grades
in November have increased materially.  The outlook for the years following is
production of around 40,000 oz per annum based on the current known reserves.
Any additional finds would increase this figure.



But Gympie Eldorado is essentially a major exploration project of which current
production is an important component.  The goal is to re-open a major high-grade
goldfield by making multi-million ounce discoveries.  Current production is
enormously helpful in building our knowledge of the field and its geology and in
providing underground access to areas of interest via modern infrastructure with
large-scale capacity.



Over the past 12 months, we have been able to extend the potential length of the
field a further 20 km to the south and we have now secured exploration rights to
this extra ground.  Taken with other results extending structures to the north,
the Gympie field now has a potential strike length of some 30 km.  This compares
to the 10 km extent of the old goldfield which yielded 4 million ounces.



Surface drilling re-commenced, on a restricted program, in August this year and
has continued to make progress.  The Quarterly Report in October referred to new
gold-bearing structures identified to the North of current workings.



Strategic Goals & Opportunities: Gympie Eldorado

The wider Gympie goldfield is very under-explored.  Until last year there had
been only 20 holes drilled that were more than 500 m away from current mine
workings.  Our limited program last year doubled that figure to 40 holes - still
a very small number for a large unexplored area adjacent to a known gold
mineralisation.



The drilling program of the last 12 months identified gold-bearing sequences to
the south of the current workings which had been uplifted and were present
relatively close to the surface.  Other work indicated that these mineralised
systems could extend much further to the south.  In terms of adding value to the
potential of the whole Gympie field, this work was highly significant.



A major corporate goal is to begin wide step-out drilling on the new ground
identified to the south.  This extends some 20 km to large granite structures
which are now interpreted as the possible source rocks for the goldfield's
mineralisation.  The quality of these targets is very high and the opportunity
they present for the company is a very substantial one.




Corporate Goals

Our overall corporate goal is, firstly, to take both the coal and the gold
businesses to new levels of production and value.  I have mentioned the
opportunities for organic growth that we are pursuing, but we are also looking
at possibilities for growth by acquisitions or merger to see whether these
present the chance of substantial value increments for shareholders.



A second major goal is to build a strong financial base for this growth.



Capital Raising

This morning the company announced a capital raising to raise some $25 million
of new equity by the placement of 50 million new shares at 50 cents per share.
The shares were placed both in the United Kingdom and Australia.



General Meeting will be called on or about 8th January 2004 to approve the issue
of 21.5 million of these shares.  The other shares can be issued under the
Directors' standing authority to place 15% of the capital of the company in any
one year.



The purposes of this raising are to provide additional working capital to take
advantage of a strong coal market to expand production at Southland, to
strengthen the balance sheet generally, and to pick up the rate of surface
exploration at Gympie Eldorado.



The demand for the new shares was solid and we are appreciative of the efforts
of the three brokers involved, Southern Cross Equities and Wilson HTM in
Australia and Numis Securities in the UK.  Numis Securities, our newly-appointed
UK broker has introduced a large number of leading investment institutions to
the share register.



Directors

I would like to close by thanking all my colleagues on the Board for their
efforts and contribution over the last year.  Directors' responsibilities are
always onerous and in tough times this is doubly true.  Their contribution in
addressing the problems we experienced and in rectifying the situation was
substantial and reflects very creditably on them.



Michael Darling
Chairman
25th November 2003








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