Southland Colliery Emergency

RNS Number:6827T
Gympie Gold Limited
29 December 2003



                             ASX & AIM Announcement
                                29 December 2003

                          Southland Colliery Emergency

Principal Points:

   *The "heating" problem at the Southland Colliery announced on 24 December
    2003 became an emergency and escalated into a fire on 25 December 2003.

   *The fire has been suppressed by ventilation changes and further contained
    by circulation of inert gases which are now choking oxygen supply.

   *Gympie Gold's wholly-owned subsidiary Southland Coal is considering its
    operational options at Southland Colliery with Joint Venturer and Alliance
    Partner Thiess.

   *An expert working group is evaluating the status of the combustion and
    damage to mine workings and equipment.

   *The mine is in the process of being sealed in a manner to allow re-entry
    or possibly closure if safety or economic considerations dictate.

   *It may remain unsafe to re-enter the mine for a protracted period and the
    situation could have serious implications for the future of Southland Coal.

   *The financial impact is currently unquantifiable.

   *The Board of Gympie Gold is considering options for the protection of all
    stakeholders' interests.

   *At the request of Directors, the ASX has suspended trading in the
    Company's securities. The Company is seeking a parallel a suspension of
    trading on AIM.


Recent Events:
The evacuation of the Southland Colliery, announced on 24 December 2003, has
worsened to the status of an emergency.
Following the escalation of the "heating" into a fire on 25 December 2003 and
the fire's subsequent containment, the Company awaits the result of an ongoing
investigation by an expert working group into the status of the combustion and
its effect on current mine workings and production.

Background to the Southland Spontaneous Combustion Emergency Situation:

   *On 23 December, gas monitoring equipment detected elevated gas levels in
    the mine and precautionary actions were triggered under the mine's Safety
    Management Plan, pending analysis and interpretation.

   *On 24 December, the situation was interpreted with expert input as one of
    serious safety risk and the Company so informed its key stakeholders, the
    emergency services and the community near the mine and announced the
    existence of the problem to both the Australian and London Stock Exchanges.
    It appeared that the mined-out area adjacent to the current SL4 longwall
    panel had developed a "heating", indicating increased potential for
    spontaneous combustion of in-situ coal.

   *On 25 December, the heating worsened and a fire commenced underground,
    which was suppressed by further changes to mine ventilation. On 27 December,
    further containment was effected by injection into the mine of suppression
    gases, which are now choking oxygen supply to the fire.

   *The mine is in the process of being 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.

Current Analysis of the Situation:

   *Expert personnel and advisors, as well as the Mines Inspectorate and
    Union representatives, continue to participate in controlling the emergency.

   *Safety takes the highest priority. The community has been kept informed
    continuously, as have the emergency services.

   *In light of the rapid escalation of this heating into a fire and the
    consequential emergency situation, it may remain unsafe to re-enter the mine
    for a protracted period.

The Future of Southland Coal and the Gympie Gold Group:

   *Time has not permitted all of the issues to be fully evaluated and
    discussed with all the relevant parties between 24 December and today.
    However, it must be recognised that the situation could ultimately threaten
    the future of Southland Coal and will have serious financial implications
    for the Gympie Gold Group.

   *Directors and management are reviewing the situation and holding
    discussions with major suppliers, lenders and with other interested parties
    to determine the immediate course of action.

   *The Board of Gympie Gold is considering options for the protection of all
    stakeholders' interests.

   *In view of the current unavailability of reliable information as to the
    financial impact of the problem, the Directors have requested, and the ASX
    has granted, the suspension of trading in the Company's securities. The
    Company is seeking a parallel suspension of trading on AIM, pending both the
    outcome of this week's discussions and the receipt of further information on
    the impact of underground damage.

Until the occurrence of the emergency situation, Southland Coal's prospects were
strong. Large contract volumes to customers worldwide had been secured,
including many term contracts. Product price negotiations had been completed
with most customers for price increases exceeding 20% for the year commencing 1
April 2004. Technical studies of further expansion possibilities of the
Southland Colliery had also been advancing.
The Board of Gympie Gold wishes to extend its thanks to the many people who have
given up their holiday period to assist in the containment and suppression of
the combustion at Southland Colliery.






                        For further information contact:
  Harry Adams, Managing Director 02 9251 2777 or international [phone]

Electronic copies of this report are available on website www.gympiegold.com.au
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