GYM gympie gold limited

Gympie Gold banks on its unique coking coal to pro

  1. 6,931 Posts.
    Gympie Gold banks on its unique coking coal to propel it forward
    BRISBANE, May 22 AAP|Published: Wednesday May 22, 2:35 PM



    Gympie Gold Ltd has secured handshake settlements with many of its coal customers for the coming year, according to managing director Harry Adams.

    The Sydney-based exploration and mining company has also reaffirmed it is on track to treble its coking coal and gold production in 2002/03.

    Gympie Gold is also heading to the market to raise up to $40 million in a five-year convertible note issue, with an 8.5 per cent coupon, closing on June 14.

    Mr Adams said the company was always on the hunt for new opportunities and would not rule out acquiring further gold or coal assets.

    "That's what this note issue is all about .. we're going from being a penny-pinching opportunistic buyer of cheap assets in the middle of Winter and getting them into production to have two operations up and running," he told AAP.

    "It's taken six years to get to this point to be able to generate serious cash flow and that is next year. We are on track to meet our production forecasts."

    One third of Gympie Gold's revenue comes from gold, while two thirds flows from its Hunter Valley coal mine, Southland Coal.

    Eighty per cent of its profits stem from coal, which is essentially semi-hard coking coal.

    Gympie Gold said earlier this year it was on track to treble coal production and almost triple gold production in 2002/03.

    While the company is watching developments in coal talks globally, Gympie's own marketing arm has been out there stitching up deals.

    "We've got handshakes in Japan, Europe, North and South America, India and Korea in the order of the industry pattern but we haven't settled all of them," Mr Adams said.

    "Volume is not an issue for us, we are like a herbs and spices supplier and there is always room for our speciality."

    Gympie Gold has aggressively diversified its customer base and markets one third of its exotic coking coal as a blend to Japan, and the rest gets sold to every continent bar Africa.

    "Our coal is a freak, it has two certain exceptional characteristics as it is the lowest ash or cleanest coking coal in the world, and it has the highest fluidity in the world, so it can be mixed with other coals," Mr Adams said.

    The annual Australia Japan coal contract negotiations indicate the prices reached for thermal coal settlements could be down eight per cent in price.

    "Thermal coal is clearly coming off, semi-soft is in that general pattern as well, while hard coking is heading in the other direction," Mr Adams said.

    Mr Adams said the semi-hard coal price was heading in the same direction as hard coking coal, where the market is hoping for a 10 per cent price rise.

    The settlement price for semi-soft coal prices is understood to be likely to drop by five to six per cent price.

    The coking coal benchmark achieved last year was $US42.75/tonne with a price of $US34.50/tonne for thermal coal.

    In 1998, Gympie Gold took over the defunct Ellalong colliery, mining the Greta seam, which is managed by Thiess which has a 10 per cent stake in Southland Coal, near Newcastle.

    The Greta seam has been mined for 100 years and Gympie owns the next 50 years, with proven reserves to cover the next 20 years.

    It is located 63 kilometres from the world's largest coal port, Port Waratah, at Newcastle.

    Since 1998 the Gympie team have radically modernised Ellalong's work practices, overhauled infrastructure and developed large panels of coal.

    Southland's third longwall, which contains 1.7 million tonnes is gearing up for extraction from July, which should take about a year.

    "That will be the biggest production panel ever developed on the Greta seam," Mr Adams said.

    The company also owns 100 per cent of the historic goldfields at Gympie, 160 kilometres north of Brisbane, managed by its wholly-owned subsidiary Gympie Eldorado Gold Mines.

    By Alex Tilbury



    I hold GYM, read the red stuff.

    Regards

    Desmond

 
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