But the miner, which has gold operations at Gympie in south-east Queensland and coal mining in the Hunter Valley, New South Wales, managed to maintain its operating profit before tax at $6 million.

Net profit was dragged down by deferred income tax provisions of $1.1 million, but Gympie does not expect to pay income tax again for some years due to carried forward tax losses.

Group revenues rose to $58 million from $44 million in fiscal 1999 based on gold sales of 33,000 ounces and coal sales of 712,000 tonnes, which were 10-15% under budget due to an emphasis on development activities at Gympie and to equipment limitations at Southland Coal. Gympie said the equipment problems are being rectified.

Current budgets have coal production increasing to an annualised rate of 1.5Mt by December 2000 and gold production to an annual rate of 100,000oz by December 2001.

Wholly-owned subsidiary Southland Coal is preparing for the start-up of production next quarter in longwall panel SL2.

The first panel from the large Bellbird South lease is planned to yield 2Mt semi-hard coking coal with high fluidity (+5000ddpm) and low ash (-7%).

Another wholly-owned subsidiary, Gympie Eldorado, has launched a series of expansion projects.

Surface and underground drilling has intercepted several large mineralised stockwork zones and produced results including 72m grading at 13.1 grams per tonne.

“Limited drilling and development to date suggests a potential for over 1Mt at +10gpt,” the company said.

At the existing Monkland Mine underground diesel haulage equipment has been introduced as part of its conversion to mainly mechanised machinery, while decline development for the new Lewis Mine with contract-operator Roche Mining has advanced the first 200m.

Gympie has funded the expansion programs with net operating cash flows of $14.3 million in fiscal 2000, cash reserves and borrowings of $5.4 million and an equity raising last November which netted $6.2 million.

Managing director Harry Adams said the company is excited about the discovery of the high grade stockwork zones.

“The large scale orebodies could trigger a significant revision of our long term production outlook. We are firing on all cylinders at Gympie.

“The coming year also sees the culmination of two years growth preparations at Southland. From November it should be full steam ahead with good gear in good seam conditions.”

Gympie Gold shares were up 0.5c to 37.5c at midday.