Media reports said Yanzhou would spend more than $100 million redeveloping the coking coal mine to around two million tonnes per annum capacity. Under Gympie Gold’s leadership the longwall produced 1.8Mt in 2003.

Full ramp-up is expected in 18 months time, although initial development production could be only six to nine months away.

Gympie went into voluntary administration and receivership after fire ravaged the colliery over the Christmas period last year.

Since Gympie’s collapse its gold arm – the Eldorado operation in Queensland – was sold to a consortium consisting of Mizuho International, Investec Bank of Australia and Buka Minerals.

Media reports indicated Yanzhou was expected to appoint Australian contractors to operate the mine. Before the fire, Leighton subsidiary Thiess was operating Southland but was forced to retrench its workforce when it encountered unsafe conditions upon re-entry of the mine.

New York listed Yanzhou produced 43.3 million tons last year from its six underground mines in Eastern China. It has proven and probable thermal and coking reserves totalling two billion tons.

In a number of its thick coal seam mines Yanzhou has used top coal caving – a method conceived in China. Southland has been named a target for longwall top coal caving in the past and it would appear likely Yanzhou may seek to employ this method at the mine.

The sale of the colliery to Yanzhou is expected to take six to eight weeks to complete.