ONE News has been told a man is running around with a firearm after a building caught fire in Franz Josef this evening.
Police are dealing with a large fire at a property but are unable to confirm reports of a person present with a gun.
State Highway 6 is currently closed and no diversions are available, police confirmed.
One resident, who lives 200 metres down the road from the mechanics building says other locals have told her to stay inside as there is "a man running around with a firearm".
She said the mechanics building is on fire.
Police said they are attending an incident on Donovan Drive where a house is on fire.
Another local, who did not wish to be identified, told ONE News he heard the town's fire alarm go off just before 8pm this evening, and has sent an image of a building well alight.
He also said that locals have been asked to stay indoors due to the risk of a firearm.
Police have confirmed the fire, but have not confirmed the armed incident.
Motorists are being asked to avoid the area.