12. FINANCIAL POSITION AND OPERATING RESULTS

2.12.1 FINANCIAL STATEMENT

  2.12.1.1 Audit for report of consolidation financial statements of
  year 2006

MRS. KREE NARONGDEJ

 CERIFIED PUBLIC ACCOUNT (THAILAND), NO. 76

 A.M.T. & ASSOCIATES

2.  Summary of independent auditor’s report : Unqualified report as
    follows:

a) As described in note 3 to the financial statements, the Company and
its subsidiaries had adjusted the beginning deficit for correction of
prior years errors and retroactively adjust to the 2005 financial
statement for comparison as follows:

- The Company had reversed the allowance for impairment of investment in
a subsidiary company effecting the deficit beginning of year 2006 to be
decreased and the investment in subsidiary company to be increased by
Baht 7.20 million.

- In the Company’s financial statements, the Company had adjusted for
the impairment of a subsidiary company investment in land asset
effecting the decrease of the investment in the subsidiary company and
increase in the deficit beginning of year 2006 of Baht 3.68 million and
in the consolidated financial statement, the Company had adjusted for
correction of error from the impairment of a subsidiary company
investment in land asset amount to Baht 4.90 million effecting the
deficit beginning of year 2006 of Baht 3.68 million, and decrease the
minority interest of Baht 1.22 million.

b) As described in note 4 to the financial statements, as of December
31, 2006, the SET had announced to post “SP” (Suspension) signs to
suspend trading of the Company’s shares until the Company is able to
reinstate back to the normal sector.

3.  Summary of significant accounting policies

  1. Cash and cash equivalents

  Cash and cash equivalents consist of cash on hand and deposit at banks
  on saving accounts and current accounts.

2.  Revenue recognition

  Revenue from sale of goods are recognized as revenue when goods are
  delivered and
  the risk and reward of goods ownership are transferred to customer.

3.  Allowance for doubtful accounts

  The company provides the allowance for doubtful accounts by reviewing
  the current status of the existing receivables, and provision were
  estimated on the amounts anticipated uncollectible.

4.  Inventories

  Inventories are stated at the lower of cost (average method) or net
  realisable value.

5.  Investments for using the equity method

  Investments in subsidiary companies in the Company’s financial
  statements are stated under the equity method. Loss of subsidiaries in
  excess of cost of investments in subsidiaries is presented as a
  liability under the caption of “Excess loss on investment in
  subsidiary companies”.

6.  Land held for development

  In year 2005, land held for development was stated at the appraised
  value by
  an independent valuer on November 4, 2003. The appraised value was
  shown as part of
  the shareholders’ equity.

  In year 2006, the subsidiary company had changed its operation policy
  from property development to rental building and service residence and
  transferred this account to property, plant and equipment.

7.  Deferred exploration and development expenditure of andesite mining

  Deferred exploration and development expenditure of andesite mining
  and andesite mining licenses fees are amortized by the straight line
  method over the period of 25 years.

  8. Deferred exploration and development expenditure of gold mining

  The subsidiary company recorded the related expenses of exploration
  and development expenditure of gold mining which expected to have the
  future economic benefits such as acquisition of rights to explore,
  exploratory drilling expenses and other direct related expenses to
  “Deferred exploration and development expenditure of gold mining”.

  If any indication exists that the above expenditure shall not
  recoverable future benefit, the subsidiary company shall write - off
  all deferred expenditure to expenses.

  Deferred exploration and development expenditure of gold mining are
  amortized when the subsidiary company derives income from operation
  according to the units of production compare with the volume of gold
  ore reserve estimated by the professional.

9.  Property, plant and equipment

  Property, plant and equipment are stated at cost.

  Except for land of a subsidiary company is stated at the appraised
  value by
  an independent valuer on November 4, 2005. The appraised value was
  shown as part of
  the shareholders’ equity.

  Depreciation is calculated on the straight-line method based on the
  estimated useful lives of the assets as follows :

  ----------------------------------------------------- --- -------------
                                                            YEARS

  Land improvement                                          10

  Building temporary building and dry dock                  5 and 20

  Furniture and office equipment                            10

  Machinery and equipment                                   10

  Vehicles                                                  5

  Other                                                     5 and 10
  ----------------------------------------------------- --- -------------

  Residue ponds are amortized on units of production basis using the
  capacity volume of the residue ponds.

10. Assets not in used

  Assets not in used are stated at the lower of net book value or net
  realisable value.

11. Deferred environmental restoration expenditures

  Deferred environmental restoration expenditures consisted of:

  - Expenditure for rehabilitation of the concession area is amortized
  on the straight - line method over the remaining life of mining
  licenses.

  - Expenditure for forest restoration is amortized on the straight -
  line method over
  the remaining life of the permit for mining operation in the
  concession forest area.

12. Provision for environmental restoration

  Future expenses relating to environmental liabilities have arisen as a
  result of past events, the Company establishes a provision when the
  obligation is incurred and charge to
  the statement of income over the remains of useful life of mining
  right and permission.
  These provisions are made on the best estimation of expenses which pay
  to current obligation on balance sheet date.

13. Capitalization of borrowing cost

  The subsidiary company has capitalized the borrowing costs that are
  directly attributable to the acquisition of building factory and
  machinery. The capitalization of interest will be discontinued when
  the assets are completed and the commercial operation start.
  The interest capitalized for the year 2006 amounted to Baht 5.09
  million.

  The subsidiary company has capitalized the borrowing costs from the
  parent company that are directly attributable to the acquisition of
  deferred exploration and development expenditure for gold mining. The
  capitalization of borrowing cost will be discontinued when the mining
  are completed and the commercial operation starts. The interest
  capitalized for the years 2006 amounted to Baht 0.90 million and 2005
  amounted to Baht 4.5 million.

14. Financial lease agreements

  The Company and subsidiaries record vehicles under lease agreements,
  as assets and liabilities in the balance sheets at amounts equal to
  fair value of the leased property at
  the inception of the lease or ,if lower, at the present value of the
  minimum lease payments.
  In calculating the present value of the minimum lease payments, the
  discount factor used is
  the interest rate implicit in the lease. The interest charge is
  recorded to periods during the lease term based on the remaining
  balance of the liability for each period.

15. Financial instruments

  Financial instruments carried in the balance sheets include cash and
  cash equivalents, investments, trade account receivables and payables,
  loans, account payable for purchase of assets, accrued expenses, and
  hire – purchase and finance lease obligations. The particular
  recognition methods adopted are disclosed in the individual policy
  statements associated with each item.

16. Foreign currency transaction

  Transactions in foreign currency are converted at the exchange rate of
  the transaction date. Assets and liabilities in foreign currencies at
  the end of year are converted at average bank buying and selling rate
  at that date respectively excluding transactions in foreign currencies
  forward position which are recorded at forward exchange rate.

  Gain or loss from translation are included in determining earnings.

17. Buffer stock contributions

  Believing that the buffer stock contributions will not be recoverable,
  the Company has adopted a policy of expending buffer stock
  contributions to earnings instead of recognizing them as an asset in
  the balance sheets.

18. Impairment of assets

  The Company and subsidiaries review impairment of assets when there is
  an indication that the carrying amount of the assets may exceed the
  recoverable amount. Should the carrying amount of an asset be higher
  than the recoverable amount, the Company recognize
  the impairment loss in the statement of income. The reversal of
  impairment losses is recorded when there is an indication that
  impairment losses no longer exist or have decreased by crediting to
  “Other income”.

19. Basic earnings (loss) per share

  Basic earnings (loss) per share was determined by dividing the net
  profit (loss) by
  the weighted average number of shares outstanding.

20. Use of accounting estimates

  The preparation of financial statements in conformity with generally
  accepted accounting principles requires management to make estimates
  and assumptions that affect the reported amounts of revenues,
  expenses, assets and liabilities and disclosure of contingent assets
  and liabilities. Subsequent actual results may differ from these
  estimates.

3.  Summary of financial statement

Comparative financial statements and consolidated financial statements
for the past two consecutive years (Audited Account).

  -------------- -------------- ------------- -- ------ --------- -- -- -- ------ ------ -------------- ----------- -------- ------------
  TONGKAH                                                                                                                    
  HARBOUR PUBLIC                                                                                                             
  COMPANY                                                                                                                    
  LIMITED AND                                                                                                                
  ITS                                                                                                                        
  SUBSIDIARIES                                                                                                               

  BALANCE SHEETS                                                                                                             

  AS OF DECEMBER                                                                                                             
  31, 2006 AND                                                                                                               
  2005                                                                                                                       

                                                                                                                             

                                                                                                                             

                                                                                                                             Thousand
                                                                                                                             Baht

                                                                                         Consolidated                        

                                                                                         %              2006        %        2005

  ASSETS                                                                                                                     (Restated)

  CURRENT ASSETS                                                                                                             

                 Cash and cash                                                           4.30           77,454      2.29     31,837
                 equivalents                                                                                                 

                 Trade accounts                                                          0.52           9,378       0.45     6,242
                 receivable,                                                                                                 
                 net                                                                                                         

                 Short - term                                                            0.00           2           0.24     3,347
                 loans to                                                                                                    
                 related                                                                                                     
                 parties                                                                                                     

                 Inventories,                                                            2.51           45,194      0.76     10,484
                 net                                                                                                         

                 Other current                                                           0.00                       -        
                 assets                                                                                                      

                                - General                                                0.41           7,327       0.08     1,171
                                advance                                                                                      

                                - Input tax                                       1.42                  25,516      0.74     10,248
                                refundable                                                                                   

                                - Other                                                  0.88           15,927      0.44     6,166

  TOTAL CURRENT                                                                          10.03          180,798     5.01     69,495
  ASSETS                                                                                                                     

  NON - CURRENT                                                                                                              
  ASSETS                                                                                                                     

                 Long - term                                                                                                 
                 investments                                                                                                 

                                - Fixed                                                  4.19           75,500      0.04     601
                                deposit                                                                                      

                                - Investments                              0.00                         -           -        -
                                for using the                                                                                
                                equity                                                                                       
                                method - as                                                                                  
                                revised                                                                                      
                                report                                                                                       

                                - Land held                                       0.00                  -           33.82    469,365
                                for                                                                                          
                                development                                                                                  

                 Deferred                                                                                           -        
                 expenditures                                                                                                
                 of other                                                                                                    
                 projects, net                                                                                               

                                - Andesite                                               0.77           13,814      1.06     14,677
                                mining                                                                                       

                                - Gold mining                                            21.53          388,053     29.10    403,942

                                - Phuket                                                 0.00           -           0.50     7,000
                                project                                                                                      

                 Long - term                                                             0.14           2,545       0.01     124
                 loans to                                                                                                    
                 related                                                                                                     
                 parties                                                                                                     

                 Property,                                                               61.86          1,115,143   29.49    409,299
                 plant and                                                                                                   
                 equipment, net                                                                                              

                 Assets not in                                                           0.28           4,969       -        -
                 used, net                                                                                                   

                 Goodwill, net                                                           0.04           672         0.18     2,543

                 Other non -                                                                                                 
                 current assets                                                                                              

                                - Deposit of                                      0.68                  12,326      -        -
                                gold royalty                                                                                 

                                - Other                                                  0.49           8,811       0.78     10,877

  TOTAL NON -                                                                            89.97          1,621,833   94.99    1,318,428
  CURRENT ASSETS                                                                                                             

  TOTAL ASSETS                                                                           100.00         1,802,631   100.00   1,387,923
  -------------- -------------- ------------- -- ------ --------- -- -- -- ------ ------ -------------- ----------- -------- ------------

  --------------- --------------- -------------- ---------------- ---------- -- -- -------------- ----------- -------- ------------
  TONGKAH HARBOUR                                                                                                      
  PUBLIC COMPANY                                                                                                       
  LIMITED AND ITS                                                                                                      
  SUBSIDIARIES                                                                                                         

  BALANCE SHEETS                                                                                                       
  (Continued)                                                                                                          

  AS OF DECEMBER                                                                                                       
  31, 2006 AND                                                                                                         
  2005                                                                                                                 

                                                                                                                       Thousand
                                                                                                                       Baht

                                                                                   Consolidated                        

                                                                                   %              2006        %        2005

  LIABILITIES AND                                                                                                      (Restated)
  SHAREHOLDERS'                                                                                                        
  EQUITY                                                                                                               

  CURRENT                                                                                                              
  LIABILITIES                                                                                                          

                  Bank overdrafts                                                                                      
                  and short -                                                                                          
                  term loans                                                                                           

                                  from financial                                   3.11           56,031      0.23     3,193
                                  institutions                                                                         

                  Trade accounts                                                   0.00           -           -        -
                  payable -                                                                                            
                  related party                                                                                        

                  - other parties                                                  0.74           13,389      0.46     6,363

                  Current portion                                                  12.67          228,351     1.52     21,111
                  of long - term                                                                                       
                  loans                                                                                                

                  Short - term                                                     0.05           977         0.53     7,359
                  loans from                                                                                           
                  related parties                                                                                      

                  Current portion                                                                                      
                  of hire -                                                                                            
                  purchase and                                                                                         
                  finance                                                                                              

                                                 lease                             0.93           16,720      0.89     12,365
                                                 obligations                                                           

                  Other current                                                                                        
                  liabilities                                                                                          

                                  - Accrued                                        1.00           18,054      0.95     13,126
                                  expenses                                                                             

                                  - Accrued                                        0.73           13,240      -        -
                                  royalty                                                                              

                                  - Accrued                                                                            
                                  expense on                                                                           
                                  payment of the                                                                       
                                  extra benefit                                                                        
                                  to DPIM                                                                              

                                  under the                                                                            
                                  agreement                                                                            
                                  dated March                                                                          
                                  30,2007                                                                              
                                  (recorded the                                                                        

                                  adjustment on                                    0.23           4,074       -        -
                                  July 9, 2007)                                                                        

                                  - Other                                          0.38           6,801       1.26     17,532

  TOTAL CURRENT                                                                    19.84          357,637     5.84     81,049
  LIABILITIES                                                                                                          

  NON - CURRENT                                                                                                        
  LIABILITIES                                                                                                          

                  Long - term                                                      0.05           852         -        -
                  loans from                                                                                           
                  related parties                                                                                      

                  Long - term                                                      11.40          205,492     4.03     55,983
                  loans                                                                                                

                  Hire - purchase                                                  1.15           20,665      1.90     26,355
                  and finance                                                                                          
                  lease                                                                                                
                  obligations                                                                                          

                  Excess loss on                                                   0.00           -           -        -
                  investment in                                                                                        
                  subsidiary                                                                                           
                  companies                                                                                            

                  Provision for                                                    0.29           5,251       0.76     10,560
                  environmental                                                                                        
                  restoration                                                                                          
                  expenses                                                                                             

  TOTAL NON -                                                                      12.88          232,260     6.69     92,898
  CURRENT                                                                                                              
  LIABILITIES                                                                                                          

  TOTAL                                                                            32.72          589,897     12.53    173,947
  LIABILITIES                                                                                                          

  SHAREHOLDERS'                                                                                                        
  EQUITY                                                                                                               

                  Share capital                                                                                        

                                                                                                                       

                                  Authorized                                       41.99          756,940     54.54    756,940
                                  share capital                                                                        
                                  756,939,463                                                                          
                                  ordinary                                                                             
                                  shares of Baht                                                                       
                                  1 each                                                                               

                                  Issued and                                       41.99          756,940     54.54    756,940
                                  fully paid -                                                                         
                                  up share                                                                             
                                  capital                                                                              

                  Premium on                                                       19.89          358,607     35.14    487,700
                  common stocks,                                                                                       
                  net                                                                                                  

                  Retained                                                                                             
                  earnings                                                                                             
                  (deficit)                                                                                            

                                                 Unappropriated                    0.11           2,071       (9.30)   (129,093)

                  Shareholders'                                                    62.00          1,117,618   80.38    1,115,547
                  Equity of the                                                                                        
                  Company                                                                                              

                  Minority                                                         5.28           95,116      7.09     98,429
                  Interest                                                                                             

  TOTAL                                                                            67.28          1,212,734   87.47    1,213,976
  SHAREHOLDERS'                                                                                                        
  EQUITY                                                                                                               

  TOTAL                                                                            100.00         1,802,631   100.00   1,387,923
  LIABILITIES AND                                                                                                      
  SHAREHOLDERS'                                                                                                        
  EQUITY                                                                                                               
  --------------- --------------- -------------- ---------------- ---------- -- -- -------------- ----------- -------- ------------

  -------------- -------------- -------------- ------------- -- -------------- --- -- -- -- -- -- -- --------- ----------- -------- ------------
  TONGKAH                                                                                                                           
  HARBOUR PUBLIC                                                                                                                    
  COMPANY                                                                                                                           
  LIMITED AND                                                                                                                       
  ITS                                                                                                                               
  SUBSIDIARIES                                                                                                                      

  BALANCE SHEETS                                                                                                                    

  AS OF DECEMBER                                                                                                                    
  31, 2006 AND                                                                                                                      
  2005                                                                                                                              

                                                                                                                                    

                                                                                                                                    Thousand
                                                                                                                                    Baht

                                                                                                     The                            
                                                                                                     Company                        
                                                                                                     Only                           

                                                                                                     %         2006        %        2005

  ASSETS                                                                                                                            (Restated)

  CURRENT ASSETS                                                                                                                    

                 Cash and cash                                                                       0.01      145         0.02     223
                 equivalents                                                                                                        

                 Trade accounts                                                                      0.53      6,749       0.48     6,242
                 receivable,                                                                                                        
                 net                                                                                                                

                 Short - term                                                                        -         -           6.60     84,898
                 loans to                                                                                                           
                 related                                                                                                            
                 parties                                                                                                            

                 Inventories,                                                                        1.08      13,930      0.77     9,880
                 net                                                                                                                

                 Other current                                                                                                      
                 assets                                                                                                             

                                - General                                                            0.05      654         0.08     1,063
                                advance                                                                                             

                                - Input tax                                                          0.19      2,425       0.21     2,690
                                refundable                                                                                          

                                - Other                                                              0.16      2,052       0.20     2,590

  TOTAL CURRENT                                                                                      2.02      25,955      8.36     107,586
  ASSETS                                                                                                                            

  NON - CURRENT                                                                                                                     
  ASSETS                                                                                                                            

                                Long - term                                                                                         
                                investments                                                                                         

                                               - Fixed                                               -         -           -        -
                                               deposit                                                                              

                                               - Investments                                         55.37     711,304     52.07    670,338
                                               for using the                                                                        
                                               equity                                                                               
                                               method - as                                                                          
                                               revised                                                                              
                                               report                                                                               

                                               - Land held                                           -         -           -        -
                                               for                                                                                  
                                               development                                                                          

                                Deferred                                                                                            
                                expenditures                                                                                        
                                of other                                                                                            
                                projects, net                                                                                       

                                               - Andesite                                            1.08      13,814      1.14     14,677
                                               mining                                                                               

                                               - Gold mining                                         -         -           -        -

                                               - Phuket                                              -         -           0.54     7,000
                                               project                                                                              

                                Long - term                                                          30.54     392,332     26.33    338,913
                                loans to                                                                                            
                                related                                                                                             
                                parties                                                                                             

                                Property,                                                            10.96     140,791     11.52    148,251
                                plant and                                                                                           
                                equipment, net                                                                                      

                                Assets not in                                                        -         -           -        -
                                used, net                                                                                           

                                Goodwill, net                                                        -         -           -        -

                                Other non -                                                                                         
                                current assets                                                                                      

                                               - Deposit of                                          -         -           -        -
                                               gold royalty                                                                         

                                               - Other                                               0.03      351         0.04     519

  TOTAL NON -                                                                                        97.98     1,258,592   91.64    1,179,698
  CURRENT ASSETS                                                                                                                    

  TOTAL ASSETS                                                                                       100.00    1,284,547   100.00   1,287,284
  -------------- -------------- -------------- ------------- -- -------------- --- -- -- -- -- -- -- --------- ----------- -------- ------------

  --------------- --------------- ---------------- ------------- ----------------- -- -- -- ---------- ----------- --------- ------------
  TONGKAH HARBOUR                                                                                                            
  PUBLIC COMPANY                                                                                                             
  LIMITED AND ITS                                                                                                            
  SUBSIDIARIES                                                                                                               

  BALANCE SHEETS                                                                                                             
  (Continued)                                                                                                                

  AS OF DECEMBER                                                                                                             
  31, 2006 AND                                                                                                               
  2005                                                                                                                       

                                                                                            Thousand                         
                                                                                            Baht                             

                                                                                                       The Company           
                                                                                                       Only                  

                                                                                            %          2006        %         2005

  LIABILITIES AND                                                                                                            (Restated)
  SHAREHOLDERS'                                                                                                              
  EQUITY                                                                                                                     

  CURRENT                                                                                                                    
  LIABILITIES                                                                                                                

                  Bank overdrafts                                                           0.47       6,031       0.25      3,193
                  and short -                                                                                                
                  term loans from                                                                                            
                  financial                                                                                                  
                  institutions                                                                                               

                  Trade accounts                                                            1.42       18,231      1.32      16,978
                  payable -                                                                                                  
                  related party                                                                                              

                  - other parties                                                           0.07       874         0.04      484

                  Current portion                                                           1.52       19,520      1.52      19,520
                  of long - term                                                                                             
                  loans                                                                                                      

                  Short - term                                                              0.08       972         0.61      7,880
                  loans from                                                                                                 
                  related parties                                                                                            

                  Current portion                                                                                            
                  of hire -                                                                                                  
                  purchase and                                                                                               
                  finance                                                                                                    

                                  lease                                                     0.10       1,234       0.12      1,609
                                  obligations                                                                                

                  Other current                                                                                              
                  liabilities                                                                                                

                                  - Accrued                                                 0.77       9,827       0.52      6,718
                                  expenses                                                                                   

                                  - Accrued                                                 -          -           -         -
                                  royalty                                                                                    

                                  - Accrued                                                                                  
                                  expense on                                                                                 
                                  payment of the                                                                             
                                  extra benefit to                                                                           
                                  DPIM                                                                                       

                                  under the                                                                                  
                                  agreement dated                                                                            
                                  March 30,2007                                                                              
                                  (recorded the                                                                              

                                  adjustment on                                             -          -           -         -
                                  July 9, 2007)                                                                              

                                  - Other                                                   0.10       1,246       0.16      2,109

  TOTAL CURRENT                                                                             4.51       57,935      4.54      58,491
  LIABILITIES                                                                                                                

  NON - CURRENT                                                                                                    -         
  LIABILITIES                                                                                                                

                  Long - term                                                               0.73       9,343       0.58      7,455
                  loans from                                                                                                 
                  related parties                                                                                            

                  Long - term                                                               2.74       35,137      4.16      53,597
                  loans                                                                                                      

                  Hire - purchase                                                           0.30       3,791       0.29      3,767
                  and finance                                                                                                
                  lease                                                                                                      
                  obligations                                                                                                

                  Excess loss on                                                            4.71       60,473      3.74      48,177
                  investment in                                                                                              
                  subsidiary                                                                                                 
                  companies                                                                                                  

                  Provision for                                                             0.02       250         0.02      250
                  environmental                                                                                              
                  restoration                                                                                                
                  expenses                                                                                                   

  TOTAL NON -                                                                               8.49       108,994     8.80      113,246
  CURRENT                                                                                                                    
  LIABILITIES                                                                                                                

  TOTAL                                                                                     13.00      166,929     13.34     171,737
  LIABILITIES                                                                                                                

  SHAREHOLDERS'                                                                                                              
  EQUITY                                                                                                                     

                  Share capital                                                                                              

                                  Authorized share                                                                           
                                  capital                                                                                    

                                                   756,939,463                              58.93      756,940     58.80     756,940
                                                   ordinary                                                                  
                                                   shares of                                                                 
                                                   Baht 1 each                                                               

                                  Issued and fully                                          58.93      756,940     58.80     756,940
                                  paid - up share                                                                            
                                  capital                                                                                    

                  Premium on                                                                27.92      358,607     37.89     487,700
                  common stocks,                                                                                             
                  net                                                                                                        

                  Retained                                                                                                   
                  earnings                                                                                                   
                  (deficit)                                                                                                  

                                  Unappropriated                                            0.16       2,071       (10.03)   (129,093)

                  Shareholders'                                                             87.00      1,117,618   86.66     1,115,547
                  Equity of the                                                                                              
                  Company                                                                                                    

                  Minority                                                                  -          -           -         -
                  Interest                                                                                                   

  TOTAL                                                                                     87.00      1,117,618   86.66     1,115,547
  SHAREHOLDERS'                                                                                                              
  EQUITY                                                                                                                     

  TOTAL                                                                                     100.00     1,284,547   100.00    1,287,284
  LIABILITIES AND                                                                                                            
  SHAREHOLDERS'                                                                                                              
  EQUITY                                                                                                                     
  --------------- --------------- ---------------- ------------- ----------------- -- -- -- ---------- ----------- --------- ------------

[TABLE]

  ----------------------- -- -- -- -- -------- -- --------- -------- -- --------
                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        
  ----------------------- -- -- -- -- -------- -- --------- -------- -- --------

  -------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- --------- ---------- -- -- -------
                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       

                                                                                                       
  -------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- --------- ---------- -- -- -------

  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- ------- ---------- -- -- -------
                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            
  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- ------- ---------- -- -- -------

  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- --------- -- -------- ---------- -- -- -------
                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            
  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- --------- -- -------- ---------- -- -- -------

  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- ------- ---------- -- -- -------
                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            

                                                                                                            
  ------------------------ -- -- -- -- -- -- -- -- -- -- -- -- -- -- ---------- -- ------- ---------- -- -- -------

4.  Table of important financial ratios of the fiscal year 2006 and 2005
    (Audited)

  -------------------------------- -------------- ----------- ----------- -----------
                                                              (Audited)    

                                   Consolidated               The Company 
                                                              only        

                                   2006           2005        2006        2005

  LIQUIDITY RATIO                                                         

  Current Ratio (Times)            0.51           0.86        0.45        1.74

  Quick Ratio (Times)              0.24           0.48        0.12        0.10

  Quick Ratio (Cash Basis) (Times) (0.09)         (0.40)      (0.40)      (0.07)

  Receivable Turnover (Times)      37.20          5.07        3.25        5.07

  Collection Period (Days)         9.68           71.06       110.91      71.06

  Inventory Turnover (Times)       5.07           1.97        1.33        2.01

  Inventory Turnover (Days)        71.01          182.82      269.70      178.95

  Accounts Payable Turnover (Days) 14.29          2.56        0.87        1.20

  Payment Period (Days)            25.19          140.58      414.20      299.89

  Cash Cycle (Days)                55.49          113.30      (33.59)     (49.88)

  PROFITABLE RATIO                                                         

  Gross Profit Margin (%)          51.42%         3.51%       24.63%      8.83%

  Net Profit Margin (%)            0.65%          (249.94%)   2.89%       (143.23%)

  Return on Equity (%)             0.19%          (6.20%)     0.19%       (5.99%)

  EFFICIENCY RATIO                                                         

  Return on Total Assets (%)       0.13%          (5.23%)     0.16%       (4.96%)

  Return on Fixed Assets (%)       6.24%          (15.78%)    6.83%       (44.37%)

  Asset Turnover (Times)           0.20           0.02        0.06        0.03

  FINANCIAL POLICY RATIO                                                   

  Debt to Equity Ratio (Times)     0.53           0.15        0.15        0.16

  Interest Coverage (Times)        0.97           (13.06)     1.99        (7.54)

  Contingency Coverage (Times)     0.68           (9.14)      1.39        (5.28)

  Contingency Coverage (Cash       0.02           (0.30)      (0.21)      0.01
  Basis) (Times)                                                          

  Pay Out Ratio (%)                0.00%          0.00%       0.00%       0.00%
  -------------------------------- -------------- ----------- ----------- -----------

2.12.2 SUMMARY OF FINANCIAL POSITION AND OPERATING RESULTS

REVIEW OF FINANCIAL RESULTS

Pursuant to the commercial operations of gold production and the
andesite mining operation, the Company reported a net profit Baht 2.071
million in 2006. The Company’s income has been derived from two of its
three major mining projects, the gold, the tin and the andesite mining
operations. Tin operation is still on hold due the high tin royalty
rate.

In early 2006, the Company has drawn USD 10.4 million loans obtained
from the Export-Import Bank of Thailand and BankThai Public Company
Limited for plant construction and machinery installation for its gold
mining project in the Loei province. The construction was completed in
May 2006 while the commercial operations began in September 2006. The
Company reports income from its gold and andesite mining projects,
beginning third quarter of financial year 2006

TIN PERFORMANCE

The Company’s income from tin and tantalum will be based on production
and price levels at the international metals market. No revenue was
reported for tin as the project was on halt throughout 2006.

QUARRY PERFORMANCE

Revenue from andesite sales in 2006 decreased 1.76% from the preceding
year, with sales recorded at Baht 21.08 million in 2006 compared to Baht
21.46 million in 2005. The Company managed to have a positive gross
margin of 21.11%, a significant increase from 3.52% in year 2005. The
increase was due mainly to price escalation in line with that of higher
oil prices during the year. Most of the revenue was derived from the
sales of aggregate to the construction of Highways department project.

The Company continues to study and research on other markets such as
high strength concrete and railway sleepers to increase the marketing
channel.

OVERALL PERFORMANCE

Total Company revenue for year 2006 was Baht 317.18 million, a
substantial increase of 966.75% from Baht 27.61 million in 2005. The
increase was mainly due to the production and sales of gold bullions.

General and administrative expenses increased from Baht 63.82 million in
2005 to Baht 121.67 million in 2006. The increase was in line with the
Company’s gold productions and sales, sizes of normal business
operations, and gold related operations (royalty fees and payments, both
included in the selling and administrative expenses)

LIQUIDITY ANALYSIS

As at 31 December 2006, the Company’s current assets increased to Baht
180.79 million as compared to Baht 69.49 million for year 2005. The
Company’s current liabilities also increased from Baht 81.04 million in
2005 to Baht 357.64 in 2006, representing an increase of 341.31%.
However, the current ratio remains lower at 0.51 times when compared to
0.86 times in 2005.

The increase in current liability was a consequence of USD.10.4 million
loan drawdown whereby part of which recorded as a current portion of
long-term debt in the audit financial statement as at end of 2006.
Besides there were a current portion of hire-purchase and an accrued
royalty fee for December 2006 gold sales. Though the short term
liability was greatly increased, the Company was unaffected by any
liquidity problem in its working capital management.

CASH FLOW FOR OPERATING ACTIVITIES

The net cash flow utilized for operations approximately Baht 19.03
million, used mostly in the sourcing and purchasing of major equipment
items, tooling, and transport, and in installations, at the gold mine
development project at Loei. The rest was from trade receivables from
andesite sales and input vat refund.

CASH FLOW FOR INVESTING ACTIVITIES

The net cash flow utilized for investment purposes amounted to Baht
364.54 million. The funds were used mainly for investment in Tungkum
Limited, the Company’s gold mining project at Loei and long term fixed
deposit used to guarantee the term loan from the Export-Import Bank of
Thailand and Bank Thai Public Company Limited.

CASH FLOW FOR FINANCING ACTIVITIES

The net cash flow from financing activities amounted to Baht 429.20
million as a result of Long-term loan granted from the Export-Import
Bank of Thailand and Bank Thai Public Company Limited.

PROFITABILITY ANALYSIS

At present, the major source of income is from gold project under a
subsidiary, Tungkum Limited. As the gold price was constantly and
steadily on the rise, definitely, it has contributed to increase in the
Company bottom line. It can be said that gold price is a primary factor
affecting Company’s ability in making the profit.

Furthermore, the increase in production throughput will directly reduce
the unit cost and attribute to the profit generation as well.