2.3 Production Operation

2.3.1 Tin Mining Operations

The Company owns 100% of the following tin mining leases at Phuket,
Thailand. The Company plans to apply for extensions of said mining
leases to the Primary Industry Ministry as appropriate in accordance to
their corresponding expiration dates.

  ----------------- ------------------ ------------------ -----------------
  TIN MINING LEASES                                       

  Lease No.         2004 Dredging      Date Valid to:     Area (Sq.M.):

  10866/13050       YES                19 May 2006        5,626.44

  18064/13448       YES                28 July 2008       3,883.93

  18065/13449       YES                28 July 2008       2,901.17

  18071/13369       NO                 28 March 2008      2,362.35

  TOTAL MINING                                            14,773.89
  CONCESSION AREA:                                        
  ----------------- ------------------ ------------------ -----------------

The Company continued to use contractors utilizing their own dredges,
under the Company’s strict engineering and technical supervision and
control, to mine the aforementioned lease areas. As reported in FY03,
the Company had planned to contract additional dredges to maximize
production in view of escalating tin prices. Contract negotiations were
entered into with three separate dredge owners in 1Q04. Said contractors
had previously been working for another offshore tin mining company, but
were looking for new contract work as that company ceased offshore
operations (leaving THL the only offshore tin operator in Thailand).
Agreement with two of the contractors could not be reached. The Company
did, however, come to an arrangement with the third contractor.
Unfortunately, this contractor (due to equipment limitations) could not
operate with the efficiency required to produce enough tin to maintain
the dredge in operation. As such, the contractor elected to cease
operations on his own accord. The Company’s FY04 tin production,
detailed in 3.3 below, was primarily the results of one suction cutter
dredge which operated normally for the year.

2.3.1.1 Tin Price and Production

In FY04, tin was the best performing base metal on the London Metal
Exchange, having soared 66% from 2003 to over US$9,000 per ton in FY04.
Since 2002, the price of tin has increased by 150%. Price escalation is
due mainly to a demand and supply gap caused by the increase in world
tin demand. Tin is used for a variety of applications, however, the most
predominant uses are for tin plating, lead-free soldering (particularly
in the electronics and IT sector), and packaging.

While the Company has been able to benefit greatly from the buoyant tin
market, it is also subject to paying increasing royalty to the Royal
Thai Government on tin price escalation. In FY04, this royalty payment
increased to an onerous 24%, the highest tin royalty rate in the world.
As this severely impacts the Company’s profits, the Company has been
lobbying the Royal Thai Government to reduce this royalty rate to a rate
more in line with other world leading tin and base metal producing
countries, which are charged on average a royalty rate of approximately
3%. The Company is of the opinion that the method of determination of
royalty rates on tin in Thailand is antiquated and should be updated to
reflect current mining practices.

[]In any event, the increase in price did lead to increased profit to
the Company in FY04, although the Company also yielded higher production
rates in FY04 as well. Production averaged about 205 habs per month in
FYO4 as compared to 192 habs per month in FY03. Tin price averaged about
(US$) 8,494 ranging from (US$) 6,650 in January to (US$) 8,647 in
December.

2.3.1.2 Marketing and Competition

(A) Marketing Policy

The product is sent to be and processed by the refinery concerned.
Prices for tin and gold are subject to world demand and supply which
sets the prices at the international metal and bullion markets.

  (B) Competition

There is no significant domestic competition at this time. Though one
other mining company also has offshore mining rights, they have ceased
offshore mining operations.

  2.3.1.3 Resources and Products

  (A) Resources

  Mining Agreement

The Company contracted (with professional engineering control) it
offshore mining operation to an independent contractor: Reu Dood Rae
Thai Ltd. Part. If the contractor purposes to change any aspect of
operations other dredges, it has to in form the Company in advance as
per agreement which is for one year contract with the following
essential terms:

  - Effective period: 31 January 2005 – 31 January 2006.

  - The contractor provides its own machinery, repair, and maintenance
  expenses, and all other mining expenses.

  - Stock must be located at a safe place on which the Company agrees.
  Sample analysis ore must be done with a Company representative
  present.

  - The tin is sold by the Company only, and to the Thai Smelting and
  Refinery Co., Ltd. Tin weight follows to buyer. Tin price is based on
  Kuala Lumpur, Malaysia (now quoted in U.S. dollars).

  - If the contractor breaks any conditions of agreement, it is liable
  to pay the Company up to the full amount of the guarantee.

  Capacity

About 19.1 sq km of offshore lease areas are currently being mined. The
contractor uses its dredges for mining operations and sends the tin ore
concentrate to a smelter at Phuket Thailand for refining. The
concentrate ore volume depends on dredge capacity, weather, and the
season. However, the Company’s concentrates are not the smelter’s only
support.

  (B) Environment Impact

Environmental regulations are overseen and enforced by the Harbor Master
and the DMR at Phuket. Offshore tin mining procedures use sea water for
dressing and washing and it is then drained back into the sea. Sediment
is returned to sea because the mining is in a deep-sea area that has
strong wind and wave action and tidal ebb and flow. The returned
sediment is widely dispused by the ocean currents. However, the Company
pays annual compensation of Baht 310,300 for draining the sediment back
into the sea.

The Company samples seven locations in the lease areas at one meter
depth for testing temperature, pH, Salinity, Oxygen, Oil, Lead, Mercury,
Arsenic, Cadmium, Copper, Chromium, Iron and Manganese. The result is
within the standards set by the Office of Environment Policy and
Planning (OEPP). The Company also pays about Baht 110,000 per annum for
the test costs.

2.3.2 Igneous Rock (Andesite) Mining Operations

THL’s andesite (granodiorite) mine is located near the town of Kaeng
Khoi in central Thailand, approximately 140 km transport distance from
Bangkok. Quarry operations commenced in 1999 after having identified and
surveyed minable resources of about 12 M tons. A further 15 M tons of
minable resources are indicated in the surveyed zone which is open
laterally and to depth. The deposit area comprises roughly 215 rai
(344,000 sq m) plus crushing plant, service, maintenance, and stockpile
areas.

THL’s quarry operations are permitted via a ten year mining license
approved in 1999 by the Ministry of Industry, in addition to a second
ten year mining license granted in 2003 to Sintana Resources Company
Limited who applied for the license for and on behalf of THL.

  2.3.2.1 Mining and Production

Rock crushing operations have been contracted to Cholsin Limited, the
Company’s 72.10% owned subsidiary, since June 1998. Cholsin holds a
5-year crushing plant permit which was granted on 31 December 2002.
Cholsin acquired relevant rock crushing experience as underground mining
operators at the Toh Moh mine in southern Thailand.

Production capacity of the crushing plant is about 250 tons per hour.
The following table provides quarterly production figures for 2004.
Production is directly related to demand for any particular product. As
such, it is noted that ballast production remains relatively low while
more focus has been placed on finer grained products.

Sales and prices charged are dependent on demand and the ability to meet
client specifications (such as particle shape and abrasive index). At
times, some product deliveries are postponed at the request of the
customer and, therefore, deliveries are not always according to contract
schedules.

  ---------------- ----------- ----------- ----------- ----------- ------------
  2004 AGGREGATE                                                   
  PRODUCTION                                                       

  Item             Qtr 1       Qtr 2       Qtr 3       Qtr 4       Total

  Road base        14,033.00   12,130.00   5,614.00    21,514.00   53,291.00

  Special 1"       0.00        2,975.00    612.00      5,009.00    8,596.00

  3/4 Well-grade   37,409.00   28,873.01   12,455.00   45,573.40   124,310.40

  Dust (Coarse)    16,269.00   13,764.00   4,623.00    19,048.00   53,704.00

  Dust (Fine)      8,326.00    5,226.00    1,793.00    8,720.00    24,065.00

  Ballast 3"       0.00        1,534.00    2,338.00    0.00        3,872.00

  Quarry Dirt      475.00      1,424.00    500.00      1,500.00    3,899.00
  ---------------- ----------- ----------- ----------- ----------- ------------

The products are stockpiled according to size as follows:

  - Railway Ballast (1” – 2.50”)

  - Road Base

  - Fine Aggregate (3/4”)

  - Aggregate (1/2”)

  - Dust ( minus )

  2.3.2.2 Marketing and Competition

(A) Marketing Policy

The quarry is one of the leading producers and suppliers of hard rock
materials in central Thailand. The quarry produces a comprehensive range
of aggregates which allows our products to be used for a wide variety of
purposes, particularly in servicing the construction, road building, and
railway industries. Our products are manufactured to comply with the
stringent standards and specifications set by the State Railway of
Thailand (SRT), the Highway Department and the MRTA, thereby making them
more competitive in the market place. In fact, our aggregate is the only
product meeting the Highway Department’s specifications in the Kaeng
Khoi region.

1 Aggregates

In FY04 the Company set out to increase its share of the quality
aggregate supply market and we are pleased that we have been able to do
so. We particularly focused on cultivating new relationships with
contractors to the Highway Department. The quality of our products and
our focus on customer service has enabled us to secure several new
contracts in this area. Given the fact that our product is the only
aggregate meeting the specifications of the Highway Department for
asphaltic road surfacing in Kaeng Khoi, we are also able to command a
premium price for this product. Moreover, demand for the finer
aggregate, and road base, is now virtually constant, and at higher
prices as well.

In connection with the SRT’s intended improvement in the Kingdom’s rail
system, the Company looked into the possibility of manufacturing railway
sleepers utilizing our own aggregate. Upon further study, it was
determined that the timing of such an endeavor was not appropriate given
the fact that the SRT is mostly promoting track rehabilitation and
repair at this juncture. Any undertaking to manufacture our own sleepers
would be dependent upon the SRT implementing new double track railway
lines, which are pending but have yet been implemented. As such, it was
determined that it was in the best interest of the Company to remain a
supplier to those contractors that are already in production of railway
sleepers.

2 Ballast

Sales of railway ballast were relatively low in 2004. However, pursuant
to further reengineering in the SRT’s management structure, maintenance
and development contracts by the SRT are expected to increase markedly
in 2005, particularly in the central and northeast regions where
extensive double tracking is planned and where our product is most
competitive.

(B) Competition

Located about 140 km form Bangkok, the product has several advantages in
marketing, including competitive transport costs. The deposit is the
only one of its kind known in the area and is central to a large region
of potential industrial expansion extending north and northeast of the
Bangkok area. There is nother deposit at Amphur Wiharndaeng, which
produces for its own projects and is not in high demand.

There are not many other readily available rock types that meet
standards set by the SRT. Highly silicified rock or igneous rock
material, such as the andesite, is required to meet current standards.
Alternatives of similar quality supplied by some competitors are
rhyolite, granite, and basalt. Ordinary limestone does not qualify. In
addition, our product is the only aggregate meeting the specifications
of the Highway Department for asphaltic road surfacing in Kaeng Khoi.

  2.3.2.3 Resources and Products

  (A) Resources

In mining lease areas, Andesite resources were found to 30 meter-depth
from surface. The surveyed zone is open laterally and to depth
indicating additional minable resources. Surveyed resources currently
under license are about 12 M tons and additional resources are estimated
to be at least about 15 M tons.

The Andesit mining is is an open pot operation and entails site clearing
followed by controlled bedrock drilling and blasting, and transport to
stockpiles or to the crushing plant. As far as possible, all mining and
crushing operations are coordinated with immediate delivery requirements
so that transport and other operating costs are kept in line with
current orders.

(B) Environment Impact

The Andesite mining impacts on the environment to the extent that the
surface is altered and there is some noise and dust from blasting. The
Company operates in accordance with OEPP, DMR, and Labour Department.
The guidelines include safety practice and environmental maintenance
procedures in and around the site area such as:

1.  Rows of trees were planted around the site before mining began to
    help reduce noise and dust into neighboring areas.

2.  Vegetation and soil are cleared from the excavation site before
    drilling and blasting, otherwise there is no lasting damage to the
    immediate environment, and no unnatural materials are used.

3.  Rock blasting is controled to reduce shock and dust. The blasting
    does not result in any appreciable rock fragments falling outside
    the lease area.

4.  Water spraying apparatus are installed in several locations for dust
    suppression.

5.  Workers wear protective goggles and face masks against dust in their
    work areas. The Company spends Baht 48,000 for protective equipment,
    and Baht 40,000 on health checks of workers and staff.

2.3.3 Gold Mining Operations

Tungkum Ltd. (TKL) is an exploration and mining company registered in
Loei Province, Northeast Thailand, with control and working interest
(see Group Structure chart) held by Tongkah Harbour Public Company
Limited (THL).

On being awarded the Block 4 concession in October 1991, subsequent to
international bidding, THL entered into an agreement with the Department
of Mineral Resources (DMR) for exploration and mining of gold and
related minerals. As required, a signature bonus of Baht 5.8 million was
paid to the DMR and committed THL to pay a Baht 6.5 million bonus for
the first batch of mining license applications approved. In addition,
THL agreed to maintain the right of the Royal Thai Government to buy 5
to 10% of TKL shares at cost plus interest at MLR, pay 2.5% royalties
(including administration costs), and production sharing at 1.5%.

This development was a direct result of regional exploration previously
conducted during the 1960’s and later decades by the DMR, in cooperation
with the United States Geological Survey and, subsequently, with
expertise from several other foreign countries including Canada (which
granted C$50 million to the DMR for mapping of mineral resources for the
whole of Thailand), Germany, and Britain.

On receiving the concession special prospecting licenses in 1992, an
extensive mineral exploration program was initiated. The geological team
comprised Company geologists and foreign exploration expertise from
Australia, Canada and the U.S. By 1995, significant economically minable
gold resources were delineated and six initial mining license
applications were filed. TKL’s mining plan was then submitted to the DMR
and subsequently approved by all required regulatory agencies.

1.  Mining and Production

A) Mining Development Plans

Given the nature of the concession, mining shall be open pit. Once
mined, the ore will then be crushed and processed through the ore
processing plant which shall utilize carbon-in-leach (CIL) methodology.
The processing plant, currently being designed to process approximately
365,000 tons of ore per annum, will blend the soft oxidized ore and hard
primary sulfide ore. The ore will be processed by a CIL/CIP plant and
gold dore’ produced will be sent to internationally accredited plants
for smelting.

Once mining operations commence, further developments are intended in
the following areas: 1) mineralized sectors in continuity with the zones
blocked out for initial mining, 2) in other oxide zones, and 3) in
several regions of primary gold and/or base metal mineralization where
assays show highly significant values for one or more of gold, copper,
lead, and zinc.

The above plans shall be implemented by TKL’s management team which
comprises expertise in mineral exploration and mining, business, finance
and administration.

  B) 2004 Gold Price

[] During the course of FY04, gold traded at an average price of
US$409.25, up nearly 13% from 2003’s average price of US$363.50 per
ounce. As shown on this price chart, gold has increased substantially
since the year 2000.

The peak price reached in 2004 was US$456 per ounce in mid- December.

Currently gold is trading in the range of US$425.

C)  Project Financing

Much of FY04 was dedicated to meeting the requirements of the lending
institutions providing the project financing for the Company’s gold
mining project in Northeastern Thailand. The main requirement consisted
of an independent evaluation of the project being completed by a local
third party team appointed by the lending institutions. Despite
concerted efforts to expedite this external verification, said report
took much longer to complete than the Company had ever expected,
particularly when a third party verification report had already been
completed and submitted to the lenders by an established and well
accredited party. After months from its commencement, the report was
submitted for lender’s review. In Q4 of FY04, we received notice that
the Board of Directors of EXIM Bank and Bank Thai formally approved
joint project financing for the Loei gold mine project. In anticipation
of lender approval, the Company had already initiated infrastructure
works and mine plan implementation efforts are now in full gear. The
Company is eager to capitalize on the buoyant gold market and is focused
on bringing the first phase of this project to fruition as quickly as
possible.

D)  Project Economics

The capital requirement for the first phase of the mine is approximately
USD20 million. With plant capacity of 365,000 tons per year and an
average annual gold production of 45,000 ounces, in the first four years
of operation, the project is projected to generate revenue of USD 72
million with an estimated net profit of USD 38 million. Cash cost of
production is estimated of USD 150 per ounce. Project costs to date are
about USD11.2 million excluding holding costs.

  2.3.3.2 Marketing and Competition

(A) Marketing Policy

In the gold mining operations, the product is bought and processed by
the refinery concerned. Prices are at international standards and vary
according to worldwide demand. The Royal Thai Government has the first
option to buy the gold output at the going world rate.

(B) Competition

There is only one registered commercial gold mining project in
production in Thailand at this time. As gold sales value will depend on
the international market, any additional producers in the country are
not likely to affect prices.

  2.3.3.3 Resources and Products

  (A) Resources

Licensing

In March 2003, TKL was granted 6 gold mining licenses (totaling 2.065 sq
km) within its total concession area of about 93 sq km. The mining
licenses are valid for 25 years (with an option for subsequent 25 year
extensions upon resource confirmation). TKL has submitted a further 114
mining license applications along with 8 special prospecting licenses to
cover the remaining concession areas.

  ---------------------- ----------- ------------------- -----------------
  Tungkum Limited Gold                                   
  Mining Licenses &                                      
  Applications                                           

  Description:           Quantity:   Status:             Area (Sq.Km.):

  Mining Licenses        6           Granted for 25      2.07
                                     Years               

  Mining License         114         Under Application   52.62
  Applications                                           

  Special Prospecting    8           Under Application   38.40
  Licenses                                               

  TOTAL BLOCK 4 GOLD                                     93.09
  MINING CONCESSION                                      
  AREA:                                                  
  ---------------------- ----------- ------------------- -----------------

Board of Investment (BOI) Approval

BOI approval was given to Tungkum’s application on 14 October 1999. The
privileges so granted can be exercised once the mining license is
granted and will include:

  1. Full exemption from import duties on machinery for two years.

  2. A 75 % reduction on raw material import duties for five years.

  3. Exemption from corporate income tax for eight years and a 50%
  exemption for five years thereafter.

Resources and Reserve

Currently, measured and inferred resources (consisting of gossanous,
surface, and near surface oxide ore) total 4.49 M tons averaging 4.14
g/t gold. Independent third party experts in the industry have recently
evaluated TKL’s ore reserves and resources. The report, compiled by Mr.
Edward Brennan, BE (app. geo.) FausImm, MMICA, CP (geo.), MGSA, MCIM,
detailed the following:

+------------+---------------+---------+---------+-----------+-------+
| Area       | Ore Type      | Tonnes  | Grade   | Contained | Strip |
|            |               |         | (g/t    | Gold (oz) | Ratio |
|            |               |         | Au)     |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-1        | Oxide         | 313,000 | 2.71    | 27,274    |       |
|            |               |         |         |           |       |
| *(1)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 88,000  | 6.66    | 18,845    |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | 867,000 | 6.78    | 189,012   |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Non-mineable  | 634,000 | 5.74    | 117,097   |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Mineable      | 634,000 | 5.79    | 118,034   | 1 :   |
|            |               |         |         |           | 2.43  |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 1,      | 5.77    | 235,131   |       |
|            |               | 268,000 |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-1-8      | Oxide         | 289,000 | 3.79    | 35,219    |       |
|            |               |         |         |           |       |
| *(1)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 7,000   | 2.46    | 554       |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | 70,000  | 2.61    | 5,875     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Non-mineable  | 62,000  | 2.75    | 5,480     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Mineable      | 304,000 | 3.70    | 36,167    | 1 :   |
|            |               |         |         |           | 1.95  |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 366,000 | 3.54    | 41,647    |       |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| QSpur *(1) | Oxide         | 48,000  | 3.93    | 6,066     | 1 :   |
|            | (eluvial)     |         |         |           | NIL   |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| GCap *(1)  | Oxide         | 16,000  | 1.47    | 756       | 1 :   |
|            | (eluvial)     |         |         |           | NIL   |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-1-S      | Oxide         | 346,000 | 2.73    | 30,372    |       |
|            |               |         |         |           |       |
| *(2)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 7,000   | 16.29   | 3,667     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | 109,000 | 8.07    | 28,284    |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Non-mineable  | 126,000 | 7.38    | 29,911    |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Mineable      | 336,000 | 3.00    | 32,412    | 1 :   |
|            |               |         |         |           | 3.50  |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 462,000 | 4.20    | 62,323    |       |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-7        | Oxide         | 35,000  | 4.90    | 5,514     |       |
|            |               |         |         |           |       |
| *(2)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 10,000  | 4.59    | 1,476     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | 7,000   | 6.92    | 1,558     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 52,000  | 5.11    | 8,548     | 1 :   |
|            |               |         |         |           | 4.97  |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-88       | Oxide         | 51,000  | 3.64    | 5,969     |       |
|            |               |         |         |           |       |
| *(2)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 11,000  | 5.13    | 1,814     |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | -       | -       | -         |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 62,000  | 3.90    | 7,784     | 1 :   |
|            |               |         |         |           | 6.74  |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| T-3        | Oxide         | 605,000 | 3.91    | 76,000    |       |
|            | Inferred      |         |         |           |       |
| *(2)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Transition    | 69,000  | 4.11    | 9,000     |       |
|            | Inferred      |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Sulfide       | 1,      | 2.94    | 146,000   |       |
|            | Inferred      | 539,000 |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            | Total         | 2,      | 3.25    | 231,000   |       |
|            | Inferred      | 213,000 |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
|            |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| TOTAL      | Oxide         | 1,      | 3.15    | 111,212   |       |
|            |               | 098,000 |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| TOTAL      | Transition    | 123,000 | 6.63    | 26,222    |       |
+------------+---------------+---------+---------+-----------+-------+
| TOTAL      | Sulfide       | 1,      | 6.64    | 229,561   |       |
|            |               | 053,000 |         |           |       |
+------------+---------------+---------+---------+-----------+-------+
| TOTAL      | Non-mineable  | 822,000 | 5.95    | 157,365   |       |
+------------+---------------+---------+---------+-----------+-------+
| TOTAL      | Mineable      | 1,      | 4.49    | 209,630   | 1 :   |
|            |               | 452,000 |         |           | 2.73  |
+------------+---------------+---------+---------+-----------+-------+
| GRAND      |               | 4,      | 4.14    | 597,000   |       |
| TOTAL WITH |               | 487,000 |         |           |       |
| INFERRED   |               |         |         |           |       |
| *(3)       |               |         |         |           |       |
+------------+---------------+---------+---------+-----------+-------+

KEY

  ------ -----------------------------------------------------------------
  *(1)   Constitutes Phase I of the Phu Thap Fah Mining Program; Mining
         Licenses Approved (25 yrs); Total Mining Area = 2.065 sq. km.

  *(2)   Constitutes Phase II; Mining Licenses Pending Final Approval of
         Mining Plan; Mining Plan to be filed upon commencement of Phase I
         production

  *(3)   Constitutes Total for Phase I and II; Does Not Include the
         Regional Area of which mineralization has been intercepted but
         not calculated
  ------ -----------------------------------------------------------------

(B) Environment Impact

Environmental impact studies in the mining area were conducted in
accordance with the Office of Environmental Planning and Policy (OEPP)
guidelines and comprised a coordinated study involving SPS Consulting,
the Department of Geotechnology at Khon Kaen University, NSR
Environmental Consulting PTY LTD, Australia and Environmental
Geochemical International PTY LTD, Australia. The comprehensive program
was inclusive of, but not limited to, ground water, soil mechanics, and
soil profile studies, all of which were found acceptable to the OEPP.

As part of our environmental management program, state of the art
technology shall be applied utilizing computer based modeling to work in
conjunction with the mining operations and on-going ground water
testing. This system will serve as an early warning system in the
unlikely event that any contamination should occur, thereby allowing
circumstances to be mitigated with the most appropriate approach to
remedial action.

TKL’s staff and management are committed to sound environmental
practices and shall maintain operations in compliance with all
applicable laws and regulations. Furthermore, TKL will initiate future
rehabilitation of mined areas for suitable post-mining beneficial land
use.

Once the Company will starts mining, related government offices - for
example the DMR, the OEPP, the Forestry Department, and others- will
monitor mining activities. The Company will also report water test
results every month and pay an environmental compensation fee of about
Baht 100,000 per month.

2.3.4 Property Development

In September FY04, upon completion of payments, the Company took full
ownership of the 6-3-51.3 rai parcel of waterfront land situated between
two waterfront parcels already owned by the Company. The Company
purchased the land from The Siam Commercial Bank for Baht 25 million.
Possession of this property joins the other two land areas resulting in
a single land parcel totaling about 24-3-36.4 rai (39,745 sq m). The
ownership of this land shall greatly increase the Company’s prospects
for major

waterfront development in the future. No other significant changes
occurred in property ownership in FY04.

The following table provides a breakdown of the Company’s current land
holdings and their status.

  ------------- ----------- -----------------------------------------------
  THL PROPERTY              
  HOLDINGS                  

  Area (Sq.     Location:   Property Description:
  M.):                      

  5,447.60      Bangkok     Land held by THL’s 75% owned subsidiary, Sky
                            Cliff Limited at the Rachadapisek / Rama IV
                            MRTA station – a prime location near the CBD.
                            Development site of Le Metro Condominiums.

  1,844.69      Bangkok     THL corporate headquarters located at the 7th
                            Floor of the Muang Thai Phatara Complex, Tower
                            1.

  39,745.00     Phuket      A large land bank located on the sea front of
                            Phuket Bay. Currently the site for THL’s Phuket
                            operations. Prime for future development.

  13,644.00     Phuket      Land with improvements located in Phuket town.
  ------------- ----------- -----------------------------------------------

2.3.4.1 Sky Cliff Limited

Sky Cliff Limited (SCL) is 75% owned subsidiary of the Company. SCL owns
a 3 rai,1 ngan, 61.9 sq wah (5,447.60 sq m), land plot with prime
frontage on Ratchadapisek Road. The site, which is near the CBD, also
enjoys very close proximity to the Rama 9 subway station and
expressways, including to the new airport. Given its convenient location
and a rising property market, SCL revived plans to develop a 29 story
service apartment on the site in FY02. As such, much of FY03 and 04 was
dedicated to advancing this project. All architectural and engineering
plans have been finalized, all piling work has been completed, and the
environmental impact study has been completed and

approved by appropriate authorities in accordance with building permit
requirements. In addition, the Company erected a show flat at the site
containing two of the 11 floor plans available for selection by
customers.

Further to the above achievements, a pre-launch marketing campaign was
carried out to reach our target demographic of young urban
professionals. However, while undertaking further marketing efforts, the
price of construction materials dramatically escalated following the
sharp increase in the price of crude oil. Given that our development is
a luxury class development employing very high quality specifications,
the increase in construction material prices dramatically impacted our
ability to move forward with the project while allowing us to still make
a profit. As such, Management determined that it was in the best
interest of the Company to keep this project in temporary abeyance,
pending oil price stabilization which in turn would allow construction
material to settle at more reasonable prices which would in turn
increase the project’s profit margin.

At this current time, the Company is negotiating with an institutional
fund to double the equity base and lessen the Company’s dependency on
bank borrowings.

  2.3.4.2 Phuket Property Holding

Development Plans and Proposal

In September of FY02, the Company submitted a comprehensive proposal to
the Royal Thai Government for the rehabilitation and development of
Phuket Bay. In FY03, the proposal was revised pursuant to further
extensive research and upon receiving community input. The revised
concept focused on development of a world class cruise ship terminal and
related tourist facilities, plus a marina, convention and exhibition
center, and recreation areas. The revision retained the proposal to
upgrade the Princes Mother’s Park to its original intent, and
safeguarding of the Bay’s extensive mangrove forest with a view to
promoting eco-tourism as a major part of the development.

In FYO4 the Royal Thai Government stated its intentions to develop a
convention and exhibition center at Phuket Bay, for which it is expected
that external participation shall be invited. However, given the recent
tsunami, the Company is uncertain as to the government’s stance on the
timing of the convention center development as focus remains on disaster
relief. When the government does proceed, the Company shall endeavor to
play a key role in the development.