4. RESEARCH AND DEVELOPMENT (R & D)

  4.1 Policy

Policy centers on: 1) Resource appraisal, market research, and summary
evaluations; and 2) on development and production processes pursuant to
results in 1). Market research involved current and expected market
demands. Resource appraisal included exploration and raw materials
testing and evaluation in accordance with relevant, up-to-date,
professional advice. Development and production planing involved
feasibility studies in preparation for production and marketing.
Canvassing of service organizations is ongoing by purchasing staff to
maximize cost effectiveness in repairs and equipment purchases.

1. In Offshore Tin Mining the current leases were granted in 1981-83 and
are valid for 25 years. Since 1990, mining has been done exclusively by
contractors who supply and maintain their own equipment.

2. In Igneous Rock (andesite) Mining, core drilling was done initially
at selected sites to establish deposit boundaries and volume, and
chemical analysis tests were also done by MAS labs (Mineral Assay
Services) in Bangkok. Qualification tests were conducted by the CTL labs
(Construction Technology Laboratories Inc.) in the United States and the
materials testing labs at AIT labs (Asian Institute of Technology), and
subsequently by the State Railway of Thailand (SRT) at its labs. Results
showed that the product (andesite) exists in economically mineable
quantities, and is well suited for high strength concrete production,
requiring only fly ash as an additive for some applications. Initial
marketing research was done by an independent third party consultant
indicating that a viable market existed.

The Company’s customers are mainly contractors for the (SRT). Since
tests during initial product appraisal were extensive, subsequent
testing has been minimal and done mainly by customers at their own
expense.

3. In Gold Mining, reserve estimations were done initially by a third
party economic consulting geologist registered with the Sydney Stock
Exchange, and later reviewed by equivalent consultancy accredited with
the Vancouver Stock Exchange. Subsequently, economic geological
consulting registered with the Australian Institute of Mining and
Metallurgy (AIMM), reviewed overall practice and made recommendations
for further work.

More recently, Australian mine development expertise conducted on-site
review pursuant to possible biding on mine development once the mining
license is granted. Chemical assaying, throughout the project, has been
done mainly at Analabs in Australia and at the MAS lab (Mineral Assay
Services) in Bangkok, both having been professionally evaluated to meet
international standards for bankable feasibility studies.

4.2 Ability, Necessity, and Expense, of Readjusting for Competitiveness

These challenges can be met in each of the mining operations, but to a
degree depending on flexibility in the initial design of the processing
facilities involved.

1. In tin mining, the decisions are left to the contractor so long as he
operates according to Government guidelines and to the Agreement with
the Company.

2. In Andesite Production, Various crushing plant components have to be
replaced from time to time as they wear out. The main items are: contact
plates and mantles in the rock crushers, conveyor belts involved in
product transport, drilling bits and extension rods, and screen cloth in
the vibrating screen assemblages. Product size ratios can be varied by
changing the screen cloth (mesh size) in the vibrating screens, and by
changing settings in the crushing apparatus.

If entirely new range of product is require, new individual apparatus
(such as a new type of rock crusher) may be introduced into the
processing sequence without having to replace large segments of the
plant as a whole. However, if large increases in production are
warranted, then larger segments of the plant may have to be expanded and
the cost would be correspondingly greater.

Overall quarry operating costs are reduced by fabricating many wearing
parts, such as back-hoe and wheel loader buckets and bucket teeth, at
the Company’s repair on-site shop which is complete with lathe and
welding equipment.

3. In Gold Mining, conditions concerning machinery and parts are similar
to those for the rock mining in 2. Above except that more of the parts
and chemicals originate overseas and, therefore, require advance
arrangements through local franchised suppliers and logistics agencies.