Audit Committee’s Report

Dear Shareholders,

The year 2010 has been the major lost to the Audit Committee and the
Board of Directors of Tongkah Harbour Public Company Limited. Khun
Nickane Sucharitaves, the former Chairman of the Audit Committee and an
Independent Board Member passed away in November 2010. The current
members of the Audit Committee sincerely offered our utmost condolences
to his family. In addition, Khun Noppadon Mantajit has resigned from the
Board and the Audit Committee on August 2010 due to his overwhelming
consultancy work in other companies.

The Audit Committee welcomed Dr. Wichai Cherdshewasart and Mr. Pramote
Bansit to be the new members.

Currently, the Audit Committee composed of three independent directors
appointed by the Board: Mr. Krittapas Kanikanant as Chairman, Mr. Wichai
Cherdshewasart, and Mr. Pramote Bansit. All members have appropriate
experiences in accounting, finance, and commercial matters or otherwise
in law and capital market pertinent to the company’s operations. As
independent directors, the Audit Committee do not hold any management
positions, are not employees of the company, and do not represent any
major shareholders.

In year 2010, the Audit Committee held four formal meetings to
effectively and responsibly carry out its duties. Each of these formal
meeting was preceded by a working group meeting to discuss and thresh
out relevant matters affecting financial disclosures in the interim and
annual financial reports. By invitation of the Chairman of the Audit
Committee, the Managing Director and his immediate executive officers,
the Accounting and Treasury Finance Officers, the in-house legal
Officer, and the Internal Auditor also attended both the working group
and formal Audit Committee meetings. The External Auditors also attended
all four formal meetings and some of the working group meetings.

The Audit Committee has discussed and agreed with the opinion of the
External Auditor on two major areas affecting the company’s financial
statements, namely:

1.  The Audit Committee cited the legal cases the Company has had with
    two parties, namely: Agricultural Land Reform Office (ALRO), and Mr.
    Tai Chong Yih. The Audit Committee concerned the risk arising from
    these cases and would reiterate the management to carefully handle
    the case. In addition, the Audit Committee asked the management to
    conservatively consider set up the provision for the claims (if any)
    arose from the future Court’s judgments.

2.  In 2010 the Audit Committee and the External Auditor mutually
    recognized that the continuous net losses of the Tongkah Group of
    Companies have been caused to a large extent by external
    factorswhich if not resolved, would threaten the companies’
    continued operations and listing status in the SET.Foremost of these
    external factors are: substantial delay in obtaining government
    approval of new mining licenses; and substantial government fees and
    royalties that have exceeded those prevailing at the commencement of
    the concession agreement.

In 2010, the Audit Committee witnessed a major event at Tongkah Harbour
Public Company Limited. After unsuccessful re-profiling negotiation with
an overseas bank, the Company had legal dispute with the overseas bank
in which the bank recalled the outstanding loan in accordance with the
Facility Agreement. In addition, the overseas bank also terminated the
Export Contract and claimed the $27.8 million early termination damage
from the Company. The management of the Company has issued the 2010
Company and Consolidated Financial Statements without the provision of
the $27.8 million damage claimed by the overseas bank. The management,
confirmed by the legal counselor, stated that if THL made such
provision, it would equally admit to the damage claimed by the overseas
bank in the Courts. Such admission, if made, would damage THL in the
on-going legal case in the English Court. The Company's External
Auditor, A.M.T. & Associates, opined the financial statements did not
fairly present, in all material respects, the financial position of the
company and its subsidiaries as of December 31, 2010, as well as the
results of their operations and cash flows for the year, then ended in
conformity with generally accepted accounting principles.

The Audit Committee had otherwise different opinion from the Company’s
External Auditor. We independently considered the issue based on Thai
Accounting Standard regarding Provisions, Contingent Liabilities and
Contingent Assets; whereby all criteria to recognize the damage claim as
a provisionmust be completed. We concurred with the management (the
management was confirmed by a Third Party independent accounting and
financial advice)the uncertainty of the damage claimsresulted in the
unreliable estimation of the provision. As the company could not make
the reliable estimation of the obligation(as one of the criteria), we
opined that the company did not necessarily provide such claims but
needed to disclose entire related information in its financial
statement.

In 2010, the Audit Committee has also established the working team to
study the establishment of the Risk Committee. The working team
comprised of a representative from the Executive Board, Internal
Auditor, Audit Committee Secretary, Financial Controller, Head of
Accounting Department, and three independent parties. The purpose of
this working group was to lay out the framework and scope of the Risk
Committee.

The Audit Committee also emphasized on the Company’s internal control
process by requesting the Internal Auditor to regularly review and to
present to the Audit Committee the followings:

-   Review of the Company’s important documents that must be immediately
    addressed to SET/SEC

-   Review of the Company’s cash and cheque disbursement
    approval/authorization process.

-   Review of the proper handling procedure for periodic bookkeeping of
    invoices and receipts.

-   Review of other important findings from the Internal Auditor.

The planned activities of the Audit Committee for 2011 will be to
continue emphasize on the abovementioned issues: Risk Management; and
Internal Control. The Audit Committee will enhance the Internal Audit
activities by monitoring the development a formal internal audit program
that will effectively review internal controls, and enhance risk
management in key areas of the companies’ operations.

The Audit Committee reviewed and monitored the independence of the
external auditors and the objectivity and effectiveness of the audit
process and recommended to the Board the reappointment of Professor
Kesaree Narongdej and/or Mrs. Natsarak Sorochanunjeen and/or Mr.
Chaiyuth Angsuwithaya of the firm of A.M.T. & Associates, as the Company
auditor(s) to conduct the audit of financial statements for the year
ended December 31, 2011, for approval by the shareholders at the next
Annual General Meeting of the Company.

Mr. Krittapas Kanikanant

Independent Director and Chairman of the Audit Committee.

Bangkok: 31 March 2011