AUDIT COMMITTEE AND INDEPENDENT DIRECTOR’S REPORT

Dear Shareholders,

As provided by the requirements and guidelines of the Stock Exchange of
Thailand (SET), and outlined in the Best Practice Guidelines for the
Audit Committee, Tongkah Harbour Public Company Limited (the “Company”)
has an established Audit Committee to ensure the company’s compliance
with generally accepted accounting principles and regulations. In year
2006, the Audit Committee met on four occasions to effectively and
responsibly carry out duties as further outlined in the Corporate
Governance Statement Section.

The Audit Committee comprises three independent directors appointed by
the Board of Directors that have appropriate experiences in accounting
and financial matters. As independent directors, Audit Committee Members
do not hold any management positions, are not employees of the company,
and do not represent any major shareholders. If necessary, the Committee
may also seek external advice from independent professional advisors. A
qualified accountant acts as the Internal Auditor.

The financial statements for the year ended 31 December 2006 were
prepared by Management and audited externally by the appointed auditing
firm of A.M.T. & Associates. Upon review of these financial statements
and other activities of the Company for the year 2006, the Audit
Committee hereby submits its findings as follows:

1. The Company’s accounting policies are in accordance with generally
accepted accounting principles and regulatory requirements.

2. Reports and interim consolidated financial statements (inclusive of
previously implemented connected transactions with related companies or
parties) were also in accordance with generally accepted accounting
principles and regulatory requirements. The Company obtained necessary
credit facilities at cost with no additional expenses charged by the
related parties in any transaction. All funds obtained have been used
exclusively by the Company and its controlled entities.

3. The Loei gold project of Tungkum Limited, a subsidiary, has completed
the plant construction in May 2006 with USD. 10.4 million financial
support in a form of Long-term loan granted by the Export-Import Bank of
Thailand and Bank Thai Public Company Limited. The commercial operations
began in the third quarter of 2006.

4. At Annual General Meeting of the Shareholders No.12/2006,
shareholders voted to approve the Company’s proposed offsetting
accumulated losses against its reserve and share premiums account of
Baht 132,615,546. By implementing this exercise, the Company’s
accumulated losses as at December 31, 2005 will be eliminated leaving
the share premium balances to Baht 355,084,695. However, due to
adjustments of past year accounting errors, this has resulted in
reduction in accumulated losses (refer to note 5.2), the Company
implemented the offsetting only for an amount of Baht 129.09 million.

5. Accounting errors adjustments

In 2006, the Company adjusted past year accounting errors through
retroactive adjustment of 2005 financial statements as follow:

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

5.2 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.

The adjustments of past year accounting errors have resulted in
reduction in accumulated losses and the Company implemented the
offsetting only for an amount of Baht 129.09 million.

6. The Audit Committee is satisfied that there is an ongoing process of
identification, evaluation, and management of risks faced by the Company
as internal audit and control systems are continuously monitored. The
Audit Committee has also ensured that all connected party transactions
was reviewed by the Committee and satisfied that the transactions were
at arms length market value and interests charged are also per financial
institution’s rate.

The Audit Committee recommended to the Board of Director that Professor
Kesaree Narongdej and/or Mrs. Natsarak Sarochanunjeen of the firm A.M.T.
& Associates, be nominated to the shareholders for appointment as the
Company auditor(s) for financial year ended December 31, 2007 at the
next Annual General Meeting of the Company.

_______________________________

Mr. Kriang Kiatfuengfoo

Independent Director and Chairman of the Audit Committee, Bangkok: 1
March 2007

Note: Mr. Somsak Potisat was appointed as an Independent Director and
Audit Committee Member by resolution of the Board on March 22, 2006.