SECTION 2

Tongkah Harbour Public Company Limited

Type of Business: Exploration and Mining

Address: 33 Rachadapisek Road, Khwang Huay Kwang, Khet Huay Kwang,
Bangkok

Company Registration: Bor Jor Mor 455

Email: tongkah@ksc.th.com

Tel: 247-2725-28 Fax: 247-2720

1. RISK FACTORS

 1.1 Mining and the Investor

 High risk investment, on the chance of high financial rewards, goes hand in hand with commodity investments. Mining products, such as gold, copper, and tin, are commodities and as such their value, together with businesses concerned, are subject to the affects of natural, economic, and socio-political developments, influencing the market. The investor, therefore, becomes exposed to these same influences and should be informed accordingly when investing in mining ventures, and include the following points in due diligence. 

1) Property rights The long term stability of a mining operation will
depend markedly on sound legal position and ownership of the mining
property concerned. The investor should be satisfied that property and
mining rights will be protected according to legal agreement.

2) Supply and Demand Be satisfied that product will be in consistent
demand over the proposed life of the venture, and that resource
evaluations are reliable., having been verified in detail by certified,
recognized, third party expertise in mineral deposit evaluations of the
type in question.

3) Project Management Be satisfied that management group consists of
people capable of efficiently managing all aspects of the operation:
exploration, mine planing, production, marketing, and finance.

4) Social Stability Be satisfied that longer term social stability is
very likely and that no disturbing policies are being promoted which
will have an adverse affect on your prospective interest.

THL’s gold operations, conducted through Tungkum Limited, are based
on: 1) its concession granted by Cabinet decree in 1991 and,
subsequently, 2) in having completed all regulatory requirements
prescribed by Government regulatory agencies, and 3) in having its
minable resource evaluations appraised, with respect to industry
standards, by certified economic geologists and mining engineers of
varied international experience. The gold mining license, on being
granted, would be valid for 25 years. The Company has possessory rights
pursuant to its concession, and the right of access and use of the
Forestry land (subject to Forestry approval including the post-mining
rehabilitation program), zoned by Cabinet decree as Mineral Area, and/or
ownership of the mining area.

Igneous rock (andesite) mining, the Company’s license is for ten years
and a second ten year license is in progress. Possible difficulties in
the operations center on marketing, maintenance, and production
management. The marketing section has to be constantly updating on new
prospects and market opportunities while maintaining contact with
existing customers and addressing any problems arising. Production must
be coordinated with current delivery schedules to avoid excessive
stockpiling, and with maintenance requirements as parts inventory has to
be planed in advance to meet expected hours of operation.

1.2 Litigation

1.2.1 The Bangtao Case

Certain companies of the Thai Wah Group have taken legal action against
THL and its contractor claiming damages totaling Baht 299,446,000 for
beach erosion which they attribute to the effects of the offshore
dredging in Bangtao Bay. The case was filed in 1991. However, the areas
concerned are within THL’s mining concession areas. The case had been in
hearings at the Civil Court for the past several years.

On 7 December 1999, The Civil Court, Bangkok; in Legal Case No.
6590/2534, Bangtao, Phuket, ruled in favor of the defendants: THL and
Seatran Mining Company Limited, which are not, therefore, deemed
responsible for the damages claimed by the plaintiff. The Court granted
the plaintiff until 4 March 2000 to make an appeal.

Of the six original Plaintiffs, only four lodged an appeal for
compensation claims totaling Baht 178,874,000 in March 2000. THL’s
lawyers filed statements to counter the appeal on 24 April 2000. The
case and hearing procedures will, accordingly, be handled by the
Appellate Court. Details of the case are as indicated in the following
Litigation Section.

1.3 Mining Industry and Competition

1. Marketing

In the Tin and Gold Mining operations, the product is bought and
processed by the refinery concerned. Prices for tin and gold are at
international standards and vary according to worldwide demand. In the
Igneous Rock Mining, economic viability is controlled by local
conditions and, therefore, a marketing and sales promotion program is in
effect as follows:

Strategy is based on canvassing government agencies and private
construction businesses that intend to, or have in progress, projects
that will require large quantities of igneous rock aggregate (such as
ours) rather than normal limestone which is softer and less durable.

Pricing Policy is based on a combination of factors including transport
distance, quantity required, prevailing price range for the product, and
terms of payment. For example railway ballast is currently priced at
Baht 150 per ton plus transport at one Baht per ton per km, 30 days
credit, and interest charges after 30 days. Credit terms are allowed for
companies considered solvent. Also some reduction is given for cash
at-site sales where the customer supplies transport.

Customer Characteristics and Relationships The Customers to date are all
associated with the construction and transport industries. We are
supplying railway ballast to joint-venture consortium’s under contract
to the State Railway of Thailand (SRT), and to similar groups under
contract with the underground transit project in Bangkok.

2. Competition

In Off Shore Tin Mining. There is no significant domestic competition in
at this time although one other mining company also has offshore mining
rights.

In Igneous Rock (Andesite) Operations. The product has several
advantages in marketing, including competitive transport costs as the
site is about 140 km from metropolitan Bangkok. 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. In late 2000, the Company won two major contracts to
supply ballast to railway development programs in the region.

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.

Gold Mining (Tungkum Ltd). There are no registered commercial gold
mining projects 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 significantly affect world prices.