7. LITIGATION

7.1 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.

The plaintiff filed an appeal 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.

THL received a letter from the Appellate Court dated 9 June 2000 asking
if the Plaintiff and defendants would like to negotiate a compromise.
THL agreed to enter into a reconciliation program. Pursuant to said
negotiations, the Plaintiff requested THL to pay Baht 3 million for
landfill costs and that THL stop, permanently, all offshore mining in
Bangtao Bay within 3 km of the shore. THL refused. Consequently, the
Appellate Court ordered cancellation of the compromise negotiations and
the case will be filed for further consideration and judgment .

7.1.1 Management Comment

After consulting with independent legal counsel, the Management has
confidence in the quality of the investigations presented in arguments
resulting in absolvement of the Defendants in the Court’s decision of 7
December 1999. Moreover, even though the Appellate Court will now
reconvene on the case pursuant to the breakdown in attempts at a
negotiated settlement, the Management feels that no new evidence, or
substantiated argument, has been presented by the Plaintiffs and that,
accordingly, the earlier verdict will be upheld.

At this stage, only legal fees have been incurred by THL, and none of
its directors or management are related to the Plaintiff.

7.1.2 The Possible Negative Impact on THL’s Assets

1. If the Appellate Court rules against THL, the Company will then
pursue the case further, to the Supreme Court.

2. If the Supreme Court finally rule in favor of the Plainiffs; then,
damage claims will be subject to the Supreme Court’s consideration and
would not exceed Baht 174,874,000.00.

3. If the Supreme Court Rules in favor of the Plaintiffs, and if the
Defendants cannot pay the damage claims, then the plaintiffs may file
for a ruling allowing for the dispersal of Company assets. Also if
assets are insufficient, the plaintiffs could file for a bankruptcy
charge against the defendants.

Note: Of the six original Plaintiffs, only four lodged an appeal to the
Appellate Court for claims against the Defendants as indicated
following:

  1. Laguna ..........................................Baht 14,316,000

  2. Phuket Resources Development ...Baht 2,566,000

  3. Bangtao Development ..................Baht 44,316,000

  4. Tai Wah Sap Pattana.....................Bhat 113,676,000

  TOTAL:.........................................Bhat 178,874,000

7.1.3 Future Offshore Tin Mining in Bangtao Bay

Pursuant to the Company’s positive summation of events and the eventual
outcome, as indicated in 7.1 above, Management is confident that mining
will be allowed to continue uninterrupted in accordance with the
Company’s existing mining lease agreements.