2.11 Transaction and Connected Parties

2.11.1 Connected Parties

+----------+---------------+------------------------+----------------+
| Company  | Aspac Co      | S                      | S              |
|          | nstruction Li | ino Pac Development (T | intana Holding |
|          | mited (ASPAC) | hailand) Limited (SPD) | s Limited (SH) |
+----------+---------------+------------------------+----------------+
| Tra      | Overdraft     | As SPD (through AsPac) | Short term     |
| nsaction | (O/D)         | allowed THL to use its | loan from SH   |
| Type     | facility of   | Baht 14 million        |                |
|          | Baht 14       | overdraft credit       |                |
|          | million       | facility. THL was      |                |
|          |               | requested by SPD to    |                |
|          |               | provide a secondary    |                |
|          |               | land mortgage          |                |
|          |               | registration with the  |                |
|          |               | bank of additional     |                |
|          |               | Baht 12 million on     |                |
|          |               | behalf of SPD.         |                |
+----------+---------------+------------------------+----------------+
| Tra      | The balance   | Baht 12 Million land   | The balance of |
| nsaction | of short term | mortgage.              | short term     |
| Value &  | loan as at    |                        | loan as at     |
| Criteria | December 31,  | This value represents  | December 31,   |
| on Net   | 2006 was Baht | less than 3% of the    | 2006 was Baht  |
| Tangible | 138,320.      | latest audited net     | 713,343.       |
| Assets   |               | tangible assets of THL |                |
|          |               | as per the Stock       |                |
|          |               | Exchange of Thailand   |                |
|          |               | (SET)’s regulation     |                |
|          |               | (ref: Bor Jor:         |                |
|          |               | 52-2-01, clause 9(1)   |                |
|          |               | and (2), page 122).    |                |
|          |               | The Transaction Value  |                |
|          |               | divided by THL’s Net   |                |
|          |               | Tangible Assets        |                |
|          |               | (12,                   |                |
|          |               | 000,000/1,802,631,000) |                |
|          |               | derives a percentage   |                |
|          |               | of 0.67%.              |                |
+----------+---------------+------------------------+----------------+
| Reason   | In 1999 THL   | To provide working     | To provide     |
| for      | accepted      | capital for THL and    | funds for the  |
| Tra      | financial     | its controlled         | capital        |
| nsaction | assistance    | entities               | increase of    |
|          | from AsPac    |                        | its            |
|          | due to severe |                        | subsidiary,    |
|          | cash flow     |                        | Tungkum        |
|          | restraints    |                        | Limited, in    |
|          | brought on by |                        | accordance     |
|          | the extremely |                        | with the       |
|          | tight credit  |                        | requirements   |
|          | market. The   |                        | of the Banking |
|          | financial     |                        | institutions   |
|          | assistance    |                        | that are       |
|          | rendered was  |                        | providing the  |
|          | used          |                        | medium term    |
|          | primarily to  |                        | loan for its   |
|          | support the   |                        | gold project.  |
|          | high strength |                        |                |
|          | aggregate     |                        |                |
|          | quarry        |                        |                |
|          | operations    |                        |                |
|          | and as THL’s  |                        |                |
|          | working       |                        |                |
|          | capital.      |                        |                |
+----------+---------------+------------------------+----------------+
| Terms    | 1) The        | When THL no longer     | In terms of    |
| and      | facility was  | utilised the Baht 14   | the loan,      |
| Co       | made          | million OD facility,   | interest       |
| nditions | exclusively   | the Baht 12 million    | charged        |
| of       | for THL and   | secondary registration | between each   |
| Tra      | its           | will be released.      | party is at    |
| nsaction | controlled    |                        | the prevailing |
|          | entities for  |                        | rate charged   |
|          | working       |                        | by the bank.   |
|          | capital       |                        |                |
|          |               |                        |                |
|          |   2) THL pays |                        |                |
|          |   the monthly |                        |                |
|          |   interest    |                        |                |
|          |   charge      |                        |                |
|          |   directly to |                        |                |
|          |   a bank at   |                        |                |
|          |   the         |                        |                |
|          |   prevailing  |                        |                |
|          |   rate.       |                        |                |
|          |               |                        |                |
|          | 3) THL        |                        |                |
|          | provided      |                        |                |
|          | collateral    |                        |                |
|          | consisting of |                        |                |
|          | land at       |                        |                |
|          | Saraburi      |                        |                |
|          | province in   |                        |                |
|          | the amount of |                        |                |
|          | Baht 4        |                        |                |
|          | million. The  |                        |                |
|          | remaining     |                        |                |
|          | Baht 10       |                        |                |
|          | million of    |                        |                |
|          | the facility  |                        |                |
|          | is secured by |                        |                |
|          | AsPac’s group |                        |                |
|          | collateral.   |                        |                |
|          |               |                        |                |
|          | 4) The OD     |                        |                |
|          | facility is   |                        |                |
|          | allocated to  |                        |                |
|          | THL and its   |                        |                |
|          | controlled    |                        |                |
|          | entities      |                        |                |
|          | without other |                        |                |
|          | charges.      |                        |                |
+----------+---------------+------------------------+----------------+
| Scope of | THL and AsPac | THL and SPD are        | THL and SH are |
| C        | are connected | connected to the       | connected as   |
| onnected | to the extent | extent that Mr. R. Ng, | SH is one of   |
| Persons/ | that Mr.      | the late Mr. W.        | the major      |
| Relat    | Ronald Ng and | Sukasem, and Dr. J.P.  | shareholders   |
| ionships | the late Mr.  | Mills were directors   | in THL.        |
|          | W. Sukasem    | of both THL and SPD at |                |
|          | were          | the time of the        |                |
|          | directors of  | transaction. As per    |                |
|          | both THL and  | THL policy, these      |                |
|          | AsPac at the  | persons abstained from |                |
|          | time of the   | voting in connection   |                |
|          | transaction.  | with these             |                |
|          | Per THL       | transactions.          |                |
|          | policy, these |                        |                |
|          | persons       |                        |                |
|          | abstained     |                        |                |
|          | from voting   |                        |                |
|          | in connection |                        |                |
|          | with this     |                        |                |
|          | transaction.  |                        |                |
+----------+---------------+------------------------+----------------+
| Tra      | This          | This transaction was   | This           |
| nsaction | transaction   | reported in THL’s      | transaction    |
| Tran     | was reported  | annual and quaterly    | was reported   |
| sparency | in THL’s      | financial statements   | in THL’s       |
| and      | annual and    | and submitted          | annual and     |
| approval | quaterly      | quarterly to the SET.  | quaterly       |
| process  | financial     | This transaction was   | financial      |
|          | statements    | reviewed by an         | statements and |
|          | and submitted | external auditor,      | submitted      |
|          | quarterly to  | legal counsel, THL’s   | quarterly to   |
|          | the SET. This | Audit Committee and    | the SET. This  |
|          | transaction   | Board of Directors who | transaction    |
|          | was reviewed  | deemed the said        | was reviewed   |
|          | by an         | transaction to be      | by an external |
|          | external      | fair, reasonable and   | auditor, legal |
|          | auditor,      | in compliance with     | counsel, THL’s |
|          | legal         | generally acceptable   | Audit          |
|          | counsel,      | accounting procedures. | Committee and  |
|          | THL’s Audit   |                        | Board of       |
|          | Committee and |                        | Directors who  |
|          | Board of      |                        | deemed the     |
|          | Directors who |                        | said           |
|          | deemed the    |                        | transaction to |
|          | said          |                        | be fair,       |
|          | transaction   |                        | reasonable and |
|          | to be fair,   |                        | in compliance  |
|          | reasonable    |                        | with generally |
|          | and in        |                        | acceptable     |
|          | compliance    |                        | accounting     |
|          | with          |                        | procedures.    |
|          | generally     |                        |                |
|          | acceptable    |                        |                |
|          | accounting    |                        |                |
|          | procedures.   |                        |                |
+----------+---------------+------------------------+----------------+

1.  CONNECTED TRANSACTIONS WITHIN THE GROUP

The transactions within the Group relate mainly to inter company loans
from THL to the subsidiaries. The terms of agreement between the parent
entity and the subsidiaries are mainly as follows:

Transaction type : Long term loan

Reason for loan : To provide long term capital for the subsidiary’s
projects.

Terms : Interest charged on the average banking interest cost.

Disclosure : Reported to the SET and shareholders, quaterly and annually
as incurred.

Approval Process : Reviewed by auditors, legal counsel, THL’s Audit
Committee and Board

  of Directors who deemed said transaction to be fair, reasonable and in

  compliance with generally acceptable accounting procedures.

+-----------+--------------+--------------+--------------+-------------+
| Name of   | Tungkum L    | Cholsin L    | Sky Cliff    | Se          |
| Company   | imited (TKL) | imited (CSL) | Limited      | a Mineral L |
|           |              |              | (SCL)        | imited SML) |
+-----------+--------------+--------------+--------------+-------------+
| Tr        | Baht         | Baht         | Baht         |             |
| ansaction | 127,567,005  | 74,979,680   | 85,565,625   |             |
| Value     |              |              |              |             |
|           | Baht         | Baht         | Baht         |             |
| Principal | 17,056,510   | 41,542,482   | 10,768,194   |             |
|           |              |              |              |             |
| Acc.      |              |              |              |             |
| Interest  |              |              |              |             |
+-----------+--------------+--------------+--------------+-------------+
| Scope of  | Share        | Share        | Share        | Share       |
| Connected | holders      | holders      | holders      | holders     |
| Persons/  | 98.86%       | 72.10%       | 75.00%       | 83.70%      |
| Relat     |              |              |              |             |
| ion-ships | Joint        | Joint        | Joint        | Joint       |
|           | directors    | directors    | directors    | directors   |
+-----------+--------------+--------------+--------------+-------------+

2.11.2 Necessary and Reason of Transaction

The connected transactions were financial assistance for the Company’s
working capital because of low liquidity. Terms and conditions of
transaction benefit the Company. For example, the Company pays interest
charge directly to a bank at the rate charged by the bank and if the
Company pays directly to lender, the Company will pay interest at the
same rate as render borrowing rate without charge. Thus, the lender
requested the Company to provide a secondary land mortgage registration.

Above said transactions were approved by the Company’s Board of
Director, and reported to the Stock Exchange of Thailand (SET) following
SET’s regulations of connected transaction disclosure.

2.11.3 Policy of Connected Transaction Approval

The Company tries to minimize or avoid further financial assistance from
connected and/or related parties. Such transactions may occur when the
Company is short of working capital to meet immediate financial
commitments. Upon entering such transactions, controls are in effect
pursuant to the Board of Director’s guidelines (meeting no. 4, August
27, 2002) stating that sums up to Baht 500,000 require approval of the
Managing Director or two directors, amounts between Baht 500,000 and 2
million require the Managing Director’s approval, and transactions of
more than Baht 2 million must be approved by the Board of Directors. In
the latter case, any involved parties must abstain from voting on the
transaction and said transaction must be scrutinized by the Audit
Committee and reported to the SET pursuant to SET regulations on
connected transaction disclosure.

4.  Future of Connected Transactions

The Company operates business based on Company benefit. Connected
transactions with related companies or parties (financial assistance)
will occur in significant circumstance. In future, the Company has no
intent to do connected transactions, except where the Company encounters
severe circumstances. However, the Company follows the policy of
connected transaction approval as stated in clause 11.3. In addition,
the Company will report connected transactions to SET.