2.7 Litigation

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 THLs 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 ruled in favor of the
defendants: THL and Seatran Mining Company Limited. On 29 March 2002,
the Appellate Court judged to stand firm with the Civil Court’s ruling
to dismiss the case and that the Company and Seatran Mining Co.,Ltd are
not therfore, deemed responsible for the damaged claimed by the
plaintiff. The four plaintiffs are to pay legal fee to the Company and
its former contractor at Baht 50,000 each. Subsequent to this rule,
however, the four plaintiffs lodged on appeal to the Supreme Court and
now the case is under the consideration of the Supreme Court.

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.

2 The Possible Negative Impact on THL’s Assets

A) 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 174,874,000

3 Future Offshore Tin Mining in Bangtao Bay

Management is confident that mining will be allowed to continue
uninterrupted in accordance with the Company’s existing mining lease
agreements.

Offshore Tin Mining Operation

The Phuket District’s Attorney filed a lawsuit against the Company
concerning offshore tin mining operations operated by the Company’s
contractor. The charges were filed on July 31, 2003 and consist of the
following:

1) Criminal Case No. Black 2825/2546 Consist of the charges as:

(1) The slime diffusion devices were not used for the dredge during the
    dredging operations over the ground.

(2) The engines installed on board the dredge were changed without
    notification submitted to the local Mineral Resources Office.

The Phuket Province Court ruled on 5 November 2004 at 13.30 hrs. in
favor of the Plaintiff that the Company have to pay a fine of Baht 5,000
each charge. The Court recommended that if the Company did not agree
with the judgment shall be able to lodge an appeal to the Appellate
Court. So that the Company lodge an appeal to the Appellate Court on 29
December 2004.

2) Criminal Case No. Black 2826/2546 Consist of the charges as:

(1) Carried out mining operations beyond the allowed period of November
    through April in each year, which is not in accordance with the
    mining scheme.

(2) Carried out mining operations without any boundary buoys installed,
    which is not in accordance with the mining scheme.

(3) Carried out mining operations only for 68 working days which is less
    than the 120 days required during each 12 month period.

The Phuket Province Court judged dismiss to all the said three charges
on 16 December 2004.