2.3 Production Operation

2.3.1 Tin Mining Operations

The Company owns 99.99% of the following tin mining leases at Phuket,
Thailand. The Company is persevering to obtain the final mining licenses
from the authorities. Additionally, the company has lobbied for royalty
rate reduction which was approved in late 2007.

In FY08 the Company has no income from tin operation.

Meanwhile, the Company is pursuing the ground work involved in preparing
its Sea Minerals holdings for future development. Activities now in
progress include filing of mining plans, reviewing and selection of
deep-water mining technique, sourcing relevant prospective mining
expertise and operators, resource verification, and data organization in
suitable mining software for ongoing control.

2.3.1.1 Tin Price and Production

During year 2008 tin price reached its high of over 25.00 USD/Kg in the
first half of the year. The price went down to 10.00 USD/Kg at the end
of year 2008. Price fluctuations was mainly due to a world demand verses
supply gap as tin is now used more widely in industry resulting from
ongoing research into new applications, industrial expansion in China,
and its increasing use in place of other materials. Current application
include metal alloys, tin plating, lead-free soldering (particularly in
the electronics and IT sector), and packaging.

As the price of tin is expected to remain buoyant, we expect to see
positive results in this sector in the near future. In FY08 there was no
offshore tin mining activity.

2.3.1.2 Marketing and Competition

(A) Marketing Policy

The product is sent and to be processed by the refinery concerned.
Prices for tin and gold are subject to world demand and supply which
sets the prices at the international metal and bullion markets.

(B) Competition

There is no significant domestic competition at this time.

2.3.1.3 Resources and Products

(A) Resources

About 50,000 rai (8,000 hectares) of offshore lease areas in Phuket are
currently valid. In operations, the contractor uses its dredges for
mining and sends the tin ore concentrate to a smelter at Phuket Thailand
for refining. The concentrate ore volume depends on dredge capacity,
weather, and the season. However, the Company’s concentrates are not the
smelter’s only support.

(B) Environment Impact

Environmental regulations are overseen and enforced by the Harbour
Master and the DMR at Phuket. Offshore tin mining procedures use sea
water for dressing and washing and it is then drained back into the sea.
The mining is in a deep-sea area that has strong wind and wave action,
tidal ebb and flow, and steady ocean currents, all of which tends to
widely disperse the returned sediment. However, the Company pays annual
compensation of Baht 310,300 for draining the sediment back into the
sea.

During mining, The Company samples seven locations in the lease areas at
one meter depth for testing temperature, pH, Salinity, Oxygen, Oil,
Lead, Mercury, Arsenic, Cadmium, Copper, Chromium, Iron and Manganese.
The test results have been within the standards set by the Office of
Environment Policy and Planning (OEPP). The Company also pays about Baht
110,000 per annum for the test costs.

2.3.2 Igneous Rock (Andesite) Mining Operations

THL’s igneous rock (andesite) mine is located near the town of Kaeng
Khoi in central Thailand, approximately 140 km transport distance from
Bangkok. Quarry operations commenced in 1999 after having identified and
surveyed minable resources of about 12 M tons. A further 15 M tons of
minable resources are indicated in the surveyed zone which is open
laterally and to depth. Current operations utilize about 215 rai
(344.000 sq m) plus crushing plant, service, maintenance, and stockpile
areas.

+--------------+---+---------+---+-------------+---+------------------------+
|              |   |   Area  |   |             |   |                        |
+--------------+---+---------+---+-------------+---+------------------------+
|   Mining     |   |   Rai   |   |   Sq. m.    |   |   Expiry date          |
|   right no.  |   |         |   |             |   |                        |
+--------------+---+---------+---+-------------+---+------------------------+
|              |   |         |   |   142,323.2 |   |   May, 2009            |
|  28676/15268 |   |  88.952 |   |             |   |                        |
+--------------+---+---------+---+-------------+---+------------------------+
|              |   |         |   |   247,467.2 |   |   January, 2007        |
|  28675/15632 |   | 154.667 |   |             |   |                        |
+--------------+---+---------+---+-------------+---+------------------------+

 

THL’s quarry operates under a ten year mining license, no. 28676/15268,
approved in 1999 by the Ministry of Industry. License no. 28675/15632
(under Sintana Resources Company Limited) has expired and is in the
process of being renewed. The two surveyed licensed areas total about
243.5 rai (about 390,000 sq m)

2.3.2.1 Mining and Production

Rock crushing operations have been contracted to Cholsin Limited, the
Company’s 72.10% owned subsidiary, since June 1998.

Production capacity of the crushing plant is about 250 tons per hour.
Sales and prices charged are dependent on demand for any particular
product and the ability to meet client specifications (such as particle
shape and abrasive index). At times, some product deliveries are
postponed at the request of the customer and, therefore, deliveries are
not always according to contract schedules.

In FY08 andesite sales decreased from Baht 8.98 million to Baht 4.34
million when compared to the previous year. This was due to the
postponement of the SRT’s double track and major rail maintenance
projects for which budget releases by the SRT did not occur.

+----------------+---------+---------+---------+---------+---------+
|   2008         |         |         |         |         |         |
|   AGGREGATE    |         |         |         |         |         |
|   SALES (tons) |         |         |         |         |         |
+----------------+---------+---------+---------+---------+---------+
|   Item         |   Qtr 1 |   Qtr 2 |   Qtr 3 |   Qtr 4 |   Total |
+----------------+---------+---------+---------+---------+---------+
|   Road base    |   1     |         |   4     |   2     |   9     |
|                | ,283.77 |  438.23 | ,698.82 | ,674.12 | ,094.94 |
+----------------+---------+---------+---------+---------+---------+
|   Railway      |   52.59 |         |         |         |         |
|   Ballast      |         |  131.07 |  214.94 | 1080.24 | 1478.84 |
+----------------+---------+---------+---------+---------+---------+
|   Aggregate ¾” |         |         |         |         |   1     |
|                | 2776.35 |  550.14 | 6960.84 |  816.72 | 1104.05 |
+----------------+---------+---------+---------+---------+---------+
|   Dust         |         |         |         |         |         |
|   (Coarse)     | 1519.55 |  359.28 | 1755.36 |  182.82 | 3817.01 |
+----------------+---------+---------+---------+---------+---------+
|   Dust (Fine)  |         |         |         |         |         |
|                |  761.17 |  588.37 |  556.72 |  501.27 | 2407.53 |
+----------------+---------+---------+---------+---------+---------+
|   TOTAL        |         |         |   1     |         |   2     |
|                | 6393.43 | 2067.09 | 4186.68 | 5255.17 | 7902.37 |
+----------------+---------+---------+---------+---------+---------+

2.3.2.2 Marketing and Competition

(A) Marketing Policy 

The quarry is one of the leading producers and suppliers of hard igneous
rock materials in central Thailand. The quarry produces a wide range of
aggregate sizes applicable mainly to the construction, road building,
and railway industries. Products are made to comply with specifications
set by the State Railway of Thailand (SRT), the Highway Department, and
the MRTA, thereby making them more competitive in the market place. The
quarry’s andesite aggregate is the only product in the Kaeng Khoi region
meeting the Highway Department’s specifications.

The Company prospect that the SRT will commence new double-track
projects in the Central Region and northeast regions in the near future
where our product is most competitive.

(B) Competition

Located about 140 km from Bangkok, the product has several advantages in
marketing, including competitive transport costs. 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. There is no other deposit at Amphur Wiharndaeng, which
produces for its own projects and is not in high demand.

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. In
addition, our product is the only aggregate meeting the specifications
of the Highway Department for asphaltic road surfacing in Kaeng Khoi.

2.3.2.3 Resources and Products

(A) Resources

In mining lease areas, Andesite resources were found to 30 meter-depth
from surface. The surveyed zone is open laterally and to depth
indicating additional minable resources. Surveyed resources currently
under license are about 12 M tons and additional resources are estimated
to be at least about 15 M tons.

The andesite mining is an open pit operation and entails site clearing
followed by controlled bedrock drilling and blasting, and transport to
stockpiles or to the crushing plant. As far as possible, all mining and
crushing operations are coordinated with immediate delivery requirements
so that transport and other operating costs are kept in line with
current orders.

  2.3.2.4 Environment Impact

The andesite mining impacts on the environment to the extent that the
surface is altered and there is some noise and dust from blasting. The
Company operates in accordance with OEPP, DMR, and Labour Department.
The guidelines include safety practice and environmental maintenance
procedures in and around the site area such as:

1.  Rows of trees were planted around the site before mining began to
    help reduce noise and dust into neighboring areas.

2.  Vegetation and soil are cleared from the excavation site before
    drilling and blasting, otherwise there is no lasting damage to the
    immediate environment, and no unnatural materials are used.

3.  Rock blasting is controlled to reduce shock and dust. The blasting
    does not result in any appreciable rock fragments falling outside
    the lease area.

4.  Water spraying apparatus are installed in several locations for dust
    suppression.

5.  Workers wear protective goggles and face masks against dust in their
    work areas. The Company spends for protective equipment, and on
    health checks of workers and staff.

2.3.3 Gold Mining Operations

Tungkum Limited (TKL), an exploration and mining company registered in
Loei, Thailand, with control and working interest 98.86% held by Tongkah
Harbour Public Company Limited (THL) has 100% control of the mineral
concessions for exploration and mining of gold and related minerals at
25 km southwest of Loei Province, northeast Thailand.

On being awarded the Block 4 concession in October 1991, subsequent to
international bidding, THL entered into an agreement with the Department
of Mineral Resources (DMR) for exploration and mining of gold and
related minerals. As required, a signature bonus of Baht 5.8 million was
paid to the DMR and committed THL to pay a Baht 6.5 million bonus for
the first batch of mining license applications approved. In addition,
THL agreed to maintain the right of the Royal Thai Government to buy 5
to 10% of TKL shares at cost plus interest at MLR including
administration costs, pay 2.5% royalties, and production sharing at
1.5%.

This development was a direct result of earlier regional exploration
during the 1960’s and later decades by the DMR in cooperation with the
United States Geological Survey and, subsequently, with expertise from
several other foreign countries including Germany, Britain, and Canada
which granted (CAD)50 million to the DMR for mapping of mineral
resources for the whole of Thailand.

On receiving Special Prospecting Licenses (SPL’s) on the concession in
1992, an extensive mineral exploration program was initiated. The
geological team consist of Company geologists and foreign exploration
expertise from Australia, Canada and the U.S. By 1995, significant
economically minable gold resources were delineated and six initial
mining license applications were filed. Tungkum Limited’s mining plan
was then submitted to the DMR and subsequently approved by all the
Government regulatory agencies concerned.

Pursuant to securing project financing through a USD 13.3M loan from
EXIM Bank, and completion of the development and commissioning phases,
Tungkum Limited’s gold mining operation at Loei was brought officially
into production in September 2006. Upon some technical problems being
corrected, throughput was brought up to the desired rate of about 1500
tons per day and recovery levels of around 90%. In 2007 an agreement was
reached with Deutsche Bank on a USD 25M refinancing package which will
enable the Company to retire the loan with the EXIM Bank and proceed
with phase 2 installations and improve efficiency in existing
operations. In April 2008, the earlier loan with Deutsche Bank was
refinanced with a new loan amounting to USD 35M to enable plant
expansion and to build a flotation processing plant, and to further
evaluate nearby mineralized areas with the objective of proving up
additional gold ore resources for future production.

2.3.3.1 Mining and Production

A) Mining Development Plans

The Project is an open pit surface to near surface operation utilizing
carbon-in-pulp (CIP) methodology. The processing plant is designed to
process up to 3,500 tons of ore per day with initial production mainly
from the readily available oxide ore. Gold dore produced is being sent
to Heraeus Limited’s refinery in Hong Kong,

With gold production and refining ongoing, plans are in progress to
delineate further ore resources focusing on: 1) mineralized sectors in
continuity with the zones now blocked out for initial mining, 2) in
other nearby oxide zones, and 3) in several regions of primary gold
and/or base metal mineralization where assays show highly significant
values for one or more of gold, copper, lead, and zinc.

The above plans will be implemented by Tungkum Limited’s management team
consisting of expertise in mineral exploration and mining, business,
finance, and administration.

B) 2008 Gold Price

During the fiscal year 2008, gold prices started strongly in the first
quarter, surpassing the USD 1,000/ oz level in March before the sell
down in world equities, which resulted in pull back of gold prices and
down to below USD 700/ oz in October. Continued bad economic data
eventually brought investors back and gold recovered to close the year
at USD 865/oz.  

C) Project Financing

Project development was initially financed by a local consortium of
banks. On 29 December 2006, TKL signed a loan agreement with Deutsche
Bank for USD 25 million, and part of the new loan was utilized to
refinance the local consortium banks’ agreement. The drawdown of USD 25
million was then completed on 29 January 2007. The remaining loans will
be utilized for further plant expansion and proving up of reserves. At
the end of 2007, the Company had a remaining loan balance of USD 19.27
million; USD 2.5 million was already spent to improve and expand
production by installing the second ball mill and crushing plant
equipment to treat T-1-8 ore expected in early 2008. In April 2008, the
USD 25 million loan with Deutsche Bank was refinanced with a new USD 35
million loan to enable plant expansion and to build a 700,000 tpa
flotation processing plant.

D) Project Economics

The capital requirement for the first phase of the mine is approximately
USD 20 million.  Commercial operations commenced in September 2006.  
Following the addition of a flotation processing plant for about USD 3
million, we now have a 700,000 tpa flotation plant (all new equipment
from Outotec) and a 1,200,000 tpa CIP plant.

2.3.3.2 Marketing and Competition

(A) Marketing Policy 

In the gold mining operations, the product is bought and processed by
the refinery concerned. Prices are at international standards and vary
according to worldwide demand. The Royal Thai Government has the first
option to buy the gold output at the going world rate.

(B) Competition

There is only one other registered commercial gold mining project 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 affect prices.

2.3.3.3 Resources and Products

A) Mining Concession and Licenses

Tungkum Limited had been awarded the Block 4 concession totaling about
545 sq km in October 1991. Later the Company was granted the first 6
gold mining licenses (totaling 2.07 sq km) and submitted a further 114
mining license applications (totaling 52.62 sq km) along with 8 special
prospecting licenses (totaling 38.4 sq km) to cover the remaining
concession areas.

The mining licenses are valid for 25 years (with an option for
subsequent 25 year extensions upon resource confirmation).

+-----------------------+---------+------------------+----------------+
| Tungkum Limited       |         |                  |                |
|                       |         |                  |                |
| Gold Mining Licenses  |         |                  |                |
| & Applications        |         |                  |                |
+-----------------------+---------+------------------+----------------+
| Description:          | Qu      | Status:          | Area (sq km):  |
|                       | antity: |                  |                |
+-----------------------+---------+------------------+----------------+
| Mining Licenses       | 6       | Granted for 25   | 2.07           |
|                       |         | Years            |                |
+-----------------------+---------+------------------+----------------+
| Mining License        | 114     | Under            | 52.62          |
| Applications          |         | Application      |                |
+-----------------------+---------+------------------+----------------+
| Special Prospecting   | 8       | Under            | 38.40          |
| Licenses              |         | Application      |                |
+-----------------------+---------+------------------+----------------+
| TOTAL BLOCK 4 GOLD    |         |                  | 93.09          |
| MINING CONCESSION     |         |                  |                |
| AREA:                 |         |                  |                |
+-----------------------+---------+------------------+----------------+

Board of Investment (BOI) Approval

Tungkum Limited has received certain Board of Investment (BOI) approvals
from the Royal Thai Government.  Most significantly, Tungkum Limited
will have the following benefits: 

1) a 100% exemption on raw material import duties for 5 years until 31
Jan 2011 which can regain this benefit again after last expired date ;
and

2) an 8 year exemption from corporate income tax and a 50% exemption for
5 years thereafter. The benefit took effect on the first day of revenue
which was 15 September 2006; and

3) Tungkum is in process of applying from BOI full exemption from import
duties on machinery till April 2009. 

Resources and Mineralization

Measured and inferred resources (consisting of gossanous, surface, and
near surface oxide ore) total 4.49 M tons averaging 4.14 g/t gold.
Independent third party experts in the industry have recently evaluated
TKL’s ore reserves and resources. The report, compiled (reconfirmed in
November 2006) by Mr. Edward Brennan, BE (app. geo.) FausImm, MMICA, CP
(geo.), MGSA, MCIM, detailed the following:

+---+---------+------------+--------+---------+------------+--------+
|   |         |   Ore Type |        |   Grade |            |        |
|   |  Target |            | Tonnes |   (g/t  |  Contained |  Strip |
|   |   Area  |            |        |   Au)   |   Gold     |        |
|   |         |            |        |         |   (oz)     |  Ratio |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-1   |   Oxide    |   3    |   2.71  |   27,274   |        |
|   |         |            | 13,000 |         |            |        |
| a |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   6.66  |   18,845   |        |
|   |         | Transition | 88,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |   8    |   6.78  |   189,012  |        |
|   |         |            | 67,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   No       |   6    |   5.74  |   117,097  |        |
|   |         | n-mineable | 34,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Mineable |   6    |   5.79  |   118,034  |   1 :  |
|   |         |            | 34,000 |         |            |   2.43 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |   1,2  |   5.77  |   235,131  |        |
|   |         |            | 68,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-1-8 |   Oxide    |   2    |   3.79  |   35,219   |        |
|   |         |            | 89,000 |         |            |        |
| a |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   2.46  |   554      |        |
|   |         | Transition |  7,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |        |   2.61  |   5,875    |        |
|   |         |            | 70,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   No       |        |   2.75  |   5,480    |        |
|   |         | n-mineable | 62,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Mineable |   3    |   3.70  |   36,167   |   1 :  |
|   |         |            | 04,000 |         |            |   1.95 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |   3    |   3.54  |   41,647   |        |
|   |         |            | 66,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Qz    |   Oxide    |        |   3.93  |   6,066    |   1 :  |
|   |   Spur  |            | 48,000 |         |            |   NIL  |
| a |         |  (eluvial) |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Gsn   |   Oxide    |        |   1.47  |   756      |   1 :  |
|   |   Cap   |            | 16,000 |         |            |   NIL  |
|   |         |  (eluvial) |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-1-S |   Oxide    |   3    |   2.73  |   30,372   |        |
|   |         |            | 46,000 |         |            |        |
| b |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   16.29 |   3,667    |        |
|   |         | Transition |  7,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |   1    |   8.07  |   28,284   |        |
|   |         |            | 09,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   No       |   1    |   7.38  |   29,911   |        |
|   |         | n-mineable | 26,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Mineable |   3    |   3.00  |   32,412   |   1 :  |
|   |         |            | 36,000 |         |            |   3.50 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |   4    |   4.20  |   62,323   |        |
|   |         |            | 62,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-7   |   Oxide    |        |   4.90  |   5,514    |        |
|   |         |            | 35,000 |         |            |        |
| b |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   4.59  |   1,476    |        |
|   |         | Transition | 10,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |        |   6.92  |   1,558    |        |
|   |         |            |  7,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |        |   5.11  |   8,548    |   1 :  |
|   |         |            | 52,000 |         |            |   4.97 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-88  |   Oxide    |        |   3.64  |   5,969    |        |
|   |         |            | 51,000 |         |            |        |
| b |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   5.13  |   1,814    |        |
|   |         | Transition | 11,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |   -    |   -     |   -        |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |        |   3.90  |   7,784    |   1 :  |
|   |         |            | 62,000 |         |            |   6.74 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   T-3   |   Oxide    |   6    |   3.91  |   76,000   |        |
|   |         |   Inferred | 05,000 |         |            |        |
| b |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |   4.11  |   9,000    |        |
|   |         | Transition | 69,000 |         |            |        |
|   |         |   Inferred |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Sulfide  |   1,5  |   2.94  |   146,000  |        |
|   |         |   Inferred | 39,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |   Total    |   2,2  |   3.25  |   231,000  |        |
|   |         |   Inferred | 13,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Total |   Oxide    |   1,0  |   3.15  |   111,212  |        |
|   |         |            | 98,000 |         |            |        |
| c |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Total |            |   1    |   6.63  |   26,222   |        |
|   |         | Transition | 23,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Total |   Sulfide  |   1,0  |   6.64  |   229,561  |        |
|   |         |            | 53,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Total |   No       |   8    |   5.95  |   157,365  |        |
|   |         | n-mineable | 22,000 |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |   Total |   Mineable |   1,4  |   4.49  |   209,630  |   1 :  |
|   |         |            | 52,000 |         |            |   2.73 |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |   2,2  |   5.02  |   366,995  |        |
|   |         |            | 74,000 |         |            |        |
| G |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| a |         |            |        |         |            |        |
| n |         |            |        |         |            |        |
| d |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| t |         |            |        |         |            |        |
| o |         |            |        |         |            |        |
| t |         |            |        |         |            |        |
| a |         |            |        |         |            |        |
| l |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| l |         |            |        |         |            |        |
| e |         |            |        |         |            |        |
| s |         |            |        |         |            |        |
| s |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| T |         |            |        |         |            |        |
| - |         |            |        |         |            |        |
| 3 |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| i |         |            |        |         |            |        |
| n |         |            |        |         |            |        |
| f |         |            |        |         |            |        |
| e |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| e |         |            |        |         |            |        |
| d |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+
|   |         |            |   4,4  |   4.14  |   597,000  |        |
|   |         |            | 87,000 |         |            |        |
| G |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| a |         |            |        |         |            |        |
| n |         |            |        |         |            |        |
| d |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| t |         |            |        |         |            |        |
| o |         |            |        |         |            |        |
| t |         |            |        |         |            |        |
| a |         |            |        |         |            |        |
| l |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| w |         |            |        |         |            |        |
| i |         |            |        |         |            |        |
| t |         |            |        |         |            |        |
| h |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
|   |         |            |        |         |            |        |
| i |         |            |        |         |            |        |
| n |         |            |        |         |            |        |
| f |         |            |        |         |            |        |
| e |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| r |         |            |        |         |            |        |
| e |         |            |        |         |            |        |
| d |         |            |        |         |            |        |
+---+---------+------------+--------+---------+------------+--------+

KEY

  ----- -----------------------------------------------------------------
  A     Constitutes Phase I of the Phu Thap Fah Mining Program; Mining
        Licenses Approved (25 yrs); Total Mining Area = 2.065 sq. km.

  B     Constitutes Phase II; Mining Licenses Pending Final Approval of
        Mining Plan; Mining Plan to be filed upon commencement of Phase I
        production

  C     Constitutes Total for Phase I and II; Does Not Include the
        Regional Area of which mineralization has been intercepted but
        not calculated
  ----- -----------------------------------------------------------------

B) Environmental Management

Environmental impact studies for the Project were conducted in
accordance with the Office of Natural Resources and Environmental Policy
and Planning (“ONEP”, previously known as “Office of the Environment
Policy and Planning or OEPP”) guidelines and consisting of a coordinated
study involving SPS Consulting, the Department of Geotechnology at Khon
Kaen University, NSR Environmental Consulting PTY LTD, Australia, and
Environmental Geochemical International PTY LTD, Australia. The
comprehensive program included ground water, soil mechanics, and soil
profile studies, all of which were approved by the ONEP.

Prior to production baseline surveys on soil and groundwater properties
were conducted by the Ground Water Research Center (GWRC) at Khon Kaen
University. Since production began, the GWRC team has been conducting
environmental site monitoring in accordance with ONEP and DPIM
regulations

TKL’s staff and management are committed to sound environmental
practices and compliance with all applicable laws and regulations during
operations. In addition, TKL will initiate future rehabilitation of
mined areas for suitable post-mining beneficial land use.

2.3.4 Property Development

In January 2008, the Company signed an agreement to sell land in Phuket
town with area 13,644 square meter to a company  at Baht 60 million. The
land was purchased in 1981 at a cost of Baht 7.85 million. Tongkah
Harbour received payment for this sale in year 2008.

Despite this sale, Tongkah Harbour Public Company Limited still owns a
sea facing land parcel in Phuket totaling 35,796.4 sq m. This land
parcel has prospects for major waterfront development in the future.

The following table provides a breakdown of the Company’s current land
holdings and their status.

+------------+--------+------------------------------------------------+
| THL        |        |                                                |
| PROPERTY   |        |                                                |
| HOLDINGS   |        |                                                |
+------------+--------+------------------------------------------------+
| Area (sq   | Loc    | Property Description:                          |
| m):        | ation: |                                                |
+------------+--------+------------------------------------------------+
| 5,447.60   | B      |   Land held by THL’s 75% owned subsidiary, Sky |
|            | angkok |   Cliff Limited at the Rachadapisek / Rama IV  |
|            |        |   MRTA station - a prime location near the     |
|            |        |   CBD. Development site of Le Metro office and |
|            |        |   service apartments / condominiums.           |
+------------+--------+------------------------------------------------+
| 1,844.69   | B      |   THL corporate headquarters located at the    |
|            | angkok |   7th Floor of the Muang Thai Phatra Complex,  |
|            |        |   Tower 1.                                     |
+------------+--------+------------------------------------------------+
| 35,796.40  | Phuket |   A large land bank located on the sea front   |
|            |        |   of Phuket Bay. Currently the site for THL’s  |
|            |        |   Phuket operations. Prime for future          |
|            |        |   development.                                 |
+------------+--------+------------------------------------------------+

2.3.4.1 Sky Cliff Limited

Sky Cliff Limited (SCL) is 75% owned subsidiary of the Company. SCL owns
a 3 rai,1 ngan, 61.9 sq wah (5,447.60 sq m), land plot with prime
frontage on Ratchadapisek Road. The site is near the CBD and close to
the Rama 9 subway station and expressways with convenient connections to
the new airport. Given its convenient location and a rising property
market, SCL is reviewing plans to develop a 28 story office and service
apartment / condominium complex on the site in 2007.

The years since 2003 were dedicated to advancing the Le Metro project
(now renamed Arden project) , structural and engineering plans have been
finalized, all piling work has been completed, and the environmental
impact study has been completed and approved by appropriate Government
authorities in accordance with building permit requirements. However,
the price of construction materials dramatically escalated then
following the sharp increase in the price of crude oil.

As the building was then slated to be a luxury class development at high
quality specifications, the increase in construction material prices
dramatically impacted our ability to move forward with the project
profitably. Therefore, Management decided to put the Project on hold
pending stabilization of oil prices and construction materials costs at
more reasonable rates.

Project location is now more enhanced with the construction of the
Markasan high speed railway central station to the new airport. Given
the slowdown of the demand of the construction industry and the
likelihood of financing availability it augurs well for the Company to
complete the project.

SCL is proposing to build a condominium on the above property during
year 2008. The project consists of a 29-storey contemporary condominium
tower with 82 m of road frontage located at 14 Ratchadapisek Road, Huay
Kwang, Bangkok, Thailand 10320.

   

1. Location Advantages: The site is only minutes away from the Praram 9
metro (subway) station, and only one turning away from access to the
expressway accessing the motorway leading to the Suvarnabhumi
International airport and to Chon Buri, and other major highways. The
site also provides easy access to other main arterials, such as
Sukhumvit and New Petchburi Roads.

2. Condo Units: At current planning, the project will offer a total of
629 individual condominium units for sale to the public (excluding
office spaces and other). Unit types will consist of: 80% one bedroom
(1+1), and 20% two bedroom including 3 and 4 bedroom units. Following is
a unit breakdown of the total project by the number of bedrooms:

+---------------------------------+------------------------------------+
|   Unit Type:                    |   Number of Units:                 |
+---------------------------------+------------------------------------+
|   4 Bedroom                     |   2                                |
+---------------------------------+------------------------------------+
|   3 Bedroom                     |   6                                |
+---------------------------------+------------------------------------+
|   2 Bedroom                     |   182                              |
+---------------------------------+------------------------------------+
|   1 Bedroom                     |   439                              |
+---------------------------------+------------------------------------+
|   Total Units                   |   629                              |
+---------------------------------+------------------------------------+

The Condominium will be an “intelligent” building equipped to provide
high-tech option to all condominium owners, including broadband internet
access, home automation, and integrated security management systems. The
home automation system will allow the owner to customize the controls of
all electrical appliances located within the unit while also maintaining
the temperature of the unit.

3. Parking & Services: The basement floors through to fifth floor will
be for parking providing about 368 spaces. The ground floor (double
height) will feature a garden-themed lobby, reception and concierge
services, an office and business center, a laundry & hair salon shop,
and a family restaurant. In addition, the basement floor will offer 15
storage units which will be available for sale or lease to condominium
owners. The sixth floor, in addition to condo units, will provide
condominium owners with various amenities, such as: a 25 meter lap pool,
a children’s swimming pool, a Jacuzzi, and fitness facilities. The area
surrounding the swimming pool will be utilized as a multi-purpose area
suitable for outdoor gatherings.

4. Security: The building will be a secured with key-card access only to
the building and parking areas. Entry areas will be monitored and will
include digital recording of CCTV at the lift areas and the lobby.

5. Status: The construction permit is valid until 15 January 2009, but
can be extended. The extension request had been submitted Bangkok
Metropolitan Administration.

The consulting service agreement with IPC Corporation Ltd (IPC) a
Singapore property investment and development company with considerable
expertise in the field of construction, architecture, property
development, marketing and sales of properties that was reached in
February 2008 has been suspended due to the current global financial
markets uncertainty and the political instability in Thailand. SCL has
had difficulties securing banking loan facilities in part due to the
ongoing political crisis and financial markets uncertainties.

However, with the current construction cost which is relatively low. We
are in negotiation with a substantial foreign entity to construct with
the approved plans. Our land has a Floor Area Ratio (FAR) of 10.5
instead of the current 7. We have put in all efforts to preserve the
FAR.

  2.3.4.2 Phuket Property Holding

Development Plans and Proposal

The Company had previously acquired full ownership of a Phuket Bay land
plot which adjoins two already existing land parcels owned by the
Company. The Company now owns one large contiguous piece of waterfront
land at Phuket Bay which dramatically increases the land value and
prospects for future development.

In January 2008, the Company signed an agreement to sell land in Phuket,
of some 13,644 square meters, to a company at Baht 60 million. The land
was purchased in 1981 at a cost of Baht 7.85 million. Tongkah Harbour
received payment for this sale in year 2008.