6.  FUTURE PLAN

GOLD EXPLORATION AND MINING – TUNGKUM LTD

6.1 Background Summary

Tungkum Ltd. (TKL) is an exploration and mining company registered in
Loei Province, Northeast Thailand, with control and working interest
(see Group Structure chart) held by Tongkah Harbour Public Company
Limited (THL). Gold Mining License Applications (MLA’s) were filed in
1996. The approval process is now in the final stages and is currently
with the Ministry of Agriculture. The mining license will be valid for
25 years.

On obtaining the concession in 1991, a signature bonus of 5.8 million
Baht was paid to the DMR plus a commitment to: (1) pay a 6.5 million
Baht bonus for the first lot of mining license

applications approved, (2) maintain the right of the Royal Thai
Government to buy 5 to 10% of Tungkum shares at par plus interest at
M.L.R., (3) pay 2.5% royalties, and 4) provide 1.5% production sharing
after royalty payments. To-date THL’s investment is about 303.1M Baht,
excluding carrying and administration costs. The Company’s management
team comprises expertise in mineral exploration and mining, business,
and finance (see section on management profiles).

6.2 Property

TKL’s concession holdings currently total about 88.56 sq km retained
from the original concession and are under licensing categories as
follows:

1. 120 MLA’s - under application, totaling - 34,174 rai (54.67 sq km).

2. 8 SPL’s - “ ” “ - 24,004 “ (38.4 “ )

under DMR consideration.

6.3 Project Summary and Status

On receiving the concession SPL’s in 1991, an extensive mineral
exploration program was initiated. By 1995, economically mineable gold
resources were delineated and six initial Mining License Applications
(MLA’s) were filed with the (DMR) at Loei. TKL’s mining plan was
approved by the DMR in early 1996, and by the Office of Environmental
Planning and Policy (OEPP) in December 1998. Ongoing mineral exploration
up to 1998 has resulted in further additions to mineable resource
figures and filing of additional MLA’s.

Of the 29 zones of economically significant gold and/or base metal
mineralization currently known, seven (comprising the “T” series) are in
the south-east sector where exploration is at a more advance stage,
including about 31,200 m of core and reverse circulation drilling in 346
holes, and has resulted in the current delineation of mineable ore grade
resources. West and northwest of the “T” series area, over 20
mineralized locations are indicated showing economically significant
assay results for one or more of gold, copper, lead, and zinc.

6.3.1 Resources

Currently, measured and inferred resources consisting of gossanous,
surface, and near surface oxide ore, well suited to open pit surface
mining, total 3.46 M tons at 4.38 g/t gold. In places, resource areas
are open laterally and to depth and transitional into primary gold
bearing sulfide ore zones. Preliminary surveys, including drilling, in
the primary mineralized zones and other oxide mineralized oxide zones in
the near vicinity suggests strongly an overall mineable resource
potential of about 1 M ounces (oz) of gold.

Reserve estimations were initially done by a professionally accredited
economic geologists in mineral resource appraisal methods. In addition,
a consulting economic geologist registered with the Australian Institute
of Mining and Metallurgy (AIMM), reviewed overall practice and made
recommendations for further work. Most recently, an Australian mining
consulting firm visited the site with a view to bidding on the
development once the mining license is granted.

6.3.2 Development Plans and Licensing

Mining operations will begin with the surface and near surface oxide
ores comprising the Quartz Spur and T-1 (northern zone) targets. The
initial plant setup will be designed to process about 190 tons of ore
per day. Phase two operations will involve expanded treatment facilities
for 1000 to 2000 tons per day and is intended to process the output from
the remaining “T” series deposits and vicinity.

In addition to the Quartz Spur deposit, the main mining zone at T-1 and
T-1-8 will total about 109.37 rai (about 0.175 sq km) in area, the plant
site about 1,030 rai (1.65 sq km) and to be located near the T-1
deposit. The plant complex will include the ore dressing plant, the
production and water treatment plants, and engineered wetlands.

Once mining operations are underway, further evaluations are intended in
three areas: 1) in mineralized sectors in continuity with the zones
blocked out for initial mining, 2) in other oxide and gossanous deposits
in the vicinity where resources of probable economic significance are
indicated, 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.

Licensing: During the year, not much progress was made on Tungkum’s MLAs
approval process. Tungkum’s applications have been pending for approval
by the Agriculture Land Reform Organization (ALRO), Bangkok under the
Minister of Agriculture and Cooperatives since July 1999. Liasions were
made continuously with the ALRO to ensure that all information on the
project supported by the government and ALRO, Loei are completed.
However, no official meeting of ALRO was held to consider the
applications. Tungkum continues to follow up in efforts to expedite the
approval process.

6.4 Environmental Impact Study

Ground water quality appraisal and appropriate controls were the main
objectives in the study. However, the study also includes other aspects
of the natural environment including wildlife appraisal and soil
analysis. The ground water study was conducted by the Department of
Geotechnology at Khon Kaen University in cooperation with SGS Consulting
Services and recommendations from NSR Environmental Consulting Pty. Ltd.
Of Australia. State-of-the-art technology was applied with the
installation of monitoring wells and computer based hydrological
modeling, all designed to work in conjunction with proposed mining
operations and ongoing ground water testing toward early warning of any
contamination, and including the most appropriate approach to remedial
action.

Soil mechanics and soil profile studies were done to determine
subsurface geological features and suitability of the insitu fine soil
for compaction and tailings pond lining. The results proved positive in
that the subsurface profile is geologically sound with no open
fractures, clay layers, or other hazardous conditions, that could result
in collapse and sudden leakage of ponded water and tailings. The tests
also indicate the presence of a sufficient and suitable fine soil
fraction for an effective stable lining for the tailings pond area, and
for pond and dam construction purposes. Drilling results, for monitoring
and water production wells, indicate more than enough ground water to
supply proposed mining activity which is expected to need about 2,000 cu
m per day.

6.5 General Geology

The general concession geology comprises complexly folded and faulted
siliclastic sedimentary rocks which, in eastern sectors of the
concession area, contain significant discontinuous limestone sections.
Phorphyritic granodiorite-to-diorite plutons and dike equivalents are
widespread across the area. In the southeast sector, gold bearing
gossanous zones (including the gold ore deposits) are preserved as
residual caps, and commonly overlay primary gold bearing sulfide zones
containing silicification, quartz veining, and skarn development.

In the central and western areas, economically significant gold and
gold-base metal mineralization occur in sectors featuring silicified
fracturing and brecciation located in and near ring-like structures of
probable volcanic origin. The ring structures are cut by regional
lineaments, trending mainly northwest and north-northeast.

The structures are of regional dimensions occurring in a broad belt 7 to
12 km wide trending northwest through the central and southern parts of
the concession. The lineament set conforms with a more extensive
regional pattern common to north Thailand and neighboring areas.
Equigranular to porphyritic granodiorite and dioritic plutonic rocks and
dike equivalents are widespread, and are commonly exposed in the ring
structures.

6.  Gold Production Process

  Gold Extraction Process

The extraction process involves eight main procedures with various sub
processes in each area depending on metallurgical necessities. Note that
all intended procedures in the gold extraction process, including the
use of cyanide, the handling of waste materials, and ongoing ground
water monitoring procedures, have already been approved by the
Department of Mineral Resources (DMR) and the Office of Environmental
Planing and Policy (OEPP).

1. The ore is fed into the hopper from which it is passed to the
vibrating feeder and on to the alluvial trommel. From the trommel, the
coarser ore fraction is passed to the jaw crusher for grinding. The

finer fraction is passed to the knelson concentrator.

2. At the jaw crusher, the ore is ground and passed on to the vibrating
screen which passes the finer fraction on to the fine ore bin and the
coarser fraction to the hammer mill for finer grinding and recycling
back to the screen. The fine ore bin passes the ore along to the ball
mill for further grinding.

3. The knelson concentrator passes the finer fraction of the material it
receives on to the gemini table and passes the coarser fraction to the
ball mill for more grinding.

4. At the gemini table, the gravity separation procedure concentrates
the finer gold and gold bearing particles and passes the concentrate on
to the smelting furnace from which the solidified concentrate is
extracted as gold bullion, and sent to the refinery. The coarser
fraction is passed to the ball mill for further grinding.

5. The ball mill, receives ore from the three sources:, the gemini
table, the knelson concentrator, and the fine ore bin. The ball mill
passes the ground ore along to the warman cyclone where it is further
graded and the finer fraction sent to the carbon leaching tanks. The
coarser fraction is recycled back to the knelson concentrator for more
grinding and sorting.

6. In the carbon leach process, a series of chemical reactions involving
solution, adsorption, and heat treatment, including cyanidization, are
applied resulting liberation of the refactory gold and also enabling
recycling and reuse of the carbon and much of the cyanide.

7. The waste water product from the carbon leach process is treated to
extract hazardous impurities such as heavy metals, arsenic, and cyanide,
before the used water is passed on to the tailings pond and engineered
wet lands for further purification, before release into the natural
drainage system through the wetlands, the water is tested to meet
purification requirements. If it does not meet standards, it is recycled
back into the treatment process.

8. The Final gold concentrate resulting from the smelting furnace and
the carbon leach process is sent to a refinery where the impurities are
extracted and the gold is refined to over 99 percent purity. Some of the
impurities extracted, such as silver, may be in economical significant
quantities.

6.7 Board of Investment (BOI) Approval

BOI approval was given to Tungkum’s application on 14 October 1999. The
privileges so granted can be exercised once the mining license is
granted and will include:

1.  Full exemption from import duties on machinery for two years.

2.  A 75 % reduction on raw material import duties for five years.

3.  Exemption from corporate income tax for eight years and a 50%
    exemption for five years thereafter.

6.8 Projected Revenue from the Project

Details of the projected return of investment are indicated in the
Management Discussion and

Analysis.