4. Business Operation

Mining and Production

4.1 Tin Mining Business

The offshore tin deposit can be considered a world class asset depending
on the cut-off grades applied; there are 41,460 tons of tin with a
cut-off grade of 0.15kg cassiterite per cubic meter, or 64,320 tons at
0.10kg per cubic meter cut-off). As stated in the Company’s 2009 Annual
Report, SML remains committed in its efforts to obtain its final mining
license from the relevant authorities given the fact that there is no
market value to the project until all government permissions are
granted. Nevertheless, SML has successfully laid plans to eventual
project development, and has successfully lobbied for the royalty rate
to be reduced.

The potential value of the deposit is commensurate with the large risks
associated with a project of this nature and magnitude. Management
recognizes our shareholders have yet to receive a dividend from the gold
mining initiative in Loei to date. After two successful plant expansions
in late 2007 and 2009, there is no further CAPEX required for the plant
to process any additional feed from the neighbouring T1-S and T-3 gold
and copper prospects. With the execution of all capital projects, the
Tungkum venture has only recently been de-risked in 2009. With that in
mind, shareholders will benefit from the immediate cash flows when
either T1-S or T-3 oxide come online. As such, the remaining risks of
the Tungkum venture centers on the issuance of the next set of mining
licenses. To manage the risks of the mining portfolio across the Group,
Management decided it was prudent to overcome the bureaucratic hurdles
arising from the Tungkum gold mining project, to ensure our shareholders
fully benefit from that project, before undertaking to develop the much
larger project in SML.

[]

4.2 Igneous Rock (Andesite) Quarry

THL’s igneous rock (andesite) quarry is located near KaengKhoi, Saraburi
of central Thailand, which is approximately 140 km north of Bangkok. The
oOperations commenced in 1999 in low-lying and hilly areas with minable
reserves of about 12 M tons, and as of today, the quarry has mined out
about 1.4 million tons of rock. Current operations utilize an area of
about 215 rais (344.000 sq m) which include the pit, crushing plant,
service, maintenance, and stockpile areas. It is estimated that with
extension of the pit laterally and to deeper levels, an additional
reserve of 15 M tons is available.

+---------------------+--------------+-------------+-------------------+
|                     |   Area       |             |                   |
|                     |              |             |                   |
|   Mining Lease No.  |              |             |                   |
|                     |              |             |                   |
|   28676/15268       |              |             |                   |
|                     |              |             |                   |
|   28675/15632       |              |             |                   |
+---------------------+--------------+-------------+-------------------+
|                     |   Rai        |   Sq. m.    |   Expiry date     |
|                     |              |             |                   |
|                     |   88.952     |   142,323.2 |                   |
|                     |              |             |                   |
|                     |   154.667    |   247,467.2 |                   |
+---------------------+--------------+-------------+-------------------+
|                     |              |             |   May, 2009       |
+---------------------+--------------+-------------+-------------------+
|                     |              |             |   January, 2017   |
+---------------------+--------------+-------------+-------------------+

Important progress of made in the operation of the quarry, is the
successful in co-ordinationgwithbetween the Company and relevant
government agencies and their staff that led in attainingto signing the
renewed mining leases. With valid mining leases, THL can enter bidding
or and contracting with major construction companies for beingas an
aggregate supplier. The subsequently renewal of furtherattempt to have
another mining leases (28676/15268) subsequently renewed is dependents
on the assessment of business opportunities in the next 5-8 years. This
is due to the fact that andesite, even having with higher durability and
some other engineering properties, is only suitable for specific uses
and thus not as widely utilized in the market, compared to limestone.

4.2.1 Product Profile

Andesite is a type of volcanic igneous rocks with intermediate chemical
composition, having 55-65 % silica, smaller amounts of feldspar, quartz,
and some other accessory minerals. The rock has high durability, high
strength, and high resistance to weathering.

THL has contracted Cholasin Ltd, which is a 72.10 % owned subsidiary, to
handle crushing since June 1998. Present production capacity of the
crushing plant is about 250 tons per hour, and outcoming aggregate
products are varied according to machinery and screen setups and to
accommodate varying demands. Main commodities of the quarry presently
include Well Grade 3/4 inch, Road Base 3/8 inch, and railway ballast. In
a few years time, from now, the company hopes that the ballast market
will expand significantly due to initiation of a number of government’s
construction projects in central part of the country.

4.2.2 Aggregate Sales

In FY2010 andesite aggregate sales decreased from Baht 8.04 million in
the previous year to Baht 5.96 million. The reason for these figures is
the mining lease has not been signed, making it difficult to team
upcollaborate with other construction companies in the bidding process
of major projects which, usually requiresd submission of legal documents
for preliminary approval. Moreover, extensive and long-lasting floods in
central provinces during the second half of last year forced
postponement of many road construction/repair from original schedules.
It is anticipated, however, that they are going to will be revived in
the first 2two quarters of 2011, and would resulting in higher sales
volume during the time.

Aggregate products that have brought significant income to the quarry
are still Well Grade 3/4 inch, Road Base 3/8 inch, together with Coarse
Dust, all of which are for road pavement. Table below shows comparison
of sales figures of different aggregate types between 2009 and 2010.

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)

+-----------------+---------+---------+----------+---------+---------+
|   2010          |         |         |          |         |         |
|   AGGREGATE     |         |         |          |         |         |
|   SALES (tons)  |         |         |          |         |         |
+-----------------+---------+---------+----------+---------+---------+
|   Products      |   Qtr 1 |   Qtr 2 |   Qtr 3  |   Qtr 4 |   Total |
+-----------------+---------+---------+----------+---------+---------+
|   Railway       |         |         |   143.00 |         |   1     |
|   Ballast       |         |  802.21 |          |  121.42 | ,066.63 |
+-----------------+---------+---------+----------+---------+---------+
|   Well Grade    |         |   3     |          |   3     |   13    |
|   3/4 in.       |  667.72 | ,840.38 | 6,088.87 | ,288.74 | ,885.71 |
+-----------------+---------+---------+----------+---------+---------+
|   Road base 3/8 |         |         |          |   2     |   7     |
|   in            |  395.76 |  835.27 | 3,895.03 | ,002.91 | ,128.97 |
+-----------------+---------+---------+----------+---------+---------+
|   Coarse Dust   |         |   1     |          |   4     |   9     |
|                 |  535.42 | ,912.77 | 3,405.54 | ,102.55 | ,956.28 |
+-----------------+---------+---------+----------+---------+---------+
|   Fine Dust     |         |         |   637.76 |         |   1     |
|                 |  436.17 |  572.71 |          |  335.66 | ,982.30 |
+-----------------+---------+---------+----------+---------+---------+
|   TOTAL         |   2     |   7     |   1      |   9     |   34    |
|                 | ,035.07 | ,963.34 | 4,170.20 | ,851.28 | ,019.89 |
+-----------------+---------+---------+----------+---------+---------+
| 2009 AGGREGATE  |         |         |          |         |         |
| SALES (tons)    |         |         |          |         |         |
+-----------------+---------+---------+----------+---------+---------+
|   Products      |   Qtr 1 |   Qtr 2 |   Qtr 3  |   Qtr 4 |   Total |
+-----------------+---------+---------+----------+---------+---------+
|   Railway       |         |         |   13.51  |         |         |
|   Ballast       |  350.55 |  169.31 |          |  113.75 |  647.12 |
+-----------------+---------+---------+----------+---------+---------+
|   Well Grade    |   5     |   4     |   1      |   8     |   28    |
|   3/4 in.       | ,388.08 | ,636.18 | 0,386.12 | ,292.63 | ,703.21 |
+-----------------+---------+---------+----------+---------+---------+
|   Road base 3/8 |         |         |          |         |   5     |
|   in            |  703.18 |  792.29 | 3,246.84 |  730.90 | ,473.21 |
+-----------------+---------+---------+----------+---------+---------+
|   Coarse Dust   |         |         |          |   4     |   8     |
|                 |  588.65 |  871.81 | 3,352.37 | ,112.83 | ,925.66 |
+-----------------+---------+---------+----------+---------+---------+
|   Fine Dust     |         |         |   634.80 |         |   2     |
|                 |  469.82 |  154.56 |          |  820.07 | ,079.25 |
+-----------------+---------+---------+----------+---------+---------+
|   TOTAL         |   7     |   6     |   1      |   14    |   45    |
|                 | ,500.28 | ,624.15 | 7,633.64 | ,070.18 | ,828.25 |
+-----------------+---------+---------+----------+---------+---------+

4.2.3 Marketing and Competition

The quarry is one of the two producers and suppliers of igneous rock
aggregates in central Thailand;, which the products are applicable to
constructions that require both high strength and durability, e.g.,
modified asphalt concrete pavements, railway ballast and slippers. THL’s
andesite has been tested and certified to meet special specifications
set by the State Railway of Thailand (SRT), the Highway Department, and
the MRTA. The Mmarketing campaign usually advocates this product
strength, and, coupled with the advantageous location, the products are
rather competitive in the market in the region. In fact, THL’s
aggregates are the only product in the KaengKhoi area that meets the
Highway Department’s specifications.

In 2011 it is anticipated that SRT will commence double-track railway
projects in central and northeastern regions, concurrently with
repair/maintenance of the existing ones –known as Phase 5 and 6. During
the course of these projects, the main contractors would require several
hundred-thousand tons of ballast for a continual period of 2-3 years.
These encouraging conditions offer great potential for andesite
aggregates from the quarry to compete for market shares which, in turn
would increase the sales volume over this period. The management Company
has closely monitored the progress and will try its best to secure the
apparent opportunity.

Located about 140 km from Bangkok and also in the heart of industrial
development in Central Thailand, the advantage from in transportation
costs is apparent. Andesite rock is only one of its kind available in a
50 km radius of about 50 km. There is another igneous rock aggregate
(rhyolite) producer in WiharnDaengDistrict, which tends to produce
materials for its own projects, and the competition for market shares
between the two producers is rather low.

4.2.4 Resources and Products

Andesite in THL’s mining leases occur as undulating terrain and
low-lying hills and extend from surface to depth of approximately 40 m.
Previous exploration indicates that the rock resources are extensive
both in vertical and lateral directions. Provend resources within the
lease are about 12 M tons and additional estimated resources at depth
can be up to about 15 M tons.

The quarry is an open pit with benched walls cutting below the present
surface and ramps for transportation of rocks and machineries. The rocks
are blasted in proper designed pattern, and the materials obtained are
loaded to crushing plant. Some oversized blocks may require secondary
splitting by hydraulic breaker. 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
contracted orders.

4.2.5 Environment Impact

The quarry has relatively low impacts to theits surroundings. This is
due to the fact that the area in general is rather flat and without
forest characteristics. Rather, it has been extensively used for
agricultural purposes, e.g., paddy fields, corns, and a variety of
mangoes. Population in the vicinity is also sparse. The Crrushing
process does not use any chemicals, and only water is used for spraying
the operation areas in order to minimize dust born from crushing and
running vehicles.

Blasting is only done when necessary and usually around 4-5 p.m. which
is in accordance with the mining plan submitted to Department of Primary
Industry and Mines as well as the agreement with nearby communities. In
general, the company operates in accordance with guidelines set by all
governmental agencies, e.g., Office of Natural Resources and Environment
Policy and Planning, Department of Primary Industry and Mines, as well
as Labour Department. Some of items in environmental guidelines includes
:

1) Planting rows of trees around the site even before mining began to
help reduce noise and dispersion of dust from operation processes.

2) Saving topsoil for future vegetation, and keeping mine faces and
benches in well order to ensure safety operation.

3) Blasting is properly controlled to reduce fly rocks, ground vibration
and dust generation.

4) Spraying water in designated areas in crushing plant and transporting
routes for effective dust suppression.

5) Providing on-site employees with safety gears, e.g., goggles or face
masks, hard hats, reinforced boots, and ear plugs. Setup annual medical
checkup program for all employees to promote well-being and healthcare.

4.3Gold Mining Asset: Tungkum Limited

Tungkum Limited (TKL), is an exploration and mining company registered
in Loei, Thailand, with control and working interest 98.86% held by
TongkahHarbour Public Company Limited (THL). TKL 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.

4.3.1 Background

On being awarded the Block 4 concession in October 1991, subsequent to
through an international bidding process, THL entered into an agreement
with the Department of Mineral Resources (DMR) for the 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 TongkahHarbour Public
Company Limited committed 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
Tungkum Limited shares at cost plus interest at MLR including
administration costs , and to pay 2.5%-20% royalties (step rate
depending on gold price), and production sharing at of 1.5%.

Theis development of this Concession was a direct result of earlier
regional exploration during the 1960’s and later decades by the DMR in
co-operation with the United States Geological Survey and,
subsequently,resulting in the integration of 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 ofthroughout Thailand.

On Upon the receiptving of Special Prospecting Licenses (SPL’s) on
within the concession in 1992, an extensive mineral exploration program
was initiated with. The a geological team consisting 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.

[]

[]

The management strategy for the entire cycle from exploration to
production and the two subsequent expansions were all conducted
in-house. A low cost approach was undertaken to match the profile of our
deposit, which is a relatively small but rich gold- copper deposit.

Pursuant to securing project financing through thea USD 13.3M project
financing loan from EXIM Bank, and the completion of the development and
commissioning phases, Tungkum Limited’s gold mining operations in at
Loei was officially brought officially into production in September
2006. Upon the correction of some technical problems being corrected,
throughput was brought up to the desired rate of about 1,500 tons per
day and recovery levels of around 90%. In 2007, an agreement was reached
with Deutsche Bank AG on a USD 25M refinancing package which, will
enabled the Company to retire the loan with the EXIM Bank and to 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.

4.3.2 Mining Concessions & Licenses

TungkumLimited had beenwas 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   |
|                        | antity: |                   |   km):       |
+------------------------+---------+-------------------+--------------+
|   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:                |         |                   |              |
+------------------------+---------+-------------------+--------------+

4.3.3 General Geology, Resources & Mineralization

For the most part of thethe majority of the Concession,’s geology
consists of complexly folded and faulted siliclastic sedimentary rocks
which, in eastern sectors of the area, contain significant discontinuous
limestone sections.

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     |   Tons  |   Grade |            |        |
|    |  Target |   Type    |         |   (g/t  |  Contained |  Strip |
|    |   Area  |           |         |   Au)   |   Gold     |        |
|    |         |           |         |         |   (oz)     |  Ratio |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-1   |   Oxide   |         |   2.71  |   27,274   |        |
|  a |         |           | 313,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |         |   6.66  |   18,845   |        |
|    |         | ransition |  88,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |         |   6.78  |   189,012  |        |
|    |         |           | 867,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Non     |         |   5.74  |   117,097  |        |
|    |         | -mineable | 634,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |   5.79  |   118,034  |   1 :  |
|    |         |  Mineable | 634,000 |         |            |   2.43 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |   1,    |   5.77  |   235,131  |        |
|    |         |           | 268,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-1-8 |   Oxide   |         |   3.79  |   35,219   |        |
|  a |         |           | 289,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |   7,000 |   2.46  |   554      |        |
|    |         | ransition |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |         |   2.61  |   5,875    |        |
|    |         |           |  70,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Non     |         |   2.75  |   5,480    |        |
|    |         | -mineable |  62,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |   3.70  |   36,167   |   1 :  |
|    |         |  Mineable | 304,000 |         |            |   1.95 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |         |   3.54  |   41,647   |        |
|    |         |           | 366,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Qz    |   Oxide   |         |   3.93  |   6,066    |   1 :  |
|  a |   Spur  |           |  48,000 |         |            |   NIL  |
|    |         | (eluvial) |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Gsn   |   Oxide   |         |   1.47  |   756      |   1 :  |
|    |   Cap   |           |  16,000 |         |            |   NIL  |
|    |         | (eluvial) |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-1-S |   Oxide   |         |   2.73  |   30,372   |        |
|  b |         |           | 346,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |   7,000 |   16.29 |   3,667    |        |
|    |         | ransition |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |         |   8.07  |   28,284   |        |
|    |         |           | 109,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Non     |         |   7.38  |   29,911   |        |
|    |         | -mineable | 126,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |   3.00  |   32,412   |   1 :  |
|    |         |  Mineable | 336,000 |         |            |   3.50 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |         |   4.20  |   62,323   |        |
|    |         |           | 462,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-7   |   Oxide   |         |   4.90  |   5,514    |        |
|  b |         |           |  35,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |         |   4.59  |   1,476    |        |
|    |         | ransition |  10,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |   7,000 |   6.92  |   1,558    |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |         |   5.11  |   8,548    |   1 :  |
|    |         |           |  52,000 |         |            |   4.97 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-88  |   Oxide   |         |   3.64  |   5,969    |        |
|  b |         |           |  51,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |         |   5.13  |   1,814    |        |
|    |         | ransition |  11,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |   -     |   -     |   -        |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |         |   3.90  |   7,784    |   1 :  |
|    |         |           |  62,000 |         |            |   6.74 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   T-3   |   Oxide   |         |   3.91  |   76,000   |        |
|  b |         |           | 605,000 |         |            |        |
|    |         |  Inferred |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   T       |         |   4.11  |   9,000    |        |
|    |         | ransition |  69,000 |         |            |        |
|    |         |           |         |         |            |        |
|    |         |  Inferred |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Sulfide |   1,    |   2.94  |   146,000  |        |
|    |         |           | 539,000 |         |            |        |
|    |         |  Inferred |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |   Total   |   2,    |   3.25  |   231,000  |        |
|    |         |           | 213,000 |         |            |        |
|    |         |  Inferred |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Total |   Oxide   |   1,    |   3.15  |   111,212  |        |
|  c |         |           | 098,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Total |   T       |         |   6.63  |   26,222   |        |
|    |         | ransition | 123,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Total |   Sulfide |   1,    |   6.64  |   229,561  |        |
|    |         |           | 053,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Total |   Non     |         |   5.95  |   157,365  |        |
|    |         | -mineable | 822,000 |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |   Total |           |   1,    |   4.49  |   209,630  |   1 :  |
|    |         |  Mineable | 452,000 |         |            |   2.73 |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |   2,    |   5.02  |   366,995  |        |
|  G |         |           | 274,000 |         |            |        |
| ra |         |           |         |         |            |        |
| nd |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
|  t |         |           |         |         |            |        |
| ot |         |           |         |         |            |        |
| al |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
| le |         |           |         |         |            |        |
| ss |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
|  T |         |           |         |         |            |        |
| -3 |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
| in |         |           |         |         |            |        |
| fe |         |           |         |         |            |        |
| rr |         |           |         |         |            |        |
| ed |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+
|    |         |           |   4,    |   4.14  |   597,000  |        |
|  G |         |           | 487,000 |         |            |        |
| ra |         |           |         |         |            |        |
| nd |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
|  t |         |           |         |         |            |        |
| ot |         |           |         |         |            |        |
| al |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
| wi |         |           |         |         |            |        |
| th |         |           |         |         |            |        |
|    |         |           |         |         |            |        |
| in |         |           |         |         |            |        |
| fe |         |           |         |         |            |        |
| rr |         |           |         |         |            |        |
| ed |         |           |         |         |            |        |
+----+---------+-----------+---------+---------+------------+--------+

Key

+----+-----------------------------------------------------------------+
|    |   Constitutes Phase I of the PhuThapFah Mining Program; Mining  |
|  A |   Licenses Approved (25 yrs); Total Mining Area = 2.065 sq. km. |
+----+-----------------------------------------------------------------+
|    |   Constitutes Phase II; Mining Licenses Pending Final Approval  |
|  B |   of Mining Plan; Mining Plan to be filed upon commencement of  |
|    |   Phase I production                                            |
+----+-----------------------------------------------------------------+
|    |   Constitutes Total for Phase I and II; Does Not Include the    |
|  C |   Regional Area of which mineralization has been intercepted    |
|    |   but not calculated                                            |
+----+-----------------------------------------------------------------+

4.3.4 Mining Operations

The Project is an open pit surface to near surface operation utilizing
carbon-in-pulp (CIP) as well as a flotation processing methodology. The
CIP methodology is designed to process up to 3,500 tons of oxide ore per
day, while the flotation process aids in the recovery of gold and copper
from the primary ores, resulting in the production of gold dore and
gold-bearing copper concentrates. Gold dore produced is being sent to a
refinery in Hong Kong, while the copper concentrates are being sent to
smelters in Europe and Asia.

With gold production 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.

4.3.5 General Operations & Production Overview

Gold production has increased dramatically since the construction of the
flotation facility dominated site activity in the earlier portion of
2009. Dore production increased from 10,131ozs to x ozs, and gold
contained in copper concentrate more than doubled to 23,121 ozs from
5,614ozs.

2009 expansion which saw the addition of a subsequent cleaner cell to
the flotation facility, recovered an additional 4% copper content,
contributing to the much higher copper revenue stream (five foldfivefold
increase). We have worked closely with the customers of our copper
concentrate, to ensure the specifications of our concentrate shipment
comply with their needs, and marketing of our concentrate in 2010 has
been smooth sailing; there have been consistent shipments since the site
obtained its final approval of gold-bearing copper concentrates
transportation and export license.

Approvals for T-3 & T1-S did not have yet to materialize, and so under
the strategic initiative of the Management team, the site team would
redouble their efforts onto the existing T-1 pit. As we push deeper into
T-1, the increasing strip ratio (ie. the amount of soil moved to access
the ore) means the average cash cost of gold has increased dramatically.
The average cash cost for gold production, including copper credit, is
USD 973/oz. The difference between the gold prices received and the
production cash costs contributed to a

healthy gross profit margin at TKL.

+-------------------------------+----------------+--------------------+
|   Summary of gold production  |                |                    |
|   for the year ended 2010     |                |                    |
+-------------------------------+----------------+--------------------+
|   Mined (total)               |   Wet Tons     |   1,616,489        |
+-------------------------------+----------------+--------------------+
|   Milled or processed         |   Tons         |   28,092           |
+-------------------------------+----------------+--------------------+
|   Feed grade (reconciled)     |   Grams/tons   |   2.63             |
+-------------------------------+----------------+--------------------+
|   Recovery (Reconciled)       |   %            |   80               |
+-------------------------------+----------------+--------------------+
|   Gold produced               |   Kg Au        |   71,908           |
+-------------------------------+----------------+--------------------+
|   Gold produced               |   Ounces Au    |   23,121           |
+-------------------------------+----------------+--------------------+
|   Copper produced             |   Kg Cu        |   867,810          |
+-------------------------------+----------------+--------------------+
|   Copper produced             |   Pounds Cu    |   1,909,181        |
+-------------------------------+----------------+--------------------+
|   Average gold price (2009    |   USD per oz   |   1103             |
|   Sale price)                 |                |                    |
+-------------------------------+----------------+--------------------+
|   Average cash cost           |   USD/oz       |   973              |
+-------------------------------+----------------+--------------------+

4.3.6 Mining Summary

Mining in 2010 totaled 1,616,489 wet tonnes was mined from 2 mining
leases, comprising 275,526 tonnes of ore at a grade of 3.2 g/t Au and
1,336,963 tonnes of waste, all mined at a stripping ratio of 1:4.9 ore
to waste.

The 275,526 wet tonnes of ore comprising 266,016 tonnes of sulphide ore
at an average grade of 3.3 g/t Au, 5,407 tonnes of transition ore at an
average grade of 2.6 g/t Au, and 4,103 tonnes of oxide ore at an average
grade of 0.8 g/t Au.

PHU THAP FAH (T-1)

Mining in PhuThapFah during 2010 base on wet tonnes is summarized in the
following table:

PHU SUM PA BON (T1-8)

Mining in Phu Sum Pa Bon during 2010 base on wet tonnes is summarized in
the following table:

** Forestry license for T1-8 was expired since the 30th September 2010.

4.3.7 Gold Dore & Concentrate Shipments

Gold bullion shipments comprised dore numbers TKL0314 to TKL0363,
contained 4,151 oz Au from 8 shipments.

A total 12 shipment of Copper (Cu)u concentrate were despatched for the
year, comprising of 7,111 dry tonnes at 76.4 ppm Au, 13.1% Cu, and 14.8%
moisture. They were contained 17,450 oz Au and 2,048 klb Cu.

[][]

4.3.8 Sustainability Report: Pre-mining Background, demarcation of a
Mineralized area and impact of mining operations on surrounding villages

TKL’s Concession Agreement originatedswithfrom the widespread gold and
base-metal discoveries across Loei province and vicinity over several
decades beginning in the 1960’s. The government gazetted this entire
lLoei province as a mineralized zone, suitable for mining purposes;.
That is, these mineralized zones, which isare mainly hill country
consisting of steep slopes, rocky lateritic soil, mainly bamboo
vegetation, and no primary forest and have by definition, poor
agriculture potential.

Pre-mining background surveys over the mine catchment area and vicinity-
including the village environs, indicate widespread naturally occurring
cyanide, arsenic, and base-metal contamination well above the
international safe standard guidelines. These background studies, were
conducted by the Ground Water Research Center (GWRC) at KhonKaen
University in 1995-6, before mine production commenced, in accordance
with OEPP guidelines. Peizometric groundwater monitoring wells were
installed in the licensed area at locations chosen in cooperation with
the (then) DMR and OEPP. At most of the surface and ground water
stations, levels for potential contaminants- cyanide, lead and arsenic
were well above standard limits in all three zones, and most pervasive
over the village and mine area stations (see figures).

Also, surface and groundwater surveys were done by the (then) DMR over a
wider area plus the present mining area and village locations; results
were published in 2002, again before the commencement of TKL operations.
For over 98 stations, arsenic levels are indicated to be above standard
limits at all but six stations, and mostly well above standard limits.
No stations are located in the village areas, but two stations are shown
in the mine’s subsequent TSF with both showing arsenic levels well above
standard limits, even in the absence of TKL’s mining operations. Water-
well drilling by the DMR ground water section in one of the villages
actually intersected lead- sulfide mineralization (galena) and the
well-site had to be abandoned as a source for potable water.

In the 2005-6 pre-mining background surveys, KKU updated its earlier
work, covering a wide range of elements including mercury, lead,
cadmium, arsenic, cyanide, plus water hardness and turbidity. The
peizometric monitoring wells are still in use today and monitored
regularly as part of the ongoing program.

Considering that naturally occurring gold- base metal mineralization is
pervasive across the Loei region as seen in the earlier regional mineral
survey findings, contamination related to said mineralization may show
up in any surface and groundwater survey programs as seen, for example,
in the above mentioned pre-mining surveys. Again we emphasize, this is
the rationale behind the declaration of the area as a Mineralized zone,
and why the Concession was awarded by the Royal Thai Cabinet. Similarly,
cyanide presence is pervasive across the region, and should be expected
to show up in any field tests as it is a common by-product in most
natural plant and soil-life processes, but it is not cumulative, as it
disperses and dissociates readily in the open natural environment.

TKL’s mine operation and the nearby village environs are in separate
catchment areas, separated by a drainage divide. The confluence of the
streams draining these catchments, and several others comprising the
immediate area, is at a lower elevation then the concerned catchment
basins. [drainage from the mine’s catchment basin flows down- gradient
to the stream confluence which drains northeastward and, thus, having no
affect on the village environs which are to the south of the confluence
and at a higher elevation.]

[]

Pre- Mining background survey results for the KKU 1995-6 surveys.

These results are for Cyanide (CN); the red color indicated readings
well above standard safe limits; the yellow indicates readings within
standard safe limits. Note that CN contamination was widespread around
the mine and village areas long before mining began in mid 2006.

[]

Pre- mining background survey results for KKU 1995-6 surveys (stations
shown in fig). Results for Arsenic (As)

[]

Pre- mining background survey results for KKU 1995-6 surveys (stations
shown in fig). Results for Lead (Pb)

4.3.9 Zero Discharge System, TSF and general Environmental Compliance

Ore processing is centred on a closed system process in which waste
waters are recycled back into the processing line with no release into
the surrounding natural environment. Our operations does do not release
anything into the downstream area, except the natural seepage that might
come from rain., Nothing is released into the valley system but from the
mine operation, and the processing plant;, nothing is released into the
valley system, anything waste goes out into the tailings pond which is
upstream.

The mine’s tailings storage facility (TSF) is constructed on a solid
granitic bedrock foundation with the residual overlying soil well suited
to compaction- so indicated by geological surveys and geotechnical test
work, and thus providing a safe foundation configuration for the
tailings storage. Also, the main withholding bund (dam) is structured
according to international standards and is further supported by ongoing
rock waste deposits from the mine operation being dumped against the
down-stream side of the bund.

Ongoing environmental monitoring, is done by Government approved third
party consultancy on a daily, weekly, and monthly basis. Concentration
levels for concerned elements have been within internationally approved
safe standards in the mine’s watershed area, and immediately downstream.
Element analyses included mercury which, TKL has not used in any
capacity in its operations.

Tungkum Limited’s staff and management are committed to sound
environmental practices and compliance will all applicable laws and
regulations stipulated by the Office of Natural Resources and
Environment Policy and Planning (ONEP, previously known as the Office of
the Environment Policy and Planning or OEPP).

4.3.10 Sustainability Report: On-going evaluation of the effects of
TKL’s mining operations

To evaluate the impact on TKL’s mining operations on the region, there
are four main considerations to be undertaken.

Firstly, the monitoring results must be analyzed chronologically and the
overall trends in potentially toxic- element levels from 1995-6 before
our mining operations commenced to the present and, in addition,
expected seasonal variations given the pronounced local climate and
seasonal changes, which affect groundwater levels.

Secondly, a watershed divide or boundary separates the mine’s watershed
from that of the village environs; recognition of this natural divide is
very fundamental in sourcing and evaluating any surface or groundwater
contamination.

Thirdly, the confluence of streams draining the mine’s watershed from
that of the village environs, is north of (and at a lower elevation) the
villages and constitutes a low point from which drainage flows
northeastward toward the main Loei River channel. The villages,
therefore, are therefore at a higher elevation than the stream junction
area and, thus, would not receive any contaminated drainage from the
junction area.

Lastly, the widespread existence of mineralized veining (gold-base metal
ore minerals with sulfides and arsenic) across Loei province, including
the village environs concerned here, will be an ongoing permanent
fundamental consideration in evaluating any surface and groundwater
base-metal contamination in this area..

4.3.11 Royalties and government incentives

All mining entities operate a two way relationship with the government.
Royalties are paid to compensate for the loss of non-renewal in-ground
minerals, which benefit both central and local government budgets.

Through local employment, our subsidiary has additionally fostered the
economic development of this North eastern province both directly and
indirectly; we have been employing local staff throughout the different
stages of mining including field exploration, plant construction and
current site operations. By generating income through direct employment
of several hundred local staff, the money they earn feeds through the
local economy whenever purchases are made, resulting in the multiplier
effect for the local region.

[]

Royalties benefit both central and local government budgets. Our
operations pay royalties on gold, copper and silver production,
calculated on the value of each commodity at the point of transport.

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

i) A 100% exemption on raw material import duties for 5 years until 31
Jan 2011 which can regain be renewedthis benefit again after last
expired date; and

ii) 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

4.4Property 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.
TongkahHarbour received payment for this sale in year 2008.

Despite this sale, TongkahHarbour 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.                                 |
+------------+--------+------------------------------------------------+

Sky Cliff Limited

The subsidiary owns a plot of land near the intersection between Rama 9
Road and Ratchadapisek Road. The latter half of the year saw several
offers from potential buyers as development picks up in the area due to
the relocation of the Stock Exchange of Thailand and the opening of a
major retailer.

Sky Cliff Limited (SCL) is 75% owned subsidiary of the Company. SCL owns
a 3 rai,1ngan, 61.9 sqwah (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
was 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,
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, proposed
development by the SET and development of the Central Departmental
Store. 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,
HuayKwang, 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. Status: The construction permit is valid until 23 April 2010, but can
be extended. The extension request had been submitted Bangkok
Metropolitan Administration

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.