Asia Pacific Resources Ltd. (APR) has discovered a world-class potash resource near the city of Udon Thani, in northeast Thailand. Due to its high-grade, shallow depth, excellent infrastructure and proximity to growing markets, the project is projected to be one of the lowest-cost producers in the industry. Since 95% of the potash produced worldwide is used as a fertilizer to increase agricultural yields, demand is directly linked to the world抯 growing need for food. As a result, selling prices and demand for potash are expected to continue to increase as the global population grows.

    To ensure the successful development of this outstanding resource, APR recently completed a comprehensive corporate and financial restructuring. The new APR, now debt free, is funded to continue development of its potash deposits. Led by new senior management and supported by a new committed majority shareholder, APR also has a strong new Board of Directors, with complementary skills and experience in mining development, fertilizer marketing, and project/corporate financing.

    Asia Pacific Potash Corporation (APPC) holds the Udon Thani Potash Concession in northeastern Thailand. APR has a direct and indirect 90% beneficial interest in APPC, with the Government of the Kingdom of Thailand holding the remaining 10%. Since 1993 APPC has conducted extensive exploration on the concession. Over 160 diamond drill-holes and 500 km of 2D seismic have led to the discovery of two extremely high-grade, world-class potash deposits; the Udon Thani South and the Udon Thani North deposits.

    The South deposit contains sylvanite ore grading 24% K2O, among the highest grades in the potash industry. Extensive testing has shown the ore to be easily processed using standard flotation technology. The deposits lie at a depth of about 350m, which is roughly one-third the depth of the major potash mines in Saskatchewan. The Udon Thani South deposit contains measured and indicated resources totaling 225 million tonnes of sylvanite. Exploration indicates that the North deposit may be substantially larger than the South.

    Existing infrastructure in the area is excellent. A rail link to deep-sea ports runs directly through the concession, within two kilometres of the proposed surface facilities. There is also a major highway a short distance from the mine site. The nearby city of Udon Thani has well-developed electrical and water supplies, and a population of over 350,000. The city also has a large airport with frequent flights to the capital city of Bangkok.

    In June 2003, Asia pacific announced the results of the updates to its technical and economic review of the proposed Udon Thani potash mining project. Based on an initial production rate of 1 million tonnes of potash per annum (tpa), increasing to 2 million tpa through a plant expansion as market share grows, the studies project internal rates of return of between 16% and 20% after-tax, for a range of potash prices, international shipping costs and levels of bank debt.

    The project economics are attractive, particularly with the anticipated long mine life, strong cashflow generation, high grade of the deposit and straight forward mining conditions. In addition, the mine will provide Thailand with over 1000 jobs during the 3 year construction phase, and 900 direct jobs over a 22 year mine life. It is important to recognize that the total contribution of the Udon Thani potash mine to the Thai economy is estimated to exceed 260 billion baht (US$6.5 billion) considering royalty payments, export earnings, materials purchases and employment benefits.

    Total capital cost for the initial stage is estimated at $US 308 million with the second stage estimated at $US 221 million ($2003). It is anticipated that the expansion to 2 million tpa can be financed from cash flow, such that no additional equity financing will be necessary.

    The Company has also undertaken further studies of potential markets in South East Asia where it has a natural cost advantage in respect of shipping. The results of these confidential studies have been incorporated into the overall economic studies of the Company. The large and growing demand in China, an estimated 6 million tonnes in 2003, and in the rest of Asia, an estimated 7 million tonnes, continues to be an immediate focus for the activities of management.

    The enhanced design incorporates an improved underground tailings disposal system, and ensures that virtually no tailings will be stored on surface for extended periods, and that all tailings are safely stored underground during the mine's operating life. This design will reduce the potential for surface subsidence, as mined out areas are filled with tailings. The change also minimizes possible ground water impacts, and responds to the concerns raised by local residents during our consultations.

    Asia Pacific is looking forward to the opportunity presented by the Mining Lease Application process to discuss our plans for building and operating an environmentally secure mine that will provide significant benefits to shareholders, customers, and the people of Thailand.