North and South Korea held a second day of talks Wednesday about their joint business project despite Pyongyang's threats last week to break off dialogue with its neighbour. The two sides were holding 'a comprehensive discussion' on ways to improve the Kaesong industrial estate just north of the border, said Seoul unification ministry spokeswoman Lee Jong-Joo. She said the talks, due to end later Wednesday, had been extended by a few hours to allow more discussions. Kaesong is the last reconciliation project still operating and a valuable source of hard currency for the cash-strapped North. Some 42,000 North Koreans work in 110 South Korean-run plants, producing cookware, textiles and other light industrial goods. Analysts say the communist North, hit harder by international sanctions following its nuclear and missile tests last year, seems willing to promote economic exchanges with the South despite an angry broadside last Friday. Its National Defence Commission, the top decision-making body, threatened to cut all dialogue and cooperation unless the South apologises for an alleged contingency plan to handle regime collapse in the North. The commission also warned of a 'holy war' against the South should there be any attempt to carry out the plan. South Korean media has reported the existence of the contingency plan, which has not been confirmed by the government. A South Korean state think-tank, in a separate report issued this week, said the North's ailing leader Kim Jong-Il may die in two or three years and this could spark upheavals such as a coup, mass unrest or massacres. In a rare report forecasting possible regime collapse in the North, the Korea Institute for National Unification also warned that such internal unrest could prompt the North to start a limited war on the peninsula. The Seoul representatives to the talks at Kaesong were due to return later Wednesday across the heavily fortified border. sm/elw 