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1/30/2009

CLINICAL SLUMDOG KWASO GOLD TRIALS

Lihir Gold has reported a 26% rise in annual gold production to 882,000
ounces and forecast output this year would exceed 1 million ounces as new
mines in Africa and Australia are fully developed.

Armed police guarded cinemas in eastern India after slum dwellers ransacked
a picture house showing Slumdog Millionaire because they didn’t like the
use of the word “dog” in the title.

Seven officers were hurt in an attack and the blame is being attributed to
the illegal home-brew alcohol known as kwaso.

Expectations for a higher gold yield come despite a landowner wrangle over
royalties at the company’s main mine in Papua New Guinea that brought it to
a standstill.

Several hundred people rampaged through the cinema in Patna, capital of the
eastern state of Bihar and tore down posters advertising the film. They
said the title was humiliating and vowed to continue their protests until
it was changed.

Around 1500 litres of the brew was seized but that is considered to be only
a tiny drop in a very big ocean.

Lihir chief executive Arthur Hood said he was hoping for a quick resolution
that would enable the mine to restart but conceded he did not know how long
it would take. “I’d like to think we could get back to work in the next day
or so, but I’ve worked in Papua New Guinea a long time and these things are
always a little bit unpredictable,” he told reporters.

The protest was organised by Tateshwar Vishwakarma, a social activist who
filed a lawsuit over the title against four Indians involved in its
production – a lead actor, the music director and two others.

The explosion of the illegal trade, which results in potentially volatile
situations, is not easy for the police trying to contain it.

The dispute involves local islanders in the province of New Ireland, about
700 kilometres north-east of the capital Port Moresby, who want a bigger
share of the mine’s revenues.

Mr Hood said the company was already paying a 2% royalty to islanders on
all gold produced at the mine as well as awarding supply contracts worth
millions of dollars to local firms.

“Referring to people living in slums as dogs is a violation of human
rights,” said Mr Vishwakarma, who works for a group promoting the rights of
slum dwellers. We will burn Danny Boyle [the film’s British director]
effigies in 56 slums here.”

“The police can only do so much. We have a licensing squad of about 12
members and the community, chiefs and religious people have to get stuck in
too,” says Peter Marshall, Solomons Acting Police Commissioner.

“Last year we were looking at about $US130 million ($195 million) worth of
our supply contracts going to Lihirians,” he said.

The case will be heard in a Patna court, according to police. Kishori Das,
another activist, said: “We are in touch with like-minded organisations
across India to take the issue on a large scale.”

Prime Minister John Key visited Honiara to assess New Zealand’s role in the
regional assistance mission and he says it will be some time before NZ
assistance in the islands can be pulled out. “At least three to five years
and it could in all probability be longer than that,” Key says.

The overall increase in the company’s gold production was boosted by a
record yield of 315,000 ounces in the fourth quarter, Mr Hood said. It cost
on average $US400 to mine each ounce in 2008 but only $US353 per ounce for
the fourth quarter, he said. “This is exactly where we want to be,” he
said.

Social, political and religious activists in India often organise violent
protests over films to try to win publicity for their cause. In 1996, Fire,
a film about lesbianism, enraged Hindu fundamentalists who burnt down
several cinemas. In 2000, production of Water, a film about Hindu
widowhood, was moved from India to Sri Lanka after violence by Hindu
nationalists.

An organised gang member who agreed to talk on the condition of anonymity
says the gangs sell 60-70 litres of kwaso a day. The sellers, mostly in
village based gangs, take a quarter of the takings.

Gold currently sells for around $US900 an ounce. The Lihir mine produced
247,000 ounces in the last quarter, taking full year production to 771,000
ounces.

Slumdog Millionaire, which recently opened in India has been generally well
received, especially since it won four Golden Globes and 10 Oscar
nominations – including one for AR Rahman, the veteran composer.

Police believe the potent home-brew is fuelling violence and crime.

In the fourth quarter some 22% of the company’s gold was derived from
newly-developed mines in Australia and Ivory Coast, reflecting efforts to
geographically diversify operations, according to Mr Hood.

However, some reviewers, commentators and film industry insiders have
criticised it as “poverty porn” which glamourises the squalor of slums and
perpetuates Western stereotypes of India.

A carton of beer costs around 165 Solomon dollars but for the same effect
you can buy a bottle of kwaso for just $10. A small joint of marijuana
costs 50 cents (NZ$).

There had been no violence against employees or vandalism at the Lihir mine
site stemming from the dispute, he said.

About 40 Mumbai slum dwellers, organised by another social activist, held
up banners reading “Poverty for Sale” and “I am not a dog” outside the home
of Anil Kapoor, one of the film’s stars.

Many sellers say they do so for survival as the Solomon Islands are filled
with a lot of young unemployed people.

Lihir’s shares were up 4% at $3.15 in early afternoon trade, outpacing a
gain of 1% in the benchmark S&P/ASX 200 index. Analysts expect Lihir to
report 2008 net profit of $US135 million, against a $US24 million loss in
2007.

Amitabh Bachchan, the veteran Bollywood star, also caused a stir when he
accused the film in his blog of portraying India as a “third-world, dirty,
underbelly developing nation”. Mr Bachchan has since apologised to Mr
Boyle, but was conspicuously absent from the film’s star-studded premiere
in Mumbai.

“Money is very hard to come by and the making of kwaso is an easy way of
making money,” says Marshall

After selling $1.2 billion in shares in 2007 to close out an unprofitable
gold hedge book, Mr Hood said the company was now benefiting from exposure
to rising prices of gold, one of the few commodities not ravaged by the
financial crisis.

Mr Kapoor, who grew up in a Mumbai slum, has denied that “slumdog” is
offensive, saying that children from the slums are called many worse things
in India. Simon Beaufoy, the screenwriter, said last week: “I just made up
the word. I liked the idea. I didn’t mean to offend anyone.” Two hours
after opening, the pediatric waiting room at All India Institute of Medical
Sciences is like the anteroom to hell. Families, anxious, restless, sweaty
in the soupy air, cram into plastic chairs, crouch in corners, crowd
doorways, clog up aisles. Cries jangle off the ceiling. Feces litter the
floor. Signs in the corridor attempt to impose order on the chaos:

Don’t spit.

Don’t feed the monkeys.

Don’t pay bribes.

“I think gold will remain very strong,” he said, adding that a weak US
dollar and the requirements for a flight to quality were keeping the yellow
metal from falling.

This overstretched government hospital and medical college treats about
4-million people a year. It’s also one of a growing number of Indian
hospitals that use their patients to gather data on experimental drugs
destined for Western markets. It recently was revealed that 49 children
have died during clinical trials at the institute.

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