Pegasus Drops Plan For Montana Mine

Pegasus Gold Corp. is scrapping plans to expand Montana’s largest open-pit gold mine south of here, bringing an end to mining at the site.

Pegasus, which filed for bankruptcy protection in January, re-evaluated the ore body and decided it could not justify the cost of expanding the Zortman-Landusky mine, said John Pearson, a Pegasus spokesman.

“With the low gold prices, the economics just don’t work,” Pearson said. The company estimated the expansion would require a $30 million to $40 million investment.

The decision not to expand marks the end of mining at Zortman-Landusky, because the current mining operation has extracted as much ore as possible under the existing state permit.

The mine opened in 1979, filed a 1992 application for a permit to expand and largely shut down within the last couple of years while awaiting a decision on that permit. The mine now employs about 30 people, down from 230 at the height of the operations. Pearson said the employees are expected to remain on the payroll at least through this year.

News that the proposed mine expansion was canceled brought cheers from Fort Belknap tribal officials, long-standing opponents of the mine. They say it has damaged water at the Fort Belknap Indian Reservation nearby.

But Phillips County officials were disappointed about the loss of employment and loss of the mine’s tax payments.