Spokane-based Pegasus Gold Inc. announced plans Thursday to expand its most promising gold mine, and reported progress in negotiations over pollution at its most controversial project.
Pegasus will begin work on Phase II of the Mount Todd gold mine in northern Australia. The mine already produces 85,000 ounces of gold through its first phase, which will end production by late 1996.
The second phase will start in early 1997, and will eventually produce 260,000 ounces of gold for Pegasus. That will make the mine the company’s largest by far.
Pegasus will spend $130 million on the Mount Todd project plus another $19 million for a power generation plant.
Pegasus President and Chief Executive Officer Werner G. Nennecker called the Mount Todd mine a cornerstone of the company’s growth for years to come.
In Montana, Pegasus officials have been meeting with Environmental Protection Agency and state officials over a lawsuit filed earlier this year.
The suit charged Pegasus with water quality violations at the Zortman/Landusky mine complex in north central Montana. The company faced possibly millions in fines for the violations.
Indian tribes downstream of the mines had joined the federal and state suits after complaining that their water supplies had been contaminated by the mines. Pegasus did build a water treatment facility near the mines.
Three days of negotiations have brought the parties close to a resolution. The company cannot elaborate on the details of a possible settlement until a consent decree becomes public, possibly later this year, according to a news release by Pegasus.
The company also reported Thursday that Montana’s Department of Environmental Quality had issued a draft environmental impact statement for the Zortman Extension project.
Pegasus expects permitting for the project to be completed by early 1996, when construction on the extension should begin.
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