The rise and fall of a gold mining company

  • Prospector and his burro

    Illustration by Diane Sylvain
  • Miner pushing a mine cart

    Illustration by Diane Sylvain
  • Danger cyanide!

    Illustration by Diane Sylvain
  • Thunderstorm

    Illustration by Diane Sylvain
  • Exchanging money

    Illustration by Diane Sylvain
  • Stop the mine!

    Illustration by Diane Sylvain
  • Chart showing the decline in gold prices

    Illustration by Diane Sylvain
  1855 The Assiniboine and Gros Ventre tribes move to what will later be known as the Fort Belknap Reservation, named for a U.S. Secretary of War.





Late 19th century Pike Landusky and Pete Zortman strike gold in a corner of the reservation.


1895 Threatened with starvation, the tribes sign the Grinnell Agreement, selling the U.S. government the gold-laden land. Miners stream into the mining towns of Zortman and Landusky.





Early 20th century Mining companies tunnel into the Little Rockies for gold while tribal members use the mountains for vision quests and hunting. Underground mining continues until 1950s.





1979 Pegasus Gold Corp. and its subsidiary, Zortman Mining Inc. (ZMI), build two connected cyanide heap-leach mines named after the original prospectors, Zortman and Landusky. The companies promise not to mine sulfide ore, which creates a lethal brew called acid mine drainage when exposed to air and water.


1979-1990 The mining complex grows. The state health department and the federal Bureau of Land Management approve nine expansions without once asking for a full-scale EIS, even though several state agencies report cyanide spills and other violations of the company's operating permit.


1990 The Native American group Red Thunder joins with environmental groups to appeal federal permits for Zortman-Landusky's 10th expansion, warning that it will cause acid mine drainage. The appeal is denied.





1991 Pegasus offers scholarships and environmental monitoring to the Fort Belknap Community Council if tribal members stop opposing the mine. The council refuses.





December 1992 Pegasus and ZMI apply for permits for Zortman-Landusky's 11th expansion.





June 1993 Red Thunder and a second Indian group, Island Mountain Protectors, give written notice that they intend to file a citizen suit under the federal Clean Water Act. This requires the regulatory agencies to take action within 60 days.





continued on next page








July 1993 After a heavy storm sends a stream of acid mine drainage into the town of Zortman, the BLM requires Pegasus and ZMI to write a new reclamation plan. The EPA finds that the mine has been leaking acids, cyanide, arsenic and lead from each of its seven drainages and cites ZMI and Pegasus for illegally discharging pollution.








August 1993 The state, under heavy pressure from the EPA and citizen groups, files suit against Pegasus and ZMI for violating Montana's water laws.





June 1995 Because the state's suit is still unresolved, the EPA files a federal clean-water suit against Pegasus. The tribes later file a similar suit.





July 1996 Although Pegasus and ZMI make no admission of guilt, the federal clean-water suit is settled out of court. The companies agree to follow a detailed plan for controlling pollution, buy a $32 million bond to ensure compliance, and pay $4.7 million to be split among the tribal council, the state, and the federal government. This is one of the largest settlement of a federal clean-water suit.





January 1996 The gold ore is exhausted at the Zortman-Landusky Mine. ZMI keeps operating its heap-leach pads but cannot dig any fresh ore until it receives a permit to expand onto neighboring land.








October 1996 The Montana Department of Environmental Quality and the federal BLM approve the firm's 11th expansion request, giving it permits to triple the acreage mined by Zortman-Landusky, from 400 to 1,192 acres.





January 1997 The Fort Belknap Community Council, National Wildlife Federation, and Montana Environmental Information Center sue Montana's Department of Environmental Quality, alleging that the agency's decision to allow the expansion violates state law. The state agency says ZMI should have been named as a defendant. When the judge offers to do so, a DEQ spokesman responds, "I don't want them in now, because the case should be dismissed." The judge asks him why he is defending the mining company.





June 1997 In an unusual move, the federal Interior Board of Land Appeals halts the expansion of the Zortman-Landusky Mine until it has a chance to investigate an appeal of the expansion filed by the Island Mountain Protectors and the tribes.





September 1997 Federal and state environmental agencies fine Pegasus and ZMI $25,300 for violating the clean-water settlement by polluting a stream in the Little Rockies last summer. John Pearson, director of investor relations for Pegasus, says discharges were the result of "acts of God" during "extraordinarily heavy rains."





October 1997 In order to resume mining, Pegasus proposes to buy private land in the Sweetgrass Hills adjacent to areas where the BLM has banned mining for 20 years. Pegasus would then give this land to the BLM in exchange for land near the Zortman-Landusky Mine. This would allow Pegasus to resume mining on these lands without a permit.





November 1997 Low gold prices and high operating costs force Pegasus to shut its recently opened Mount Todd gold mine in Australia. After Pegasus reports an annual loss of more than $400 million, its stock, which had been as high as $17/share in 1996, falls to under $1/share. The company warns that if it doesn't get its permit to expand the Zortman-Landusky Mine, it will not be economical to keep leaching gold from the current heap-leach pads after Jan. 1, 1998.





December 12, 1997 Pegasus Gold Australia, a wholly owned subsidiary of Pegasus Gold, files for bankruptcy in Australia. The future of Pegasus Gold is unclear, and the state of Montana wonders if Pegasus' bonds will be sufficient to pay for reclamation at its four mines.


*H.A.