Pegasus to increase gold yield at Mt. Todd

Construction will begin immediately on a new phase of work at the Mt. Todd mine of Pegasus Gold (AMEX). As a result, gold production at the Australian operation is expected to rise to 260,000 oz. per year.

Construction costs are estimated at US$130 million, and an additional US$19 million will be expended on a new power plant. The company is negotiating with several banks for a corporate revolving credit facility to finance the project.

Startup is expected in early 1997, with a minimum mine life of eight years. Proven and probable reserves at Mt. Todd stand at 115.4 million tons of predominantly sulphide ore grading 0.031 oz. gold per ton, with cash costs estimated at US$265 per oz. The first phase of work at Mt. Todd, which is designed to accommodate 6.6 million tons of ore per year, is expected to last until late 1996.

The second phase will entail the addition of a milling circuit to existing operations, which should increase capacity to 8.8 million tons per year. The circuit will consist of three parallel mills that will grind the ore to 150 microns, followed by two stages of flotation. The flotation concentrate, containing 63% of the gold, will be reground to 15 microns prior to leaching.

While most of the construction will take place in 1996, a freshwater storage dam will be built during 1995 to contain runoff during the rainy season.

In other company news, Pegasus has received the draft environmental impact statement for its Zortman Extension project in Montana. Permitting remains on schedule for completion early next year.

Also, three days of productive settlement negotiations are bringing the company closer to resolving its dispute with the Environmental Protection Agency and the state of Montana, both of which brought claims against Pegasus relating to the Clean Water Act. Further meetings will address compliance issues and determine the amount of cash penalties.