Environmental Cost Impact To Gold Mine Development The Zortman/Landusky Experience

This paper examines the cost elements associated with changes to gold mining practice over the last decade that result from the changes in environmental regulation and the heightened governmental and public awareness of environmental issues. The main experience base is Pegasus Gold Corporation's flagship mine, Zortman/Landusky, located in the Little Rocky Mountains of Phillips County, Montana. This operation was among the first mines that were permitted under the 1974 Montana Metal Mining Reclamation Act. In 1974, the Montana Metal Mine Reclamation Act was enacted, creating a permit system for metal and industrial mineral mines for the state of Montana. The act established the content of mine permit applications and defined parameters for the reclamation of mining disturbances. The Act can be viewed as implementing legislation for Article 9, Section 2, of Montana's Constitution, which provides that "all lands disturbed by the taking of natural resources shall be reclaimed." Pegasus Gold Corporation's Zortman/Landusky mine was among the first mines permitted under the new Act. In 1978, the initial permit applications were submitted for Zortman and Landusky, and a full Environmental Impact Statement was prepared by the Montana Department of State Lands; permits were issued in 1979. When opened later that year, the anticipated mine life for the combined Landusky and Zortman operations was approximately 18 years, based upon a proven and probable ore reserve of 43.2 million tons. Zortman/Landusky was the first large-scale heap leach gold mine in the United States. Its distinguishing feature was, and remains, a remarkably low ore grade, now .016 oz/ton. The ore is economic because it requires neither crushing nor agglomerating to leach effectively. Approximately two years after the initiation of the state's regulatory process, the Federal Land Policy Management Act (FLPMA) was enacted, establishing a mine regulatory framework for lands under the administration of the Bureau of Land Management.