FOR IMMEDIATE RELEASE                                         ENR
MONDAY, JULY 22, 1996                              (202) 616-2771
                                               TDD (202) 514-1888


     BILLINGS, MONTANA -- Pegasus Gold Corporation and its
subsidiary, Zortman Mining Inc., have agreed to pay up to $32.3
million to upgrade and expand their mine wastewater management
and treatment facilities at two Montana gold mines in the Little
Rocky Mountains adjacent to the Ft. Belknap Indian Reservation,
the United States and the State of Montana announced today.  The
settlement includes a $2 million civil penalty for federal and
state clean water violations, and supplemental environmental
projects valued at about $1.7 million.

     The settlement, filed today in U.S. District Court in
Billings, Montana, concludes two lawsuits alleging the companies
threatened the health and safety of the environment, violating
both the federal Clean Water Act and the Montana Water Quality
Act.  The lawsuits alleged that the mining companies discharged
acidic, metal-laden wastewater from two Phillips County, Montana
gold mines into waters draining into the Missouri and Milk

     One lawsuit was filed by the Fort Belknap Community Council
on behalf of the Assiniboine and Gros Ventre Tribes, and Island
Mountain Protectors, an association of Tribal members, who were
the first to bring claims against the companies.  The other
lawsuit was filed by the United States and the State of Montana.

     The Zortman and Landusky mines are heap leach gold mines. 
Heap leach gold mining involves the placement of ore on heap
leach pads.  Cyanide is then sprayed onto the ore to extract the
gold.  The Zortman mine was the first major heap leach gold mine
in the United States.  It has been operating for over 15 years.

     "This settlement -- the result of substantial cooperation 


between the Tribes, the state and the federal government -- 
should protect the health of the Little Rocky Mountains and 
penalize the polluters," said Lois J. Schiffer, Assistant
Attorney General in charge of the Justice Department's
Environment and Natural Resources Division.  "Enforcing our
environmental laws is vitally important if we are to keep our
rivers and streams clean.  Clean water truly is more valuable
than gold."

     Mark Simonich, Director of the Montana Department of
Environmental Quality, said, "This is the biggest settlement on
record in the State of Montana regarding water quality
violations.  The monetary penalty illustrates our willingness to
see enforcement actions through, but the practical effects of the
compliance plan and supplemental environmental projects will
actually improve water quality in the area of the mines."

     "This decree is a good example of what can happen when two
suits are consolidated into a multi-party, cooperative effort,"
said Jack McGraw, Acting Regional Administrator for EPA's
regional office in Denver.  "Through our cooperative efforts we
were able to obtain one of the most comprehensive compliance
plans involving mining operations in history."

     Kenneth Helgeson, an enrolled member of the Fort Belknap 
community, rancher and co-chair of Island Mountain Protectors
Association said, "This judgment against Pegasus began through
the efforts of IMP and other residents of Ft. Belknap."  "We
believe the judgment is an important first step to cleaning up
the water of Little Rocky Mountains," Helgeson continued.  "IMP
plans to work actively to ensure that the consent decree is fully

     According to the consent decree, the Nevada-based Pegasus
Gold Corporation and its Montana-based subsidiary, Zortman Mining
Inc., will be required to spend up to $32.3 million to:

    construct a water treatment plant at the Zortman mine;

    construct water capture systems and other water conveyance
     systems designed to insure proper wastewater discharge;

    comply with a program of tiered effluent limits becoming
     more restrictive until toxic discharges are eliminated.

     The $2 million civil penalty, to be divided between the
United States and the State of Montana, is for the illegal
discharge of mine wastewaters from the two mines without Montana
or National Pollutant Discharge Elimination System (M/NPDES)
permits.  The Tribes will also receive $1 million in partial
settlement of their separate claims against the companies.


     The companies have also agreed to perform the following
supplemental environmental projects at an estimated cost of

    Community Health Evaluation to investigate the pathways and
     possible impacts of environmental contaminants on residents
     of the Ft. Belknap Reservation, particularly children.

    Aquatic Study to evaluate the general health of the
     groundwater on the Ft. Belknap Reservation.

    Improvement Projects to the water supply systems for the
     communities of White Cow/Hays/Mission Housing and the
     Lodgepole communities of the Ft. Belknap Reservation to
     improve the availability, consistency and quality of
     drinking water.  In addition, a fund of $300,000 will be
     established for maintenance and operation of the improved
     water systems.

     The Clean Water Act and the Montana Water Quality Act
require that dischargers of wastewater obtain permits under the
National Pollutant Discharge Elimination System or at the State
level under the Montana Pollutant Discharge Elimination System. 
M/NPDES regulates the discharge of pollutants from point sources
into water.  M/NPDES permits establish limits on the discharged
pollutants to protect human health and the environment.

     All penalty amounts listed must be paid within 30 days after
the effective date of the settlement decree.  Penalties are
necessary to deter violations and recover the economic benefit
the mining companies gained by violating the law.