Filed by Black Hills Corporation
                                      Pursuant to Rule 425 under the Securities
                                      Act of 1933
                                      And deemed filed pursuant to Rule 14a-12
                                      Of the Securities Exchange Act of 1934

                                      Subject Company: Black Hills Corporation
                                      Commission File No.: 1-31303

The following press release was made by Black Hills Corporation:

                                                        FOR IMMEDIATE RELEASE


            Black Hills Corporation and Mallon Resources Corporation
                            Announce Merger Agreement

          * Merger to significantly increase Black Hills' gas reserves


RAPID CITY, SD--October 1, 2002-- Black Hills Corporation (NYSE: BKH) today
announced it has entered into a definitive merger agreement to acquire
Denver-based Mallon Resources Corporation (OTCBB: MLRC). The total cost of the
transaction is estimated at $52 million, which includes the acquisition today by
Black Hills of Mallon's debt to Aquila Energy Capital Corporation and the
settlement of outstanding hedges, amounting to $30.5 million. The merger
agreement, which has been approved by both companies' Boards of Directors,
provides that Mallon shareholders will receive 0.044 of a share of Black Hills
for each share of Mallon. Completion of the acquisition which is subject to
customary conditions, including approval by the shareholders of Mallon, is
expected in the first quarter of 2003.

         Mallon Resources' proved reserves, as reported at December 31, 2001,
were 53.3 billion cubic feet of gas equivalent (BCFE). Black Hills believes that
Mallon's current proved reserves could be substantially higher based on its
review of the reserves and current oil and gas prices. The reserves are located
primarily on the Jicarilla Apache Nation in the San Juan Basin of New Mexico and
are comprised almost entirely of natural gas in shallow sand formations. The oil
and gas leases of the acquisition total more than 66,500 gross acres (56,000
net), most of which is contained in a contiguous block that is in the early
stages of development. Black Hills also believes it could recover additional gas
reserves from the shallow sands. Further, more gas could be recoverable from
deeper horizons that have yet to be explored but are productive elsewhere in the
San Juan Basin.

         Daniel P. Landguth, Chairman and CEO of Black Hills Corporation, said
"This acquisition is an outstanding strategic fit for us. In one transaction, we
have advanced several of our long-term objectives by dramatically increasing our
natural gas reserves and production. We believe that natural gas is the fuel of
choice and that U.S. gas demand will remain strong. Our integrated energy
strategy seeks balance and integration among our business lines."

         Current daily net production of the Mallon properties is nearly 13
million cubic feet of gas equivalent (MMCFE). Mallon operates 149 of 171 total
gas and oil wells, with working interests averaging 90 to 100 percent in most of
the wells and undeveloped acreage. Landguth added, "These operated properties
provide us with control over the exploration and development program, allowing
flexible capital deployment as market conditions dictate. Moreover, our Denver
marketing subsidiary, Enserco Energy, can add gas marketing and transportation
expertise. We also look forward to working in partnership with the Jicarilla
Apache Nation to responsibly develop the portion of their gas resources
contained beneath these leases."

         Landguth continued, "This deal demonstrates our commitment to long-term
earnings growth. Upon closing, the acquisition is expected to increase gas and
oil production immediately by approximately 60 percent and more than double our
proven oil and gas reserves at a very attractive acquisition cost. Combined with
our other integrated energy activities, this acquisition will solidify our
presence in Western markets."

         George O. Mallon, Jr., Chairman and CEO of Mallon Resources
Corporation, stated, "We feel that this transaction is both prudent and exciting
for our shareholders. After pursuing several corporate strategies, we concluded
that this merger with Black Hills Corporation was the most attractive for our
shareholders. With Mallon's unique fit into the Black Hills strategy, this
combination will give all shareholders the opportunity to grow with a solid,
well run energy company that has the desire, knowledge and financial capability
to develop our significant undeveloped gas reserves in the San Juan Basin."

         After the acquisition is closed, Black Hills plans to initiate an
expanded development and exploratory drilling program on the properties. As a
result, Black Hills expects to increase gas production, reserves and cash flow
from fuel operations in late 2003 and beyond. Black Hills expects the
acquisition to have a nominal earnings-per-share impact until production levels
can be increased.


         Black Hills Corporation (www.blackhillscorp.com) is a diverse energy
and communications company. Oil and gas operations, conducted in nine states
with a concentration of resources in the Rocky Mountain region, are part of the
Black Hills Energy, the integrated energy business unit which generates
electricity and produces and markets natural gas, oil and coal; Black Hills
Power, an electric utility serving western South Dakota, northeastern Wyoming
and southeastern Montana; and Black Hills FiberCom, a broadband communications
company offering bundled telephone, high speed Internet and cable entertainment
services. Mallon Resources Corporation is a Denver, Colorado, based oil and gas
exploration and production company operating primarily in the San Juan Basin of
New Mexico.


Investor Notices

         Investors and security holders are advised to read the joint proxy
statement/prospectus that will be included in the Registration Statement on Form
S-4 expected to be filed with the SEC in connection with the proposed merger.
Black Hills and Mallon will file the joint proxy statement/prospectus with the
SEC. Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by Black Hills
and Mallon with the SEC at the SEC's web site at www.sec.gov. The joint proxy
statement/prospectus and such other documents (relating to Black Hills) may also
be obtained for free from Black Hills by directing such request to: Black Hills
Corporation, P.O. Box 1400, 625 Ninth Street, Rapid City, South Dakota 57709,
Attention: Steven J. Helmers, General Counsel; telephone: 605-721-2300; email:
shelmers@bh-corp.com. The joint proxy statement/prospectus and such other
documents (relating to Mallon) may also be obtained for free from Mallon by
directing such request to: Mallon Resources Corporation, 999 18th Street, Suite
1700, Denver, Colorado 80202, Attn: Peter H. Blum, Executive Vice President;
telephone: 303-293-2333.


         Mallon, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation" of
proxies from Mallon's shareholders in connection with the merger. Information
regarding such persons and a description of their interests in the merger and
related transactions will be contained in the Registration Statement on Form S-4
when it is filed.


Caution Regarding Forward-Looking Statements

         Some of the statements in this release include "forward-looking
statements" as defined by the Securities and Exchange Commission, or SEC. Black
Hills Corporation makes these forward-looking statements in reliance on the safe
harbor protections provided under the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts, included in
this release that address activities, events or developments that Black Hills
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These forward-looking statements are based on
assumptions, which Black Hills believes are reasonable based on current
expectations and projections about future events and industry conditions and
trends affecting Black Hills' business. However, whether actual results and
developments will conform to Black Hills' expectations and predictions is
subject to a number of risks and uncertainties that could cause actual results
to differ materially from those contained in the forward-looking statements,
including, among other things: (1) unanticipated developments in the western
power markets, including unanticipated governmental intervention, deterioration
in the financial condition of counterparties, default on amounts due from
counterparties, adverse changes in current or future litigation, adverse changes
in the tariffs of the California Independent System Operator, market disruption
and adverse changes in energy and commodity supply, volume and pricing and
interest rates; (2) prevailing governmental policies and regulatory actions with
respect to allowed rates of return, industry and rate structure, acquisition and
disposal of assets and facilities, operation and construction of plant
facilities, recovery of purchased power and other capital investments, and
present or prospective wholesale and retail competition; (3) the State of
California's efforts to reform its long-term power purchase contracts; (4)
impact of environmental and safety laws; (5) weather conditions; (6)
competition; (7) pricing and transportation of commodities; (8) market demand,
including structural market changes; (9) unanticipated changes in operating
expenses or capital expenditures; (10) capital market conditions; (11) legal and
administrative proceedings that influence Black Hills' business and
profitability; (12) the effects on Black Hills' business of terrorist actions or
responses to such actions; (13) the effects on Black Hills' business resulting
from the financial difficulties of Enron and other energy companies, including
their effects on liquidity in the trading and power industry, and Black Hills'
ability to access the capital markets on the same favorable terms as in the
past; (14) the effects on Black Hills' business in connection with a lowering of
Black Hills' credit rating (or actions Black Hills may take in response to
changing credit ratings criteria), including, increased collateral requirements
to execute Black Hills' business plan, demands for increased collateral by Black
Hills' current counter-parties, refusal by Black Hills' current or potential
counterparties or customers to enter into transactions with Black Hills and
Black Hills' inability to obtain credit or capital in amounts or on terms
favorable to Black Hills; and (15) other factors discussed from time to time in
Black Hills' filings with the SEC.

         This information contains forward-looking statements and forecasts, the
realization of which cannot be assured by Mallon Resources Corporation. Actual
results may differ significantly from those forecast. Inaccurate geologic and
engineering interpretations, the volatility of commodity prices, unbudgeted cost
increases, unforeseen delays in operations, and operations that prove less
successful than anticipated are risks that can significantly affect Mallon's
operations. These and other risk factors that affect Mallon's business are
discussed in Mallon's Annual Report on Form 10-K.

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