AMAX GOLD INC, PRE 14A, 1996-07-09

AMAX GOLD INC
PRE 14A, 1996-07-09
GOLD AND SILVER ORES

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SCHEDULE 14A INFORMATION

Consent Solicitation Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

AMAX GOLD INC.
(Name of Registrant as Specified in Its Charter)

AMAX GOLD INC.
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and
O-11.

1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth the
amount on which the filing is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form of Schedule
and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:<PAGE>
AMAX GOLD INC.

CONSENT SOLICITATION STATEMENT

DATED JULY __, 1996

This Consent Solicitation Statement is being furnished to the
stockholders of Amax Gold Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of consents by the
Company's Board of Directors (the "Board") from holders of outstanding
shares of the Company's common stock, par value $.01 per share
("Common Stock"), on June __, 1996 (the "Record Date").

This Consent Solicitation Statement and the form of Consent
enclosed herewith are being mailed to the stockholders of the Company
on or about July __, 1996.

Stockholders are being asked to approve a financing arrangement
with Cyprus Amax Minerals Company, a Delaware corporation ("Cyprus
Amax"), and a stockholder owning 51.2 percent of the outstanding
shares of Common Stock of the Company, under which Cyprus Amax has
guaranteed (the "Cyprus Amax Guaranty") the Company's $250 million
secured financing (the "Loan") until economic completion of the Fort
Knox project and has provided the Company with a $250 million demand
loan facility (the "Demand Loan Facility"), in exchange for which the
Company will (i) pay Cyprus Amax a financing and guaranty fee of
$10 million (the "Financing and Guaranty Fee"), (ii) pay Cyprus Amax
1.75 percent on amounts outstanding under the Loan (the "Interest
Differential Payments"), (iii) reimburse Cyprus Amax for any payments
made or costs incurred under the Cyprus Amax Guaranty (the
"Reimbursement Payments"), (iv) make no additional borrowings under
the Company's existing $100 million convertible line of credit with
Cyprus Amax ("DOCLOC I") without the prior consent of Cyprus Amax, and
(v) grant Cyprus Amax a first priority security interest in the
collateral for the Loan, and if requested, security interests in
certain additional assets to the extent available; all of the
Company's obligations to Cyprus Amax are payable in cash or, at the
election of Cyprus Amax, in shares of Common Stock, valued at the time
of issuance of the shares. Stockholder approval shall include, but
not be limited to, approval of the authorization and issuance of
shares of Common Stock to Cyprus Amax under the foregoing arrangement
(the "Financing Arrangement" or the "Proposal").

Cyprus Amax has the right to request that the Company pay amounts
due under the Financing Arrangement in cash or shares of Common Stock.
The Company would issue to Cyprus Amax between approximately 28.9
million and 46.4 million shares (based on an assumed price per share
of Common Stock of $6.50) under the transactions contemplated by the
Proposal, assuming that Cyprus Amax elects to receive payment in
shares of Common Stock, that the Cyprus Amax Guaranty is not called
and that between $150 million and $250 million is borrowed under the
Demand Loan Facility (with interest accruing over the period from
April 1, 1996 through December 31, 1997). If Cyprus elects to receive
all payments in cash, no shares of Common Stock would be issued under
the Financing Arrangement. See "CAPITALIZATION," "THE PROPOSAL--
Background" and "THE PROPOSAL--Effects of the Proposal Upon the Rights
of Existing Holders of Common Stock."

Pursuant to the General Corporation Law of the State of Delaware
("Delaware Law"), approval of the Proposal requires the consent of at
least a majority of the shares of Common Stock outstanding as of the
Record Date. Abstentions and broker non-votes will have the effect of
withholding consent. Cyprus Amax holds approximately 51.2 percent of
the outstanding shares of Common Stock. The consent of Cyprus Amax
will be sufficient to approve the Proposal without the consent of any
other stockholder. See "THE PROPOSAL--Effects Upon Rights of Existing
Holders of Common Stock." Cyprus Amax has agreed to consent to the
Proposal and has advised the Company that Cyprus Amax will give its
consent to the Proposal at 5:00 p.m., Mountain Time, on August __,
1996 (the "Expiration Time"). Upon receipt of the written consent of
Cyprus Amax, the Proposal will be adopted. Prior to the Expiration
Time, consents may be revoked. Subsequent to the Expiration Time, the
Company will not consider any additional consents, and consents
previously delivered may not be revoked.<PAGE>
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS CONSENT
SOLICITATION STATEMENT, THE COMPANY WILL ACCEPT ALL WRITTEN
CONSENTS FROM HOLDERS OF RECORD ON THE RECORD DATE RECEIVED ON OR
PRIOR TO THE EXPIRATION TIME (5:00 P.M., MOUNTAIN TIME, ON
AUGUST __, 1996).

The Proposal is being submitted to stockholders for their consent
to satisfy a rule of the New York Stock Exchange (the "NYSE"), which
requires the approval of a majority of the consents received on the
Proposal (provided that the total consents received on the Proposal
represents over 50 percent of the shares of Common Stock outstanding
on the Record Date) as a prerequisite to the listing of the Common
Stock to be issued to Cyprus Amax in connection with the Financing
Arrangement, on the basis that the Proposal contemplates that a
"tangible or intangible asset" is to be acquired directly or
indirectly from a substantial security holder of the Company (a holder
of five percent or more of the Company's outstanding shares of Common
Stock) and the number of shares of Common Stock to be issued in such
transaction may exceed one percent of the number of shares of Common
Stock outstanding before such issuance. The Company's Common Stock
also is listed on The Toronto Stock Exchange (the "TSE"), and rules of
the TSE also require stockholder approval in certain circumstances.

The Company is engaged in the mining and processing of gold and
silver ore and in the exploration for and acquisition and development
of gold-bearing properties principally in North and South America and
Russia. The Company was incorporated in Delaware in April 1987 and is
the surviving corporation following a reincorporation merger effective
June 1995. The Company's principal offices are located at 9100 East
Mineral Circle, Englewood, Colorado 80112, and its telephone number is
(303) 643-5500.

For additional information regarding the business of the Company,
see "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY CONCERNING THE PROPOSAL IF NOT
CONTAINED IN THIS CONSENT SOLICITATION STATEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS CONSENT SOLICITATION STATEMENT DOES NOT
CONSTITUTE THE SOLICITATION OF A CONSENT BY ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION. DELIVERY
OF THIS CONSENT SOLICITATION STATEMENT SHALL NOT, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE INFORMATION SET FORTH HEREIN OR THEREIN SINCE THE DATE OF THIS
CONSENT SOLICITATION STATEMENT.

The date of this Consent Solicitation Statement is July __, 1996.

-2-<PAGE>
TABLE OF CONTENTS

Page
----

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Proposal. . . . . . . . . . . . . . . . . . . . . . . . . 4
The Company . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cyprus Amax . . . . . . . . . . . . . . . . . . . . . . . . . 4
Relationship Between the Company and Cyprus Amax. . . . . . . 4
Background of and Reasons for the Financing Arrangement . . . 5
Recommendation of the Special Committee . . . . . . . . . . . 6
Consent Solicitation. . . . . . . . . . . . . . . . . . . . . 6
Consents Required; Consent of Cyprus Amax; Revocation of
Consent. . . . . . . . . . . . . . . . . . . . . . . . . 6
Intention of Directors and Executive Officers . . . . . . . . 7
Effects of the Proposal Upon Rights of Existing Holders of
Common Stock . . . . . . . . . . . . . . . . . . . . . . 7

STOCKHOLDER ACTION BY WRITTEN CONSENT. . . . . . . . . . . . . . . 8
Recommendation of the Special Committee . . . . . . . . . . . 8
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 8
Consent Procedures; Revocation of Consents. . . . . . . . . . 8
Consents Required . . . . . . . . . . . . . . . . . . . . . . 8
Cost of Solicitation. . . . . . . . . . . . . . . . . . . . . 9

MARKET PRICES OF THE COMPANY'S STOCK . . . . . . . . . . . . . . . 10

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. . . . . . . . . . 11

CERTAIN TRANSACTIONS-RELATIONSHIP WITH CYPRUS AMAX . . . . . . . . 11
Agreements with Cyprus Amax . . . . . . . . . . . . . . . . . 12

SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS . . . . . . . . . . . 14

THE PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Background. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Reasons for the Financing Arrangement; Recommendation of the
Special Committee. . . . . . . . . . . . . . . . . . . . 17
Material Terms of the Cyprus Amax Guaranty. . . . . . . . . . 18
Material Terms of the Demand Loan Facility. . . . . . . . . . 19
Fee and Support Agreements. . . . . . . . . . . . . . . . . . 20
Consent of Cyprus Amax; Intention of the Directors and
Executive Officers . . . . . . . . . . . . . . . . . . . 21
Effects of the Proposal Upon Rights of Existing Holders of
Common Stock . . . . . . . . . . . . . . . . . . . . . . 21

CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 23

DESCRIPTION OF CAPITAL STOCK OF THE COMPANY. . . . . . . . . . . . 24
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . 24
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 24

PROPOSALS FOR 1997 ANNUAL MEETING. . . . . . . . . . . . . . . . . 27

AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 28

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . . . 28

APPENDIX A - Cyprus Amax Guaranty

APPENDIX B - Demand Loan Facility

APPENDIX C - Fee and Support Agreements

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SUMMARY

The following summary is not intended to be complete and is
qualified in all respects by the more detailed information included in
this Consent Solicitation Statement, the Appendices hereto and the
documents incorporated herein by reference. Stockholders are urged to
read carefully, in their entirety, this Consent Solicitation
Statement, the Appendices hereto and the documents incorporated herein
by reference.

THE PROPOSAL

Stockholders are being asked to approve the Financing Arrangement
under which Cyprus Amax has provided the Cyprus Amax Guaranty for the
Loan until economic completion of the Fort Knox project and has
provided the Company with the Demand Loan Facility, in exchange for
which the Company will (i) pay Cyprus Amax the Financing and Guaranty
Fee, (ii) pay Cyprus Amax Interest Differential Payments, (iii) make
Reimbursement Payments to Cyprus Amax for any payments made or costs
incurred under the Cyprus Amax Guaranty, (iv) make no additional
borrowings under DOCLOC I without the prior consent of Cyprus Amax,
and (v) grant Cyprus Amax a first priority security interest in the
collateral for the Loan, and if requested, security interests in
certain additional assets to the extent available; all of the
Company's obligations to Cyprus Amax are payable in cash or, at the
election of Cyprus Amax, in shares of Common Stock, valued at the
average closing price per share for the five day period ending on the
business day prior to the date payment is requested. Stockholder
approval shall include, but not be limited to, approval of the
authorization and issuance of shares of Common Stock to Cyprus Amax
under the foregoing arrangement.

The number of shares of Common Stock that will be issued to
Cyprus Amax pursuant to the Financing Arrangement will depend on a
number of factors described in this Consent Solicitation Statement.
Cyprus Amax has the right to request that the Company pay amounts due
under the Financing Arrangement in cash or shares of Common Stock.
The Company would issue to Cyprus Amax between approximately 28.9
million and 46.4 million shares (based on an assumed price per share
of Common Stock of $6.50) under the transactions contemplated by the
Proposal, assuming that Cyprus Amax elects to receive payment in
shares of Common Stock, that the Cyprus Amax Guaranty is not called
and that between $150 million and $250 million is borrowed under the
Demand Loan Facility (with interest accruing over the period from
April 1, 1996 through December 31, 1997). If Cyprus elects to receive
all payments in cash, no shares of Common Stock would be issued under
the Financing Arrangement. See "CAPITALIZATION," "THE PROPOSAL--
Background" and "THE PROPOSAL--Effects of the Proposal Upon the Rights
of Existing Holders of Common Stock."

THE COMPANY

CYPRUS AMAX

Cyprus Amax is a diversified mining company engaged in the
exploration for and the extraction, processing and marketing of
mineral resources, primarily copper, molybdenum, coal, lithium and
gold.

RELATIONSHIP BETWEEN THE COMPANY AND CYPRUS AMAX

Cyprus Amax currently owns 49,361,557 shares or approximately
51.2 percent of the outstanding shares of Common Stock of the Company.
Directors and officers of Cyprus Amax comprise four of the seven
members of the Company's Board. Milton H. Ward, Chairman of the Board
of Directors and Chief Executive Officer of the Company, is Chairman
of the Board of Directors, President and Chief Executive Officer of
Cyprus Amax; Gerald J. Malys, a director of the Company, is Senior
Vice President and Chief Financial Officer of Cyprus Amax; and Allen
Born and Rockwell A. Schnabel, both directors of the Company, are
directors of Cyprus Amax.

Cyprus Amax is party to a number of contracts with the Company,
including DOCLOC I, a Stock Issuance Agreement, the Kubaka Acquisition
Agreement, an Exploration Joint Venture Agreement, a Services
Agreement, an Employee Transfer Agreement and a Net Operating Loss
Agreement. See "CERTAIN TRANSACTIONS--RELATIONSHIP WITH CYPRUS AMAX."

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BACKGROUND OF AND REASONS FOR THE FINANCING ARRANGEMENT

In January 1992, the Company acquired the Fort Knox gold project
located in the Fairbanks Mining District, approximately 15 miles
northeast of Fairbanks, Alaska. Construction of the Fort Knox project
began in the first quarter of 1995 and is expected to be completed in
the first quarter of 1997. The Fort Knox project has proven and
probable gold ore reserves of approximately 162 million tons, with an
average grade of 0.025 ounces of gold per ton and 4.1 million
contained ounces of gold.

The Company originally estimated that its total capital
requirements to construct and develop the Fort Knox project would be
approximately $256 million. In the second and third quarters of 1995,
the Company borrowed $80 million from Cyprus Amax under DOCLOC II to
fund initial construction at the Fort Knox project and to repay
approximately $18 million in outstanding indebtedness. During the
fourth quarter of 1995, the Company secured an additional $250 million
of financing pursuant to the Loan Agreement, dated October 31, 1995
(the "Loan Agreement"), among the Company, certain of its subsidiaries
and a group of banks (the "Lenders"). In the second half of 1995, the
Company encountered unexpected geotechnical conditions in the
underlying bedrock at the Fort Knox project, which increased
excavation and design foundation requirements. The Company also was
required to make design changes to comply with more stringent fire
code requirements and to accommodate the difficult seismic conditions.
As a result, at the end of February 1996, the Company increased its
estimate of the cost to complete the Fort Knox project to at least
$330 million, subject to further increases once final cost estimates
were available. Subsequently, on April 30, 1996 the Company announced
anticipated total project capital costs to be approximately $370
million, excluding approximately $26 million of capitalized interest.

From mid February through mid March 1996, management of the
Company and Cyprus Amax negotiated with the Lenders regarding the
status of the Fort Knox project, the estimated costs to complete the
project and a restructuring of the Loan. Over the course of the
negotiations, the Lenders agreed to waive any noncompliance with the
Loan Agreement and to eliminate all financial and most other covenants
under the Loan Agreement until economic completion of the Fort Knox
project if Cyprus Amax would agree to guarantee the Loan until
economic completion.

A special meeting of the Company's Board of Directors was held
on March 1, 1996 to inform the Board of the status of the Fort Knox
project, including costs overruns, and the need for additional
financing. The Special Committee of the Board (consisting of
Messrs. Taylor and Wood, two members of the Board who are neither
affiliates of Cyprus Amax nor officers or employees of the Company)
met on March 17, 1996 to discuss the status of the Fort Knox project
and the alternatives available to finance the project. On March 18,
1996, the Board confirmed the delegation to the Special Committee of
authority to evaluate the proposed Financing Arrangement and to
approve or reject the Financing Arrangement on behalf of the Company.
The Special Committee, with its financial advisors and legal counsel,
met with the Company's management on March 18, 1996. The Special
Committee considered the range of the potential costs associated with
the completion of the Fort Knox project, as well as the Lenders' views
of those costs. The Special Committee also considered the relative
costs to the Company of the proposed financing and alternative
financings, the nature of Cyprus Amax's commitment to the Company and
Cyprus Amax's expressed intention to make additional needed financing
available to the Company. The Special Committee, with the advice of
its financial advisors, determined that it was in the best interests
of the Company to proceed with the Financing Arrangement and
authorized the Company's officers to negotiate and sign definitive
agreements on behalf of the Company. See "THE PROPOSAL--Reasons for
the Financing Arrangement; Recommendation of the Board of Directors."

During the first quarter of 1996, the Company borrowed the
remaining $50 million available under the Loan to fund construction of
the Fort Knox project and for general corporate purposes. Through the
second quarter of 1996, the Company borrowed $45 million under the
Demand Loan Facility to fund construction at Fort Knox and for general
corporate purposes. The Company intends to seek third party
financing, if available on terms acceptable to the Company, to fund a
portion of the costs associated with the completion of the Fort Knox
project. If third party financing is obtained, the amounts that may
be required to be borrowed from Cyprus Amax under the Demand Loan
Facility (and, correspondingly, the number of shares of the Company's
Common Stock obtainable by Cyprus Amax in satisfaction of borrowings
under such loan) would be reduced. There can be no assurance that
third party financing will be available on terms acceptable to the
Company.

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For further information on the background of the transaction and
the factors considered by the Special Committee, see "THE PROPOSAL--
Background" and "THE PROPOSAL--Reasons for the Financing Arrangement;
Recommendation of the Special Committee."

RECOMMENDATION OF THE SPECIAL COMMITTEE

The Special Committee, acting on behalf of the Board, believes
that the Proposal is fair to and in the best interests of all
stockholders and recommends that stockholders consent to the Proposal.
See "THE PROPOSAL--Background" and "THE PROPOSAL--Reasons for the
Financing Arrangement; Recommendation of the Special Committee."

CONSENT SOLICITATION

This Consent Solicitation Statement is being furnished to
stockholders in connection with the solicitation of written consents
by the Board from holders of outstanding shares of Common Stock. The
Board has set June __, 1996 as the Record Date for determining the
stockholders of record whose written consent is to be solicited.

A rule of the NYSE requires that the Proposal be submitted to
stockholders for their consent as a prerequisite to the listing of the
Common Stock to be issued to Cyprus Amax in connection with the
Financing Arrangement, on the basis that the Proposal contemplates
that a "tangible or intangible asset" is to be acquired directly or
indirectly from a substantial security holder of the Company (a holder
of five percent or more of the outstanding shares of Common Stock) and
the number of shares of Common Stock to be issued in such transaction
may exceed one percent of the number of shares of Common Stock
outstanding before such issuance. The Company's Common Stock is also
listed on the TSE, and rules of the TSE also require stockholder
approval in certain circumstances.

This Consent Solicitation Statement and form of Consent enclosed
herewith are being mailed to Stockholders on or about July __, 1996.

CONSENTS REQUIRED; CONSENT OF CYPRUS AMAX; REVOCATION OF CONSENT

Only stockholders of record at the close of business as of the
Record Date will be entitled to consent to the Financing Arrangement.
Approval of the Proposal requires the consent of at least a majority
of the shares of Common Stock outstanding as of the Record Date.
Abstentions and broker non-votes will have the effect of withholding
consent.

Cyprus Amax owns approximately 51.2 percent of the outstanding
shares of Common Stock of the Company. The consent of Cyprus Amax
will be sufficient to approve the Proposal without the consent of any
other stockholder. Cyprus Amax has agreed to consent to the Proposal
and has advised the Company that Cyprus Amax will deliver its written
consent at the Expiration Time (5:00 p.m., Mountain Time, on
August __, 1996). Upon receipt of the written consent of Cyprus Amax,
the Proposal will be adopted. Prior to the Expiration Time, consents
may be revoked. Subsequent to the Expiration Time, the Company will
not consider any additional consents and consents previously delivered
may not be revoked.

Written consents must be signed, dated and received by the
Company prior to the Expiration Time. If a stockholder submits a
consent form which fails to indicate whether the stockholder does or
does not consent to the Proposal, the stockholder shall be deemed to
have consented to the Proposal. A stockholder who signs and returns
the enclosed consent may revoke it by a written revocation delivered
to Georgeson & Company Inc. ("Georgeson") any time before the
Expiration Time. Consents will be tabulated by Georgeson. THERE WILL
BE NO MEETING AT WHICH STOCKHOLDERS MAY VOTE IN PERSON.

INTENTION OF DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company (with four of
the seven directors and one of the seven executive officers being
directors and/or executive officers of Cyprus Amax), holding in the
aggregate less than one percent of the shares of Common Stock as of
the Record Date, have advised the Company that they intend to give
their written consent to the Proposal.

-6-<PAGE>
EFFECTS OF THE PROPOSAL UPON RIGHTS OF EXISTING HOLDERS OF COMMON
STOCK

The percentage of the Company's voting securities owned of record
by existing holders of shares of Common Stock, other than Cyprus Amax,
may be reduced significantly if the Financing Arrangement is approved
by the Company's stockholders. The number of shares of Common Stock
that may be issued to Cyprus Amax will depend on the actual amount
borrowed under the Demand Loan Facility, Cyprus Amax's decision to
satisfy borrowings under the Demand Loan Facility and/or related
interest and fee obligations with shares of Common Stock, whether the
Cyprus Amax Guaranty is called and the price per share of Common Stock
at the time payments are requested. The actual amount borrowed under
the Demand Loan Facility will depend on a number of factors,
including, without limitation, the actual cost to complete the Fort
Knox project, the availability of third party debt or equity financing
on attractive terms to fund a portion of such costs and Cyprus Amax's
discretion in making additional funding available under such facility.
Accordingly, the Company can not predict with certainty the number of
additional shares of Common Stock that will be issued to Cyprus Amax
under the Financing Arrangement. If all amounts due in connection
with the Financing Arrangement are repaid in cash, no shares of Common
Stock will be issued to Cyprus Amax and the voting securities owned of
record by Cyprus Amax will not change. The Company would issue to
Cyprus Amax between approximately 28.9 million and 46.4 million shares
(based on an assumed price per share of Common Stock of $6.50) under
the transactions contemplated by the Proposal, assuming that Cyprus
Amax elects to receive payment in shares of Common Stock, that the
Cyprus Amax Guaranty is not called and that between $150 million and
$250 million is borrowed under the Demand Loan Facility (with interest
accruing over the period from April 1, 1996 through December 31,
1997). The Financing Arrangement, if approved by stockholders, would
reduce the interest of existing holders of outstanding shares of
Common Stock, other than Cyprus Amax, based on the above assumptions
from approximately 48.8 percent to between approximately 33.0 percent
and 37.6 percent and increase Cyprus Amax's record ownership from
approximately 51.2 percent to between approximately 62.4 percent and
67.0 percent of the outstanding shares of Common Stock.

As a result of Cyprus Amax's rights under existing agreements
that permit the issuance of Common Stock in lieu of outstanding
indebtedness and other obligations, Cyprus Amax is deemed to be the
beneficial owner of 62,212,228 shares or approximately 56.9 percent of
the shares of Common Stock, excluding shares of Common Stock that may
be issued under the Kubaka Acquisition Agreement (defined below). If
the Proposal is approved by stockholders, Cyprus Amax's beneficial
ownership could increase to between approximately 65.9 percent and
69.7 percent of the outstanding shares of Common Stock.

In addition, the Company and Cyprus Amax have executed an
Agreement and Plan of Merger and Reorganization, dated January 24,
1996 (the "Kubaka Acquisition Agreement"), which provides for the
acquisition by the Company of Cyprus Amax's interest in the Kubaka
gold project in the Russian Federation. In the event the Kubaka
Acquisition Agreement is consummated and approved by the Company's
stockholders, Cyprus Amax's beneficial ownership of shares of Common
Stock would increase by 16.0 million shares to approximately 62.4
percent, before the issuance of shares of Common Stock in connection
with the Financing Arrangement. The number of shares issuable to
Cyprus Amax under the Kubaka Acquisition Agreement is subject to
further increase if additional shares are issued to satisfy certain
potential obligations under the Kubaka Acquisition Agreement. See
"CERTAIN TRANSACTIONS--RELATIONSHIP WITH CYPRUS AMAX."

Cyprus Amax, as the holder of greater than 50 percent of the
outstanding shares of Common Stock, will continue to be able to elect
all the directors of the Company and to direct corporate policy.

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STOCKHOLDER ACTION BY WRITTEN CONSENT

RECOMMENDATION OF THE SPECIAL COMMITTEE

On March 18, 1996, the Special Committee (consisting of
Messrs. Wood and Taylor, the two directors who are neither affiliates
of Cyprus Amax nor officers or employees of the Company), acting on
behalf of the Board, determined that the Proposal is fair to and in
the best interests of all stockholders and recommends that
stockholders consent to the Proposal. See "THE PROPOSAL--Background"
and "THE PROPOSAL--Reasons for the Financing Arrangement;
Recommendation of the Special Committee."

RECORD DATE

The close of business on June __, 1996 shall be the Record Date
for the determination of the holders of Common Stock entitled to
receive this Consent Solicitation Statement and to give or withhold
their written consent.

CONSENT PROCEDURES; REVOCATION OF CONSENTS

To be effective, consents must be signed and dated and mailed or
delivered to Georgeson prior to 5:00 p.m., Mountain Time, on
August __, 1996, the Expiration Time. Any consent form mailed or
delivered to the Company that fails to indicate whether the
stockholder does or does not consent to the Proposal shall be deemed
to be a consent to the Proposal. Any consent given pursuant to this
solicitation may be revoked by the person giving it at any time before
the Expiration Time by a written revocation mailed or delivered to
Georgeson. There will not be a meeting at which stockholders may vote
in person. Consents will be tabulated by Georgeson.

If a stockholder consents to the Proposal, such consent may limit
the right of the stockholder to challenge the Financing Arrangement in
the future.

CONSENTS REQUIRED

The Proposal is being submitted to stockholders for their consent
to satisfy a rule of the NYSE which requires the approval of
stockholders as a prerequisite to the listing of the Common Stock to
be issued to Cyprus Amax in connection with the Financing Arrangement
on the basis that the Proposal contemplates that a "tangible or
intangible asset" is to be acquired directly or indirectly from a
substantial security holder of the Company (a holder of five percent
or more of the Company's outstanding shares of Common Stock) and the
number of shares of Common Stock to be issued in such transaction may
exceed one percent of the number of shares of Common Stock outstanding
before such issuance. The Company's Common Stock also is listed on
the TSE, and rules of the TSE also require stockholder approval in
certain circumstances.

Under Section 228 of Delaware Law and the Company's By-Laws, any
action that could be taken by stockholders at a meeting may be taken
without a meeting if consents in writing, setting forth the actions so
taken, are signed by the holders of a majority of the outstanding
shares of Common Stock. Under this provision of Delaware Law, no
written consent shall be effective to take the corporate action
referred to therein unless, within 60 days of the earliest dated
consent delivered in accordance with Delaware Law to the corporation,
written consents signed by a sufficient number of holders (here,
holders of a majority of the outstanding shares of Common Stock on the
Record Date) to take such action are so delivered.

-8-<PAGE>
As of the Record Date, there were [96,482,865] shares of Common
Stock outstanding. Common Stock is the only outstanding class of
voting securities of the Company. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on the
Proposal. Abstentions and broker non-votes will have the effect of
withholding consent.

As of the Record Date, Cyprus Amax had an indirect record
ownership of 49,361,557 shares of Common Stock or approximately 51.2
percent of the shares of Common Stock outstanding on such date.
Cyprus Amax has agreed to consent to the Proposal. The consent of
Cyprus Amax will be sufficient to approve the Proposal without the
consent of any other stockholder. As of the Record Date, directors
and executive officers of the Company (with four of the seven
directors and one of the seven executive officers of the Company being
directors and/or executive officers of Cyprus Amax) owned beneficially
less than one percent of the shares of Common Stock (including shares
which may be acquired within 60 days upon exercise of employee stock
options) outstanding on such date. The directors and executive
officers of the Company have advised the Company that they intend to
consent to the Proposal.

COST OF SOLICITATION

The Company will bear the cost of solicitation of consents. In
addition to the use of mails, consents may be solicited by officers
and regular employees of the Company, personally or by telephone or
telegraph, and the Company may reimburse persons holding shares in
their names or those of their nominees for their expenses in sending
solicitation material to their principals.

-9-<PAGE>
MARKET PRICES OF THE COMPANY'S STOCK

The Common Stock is listed on the NYSE under the symbol "AU" and
on the TSE under the symbol "AXG." The Company's $3.75 Series B
Convertible Preferred Stock, par value $1.00 per share (the "Series B
Preferred Stock"), is listed on the NYSE under the symbol "AUPrB."
The following table sets forth the quarterly high and low sales price
of the Common Stock and the Series B Preferred Stock for the fiscal
quarters indicated as reported on the NYSE Composite Transactions Tape
and the dividends paid on such stocks. On March 19, 1996 (the date
prior to the public announcement of the Financing Arrangement), the
last sale price of the Common Stock and the Series B Preferred Stock
reported on the NYSE was $6-3/4 and $58-7/8, respectively. The
approximate number of holders of shares of Common Stock and the
Series B Preferred Stock as of July __, 1996 was __________ and
__________, respectively.

<TABLE>
<CAPTION>
COMMON STOCK SERIES B PREFERRED STOCK
------------ ------------------------
FISCAL YEAR HIGH LOW DIVIDEND HIGH LOW DIVIDEND
- ----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1996
Third Quarter
(through July __, 1996). . $ $ $ - $ $ $ -
Second Quarter . . . . . . 7 1/8 5 3/8 - 57 3/8 51 1/8 .9375
First Quarter. . . . . . . . 9 5/8 6 3/8 - 66 5/8 54 3/8 .9375

1995
Fourth Quarter . . . . . . . 7 5/8 5 5/8 - 55 7/8 47 .9375
Third Quarter. . . . . . . . 6 7/8 5 1/2 - 52 1/24 7 7/8 .9375
Second Quarter . . . . . . . 6 1/4 5 - 49 1/24 6 1/2 .9375
First Quarter. . . . . . . . 6 1/8 4 1/2 - 49 42 3/4 .9375

1994
Fourth Quarter . . . . . . . 7 5/8 5 5/8 - 56 1/4 47 7/8 .9791
Third Quarter. . . . . . . . 7 7/8 6 1/8 - 55 5/8 50 -
Second Quarter . . . . . . . 8 1/4 6 5/8 - - - -
First Quarter. . . . . . . . 8 1/4 6 1/4 - - - -

1993
Fourth Quarter . . . . . . . 8 6 .02 - - -
Third Quarter. . . . . . . . 10 1/2 6 3/4 .02 - - -
Second Quarter . . . . . . . 9 1/2 6 7/8 .02 - - -
First Quarter. . . . . . . . 9 3/8 7 3/4 .02 - - -
</TABLE>

-10-<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of December 31, 1995, the following is, to the knowledge of
the Company, the only person (including any "group" as that term is
used in Section 13(d)(3) of the Exchange Act) who is a beneficial
owner of more than five percent of the Common Stock:

<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cyprus Amax 62,212,228 shares<F1> 56.9%
9100 East Mineral Circle
Englewood, Colorado 80112

<FN>
<F1> Includes 12,850,671 shares of Common Stock that Cyprus Amax has the right to acquire within 60 days pursuant
to DOCLOC I and the Stock Issuance Agreement (defined below). Does not include 16,000,000 shares of Common
Stock that Cyprus Amax has the right to acquire in connection with the Kubaka Acquisition Agreement or any
shares that may be issued to Cyprus Amax under the Financing Arrangement.
</TABLE>

CERTAIN TRANSACTIONS-RELATIONSHIP WITH CYPRUS AMAX

Cyprus Amax is a diversified mining company engaged in the
exploration for and the extraction, processing and marketing of
mineral resources, primarily copper, molybdenum, coal, lithium and
gold. Cyprus Amax was incorporated in Delaware in 1969 and operates
primarily in the United States. Cyprus Amax's principal executive
offices are located at 9100 East Mineral Circle, Englewood, Colorado
80112, and its telephone number is (303) 643-5000.

Cyprus Amax currently owns 49,361,557 shares or approximately
51.2 percent of the outstanding shares of Common Stock of the Company.
Cyprus Amax holds these shares of Common Stock as a result of the
following events: (i) the acquisition of approximately 40% of the
outstanding shares of Common Stock of the Company pursuant to the
merger on November 15, 1993 of AMAX Inc., a New York corporation
("AMAX"), which owned approximately 68 percent of the outstanding
shares of Common Stock, with and into Cyprus Minerals Company (renamed
Cyprus Amax Minerals Company), (ii) the acquisition in July 1994 by
Cyprus Amax of 3,000,000 shares of Common Stock under a Stock Purchase
Agreement for the purpose of retiring debt owed by the Company to
Cyprus Amax, (iii) the issuance of 6,601,133 and 8,318,673 shares of
Common Stock to Cyprus Amax in July 1995 and September 1995,
respectively, as payment for interest and principal due Cyprus Amax
under DOCLOC II (defined below), and (iv) the purchase of 128,042
shares of Common Stock by Cyprus Amax on September 29, 1995 under the
Stock Issuance Agreement in lieu of the remaining principal amount
owed Cyprus Amax under DOCLOC II. Cyprus Amax is the beneficial owner
of 62,212,228 shares or approximately 56.9 percent of the Common Stock
as a result of Cyprus Amax's rights under existing agreements that
permit the issuance of Common Stock in lieu of outstanding
indebtedness and other obligations. See "THE PROPOSAL--Effects of the
Proposal Upon Rights of Existing Holders of Common Stock."

Directors and officers of Cyprus Amax comprise four of the seven
members of the Company's Board. Milton H. Ward, Chairman of the Board
and Chief Executive Officer of the Company, is Chairman of the Board
of Directors, President and Chief Executive Officer of Cyprus Amax;
Gerald J. Malys, a director of the Company, is Senior Vice President
and Chief Financial Officer of Cyprus Amax; Allen Born and Rockwell A.
Schnabel, both directors of the Company, are directors of Cyprus Amax.

-11-<PAGE>
AGREEMENTS WITH CYPRUS AMAX

In addition to the proposed Financing Arrangement, Cyprus Amax is
party to a number of contracts with the Company, which are described
below.

Revolving Credit Agreements. Under DOCLOC I, the Company can
borrow up to $100 million and pay any indebtedness with up to two
million shares of the Company's $2.25 Series A Convertible Preferred
Stock, par value $1.00 per share ("Series A Preferred Stock"). Such
shares of Series A Preferred Stock may be redeemed by the Company for
12,099,213 shares of Common Stock at a price equal to the greater of
$5.854 per share or the average closing price per share over a period
prior to redemption. Cyprus Amax may acquire at any time up to
12,099,213 shares of Common Stock at a price of $8.265 per share, in
which event DOCLOC I would be terminated and any outstanding principal
and interest would be deemed repaid. Under the Proposal, the
Company's ability to borrow under DOCLOC I would become subject to the
consent of Cyprus Amax. See "THE PROPOSAL--Fee and Support
Agreements."

In March 1995, the Company and Cyprus Amax entered into a
convertible line of credit ("DOCLOC II"), under which the Company
borrowed the entire $80 million available. During 1995 Cyprus Amax
acquired 14,919,806 shares of Common Stock at $5.362 per share
pursuant to DOCLOC II, DOCLOC II was terminated and the outstanding
indebtedness was deemed repaid.

Stock Issuance Agreement. In September 1995, the Company and
Cyprus Amax entered into an Agreement Regarding Stock Issuance
pursuant to which, with the agreement of both parties, obligations
owing from the Company to Cyprus Amax under existing or future
contractual arrangements may be paid in shares of Common Stock, valued
at the 30-day average closing price per share prior to the date of
payment. Of the 879,500 shares issuable, 128,042 shares were issued
to Cyprus Amax as payment for $835,473 due Cyprus Amax under
DOCLOC II.

Exploration Joint Venture Agreement. The Company entered into an
Exploration JV Agreement with Cyprus Amax effective January 1, 1994.
Under the Exploration JV Agreement, the Company and Cyprus Amax have
agreed to pool their efforts for the principal purpose of discovering
and developing future gold prospects, with Cyprus Amax providing 75
percent and the Company providing 25 percent of the initial
exploration funding for such prospects. Properties held by the
parties prior to January 1, 1994 (including the Kubaka deposit) are
excluded from the joint venture. A subsidiary of Cyprus Amax has been
appointed as Manager to manage, direct and control exploration
activities. Either party may withdraw upon giving 60 days' notice to
the other party. Pursuant to the Exploration JV Agreement, the
Company has the first right to acquire any gold property covered by
the Exploration JV Agreement, and Cyprus Amax has the first right to
acquire property containing deposits of minerals or precious metals
other than gold. The agreement will terminate on January 1, 1998.

Kubaka Acquisition Agreement. Pursuant to the Kubaka Acquisition
Agreement, the Company will acquire, subject to the satisfaction of
certain conditions, Cyprus Amax's indirect interest in the Kubaka
project located in the Magadan Region of the Russian Federation for a
purchase price payable in shares of Common Stock as follows: (i)
approximately 11.8 million shares of Common Stock to be paid upon
closing the Kubaka Acquisition Agreement; (ii) approximately 4.2
million shares of Common Stock to be paid within ten days of
commencement of commercial production of the Kubaka project; (iii) a
contingent payment in shares of Common Stock (a) equal to $10 per gold
equivalent ounce (up to a maximum of $45 million) of the Company's pro
rata share of proven and probable reserves that the Company acquires
the right to mine in the Russian Federation (excluding properties
covered by the license to develop Kubaka or properties acquired under
the Exploration JV Agreement) on or before June 30, 2004, and (b)
valued at the 10-day average closing price per share ending two
business days prior to the date of payment.

Due to a delay in start-up, higher logistics, freight and labor
costs and higher than anticipated taxes, the total capital
construction costs to complete the Kubaka project have been increased
from approximately $182 million to $228 million. Cyprus Amax has
informed the Company that Cyprus Amax is exploring various methods by

-12-<PAGE>
which the increased costs at the Kubaka project may be funded. The
Company is evaluating the impact of these cost increases on the
project and the acquisition transaction. Subject to satisfactory
resolution of these issues and approval by the Company's stockholders
of the Kubaka Acquisition Agreement, the Company expects to complete
the acquisition during 1996.

Services Agreement. Pursuant to the terms of the Services
Agreement, the Company and Cyprus Amax have agreed to provide a
variety of managerial and other services to each other on a full
cost-reimbursement basis. The agreement is terminable by the Company
or by Cyprus Amax as of the end of any month on 180 days' prior
written notice. During the first six months of 1996, amounts charged
to the Company by Cyprus Amax pursuant to the Services Agreement were
approximately $1.4 million, including the cost of insurance coverage
for the Company, and amounts charged to Cyprus Amax by the Company
pursuant to the Services Agreement were approximately $.8 million.

Employee Transfer Agreement. Pursuant to the Employee Transfer
Agreement, the Company and Cyprus Amax have amended their respective
benefit plans to allow employees to transfer from the Company to
Cyprus Amax or from Cyprus Amax to the Company with minimal effect on
an employee's benefits.

Net Operating Loss Agreement. Pursuant to the Net Operating Loss
Agreement, the Company agreed to allow Cyprus Amax to use the
Company's net operating loss generated in 1993 (the "1993 NOL") which
would result in a refund of taxes paid by Cyprus Amax in a prior year,
and Cyprus Amax agreed to reimburse the Company at such time that the
Company would have received the benefit for the 1993 NOL had the
Company elected to carry forward the 1993 NOL.

-13-<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS

As of May 31, 1996, the following table sets forth the amount of
all equity securities of the Company and Cyprus Amax that are
beneficially owned by each director of the Company, the chief
executive officer and each of the two other most highly compensated
executive officers of the Company in 1995 (excluding shares owned by
the other two most highly compensated executive officers of the
Company in 1995, who resigned their positions prior to May 31, 1996),
and all directors and executive officers of the Company as a group. A
person is considered the beneficial owner of any shares (i) over which
such person exercises sole or shared voting or investment power or
(ii) of which such person has the right to acquire beneficial
ownership at any time within 60 days (e.g., through the exercise of
stock options). Unless otherwise indicated, each person has sole
voting and investment power with respect to the shares set forth
opposite his or her name.

<TABLE>
<CAPTION>
Number of Shares Number of Shares of Number of Shares
Name of of Company Company Series B of Cyprus Amax
Beneficial Owner Common Stock<F1>* Prefererd Stock<F1> Common Stock
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Milton H. Ward 20,000 -- 963,991<F2>

Allen Born 19,317<F3> -- 97,109<F2><F4>

Gerald J. Malys 11,534<F3> -- 187,465<F2><F5>

Rockwell A. Schnabel 33,533<F3> 2,500 17,365<F4>

Vernon F. Taylor, Jr. 24,660<F6> 3,000<F6> 24,094<F7>

Russell L. Wood 13,141<F3> -- --

Deborah J. Friedman 21,050 400 26,863<F2>

Mark A. Lettes 61,072<F8> -- --

All directors and
executive officers as
a group (13 persons) 260,048<F9> 5,900 1,348,494

<FN>
*All amounts shown are less than one percent of the class.
<F1> Each share of Series B Preferred Stock is convertible into 6.061 shares of Common Stock. Shares of Common
Stock include shares obtainable upon conversion of the Series B Preferred Stock. Also included in the table
above are shares of Common Stock held pursuant to the Company's employee deferred compensation plan, thrift
plan and performance share plan.
<F2> Includes shares subject to options exercisable within 60 days: 632,294 shares for Mr. Ward; 75,461 shares for
Mr. Born; 97,088 shares for Mr. Malys; and 21,700 shares for Ms. Friedman.
<F3> Includes shares held in the Deferred Compensation Plan for Members of the Board of Directors: 4,679 shares for
Mr. Born; 5,034 shares for Mr. Malys; 3,880 shares for Mr. Schnabel; and 8,641
shares for Mr. Wood.
<F4> Includes shares held in the Cyprus Amax Non-Employee Director Deferred Compensation Plan.
<F5> Includes 10,000 shares held by Mrs. Malys.
<F6> Includes 1,227 shares of Common Stock and 3,000 shares of Series B Preferred Stock owned by trusts in which
Mr. Taylor, as trustee, has investment or voting power.
<F7> Includes 12,344 shares of Cyprus Amax common stock obtainable upon conversion of 6,000 shares of $4.00 Series A
Convertible Preferred Stock of Cyprus Amax.
<F8> Includes 43,000 shares subject to options exercisable within 60 days.
<F9> Includes 78,000 shares subject to options exercisable within 60 days.
</TABLE>

-14-<PAGE>
THE PROPOSAL

BACKGROUND

The Fort Knox project is located in the Fairbanks Mining
District, approximately 15 miles northeast of Fairbanks, Alaska.
Construction of the Fort Knox project began in the first quarter of
1995 and is estimated to be completed by the first quarter of 1997.
The Fort Knox operations will include an open pit mine, a conventional
36,000 tons per day (13.1 million tons per year) process plant, a
tailings storage facility and a reservoir to supply process water.
The Fort Knox project has proven and probable gold ore reserves of
approximately 162 million tons, with an average grade of 0.025 ounces
of gold per ton and 4.1 million contained ounces of gold.

During the fourth quarter of 1995, the Company secured an
additional $250 million of financing pursuant to the Loan Agreement
among the Company, certain of its subsidiaries and the Lenders. The
original Loan Agreement provides for an interest rate of LIBOR plus
2.25 percent, a commitment fee of a 2.5 percent, security interests in
the Company's assets at the Fort Knox project and the Hayden Hill mine
and a maturity date of December 31, 2001. The Loan Agreement contains
standard financial and other covenants. The Loan Agreement was
amended in December 1995 to clarify certain provisions.

In the second half of 1995, the Company encountered unexpected
geotechnical conditions in the underlying bedrock at the Fort Knox
project, which increased excavation and design foundation requirements
for two dams, the primary crusher and the access road. The Company
also was required to make design changes to comply with more stringent
fire code requirements and to accommodate the difficult seismic
conditions.

At a meeting of the Board held on December 13, 1995, the Board
discussed the status of the Fort Knox project and its financing
requirements. The Company had projected that as of December 31, 1995,
it would have borrowed $200 million under the Loan Agreement and that
additional funding, beyond amounts remaining available under the Loan
Agreement and from operating cash flows, would be required for capital
expenditures and working capital for the Fort Knox project and debt
repayments. To fund completion of the Fort Knox project on schedule,
the Company anticipated borrowing under DOCLOC I or accessing the
public markets. The Board requested that management present a
complete assessment of the Company's financing situation for the Board
at its meeting in February 1996, when updated construction cost
estimates were expected to be available for both the Fort Knox project
and the Kubaka project in the Russian Federation, which the Company
has agreed to acquire, subject to certain conditions, from Cyprus Amax
(see "CERTAIN TRANSACTIONS--RELATIONSHIP WITH CYPRUS AMAX").

At a meeting of the Board held on February 14, 1996, the
Company's management reported to the Board that a recently completed
review of the costs for the Fort Knox project indicated a preliminary
cost to complete estimate of at least $330 million. The Board also
reviewed the schedule and costs for the Kubaka project. Additionally,
in late February 1996, the Company requested assistance from the
Cyprus Amax project development group with the final determination of
the required costs to complete the Fort Knox and Kubaka projects. In
light of the significant cost overruns expected at the Fort Knox
project, the Company determined that financing in addition to DOCLOC I
would be needed.

The Company's management began negotiations with the Lenders in
mid February 1996 regarding the status of the Fort Knox project, the
estimated costs to complete the project and a possible restructuring
of the Loan. Over the course of the negotiations, the Lenders agreed
to waive any noncompliance with the Loan Agreement and to eliminate
all financial and most other covenants under the Loan Agreement until
economic completion of the Fort Knox project if Cyprus Amax would
agree to guarantee the Loan until economic completion.

-15-<PAGE>
At a special meeting of the Board held on March 1, 1996, the
Board met with the Company's management to discuss the projected cost
overruns at the Fort Knox project, the Company's potential violation
of its covenants under the Loan Agreement and the progress of
negotiations with the Lenders to restructure the Loan. The Board also
discussed the status of the Kubaka project. The Board reviewed the
Company's immediate cash needs based on anticipated spending levels.
The Board also was informed that Cyprus Amax had agreed, subject to
the approval of its board of directors, to guarantee the Loan
Agreement and to provide additional financing. The Board considered
funding the cash shortfall with equity or other financing; however,
concerns were expressed about the feasibility of completing such
financings in time to meet the Company's needs. The Board discussed
the proposed financing arrangement with Cyprus Amax as an attractive
alternative for the Company and noted that the support thus offered to
the Company by Cyprus Amax should be perceived positively in the
market.

During the first weeks of March 1996, management of the Company
and of Cyprus Amax continued negotiations with the Lenders regarding
restructuring the Loan, and the Company continued its review of the
estimated cost to complete the Fort Knox project, which cost had been
increased due to difficult site conditions, expanded excavation work
and design enhancements at the Fort Knox project.

On March 17, 1995, Messrs. Taylor and Wood, two members of the
Board who are neither affiliates of Cyprus Amax nor officers or
employees of the Company, as the Special Committee, met by telephone
with the Company's management to discuss the terms of the proposed
financing arrangement.

The Company's Board met on March 18, 1996 to review the Financing
Arrangement proposed to be entered into with Cyprus Amax. The Board
confirmed the delegation to the Special Committee (consisting of
Messrs. Taylor and Wood) of authority to evaluate the proposed
Financing Arrangement (including the issuance of shares of Common
Stock) and to approve or reject the Financing Arrangement on behalf of
the Company. The Board also confirmed the retention of Salomon
Brothers Inc as financial advisors and Willkie Farr & Gallagher as
legal counsel to the Special Committee.

Later on March 18, 1996, the Special Committee, with its
financial advisors and legal counsel, met with the Company's
management. The Special Committee considered the range of the
potential costs associated with the completion of the Fort Knox
project, as well as the Lenders' views of those costs. Mr. Malys
reported to the Special Committee that the Cyprus Amax board had
approved the proposed Financing Arrangement earlier in the day. The
Special Committee considered the possibility of the Company seeking
alternative financing arrangements but determined that any third party
debt financing likely would require the guaranty of Cyprus Amax and
that no other source of funding would be available when the Company
needed additional financing. The Special Committee considered the
relative costs to the Company of the proposed financing and
alternative financings, the potential dilution of the percentage
ownership of stockholders other than Cyprus Amax, the nature of Cyprus
Amax's commitment to the Company and Cyprus Amax's expressed intention
to make additional needed financing available to the Company. The
Special Committee, with the advice of its financial advisors,
determined that it was in the best interests of the Company to proceed
with the Financing Arrangement and authorized the Company's officers
to negotiate and sign definitive agreements on behalf of the Company.
See "--Reasons for the Financing Arrangement; Recommendation of the
Board of Directors."

On March 19, 1996, the Company and the Lenders amended the Loan
Agreement (the "Amended Loan Agreement"), and Cyprus Amax guaranteed
the Company's repayment of the loan. See "--Material Terms of the
Cyprus Amax Guaranty." Cyprus Amax also agreed to provide the Company
with the Demand Loan Facility to be used primarily to support the
Company's additional costs to construct the Fort Knox project, to
provide working capital and for general corporate purposes. Cyprus
Amax's right under the Demand Loan Facility to require repayment in
shares of Common Stock could not be exercised, however, until
stockholders of the Company approved the Financing Arrangement. See
"--Material Terms of the Demand Loan Facility."

During the first quarter of 1996, the Company borrowed the
remaining $50 million available under the Loan, which amount was
required to fund short-term operating needs of the Company and
construction of the Fort Knox Project. In April 1996, the Company
borrowed $20 million under the Demand Loan Facility to fund
construction at Fort Knox and for general corporate purposes.

-16-<PAGE>
Also in the first quarter of 1996, the Cyprus Amax project
development group was seconded to the Company to complete both the
Fort Knox and the Kubaka projects. On April 1, 1996, S. Scott
Shellhaas was elected to serve as the Company's President and Chief
Operating Officer, replacing the Company's previous President and
Chief Operating Officer who had resigned. Mr. Shellhaas joined the
Company from Cyprus Foote Mineral Company, a wholly owned subsidiary
of Cyprus Amax and the world's largest lithium producer, where he had
served as President since 1993. Following Mr. Shellhaas' appointment,
the Company, with the assistance of the Cyprus Amax project
development group, continued to review and update the estimated costs
to complete the Fort Knox and Kubaka projects.

The Company's Board met on April 30, 1996 to review the final
cost estimates for the Fort Knox and Kubaka projects and to receive
the reports of the Company's management and of the Cyprus Amax project
development group. The members of the Special Committee met
separately with the Company's management to review the cost to
complete reports and the Company's proposed press release. On April
30, 1996, the Company reported that updated reviews of the Fort Knox
project indicated that due to costs associated with the expanded
excavation and design foundation requirements and higher than
anticipated costs in several areas such as labor, freight and
engineering, total project capital costs were expected to be
approximately $370 million, in addition to approximately $26 million
of capitalized interest.

The Company also determined that revised estimates for the Kubaka
project indicated that the Kubaka project probably would commence
operations later than expected, and that due to delayed start-up,
higher logistics and freight costs, higher than anticipated labor
costs and taxes, and some design changes, the total capital
construction costs for the Kubaka project had increased to
approximately $228 million from an original estimate of approximately
$182 million.

During May and June 1996, the Company borrowed an additional $25
million under the Demand Loan Facility and pursued a number of other
financing arrangements. The Company estimates that, with the Demand
Loan facility and the Cyprus Amax Guaranty, the Company has sufficient
financing to complete the Fort Knox project. The Company intends to
seek third party financing, if available on terms acceptable to the
Company, to fund a portion of the costs associated with the completion
of the Fort Knox project. If third party financing is obtained, the
amounts that may be required to be borrowed from Cyprus Amax under the
Demand Loan Facility (and, correspondingly, the number of shares of
the Company's Common Stock obtainable by Cyprus Amax in satisfaction
of borrowings under such loan) would be reduced. There can be no
assurance that third party financing will be available on terms
acceptable to the Company.

REASONS FOR THE FINANCING ARRANGEMENT; RECOMMENDATION OF THE SPECIAL
COMMITTEE

The Special Committee (comprised of Messrs. Taylor and Wood, the
two directors who are neither affiliates of Cyprus Amax nor officers
or employees of the Company), with the advice of its financial
advisors and legal counsel, on behalf of the Board determined on
March 18, 1996 that the Financing Arrangement was fair to and in the
best interests of the Company and its stockholders (exclusive of
Cyprus Amax). This determination was based on the following factors
(not necessarily in order of importance), among others:

(i) The projected total capital costs to complete the Fort Knox
project had increased significantly from $256 million to a minimum of
approximately $330 million, and the Company faced compliance issues
regarding covenants contained in the Loan Agreement. In addition, the
Company would have been out of cash in the near future, would not have
had the capital resources to fund its projects and operations and
effectively would have been precluded from raising funds in the public
markets. Without Cyprus Amax's agreement to guarantee the Loan
Agreement, the Company might not have been able to avoid a default
under the Loan Agreement.

(ii) The Special Committee evaluated various financing
alternatives considered most likely to be available to the Company.
The Special Committee determined that any third party debt financing
would have required the guaranty of Cyprus Amax. The Special
Committee considered the possibility of selling assets and seeking
third party investors or joint venture partners for the Fort Knox
project, but determined that these steps could not likely be completed
in the necessary time frame, on acceptable terms and without
detrimental effects on

-17-<PAGE>
the Company's business. The Special Committee also concluded that it
was not the appropriate time to complete an equity offering in light
of the Company's financial position. The Special Committee was
advised by its financial advisors that the Financing Arrangement with
Cyprus Amax was the best alternative available.

(iii) The possibility that the Company may issue shares of Common
Stock (subject to Cyprus Amax's election to receive shares instead of
cash) for payment of the Financing and Guaranty Fee, the Interest
Differential Payments, principal and interest due under the Demand
Loan Facility and the Reimbursement Payments under the Cyprus Amax
Guaranty is advantageous to the Company and its stockholders in that
payments with equity would permit the Company to conserve its cash and
minimize borrowing requirements.

(iv) The Demand Loan Facility provides the Company with
relatively low interest financing for its working capital and capital
expenditure needs. Under the Demand Loan Facility, the Company may
borrow up to $250 million from time to time, subject to the discretion
of Cyprus Amax. Although under the Demand Loan Facility Cyprus Amax
has discretion whether or not to lend, Cyprus Amax has informed the
Company that it intends to make additional needed financing available
to the Company. The Demand Loan Facility does not impose restrictive
covenants. The Demand Loan Facility provides for an interest rate of
LIBOR plus 2.25 percent, currently a rate of approximately 8.0
percent. The Special Committee was advised that third party financing
would not have been available within the required time frame and that
such financing likely would have required higher interest rates and
higher transactions costs.

(v) The margin over LIBOR or the gold lease rate paid as
interest by the Company to the Lenders was reduced in the Amended Loan
Agreement from 2.25 percent to 0.50 percent as a result of the Cyprus
Amax Guaranty. Although the Company agreed to pay Cyprus Amax this
interest differential of 1.75 percent, the Company was able to
maintain the same interest cost as the original interest rate on the
Loan. The Amended Loan Agreement also eliminated all financial and
most other covenants of the Company under the original Loan Agreement
until economic completion of the Fort Knox project.

(vi) Under the Financing Arrangement, the collateral provided by
the Company to its third party lenders remains unchanged, except that
Cyprus Amax receives first priority security interests in the
collateral and the right to require the grant of security interests in
the Company's Refugio and Guanaco mines, subject to previously granted
security interests.

(vii) In consideration for the Cyprus Amax Guaranty, the Company
agreed to pay Cyprus Amax a one-time Financing and Guaranty Fee of $10
million, i.e., 2.5 percent of funding facilitated by Cyprus Amax,
which is the same percentage as the commitment fee charged by the
Lenders with respect to the Loan Agreement. The Special Committee's
financial advisors advised that the fee was lower than the fee that
would have been available from a third party.

(viii) The Financing Arrangement permits the Company to avoid a
cross-default under its financing for its Refugio mine.

MATERIAL TERMS OF THE CYPRUS AMAX GUARANTY

The following is a description of the material terms of the
Cyprus Amax Guaranty, which is attached as Appendix A to this Consent
Solicitation Statement and incorporated herein by reference. All
stockholders are urged to read the Cyprus Amax Guaranty in its
entirety. See also "--Background" for a summary of the principal
terms of the Loan Agreement and the Amended Loan Agreement."

Guaranty. Cyprus Amax agreed to guaranty the Company's payment
of up to $250 million of principal and interest at LIBOR plus 0.50
percent due under the Amended Loan Agreement. The Cyprus Amax
Guaranty terminates on achievement of economic completion at the Fort
Knox project as defined in the Amended Loan Agreement.

-18-<PAGE>
Indemnification. The Company has agreed to indemnify Cyprus Amax
for any costs it may incur under the Cyprus Amax Guaranty.

MATERIAL TERMS OF THE DEMAND LOAN FACILITY

The following is a description of the material terms of the
Demand Loan Facility, which is attached as Appendix B to this Consent
Solicitation Statement and incorporated herein by reference. All
Stockholders are urged to read the Demand Loan Facility in its
entirety.

Demand Loan. Under the Demand Loan Facility, Cyprus Amax will
agree to make loans (at its discretion) to the Company from time to
time until the earlier of December 31, 2001 or the date on which
Cyprus Amax notifies the Company that loans will no longer be made
available under the Demand Loan Facility (the "Expiration Date") in an
aggregate principal amount not to exceed $250 million at any time
outstanding. The Company may repay the outstanding indebtedness
either by payment in cash or, at the election of Cyprus Amax and
subject to the approval of the Company's stockholders of the Financing
Arrangement (which is being sought in this Consent Solicitation
Statement), by payment in shares of Common Stock. The amount of the
Demand Loan Facility commitment will be reduced by the amount paid or
prepaid in cash or Common Stock.

Interest Rate. Each loan made by Cyprus Amax to the Company
bears interest at an annual rate equal to the LIBOR for the interest
period selected by the Company at its option (a period of one, three
or six months) plus 2.25 percent. The Demand Loan Facility also bears
a default interest rate that is 1.0 percent per annum higher than the
above rate.

Principal and Interest Payments. All principal and accrued and
unpaid interest on the loans are payable upon demand by Cyprus Amax.
The Company may make prepayments of principal without premium or
penalty in integral multiples of $1,000,000.

Payment with Common Stock. Cyprus Amax may require that the
Company pay any amounts due or being repaid under the Demand Loan
Facility by issuing shares of Common Stock. The number of shares of
Common Stock to be issued can be determined by dividing the amount of
the payment under the Demand Loan Facility to be repaid with shares of
Common Stock by the average closing price of the Common Stock on the
NYSE over the five trading day period ending on the business day prior
to the date that payment in shares of Common Stock is requested (the
"Average Market Price"). The Company's obligation to issue shares of
Common Stock is subject to the acceptance by the NYSE of a listing
application for the issuance of shares of Common Stock therefor and
approval by the Company's stockholders of the Financing Arrangement
(which is being sought in this Consent Solicitation Statement).

Covenants. The Demand Loan Facility requires the Company (i) to
pay principal and interest on the loans as required, (ii) to provide
reports to Cyprus Amax, (iii) to list with the NYSE the shares of
Common Stock issuable at Cyprus Amax's election on repayment of the
loan, (iv) to permit Cyprus Amax to inspect its books and records and
(v) to enter into appropriate security agreements providing Cyprus
Amax with a security interest in the collateral.

Events of Default. Events of default occur under the Demand Loan
Facility in the event (i) of a failure to pay, for a period of five
business days, principal or interest when due, (ii) of a default for
30 calendar days in the performance of any other term, covenant or
condition in the Demand Loan Facility, (iii) any representation or
warranty made by the Company, pursuant to the Demand Loan Facility,
proves to have been incorrect in any material respect when made and is
not corrected within ten days after discovery by the Company, or
(iv) bankruptcy or insolvency of the Company. If an event of default
occurs, Cyprus Amax may, at its option, terminate the Demand Loan
Facility or declare the principal and interest and any other sums due
under the Demand Loan Facility immediately due and payable. Upon the
occurrence of an event of default pursuant to subparagraph (iv) above,
the Demand Loan Facility automatically will be terminated and all
principal and interest and any other sums due under the Demand Loan
Facility automatically will become due and payable.

-19-<PAGE>
Use of Proceeds. The proceeds of the Demand Loan Facility will
be used primarily to finance increases in actual and projected capital
expenditures necessary to construct and develop the Fort Knox project,
to provide working capital and for general corporate purposes.

Demand Registration Rights. Cyprus Amax may make one or more
written requests (a "Demand") for registration under the Securities
Act of 1933 of not less than 1,000,000 shares of Common Stock per
demand of shares issued pursuant to the Demand Loan Facility. If, at
the time of such Demand, Cyprus Amax directly or indirectly owns less
than five percent of the number of shares of Common Stock outstanding,
the Company may, if the Special Committee of the Board determines that
it would be inadvisable to effect a demand registration, defer such
demand registration (for up to three months) until the earliest
practicable time at which such demand registration can be reasonably
effected. All expenses of registration incurred in connection with
the first registration statement to be filed pursuant to Cyprus Amax's
demand registration rights will be paid by the Company. All expenses
of registration associated with each additional registration statement
to be filed, if any, pursuant to Cyprus Amax's registration rights
will be paid by Cyprus Amax.

Representations and Warranties. The Company made representations
and warranties to Cyprus Amax concerning corporate existence,
corporate power and authority concerning the Demand Loan Facility,
government approvals and enforceability and to the effect that the
shares of Common Stock issued pursuant to the Demand Loan Facility
would be validly issued, fully paid and nonassessable.

FEE AND SUPPORT AGREEMENTS

The following is a description of the material terms of the Fee
Agreement and the Reimbursement Agreement, both dated March 19, 1996
(the "Fee and Support Agreements"), between the Company and Cyprus
Amax, which are attached as Appendix C to this Consent Solicitation
Statement and incorporated herein by reference. All stockholders are
urged to read the Fee and Support Agreements in their entirety.

Security. The Cyprus Amax Guaranty and the Demand Loan Facility
are secured by a first priority lien in the collateral for the Amended
Loan Agreement, including the assets at the Fort Knox project and the
Hayden Hill mine. At the request of Cyprus Amax, the Company must
grant Cyprus Amax the highest priority security interest in the assets
at the Guanaco and the Refugio mines permitted after giving effect to
all outstanding security interests. The Company's interest in the
Refugio mine has been pledged to a group of banks that have provided
financing for the Refugio mine.

Reimbursement Payments. The Company has agreed to reimburse
Cyprus Amax for all payments made and all reasonable out-of-pocket
expenses incurred by Cyprus Amax under the Cyprus Amax Guaranty. Any
reimbursement obligation that arises will be treated as a demand loan,
bearing interest at an annual rate equal to LIBOR plus 3.25 percent,
and will be payable by the Company within five business days of demand
from Cyprus Amax. Payment may be in cash or such other consideration
as may be agreed upon by the Company and Cyprus Amax, including shares
of Common Stock valued at the Average Market Price.

Financing and Guaranty Fee. In consideration for both the Cyprus
Amax Guaranty and the Demand Loan Facility, the Company has agreed to
pay Cyprus Amax the Financing and Guaranty Fee of $10 million. The
Financing and Guaranty Fee is payable in cash, or at the election of
Cyprus Amax, in shares of Common Stock, valued at the Average Market
Price. Cyprus Amax has advised the Company that it will not seek
payment of the Financing and Guaranty Fee until the later of the date
the Company's stockholders approve the Financing Arrangement and
December 31, 1996.

Interest Differential Payments. Also in consideration for the
Cyprus Amax Guaranty and the Demand Loan Facility, the Company has
agreed to pay Cyprus Amax Interest Differential Payments equal to 1.75
percent of the portion of the guaranteed obligations constituting
principal under the Amended Loan Agreement to the extent that accrued
interest is due on such principal amount. Interest Differential
Payments are payable in cash, or at the election of Cyprus Amax and
subject to the approval of the Company's stockholders of the Financing
Arrangement

-20-<PAGE>
(which is being sought in this Consent Solicitation Statement), in
shares of Common Stock valued at the Average Market Price.

Borrowings Under DOCLOC I. Until economic completion of the Fort
Knox project, the Company has agreed not to borrow under DOCLOC I for
purposes other than repaying the Lenders or the lenders for the
Refugio project without the prior written consent of Cyprus Amax

CONSENT OF CYPRUS AMAX; INTENTION OF THE DIRECTORS AND EXECUTIVE
OFFICERS

Cyprus Amax owns approximately 51.2 percent of the outstanding
shares of Common Stock as of the Record Date. The consent of Cyprus
Amax will be sufficient to approve the Proposal without the consent of
any other stockholder. Cyprus Amax has agreed to consent to the
Proposal and has advised the Company that Cyprus Amax will deliver its
written consent on August __, 1996.

EFFECTS OF THE PROPOSAL UPON RIGHTS OF EXISTING HOLDERS OF COMMON
STOCK

The percentage of the Company's voting securities owned of record
by existing holders of shares of Common Stock, other than Cyprus Amax,
may be reduced significantly if the Financing Arrangement is approved
by the Company's stockholders. The number of shares of Common Stock
that may be issued to Cyprus Amax will depend on the actual amount
borrowed under the Demand Loan Facility, Cyprus Amax's decision to
satisfy borrowings under the Demand Loan Facility and/or related
interest and fee obligations with shares of Common Stock, whether the
Cyprus Amax Guaranty is called and the price per share of Common Stock
at the time payments are requested. The actual amount borrowed under
the Demand Loan Facility will depend on a number of factors,
including, without limitation, the actual cost to complete the Fort
Knox project, the availability of third party debt or equity financing
on attractive terms to fund a portion of such costs and Cyprus Amax's
discretion in making additional funding available under such facility.
Accordingly, the Company can not predict with certainty the number of
additional shares of Common Stock that will be issued to Cyprus Amax
under the Financing Arrangement. If all amounts due in connection
with the Financing Arrangement are repaid in cash, no shares of Common
Stock will be issued to Cyprus Amax and the voting securities owned of
record by Cyprus Amax will not change. The Company would issue to
Cyprus Amax between approximately 28.9 million and 46.4 million shares
(based on an assumed price per share of Common Stock of $6.50) under
the transactions contemplated by the Proposal, assuming that Cyprus
Amax elects to receive payment in shares of Common Stock, that the
Cyprus Amax Guaranty is not called and that between $150 million and
$250 million is borrowed under the Demand Loan Facility (with interest
accruing over the period from April 1, 1996 to December 31, 1997).
The Financing Arrangement, if approved by stockholders, would reduce
the interest of existing holders of outstanding shares of Common
Stock, other than Cyprus Amax, based on the above assumptions from
approximately 48.8 percent to between approximately 33.0 percent and
37.6 percent and increase Cyprus Amax's record ownership from
approximately 51.2 percent to between approximately 62.4 percent and
67.0 percent of the outstanding shares of Common Stock.

-21-<PAGE>
by the Company of Cyprus Amax's interest in the Kubaka gold project in
the Russian Federation. In the event the Kubaka Acquisition Agreement
is consummated and approved by the Company's stockholders, Cyprus
Amax's beneficial ownership of shares of Common Stock would increase
by 16.0 million shares to approximately 62.4 percent, before the
issuance of shares of Common Stock in connection with the Financing
Arrangement. The number of shares issuable to Cyprus Amax under the
Kubaka Acquisition Agreement is subject to further increase if
additional shares are issued to satisfy certain potential obligations
under the Kubaka Acquisition Agreement. See "CERTAIN TRANSACTIONS--
RELATIONSHIP WITH CYPRUS AMAX."

Cyprus Amax, as the holder of greater than 50 percent of the
outstanding shares of Common Stock, will continue to be able to elect
all the directors of the Company and to direct corporate policy.

-22-<PAGE>
CAPITALIZATION
(in millions, except per share amounts)

The following table presents the Company's other current
liabilities and capitalization as of March 31, 1996, as adjusted to
give effect to (i) borrowings by the Company of $250 million under the
Demand Loan Facility and (ii) repayment of amounts owed pursuant to
the Financing Arrangement.

<TABLE>
<CAPTION>
March 31, 1996
-------------------------------------------------------------------------------
As Adjusted
Borrowing and with
Funds As Adjusted for Interest Converted Borrowings
Actual Borrowed<F1> Borrowing to Common Stock Converted<F2><F3>
------ ------------ -------------- ------------------ -----------------

<S> <C> <C> <C> <C> <C>
Other current liabilities. . . . . . . . 43.4 44.6 88.0 (44.6) 43.4
Current maturities of long-term debt . . 5.8 - 5.8 - 5.8
Demand note from Cyprus Amax . . . . . . 5.0 250.0 255.0 (250.0) 5.0
--- ----- ----- ------- ---
Total Current Liabilities. . . . . . . $ 54.2 $294.6 $348.8 $(294.6) $ 54.2
===== ===== ===== ======= =====
Long-term debt . . . . . . . . . . . . . $288.2 $ - $288.2 $ - $288.2
Stockholders' Equity:
Preferred stock. . . . . . . . . . . . 1.8 - 1.8 - 1.8
Common stock . . . . . . . . . . . . . 1.0 - 1.0 0.5 1.5
Paid-in capital. . . . . . . . . . . . 340.3 - 340.3 294.1 634.4
Accumulated deficit. . . . . . . . . . (51.5) (25.5) (77.0) - (77.0)
------ ------ ------ ----- ------
Total Stockholder's Equity . . . . . . . 291.6 (25.5) 266.1 294.6 560.7
------ ------ ------ ----- ------
Total Capitalization . . . . . . . . . . $579.8 $(25.5) $554.3 $294.6 $848.9
===== ===== ===== ======= =====
____________________
<FN>
<F1> Represents $250.0 million maximum borrowing under the Demand Loan Facility note from Cyprus Amax to be used to
fund remaining capital requirements for the Fort Knox project and for other general corporate purposes. The
increase in other current liabilities includes accrued interest of $33.9 million on $250.0 million borrowed
under the Demand Loan Facility, $7.7 million of interest differential payable to Cyprus Amax on amounts
borrowed under the Loan Agreement and $3.0 million representing amortization of a portion of the $10.0 million
Financing and Guaranty Fee paid to Cyprus Amax. Interest and amortization of the Financing and Guaranty Fee
have been computed as though the maximum amounts were outstanding for the period from April 1, 1996 through
December 31, 1996. Interest for the period from April 1 through December 31, 1997 will be capitalized as part
of the Fort Knox construction project. Interest in 1997 will be expensed. Amounts will be borrowed under the
Demand Loan Facility as needed to complete the Fort Knox project, to provide working capital and for general
corporate purposes.
<F2> Represents conversion of the maximum available under the Demand Loan Facility and accrued interest payable to
Cyprus Amax into 45.3 million shares of Common Stock at a conversion price of [$6.50] per share, the price per
share of Common Stock on [June 19, 1996.]
<F3> Does not include the previously announced purchase of the Kubaka project from Cyprus Amax (subject to the
satisfaction of certain conditions) for 16.0 million shares of Common Stock, valued at $5.935 per share; and
$73.0 million of debt funded by the Company's 50% share of assumed outside financing guaranteed
by Cyprus Amax until project completion. The purchase of Kubaka, if consummated, will be recorded at $40.2
million, plus any capitalized interest. Project financing of $73.0 million will be recorded using
proportionate consolidation and will be repaid from operations.
</TABLE>

-23-<PAGE>
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY

The Company is authorized by its Certificate of Incorporation to
issue 200.0 million shares of Common Stock and 10.0 million shares of
preferred stock. As of March 31, 1996, there were approximately
96.4 million shares of Common Stock issued and outstanding and
1,840,000 shares of the Series B Preferred Stock issued and
outstanding. In addition, 2.0 million shares of the Series A
Preferred Stock have been authorized by the Board for issuance. All
of the shares of Series A Preferred Stock are reserved for issuance
under DOCLOC I. See "--Preferred Stock--Series A Preferred Stock."

COMMON STOCK

The Company's Certificate of Incorporation authorizes the
issuance of 200 million shares of Common Stock. A summary of the
terms and provisions of the Common Stock is set forth below.

Dividends. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board out of funds legally
available therefor, provided that if any shares of Series A Preferred
Stock and Series B Preferred Stock, or any other shares of preferred
stock, are at the time outstanding, the payment of dividends on Common
Stock or other distributions (including Company repurchases of Common
Stock) will be subject to the declaration and payment of all
cumulative dividends on outstanding shares of the Series A Preferred
Stock, Series B Preferred Stock, and any other shares of preferred
stock which are then outstanding.

Liquidation. In the event of the dissolution, liquidation or
winding up of the Company, holders of Common Stock are entitled to
share ratably in any assets remaining after the satisfaction in full
of the prior rights of creditors, including holders of the Company's
indebtedness, and the payment of the aggregate liquidation preference
of the Series A Preferred Stock, the Series B Preferred Stock, and any
other shares of preferred stock then outstanding.

Voting. The Company's stockholders are entitled to one vote for
each share on all matters voted on by stockholders, including election
of directors. Shares of Common Stock held by the Company or any
entity controlled by the Company do not have voting rights and are not
counted in determining the presence of a quorum. Directors are
elected annually. Holders of Common Stock have no cumulative voting
rights.

No Other Rights. The holders of Common Stock do not have any
conversion, redemption or preemptive rights.

Transfer Agent. The transfer agent for the Common Stock is
KeyCorp Shareholder Services, Inc., 1515 Arapahoe Street, Suite 1505,
Denver, Colorado 80202.

Listing. Shares of the Company's outstanding Common Stock are
listed on the NYSE and the TSE.

PREFERRED STOCK

The authorized capital stock of the Company includes 10 million
shares of preferred stock, $1.00 par value per share. As a result of
a public offering in August 1994, 1,840,000 shares of Series B
Preferred Stock are currently outstanding. In addition, 2.0 million
shares of Series A Preferred Stock are authorized for issuance
pursuant to DOCLOC I.

Shares of the Company's preferred stock may be issued from time
to time in one or more series. The Company's Board is authorized,
without stockholder approval, to fix the voting rights, dividend
rights and terms, any conversion rights, rights and terms of
redemption (including sinking fund provisions), liquidation
preferences and any other rights, preferences and restrictions of any
series of preferred stock and the number of shares constituting such
series and designation thereof. The terms of such preferred stock may
affect adversely the voting power and other rights of the holders of
Common Stock and may make it more difficult for a third party to gain
control of the Company.

-24-<PAGE>
SERIES A PREFERRED STOCK. The Series A Preferred Stock was
designated as a series of preferred stock in connection with DOCLOC I.
The Series A Preferred Stock consists of 2.0 million shares. A
summary of the terms and provisions of the Series A Preferred Stock is
set forth below.

Dividends. The holders of shares of Series A Preferred Stock are
entitled to receive dividends at an annual rate of $2.25 per share,
which is cumulative, accrues without interest and is payable in cash
in equal semi-annual installments. The Company may elect to pay any
dividend due and payable in shares of Common Stock in lieu of a
dividend payment in cash, unless the holder of Series A Preferred
Stock delivers written notice stating that such holder elects to
receive cash. The Series A Preferred Stock ranks, as to dividends, on
a parity with the Series B Preferred Stock and no dividends may be
made on the Series A Preferred Stock for any period unless full
cumulative dividends have been paid, are paid contemporaneously or are
set apart for payment on the Series B Preferred Stock.

Liquidation Preference. Upon the liquidation, dissolution or
winding up of the Company, the holders of Series A Preferred Stock are
entitled to receive from the assets of the Company an amount equal to
the dividends accrued and unpaid thereon to the date of final
distribution to such holders, whether or not declared, without
interest, and a sum equal to $50.00 per share, and no more. Payment
to the holders of shares of Series A Preferred Stock will be made
before any payment is made or any assets distributed to holders of
Common Stock or any other class or series of the Company's capital
stock ranking junior as to liquidation rights to the Series A
Preferred Stock. The Series A Preferred Stock ranks, as to
liquidation rights, on a parity with the Series B Preferred Stock.

Redemption at the Option of the Company. The Company, at its
option, may at any time redeem the Series A Preferred Stock in whole
or, from time to time, in part, for that number of shares of Common
Stock obtained by dividing $50.00 by the lesser of (i) the call price
(defined below) and (ii) the conversion price (defined below), plus
accrued and unpaid dividends, whether or not declared or due, to the
date fixed for redemption. The Company may issue up to a maximum of
12,099,213 shares of Common Stock upon redemption and conversion of
and the payment of dividends on the Series A Preferred Stock, subject
to adjustment of the conversion price. In the case of the redemption
of shares of Series A Preferred Stock that would result in the
issuance of more than 12,099,213 shares of Common Stock, the Company
would pay an amount in cash in lieu of such shares equal to the lesser
of the call price or the conversion price multiplied by the number of
shares in excess of 12,099,213. Such cash payment will be made in 12
consecutive substantially equal quarterly payments.

The call price with respect to a redemption of Series A Preferred
Stock is equal to the greater of (i) $5.854 (subject to adjustment of
the conversion price) and (ii) the average closing price per share of
Common Stock as calculated for a ten day trading period ending on the
fifth trading day prior to the date the notice of redemption is
mailed.

Conversion. The holder of any shares of Series A Preferred Stock
will have the right, at the holder's option, to convert any or all
shares of Series A Preferred Stock held by such holder into Common
Stock at any time. Each share of Series A Preferred Stock is
convertible into that number of shares of Common Stock obtained by
dividing $50.00 by the conversion price in effect at the time. The
conversion price is $8.265 and is subject to adjustment upon payment
by the Company of a dividend or the making by the Company of a
distribution on Common Stock in shares of Common Stock, upon the
subdivision, combination or issuance by reclassification of Common
Stock, or upon the issuance of rights, options or warrants to purchase
shares of Common Stock at a price per share less than the then current
market price. The maximum number of shares of Common Stock that the
Company may issue upon redemption and conversion of and the payment of
dividends on the Series A Preferred Stock is 12,099,213 shares,
subject to adjustment of the conversion price. No fractional shares
of Common Stock will be issued upon conversion but, in lieu thereof,
an appropriate amount will be paid in cash. No adjustment will be
made to the conversion price unless such adjustment would require an
increase or decrease of at least one percent of such price.

Voting Rights. The holders of Series A Preferred Stock are not
entitled to vote except as described below or as required by law.
Shares of Series A Preferred Stock held by the Company or any entity
controlled by the

-25-<PAGE>
Company do not have voting rights and are not counted in determining
the presence of a quorum. If dividends on the Series A Preferred
Stock are in arrears in an amount equal to at least three semi-annual
dividend payments (whether or not consecutive), the number of members
of the Board will be increased by two and the holders of Series A
Preferred Stock, voting separately as a class, will have the right to
vote for and elect two additional directors of the Company during the
period that such dividends remain in arrears.

The affirmative vote or consent of the holders of at least 66-2/3
percent of all outstanding shares of Series A Preferred Stock is
required for the Company (i) to amend, alter or repeal any provision
of the Restated Certificate of Incorporation or the Bylaws of the
Company so as to affect adversely the relative rights, preferences,
qualifications, limitations or restrictions of the Series A Preferred
Stock, (ii) to authorize, issue or increase the authorized amount of,
any additional class or series of stock, or any security convertible
into stock of such class or series ranking senior to the Series A
Preferred Stock as to the payment of dividends or upon liquidation,
dissolution or winding up of the Company or (iii) to effect any
reclassification of the Series A Preferred Stock.

No Preemptive Rights. The Series A Preferred Stock does not have
any preemptive or subscription rights in respect of any securities of
the Company. Cyprus Amax, however, does have the right to convert
from time to time all or a portion of DOCLOC I and any outstanding
indebtedness and/or Series A Preferred Stock into up to 12,099,213
shares of Common Stock at a conversion price of $8.265 per share (or
$100 million if all 12,099,213 shares of Common Stock are converted).

SERIES B CONVERTIBLE PREFERRED STOCK. There are 1,840,000 shares
of Series B Preferred Stock currently outstanding. A summary of the
terms and provisions of the Series B Preferred Stock is set forth
below.

Dividends. The holders of shares of Series B Preferred Stock are
entitled to receive dividends at an annual rate of $3.75 per share,
which is cumulative, accrues without interest and is payable in cash
in equal quarterly installments. The Series B Preferred Stock ranks,
as to dividends, on a parity with the Series A Preferred Stock and no
dividends may be made on the Series B Preferred Stock for any period
unless full cumulative dividends have been paid, are paid
contemporaneously or are set apart for payment on any Series A
Preferred Stock outstanding.

Liquidation Preference. Upon the liquidation, dissolution or
winding up of the Company, the holders of Series B Preferred Stock are
entitled to receive from the assets of the Company an amount equal to
the dividends accrued and unpaid thereon to the date of final
distribution to such holders, whether or not declared, without
interest, and a sum equal to $50.00 per share, and no more. Payment
to the holders of shares of Series B Preferred Stock will be made
before any payment is made or any assets distributed to holders of
Common Stock or any other class or series of the Company's capital
stock ranking junior as to liquidation rights to the Series B
Preferred Stock. The Series B Preferred Stock ranks, as to
liquidation rights, on a parity with the Series A Preferred Stock.

Redemption at Option of the Company. Shares of Series B
Preferred Stock are not redeemable prior to August 15, 1997. On and
after such date, the Series B Preferred Stock will be redeemable at
the option of the Company, in whole or, from time to time, in part, at
the following redemption prices per share, if redeemed during the
12-month period commencing on August 15, of the year indicated:

-26-<PAGE>
Years Price per Share

1997 $52.625
1998 52.250
1999 51.875
2000 51.500
2001 51.125
2002 50.750
2003 50.375
2004 and thereafter 50.000

plus in each case accrued and unpaid dividends to, but excluding, the
date of redemption.

Conversion. The holder of any shares of Series B Preferred Stock
will have the right, at the option of the holder, to convert any and
all shares of Series B Preferred Stock held by such holder into shares
of Common Stock at any time. Each share of Series B Preferred Stock
is convertible into that number of shares of Common Stock obtained by
dividing $50.00 by the conversion price in effect at the time. The
conversion price is $8.25 and is subject to adjustment upon certain
events, including (i) the issuance of Common Stock as a dividend or
distribution on the Common Stock; (ii) a combination, subdivision or
reclassification of the Common Stock; (iii) the issuance to all
holders of Common Stock of rights, options or warrants entitling them
to subscribe for or to purchase Common Stock at a price per share less
than the then current market price; and (iv) the distribution to all
holders of Common Stock of capital stock (other than Common Stock),
evidences of indebtedness of the Company, assets (excluding regular
periodic cash dividends), or rights, options or warrants to subscribe
for or to purchase securities of the Company. No adjustment will be
made to the conversion price unless such adjustment would require an
increase or decrease of at least one percent of such price.

Voting Rights. The holders of Series B Preferred Stock are not
entitled to vote except as described below or as required by law.
Shares of Series B Preferred Stock held by the Company or any entity
controlled by the Company do not have voting rights and are not
counted in determining the presence of a quorum. If dividends on the
Series B Preferred Stock are in arrears in an amount equal to at least
six quarterly dividend payments (whether or not consecutive), the
number of members of the Board will be increased by two and the
holders of Series B Preferred Stock, voting separately as a class,
will have the right to elect two additional directors to the Company's
Board during that period that such dividends remain in arrears.

The affirmative vote or consent of the holders of at least 66-2/3
percent of all outstanding shares of Series B Preferred Stock is
required for the Company (i) to amend, alter or repeal any provision
of the Certificate of Incorporation or By-laws of the Company so as to
affect adversely the relative rights, preferences, qualifications,
limitations or restrictions of the Series B Preferred Stock, (ii) to
authorize, issue or increase the authorized amount of any additional
class or series of stock, or any security convertible into stock of
such class or series, ranking senior to the Series B Preferred Stock
as to the payment of dividends or upon liquidation, dissolution or
winding up of the Company or (iii) to effect any reclassification of
the Series B Preferred Stock.

No Preemptive Rights. The Series B Preferred Stock does not have
any preemptive or subscription rights in respect of any securities of
the Company.

PROPOSALS FOR 1997 ANNUAL MEETING

The Company anticipates that the 1997 Annual Meeting of
Stockholders will be held on or about May 6, 1997. The exact date,
time and place for such meeting has yet to be determined. A
stockholder who intends to present a proposal at that Annual Meeting
should submit the written text of the proposal to the Company at its
principal executive offices by November 27, 1996, in order for the
proposal to be considered for inclusion in the Company's Proxy
Statement for that meeting.

-27-<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied
at the Commission's public reference facilities in the Commission's
regional offices located at: 7 World Trade Center, 13th Floor, New
York, New York 10048; and Suite 1400, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60604. Copies of such
material can be obtained at prescribed rates by writing to the
Securities and Exchange Commission, Public Reference Section,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company is also subject to the information and reporting requirements
of the securities regulatory authorities of certain provinces of
Canada and files similar reports, proxy statements and other
information with such authorities. The Common Stock is listed on the
New York and Toronto Stock Exchanges and certain warrants to purchase
Common Stock are listed on the American Stock Exchange. Such reports,
proxy statements and other information can also be inspected and
copied at the respective offices of these exchanges at 20 Broad
Street, New York, New York 10005, 2 First Canadian Place, Toronto,
Ontario, Canada M5X 1J2, and 86 Trinity Place, New York, NY
10006-1881.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

This Consent Solicitation Statement incorporates by reference
documents not presented herein or delivered herewith. Documents
incorporated by reference herein, excluding exhibits unless
specifically incorporated herein, are available without charge upon
request to Secretary, Amax Gold Inc., 9100 East Mineral Circle,
Englewood, Colorado 80112. Telephone requests may be directed to
Investor Relations at (303) 643-5375. In order to ensure timely
delivery of the documents, any request should be made by July __,
1996.

The following portions of the following documents are
incorporated herein by reference:

(i) "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 21-24 and "Financial
Statements and Supplementary Data" on pages 25-50 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, filed with the Commission on
March 29, 1996 (File No. 1-9620); and

(ii) "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 8-11 and "Financial
Statements and Supplementary Data" on pages 2-7 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, filed with the Commission on May 15,
1996.

All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, as amended, subsequent to the
date hereof and prior to July __, 1996 shall be deemed to be
incorporated herein by reference and to be a part hereof from the date
of such filing. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part
hereof, except as so modified or superseded.

-28-<PAGE>
APPENDIX A
CYPRUS AMAX GUARANTY

THIS GUARANTY, dated as of March 19, 1996 (this
"Agreement"), by CYPRUS AMAX MINERALS COMPANY, a Delaware
---------
corporation (the "Guarantor"), in favor of N M ROTHSCHILD & SONS
---------
LIMITED, a bank organized under the laws of England
("Rothschild"), in its capacity as the administrative agent for
----------
the Lender Parties (in such capacity, the "Administrative
--------------
Agent").
- -----

W I T N E S S E T H:

WHEREAS, pursuant to that certain Loan Agreement, dated as
of October 31, 1995 and amended as of December 7, 1995 and
pursuant to the Second Amendment Agreement (as so amended, the
"Loan Agreement"), among (1) Amax Gold Inc., a Delaware
--------------
corporation (the "Borrower"), (2) Fairbanks Gold Mining, Inc., a
--------
Delaware corporation, Guanaco Mining Company, Inc., a Delaware
corporation, Lassen Gold Mining, Inc., a Delaware corporation,
Melba Creek Mining, Inc., an Alaska corporation, and Nevada Gold
Mining, Inc., a Delaware corporation (collectively, the
"Principal Subsidiaries"), (3) Merrill Lynch Capital Corporation,
----------------------
a Delaware corporation ("Merrill Lynch"), ABN AMRO Bank N.V., a
-------------
bank organized under the laws of The Netherlands, Rothschild and
The Toronto-Dominion Bank, a bank organized under the federal
laws of Canada ("Toronto-Dominion"), as the Arrangers, (4) the
----------------
banks and other financial institutions party thereto
(collectively, the "Lenders"), (5) Merrill Lynch, as Syndication
-------
Agent for the Lenders, (6) Toronto-Dominion, as Documentation and
Technical Agent for the Lender Parties, (7) LaSalle National
Trust, N.A., a U.S. national banking association, as Collateral
Agent for the Lender Parties, and (8) Rothschild, as
Administrative Agent for the Lender Parties, the Lenders extended
Commitments to make Loans to the Borrower;

WHEREAS, the parties to the Loan Agreement have entered into
the Second Amendment Agreement thereto, dated as of March 19,
1996 (the "Second Amendment Agreement");
--------------------------

WHEREAS, the Guarantor owns as of the date hereof
approximately 51.2% of the issued and outstanding capital stock
of the Borrower and the Borrower owns, either directly or
indirectly, all of the outstanding shares of capital stock of the
Principal Subsidiaries;

<PAGE>
WHEREAS, in consideration of the Lender Parties agreeing to
the waivers and other transactions contemplated by the Second
Amendment Agreement, the Guarantor has agreed to enter into this
Agreement;

WHEREAS, the Guarantor will derive substantial direct and
indirect benefit from the waivers and other transactions
contemplated by the Second Amendment Agreement; and

WHEREAS, this Agreement is the Cyprus Amax Guaranty referred
to in the Second Amendment Agreement, and it is a condition
precedent to the effectiveness of the Second Amendment Agreement
that the Guarantor execute and deliver this Agreement;

NOW THEREFORE, for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged by the
Guarantor, the Guarantor undertakes and agrees, for the rateable
benefit of each Lender Party, as follows:

ARTICLE 1. DEFINITIONS; INTERPRETATION
---------------------------------------

SECTION 1.1. LOAN AGREEMENT TERMS; INTERPRETATION.
Capitalized terms used but not defined herein (including in the
preamble and recitals) have the meanings provided in the Second
Amendment Agreement. This Agreement is a Loan Document, and
shall be interpreted and construed in accordance with the terms
and provisions of the Second Amendment Agreement (including
Section 1.1 thereof).
- -----------

SECTION 1.2. DEFINED TERMS. In this Agreement (including
its preamble and recitals), the following capitalized terms shall
have the following meanings:

"Administrative Agent" is defined in the preamble.
-------------------- --------

"Agreement" is defined in the preamble.
--------- --------

"AS" is defined in clause (b)(i) of Section 3.3.
-- ------------- -----------

"Borrower" is defined in the first recital.
-------- -------------

"Guaranteed Obligations" is defined in clause (a) of
---------------------- ----------
Section 2.1.
- -----------

"Guarantor" is defined in the preamble.
--------- --------

"Guaranty" is defined in clause (a) of Section 2.1.
-------- ---------- -----------

"Insolvency Proceeding" is defined in clause (f)(ii) of
--------------------- --------------
Section 2.4.
- -----------

-2-<PAGE>
"Lenders" is defined in the first recital.
------- -------------

"Loan Agreement" is defined in the first recital.
-------------- -------------

"Merrill Lynch" is defined in the first recital.
------------- -------------

"Principal Subsidiaries" is defined in the first recital.
---------------------- -------------

"Rothschild" is defined in the preamble.
---------- --------

"Second Amendment Agreement" is defined in the second
-------------------------- ------
recital.
- -------

"Toronto-Dominion" is defined in the first recital.
---------------- -------------

ARTICLE 2. GUARANTY; OBLIGATIONS WITH RESPECT TO SALE/LEASEBACK
- ----------------------------------------------------------------
OF FORT KNOX ASSETS
-------------------

SECTION 2.1. GUARANTY OF THE BORROWER'S OBLIGATIONS.

(a) The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees (the "Guaranty"), for the rateable benefit
--------
of the Lender Parties, the full and punctual payment of principal
and interest from time to time outstanding under the Loan
Agreement (as such amounts may be reduced by any prepayment or
repayment made by the Borrower with the proceeds of the 1994
DOCLOC Facility or otherwise, but without prejudice to any right
or remedy of the Lender Parties with respect thereto) in
accordance with the stated maturities thereof (and not by way of
acceleration of any Obligation pursuant to Section 8.2 or 8.3 of
----------- ---
the Loan Agreement other than any such acceleration arising as a
result of any Event of Default under Section 8.1.15 of the Loan
--------------
Agreement) and all payments in respect of relevant Hedging
Agreements and Interest Rate Protection Agreements (including all
such amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, or
the operation of Sections 502(b), 502(d) and 506(b) of the
Bankruptcy Code, and any other similar provisions arising under
Applicable Law; all such amounts and other obligations being
hereinafter referred to as the "Guaranteed Obligations"). The
----------------------
Guarantor hereby further covenants to indemnify and hold harmless
each Lender Party for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Lender
Party in enforcing any rights under this Section.
Notwithstanding the foregoing, except with respect to any claim
made by any Lender Party under the Guaranty on or prior to the

-3-<PAGE>
Fort Knox Economic Completion Date and subject to Section 2.3,
-----------
the Guaranty shall terminate, and the Guarantor shall be released
from its obligations under the Guaranty and this Agreement on the
Fort Knox Economic Completion Date.

(b) The Guaranty constitutes a guaranty of payment when due
and not of collection, and the Guarantor specifically agrees that
it shall not be necessary or required that any Lender Party
exercise any right, assert any claim or demand or enforce any
remedy whatsoever against any Obligor or any other Person before
or as a condition to the obligations of the Guarantor under the
Guaranty and this Agreement.

(c) The Guarantor agrees that the Guaranteed Obligations
will be paid as contemplated by this Agreement, regardless of any
Applicable Law affecting any of such terms or the rights of any
Lender Party with respect thereto.

SECTION 2.2. REINSTATEMENT. The Guarantor agrees that the
Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment (in whole or in part) of
any of the Guaranteed Obligations is rescinded or must otherwise
be restored by any Lender Party, upon an Insolvency Default, all
as though such payment had not been made to such Lender Party;
provided, however, that for the avoidance of doubt, to the extent
- -------- -------
permitted by Applicable Law, if any payment is rescinded or
restored as aforesaid at any time after the Termination Date (as
defined in the Priority Agreement), the arrangements contemplated
by the Priority Agreement shall be reinstated.

SECTION 2.3. WAIVER. In addition to the other waivers
provided in this Agreement, the Guarantor hereby waives each of
the following to the fullest extent permitted by Applicable Law:

(a) all presentments, demands for performance, promptness,
diligence, notices of nonperformance, protests, notices of
protest, notices of dishonor, notices of acceptance of this
Agreement, and demands and notices of every kind with respect to
any of the Guaranteed Obligations and the Guaranty except for any
demand or notice expressly provided for in this Agreement;

(b) subject to the Priority Agreement, any requirement that
any Lender Party protect, secure, perfect or insure any Lien
securing any of the Guaranteed Obligations or the Guarantor's
performance of its obligations hereunder, or any property subject
thereto;

(c) all statutes of limitations as a defense to any action
or proceeding brought against the Guarantor by the Lender Parties
or any of them, to the fullest extent permitted by Applicable
Law;

-4-<PAGE>
(d) any right it may have (whether by contract, in equity
or at law) to require any of the Lender Parties to proceed
against, or proceed against or exhaust any security held from,
any Obligor or any other Person (including any other guarantor or
surety of all or any of the Guaranteed Obligations) or any
collateral securing any of the Guaranteed Obligations or the
Guarantor's performance of its obligations hereunder, or to
pursue any other remedy in such Lender Party's power to pursue
and which would lighten the Guarantor's burden;

(e) any defense based on any claim that the Guarantor's
obligations exceed or are more burdensome than those of any
Obligor;

(f) any defense based on: (i) any legal disability of the
Borrower or any other Obligor, (ii) any release, discharge,
modification, impairment or limitation of the liability of the
Borrower or any other Obligor to any of the Lender Parties from
any cause, whether consented to by the Administrative Agent or
any of the other Lender Parties, or arising by operation of
Applicable Law or from any bankruptcy or other voluntary or
involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships (any such proceeding, an
"Insolvency Proceeding") including any Insolvency Proceeding
---------------------
which results in the delay or modification of the stated maturity
of payments (or the amounts thereof) of the Loans pursuant to the
Loan Agreement, and (iii) any rejection or disaffirmance of any
or all of the Guaranteed Obligations, or any security held for
such Guaranteed Obligations, in any such Insolvency Proceeding;

(g) any defense based on any action taken or omitted by the
Administrative Agent or any of the other Lender Parties in any
Insolvency Proceeding involving the Borrower or any other
Obligor, including any election to have such Lender Party's claim
allowed as being secured, partially secured or unsecured, any
extension of credit by any of the Lender Parties to the Borrower
or any other Obligor in any Insolvency Proceeding, and the taking
and holding by any of the Lender Parties of any security for any
such extension of credit;

(h) any defense based on or arising out of any defense that
the Borrower may have to the payment or performance of the
Guaranteed Obligations or any part of them; and

(i) all other suretyship defenses and rights of every kind
or nature otherwise available under Applicable Law.

SECTION 2.4. SALE/LEASEBACK OF FORT KNOX ASSETS. Upon the
occurrence of any Event of Default permitting or requiring
acceleration of any of the Obligations pursuant to Section 8.2 or
-----------
8.3 of the Loan Agreement, or upon default by the Borrower (or
- ---

-5-<PAGE>
Fairbanks Gold) in the performance of any of its obligations
pursuant to the Permitted Fort Knox Sale-Leaseback if as a
consequence of any such default by the Borrower (or Fairbanks
Gold) the lessor of any of the relevant equipment shall elect to
exercise any of its remedies as a consequence thereof, the
Guarantor will immediately, upon the request of the
Administrative Agent, issue in favor of the lessor under the
Permitted Fort Knox Sale-Leaseback an unconditional and
irrevocable guaranty of all of the obligations of the Borrower
(or Fairbanks Gold) in connection therewith in form and substance
reasonably satisfactory to the Administrative Agent (acting in
consultation with the Required Lenders); provided, however, that
-------- -------
the obligations of the Guarantor to the Lender Parties to
maintain such guaranty shall be discontinued in the event that
the Guarantor shall have fully discharged the Borrower's (or
Fairbanks Gold's) obligations with respect to the Permitted Fort
Knox Sale-Leaseback or shall have arranged for equipment of a
substantially similar nature to that subject to the Permitted
Fort Knox Sale-Leaseback to be delivered to the Borrower (or
Fairbanks Gold) at the Fort Knox Mine free and clear of all Liens
and such equipment shall actually have been delivered within 180
days after the implementation of such arrangement.

ARTICLE 3. PROVISIONS OF GENERAL APPLICATION
---------------------------------------------

SECTION 3.1. OBLIGATIONS ABSOLUTE, ETC. Subject to
Section 2.3, this Agreement shall remain in full force and effect
- -----------
until the earlier to occur of the Fort Knox Economic Completion
Date and the payment in full of the Guaranteed Obligations. The
liability of the Guarantor under this Agreement shall be
absolute, unconditional and irrevocable irrespective of:

(a) any lack of validity, legality or enforceability of the
Loan Agreement or any other Operative Document;

(b) the failure of any Lender Party:

(i) to assert any claim or demand or to enforce any
right or remedy against any other guarantor or surety of all
or any of the Guaranteed Obligations, the Borrower, any
guarantor under any Principal Subsidiary Guaranty or any
other Person under the provisions of the Loan Agreement or
any other document, instrument or agreement related thereto,
or otherwise; or

(ii) to exercise any right or remedy against any other
guarantor or surety of, or collateral (whether pursuant to
any Security Document, any Principal Subsidiary Guaranty or
otherwise) securing, the Guaranteed Obligations;

-6-<PAGE>
(c) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the
Guaranteed Obligations or any other extension, compromise or
renewal of any Guaranteed Obligation;

(d) any reduction, limitation, impairment or termination of
any Guaranteed Obligation for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall
not be subject to (and the Guarantor hereby waives any right to
or claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of or
any other event or occurrence affecting, any Obligation of any
Obligor or otherwise;

(e) any amendment to, rescission, waiver or other
modification of, or any consent to departure from, any of the
terms of the Loan Agreement, any Principal Subsidiary Guaranty or
any other Operative Document;

(f) any addition, enforcement, exchange, change in the
priorities relating to, release, abandonment, liquidation,
surrender or non-perfection of any collateral granted pursuant to
any Security Document securing performance of all or any of the
Guaranteed Obligations or the Guaranty or any other obligations
of the Guarantor arising pursuant to this Agreement, or any
amendment to or waiver or release or addition to, or consent to
departure from, any other guaranty held by any Lender Party
securing any of the Guaranteed Obligations; or

(g) any other circumstance which might otherwise constitute
a defense available to, or a legal or equitable discharge of, any
Obligor, any guarantor under any Principal Subsidiary Guaranty,
or any other surety or any guarantor.

The Guarantor agrees that the Guaranty is an "instrument for
the payment of money only" within the meaning of Section 3213 of
the New York Civil Practice Law and Rules.

SECTION 3.2. RIGHTS OF LENDER PARTIES. The Guarantor
authorizes each of the Lender Parties to perform any or all of
the actions described or implied in Section 3.1 and in addition,
-----------
the following actions at any time, in each case, in its sole
discretion, all without notice to the Guarantor and without
affecting the Guarantor's obligations under this Agreement:

(a) Any Lender Party may, subject to the Priority
Agreement, direct the order and manner of any sale of all or any
part of any security now or later to be held for any of the
Guaranteed Obligations or the Guarantor's obligations under this

-7-<PAGE>
Agreement, and such Lender Party may also bid and purchase at any
such sale.

(b) Subject to the provisions of Section 4.13 of the Loan
------------
Agreement and the Priority Agreement, any Lender Party may accept
and apply any payments or recoveries from the Borrower, the
Guarantor or any other source, and any proceeds of any security,
to the Guaranteed Obligations in such manner, order and priority
as such Lender Party may elect, whether or not those obligations
are guarantied by this Agreement or secured at the time of the
application.

(d) In addition to the Loans, any one or more of the Lender
Parties may extend any other credit to any Obligor, and may take
and hold security for the credit so extended, all without
affecting the Guarantor's liability under this Agreement or the
obligations of any other guarantor under any Principal Subsidiary
Guaranty to which it is a party.

SECTION 3.3. WAIVERS OF SUBROGATION AND OTHER RIGHTS.

(a) If any default by the Guarantor under this Agreement
shall have occurred and be continuing, but at all times subject
to the Priority Agreement, the Lender Parties, in their sole
discretion, with prior notice to the Guarantor, may elect to:
(i) foreclose either judicially or nonjudicially against any real
or personal property security held for the Guaranteed
Obligations, (ii) accept a transfer of any such security in lieu
of foreclosure, (iii) compromise or adjust any of the Guaranteed
Obligations or any part of any Guaranteed Obligation or any
guarantor or surety of any of the Guaranteed Obligations or
(iv) exercise any other remedy against the Guarantor or any
security. Subject to the Priority Agreement, no such action by a
Lender Party shall release or limit the liability of the
Guarantor, who shall remain liable under this Agreement after the
action, even if the effect of the action is to deprive the
Guarantor of any subrogation rights, rights of indemnity, or
other rights to collect reimbursement from the Borrower or any
Principal Subsidiary for any sums paid to any of the Lender
Parties, whether contractual or arising by operation of
Applicable Law or otherwise. Subject to the Priority Agreement,
the Guarantor expressly agrees that under no circumstances shall
it be deemed to have any right, title, interest or claim in or to
any real or personal property to be held by any of the Lender
Parties or any third party after any foreclosure or transfer in
lieu of foreclosure of any security for the Guaranteed
Obligations.

-8-<PAGE>
(b) Regardless of whether the Guarantor may have made any
payments to any Lender Party, the Guarantor waives, subject to
the Priority Agreement, until the prior payment, in full and in
cash, of all Guaranteed Obligations:

(i) all rights of subrogation and reimbursement, all
rights of indemnity, and any other rights to collect
reimbursement from the Borrower or any Principal Subsidiary
for any sums paid to any Lender Party, whether contractual
or arising by operation of Applicable Law (including under
Alaska Statutes ("AS") 45.03.419, Sections 2847 or 2848 of
--
the California Civil Code, under any provisions of the
United States Bankruptcy Code, or any successor or similar
statutes) or otherwise,

(ii) all rights to enforce any remedy that any Lender
Party may have against the Borrower or any Principal
Subsidiary, and

(iii) all rights to participate in any security now or
later to be held by any Lender Party for any of the
Guaranteed Obligations. The Guarantor further agrees that,
to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is
found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation,
reimbursement, indemnification and contribution the
Guarantor may have against the Borrower or any Principal
Subsidiary or against any collateral or security, shall be
junior and subordinate, and to all right, title and interest
any Lender Party may have in any such collateral or
security. If any amount shall be paid to the Guarantor on
account of any such subrogation, reimbursement,
indemnification or contribution rights at any time when all
of the Guaranteed Obligations have not been paid or
otherwise performed in full, such amount shall be held in
trust for the Lender Parties and shall forthwith be paid
over to the Lender Parties to be credited and applied
against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Loan
Documents (including Section 4.13 of the Loan Agreement).

(c) THE GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING
OUT OF AN ELECTION OF REMEDIES BY ANY OF THE LENDER PARTIES
(SUBJECT TO THE PRIORITY AGREEMENT), EVEN THOUGH THAT ELECTION OF
REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO
SECURITY FOR A GUARANTEED OBLIGATION, HAS DESTROYED THE
GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AGAINST THE
BORROWER OR ANY PRINCIPAL SUBSIDIARY BY THE OPERATION OF

-9-<PAGE>
APPLICABLE LAW, INCLUDING AS 45.03.605 OR SECTION 580d OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE OR OTHERWISE.

(d) The Guarantor understands and acknowledges that if the
Lender Parties foreclose, subject to the Priority Agreement,
judicially or nonjudicially against any real property security
for any of the Guaranteed Obligations, that foreclosure could
impair or destroy any ability that the Guarantor may have to seek
reimbursement, contribution or indemnification from the Borrower
or any Principal Subsidiary or others based on any right the
Guarantor may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by the Guarantor under this
Agreement. The Guarantor further understands and acknowledges
that in the absence of the waivers by the Guarantor set forth in
this Section, such potential impairment or destruction of the
Guarantor's rights, if any, might entitle such Guarantor to
assert a defense to this Agreement based on AS 45.03.605, Section
580d of the California Code of Civil Procedure as interpreted in
Union Bank v. Gradsky, 265, Cal. App.2d 40 (1968) or other
- ---------------------
Applicable Law. With such understanding and without limitation
on any of the foregoing provisions of this Section, by executing
this Agreement, pursuant to AS 45.03.605(h) or other Applicable
Law, the Guarantor freely, irrevocably and unconditionally (but
subject to the Priority Agreement):

(i) waives and relinquishes that defense and agrees
that the Guarantor will be fully liable under this Agreement
even though the Lender Parties may foreclose judicially or
nonjudicially against any real property security for the
Guaranteed Obligations;

(ii) agrees that the Guarantor will not assert that
defense in any action or proceeding which a Lender Party may
commence to enforce this Agreement;

(iii) acknowledges and agrees that the rights and
defenses waived by the Guarantor in this Agreement include
any right or defense that the Guarantor may have or be
entitled to assert based upon or arising out of any one or
more of the circumstances set forth in AS 45.03.605 or
Sections 580a, 580b, 580d or 726 of the California Code of
Civil Procedure of Section 2848 of the California Civil Code
(including any defense that any exercise by the Lender
Parties of any right or remedy hereunder or under the Loan
Documents violates, or would, in combination with the
previous or subsequent exercise by the Guarantor of any
rights of subrogation, reimbursement, contribution or
indemnification against the Borrower or any Principal
Subsidiary or any other Person, directly or indirectly
result in, or be deemed to be, a violation of any of such
statutory provisions); and

-10-<PAGE>
(iv) acknowledges and agrees that each of the Lender
Parties is relying on this waiver in entering into the
Second Amendment Agreement, and that this waiver is a
material part of the consideration which each of the Lender
Parties is entering into the Second Amendment Agreement.

(e) Based on the representations and warranties of the
Guarantor set forth herein, the Guarantor hereby forever and
completely waives any right the Guarantor might otherwise have to
assert or claim, as part of a defense against any action taken by
any Lender Party against the Guarantor under this Agreement after
a Lender Party shall have, subject to the Priority Agreement,
completed an action against the Borrower or another Obligor for
the enforcement of any of the Guaranteed Obligations, that such
action against the Guarantor is barred by operation of California
Civil Code Section 7260 or any "one action" or "one form of
action" statute (or any similar Applicable Law limiting a
creditor's remedies or the manner in which such remedies may be
enforced) on the theory that this Agreement and the Loan
Agreement are part and parcel with the Guaranteed Obligations as
one integrated transaction, rather than related but separate and
distinct transactions, or on the theory that any Obligor is the
alter ego of the Guarantor or the Guarantor is the alter ego of
any Obligor.

(f) Without limitation on any of the other waivers of the
Guarantor hereunder, the Guarantor hereby specifically waives the
benefit of (and any and all rights arising out of) California
Civil Code Section 2845, or any similar statute arising under
Applicable Law, which gives a guarantor or surety the power to
require a creditor to proceed against the principal, or to pursue
any other remedy in the creditor's power which the guarantor or
surety can not pursue, and which would lighten the guarantor's or
the surety's burden.

(g) The covenants and waivers of the Guarantor contained in
this Section shall survive termination of this Agreement and are
made for the benefit of each of the Lender Parties, the Borrower,
the Principal Subsidiaries and any other person against whom the
Guarantor shall at any time have any rights of subrogation,
reimbursement, contribution or indemnification with respect to
the Guarantor's obligations under this Agreement. The covenants
and waivers of the Guarantor contained in this Section are in all
cases subject to the Priority Agreement.

SECTION 3.4. CONSENT OF GUARANTOR. Prior to the Fort Knox
Economic Completion Date, the Administrative Agent shall not
enter into any amendment to, waiver or other modification of, or
give any consent to a departure from, any of the material terms
of the Loan Agreement, any Principal Subsidiary Guaranty or any

-11-<PAGE>
other Operative Document without the prior written consent of the
Guarantor.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES
------------------------------------------

In order to induce the Lender Parties to enter into the
Second Amendment Agreement and, in the case of the Lenders, to
make, maintain, continue and/or convert Loans, the Guarantor
represents and warrants unto the Administrative Agent (for the
rateable benefit of the Lender Parties) as set forth in Sections
--------
4.01, 4.02, 4.03 and 4.04 of the Competitive Advance Facility
- ---- ---- ---- ----
Agreement as in effect on the Amendment Effective Date with the
intent that references therein to "this Agreement", "Loan
Documents" and the like shall be deemed to be references to this
Agreement and the Priority Agreement. The representations and
warranties set forth in this Section shall be made upon the date
hereof, the Amendment Effective Date and the delivery of each
Borrowing Request.

ARTICLE 5. COVENANTS
---------------------
Cyprus Amax agrees with the Administrative Agent (for the
rateable benefit of the Lender Parties) that, at all times on or
prior to the Fort Knox Economic Completion Date, it will perform
the obligations set forth in Sections 7.01 and 7.05 of the
------------- ----
Competitive Advance Facility Agreement as in effect on the
Amendment Effective Date with (a) references to this "Agreement"
being deemed to be references to the Loan Agreement and the other
Loan Documents and (b) references to the "Required Lenders" being
deemed to be references to the Required Lenders under the Loan
Agreement.

ARTICLE 6. MISCELLANEOUS
-------------------------

SECTION 6.1. WAIVERS, AMENDMENTS, ETC. The provisions of
this Agreement may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing
and consented to by the Guarantor and the Administrative Agent
(acting with the approval of the Required Lenders or all the
Lenders, as may be required pursuant to the Loan Agreement).

No failure or delay on the part of the Administrative Agent
in exercising any power or right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No
notice to or demand on the Guarantor in any case shall entitle it
to any notice or demand in similar or other circumstances. No

-12-<PAGE>
waiver or approval by the Administrative Agent under this
Agreement shall, except as may be otherwise stated in such waiver
or approval, be applicable to subsequent transactions. No waiver
or approval hereunder shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder.

SECTION 6.2. NOTICES. All notices and other communications
provided to any party hereto under this Agreement shall be in
writing and sent by hand delivery, courier delivery, first class
prepaid post, telex (if the receiving party shall have telex
facilities) or facsimile and addressed or delivered to it at its
address set forth below its signature hereto and designated as
its "Address for notices" or at such other address as may be
designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with first class postage
prepaid, shall be deemed given when delivered; any notice, if
sent by hand or courier delivery, shall be deemed given when
delivered; and any notice, if transmitted by telex or facsimile,
shall be deemed given when transmitted (answerback received at
both the beginning and the end of the relevant transmission in
the case of telexes and transmission completed and confirmed by
the sending facsimile machine in the case of facsimiles).

SECTION 6.3. SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto (and in the case of the Administrative Agent, to the
rateable benefit of the Lender Parties) and their respective
successors and assigns; provided, however, that:
-------- -------

(a) the Guarantor may not assign, delegate or transfer its
rights or obligations hereunder without the prior written consent
of the Administrative Agent and all the Lenders; and

(b) the rights of sale, assignment and transfer of the
Agents and the Lenders are subject to Article 9 and Section 10.11
--------- -------------
of the Loan Agreement.

SECTION 6.4. SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity
or enforceability of such provision in any other jurisdiction.

SECTION 6.5. HEADINGS. The various headings of this
Agreement are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or any provisions
hereof or thereof.

-13-<PAGE>
SECTION 6.6 GOVERNING LAW; ENTIRE AGREEMENT.

(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

(b) Upon the Amendment Effective Date, except with respect
to the Borrower's obligations to indemnify and pay the costs and
expenses of the Underwriters as set forth in the Commitment
Letter, this Agreement, together with the other Loan Documents,
constitutes the entire understanding between the parties hereto
with respect to the subject matter hereof and supersedes any
prior agreements, written or oral, with respect thereto
(including the Commitment Letter (except as aforesaid), the
Indicative Summary Terms for $250,000,000 Senior Term Loan
Facility, dated August 15, 1995, and the Information Memorandum).

SECTION 6.7. FORUM SELECTION AND CONSENT TO JURISDICTION,
WAIVER OF IMMUNITY. ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR THE GUARANTOR
MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF NEW
YORK, BOROUGH OF MANHATTAN, OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND IN ADDITION ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY OF THE GUARANTOR
MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE LOCATED OR
DEEMED LOCATED. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF
ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. SERVICE OF PROCESS MAY BE MADE UPON THE GUARANTOR BY
MAILING OR DELIVERING A COPY OF SUCH PROCESS TO IT IN CARE OF THE
PROCESS AGENT AT THE PROCESS AGENT'S ADDRESS AND THE GUARANTOR
HEREBY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
ANY SUIT, ACTION OR PROCEEDING IN NEW YORK ARISING OUT OF THIS
AGREEMENT BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS
ADDRESS FOR NOTICES SET FORTH BELOW ITS SIGNATURE HERETO. THE
GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

-14-<PAGE>
SECTION 6.8. Waiver of Jury Trial. EACH OF THE
ADMINISTRATIVE AGENT, ON BEHALF OF THE OTHER LENDER PARTIES, AND
THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT OR ANY OTHER LENDER PARTY, THE
GUARANTOR, AND ANY AND ALL OTHER GUARANTORS OR SURETIES OF ALL OR
ANY OF THE GUARANTEED OBLIGATIONS. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS
AGREEMENT.

SECTION 6.9. INCORPORATION OF MISCELLANEOUS PROVISIONS.
The parties hereto agree that the provisions of Sections 4.6
------------
(Taxes), 4.7 (Mitigation), 4.8 (Payments, Computations, etc.),
--- ---
4.9 (Proration of Payments), 4.10 (Miscellaneous Provisions for
- --- ----
Payments in Gold) and 4.11 (Setoff), and the last sentence of
----
Section 10.11.2 (Participations) of the Loan Agreement shall
- ---------------
apply mutatis mutandis to the Guarantor as if set forth herein
------- --------
except that references to an "Obligor" or the like shall be
deemed to be references to the Guarantor.

-15-<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the day and year first
above written.

The Guarantor:
-------------

CYPRUS AMAX MINERALS COMPANY

By: /s/ Francis J. Kane
-------------------------------------
Name Printed: Francis J. Kane
---------------------------
Title: Vice President, Investor
----------------------------------
Relations and Treasurer

Address for notices:

9100 East Mineral Circle
Englewood
Colorado 80112
USA

Attention:
------------------------------
Facsimile No.: [ ]
-----------------------
Telex No.: [ ]
---------------------------
(Answerback [ ])
-------------------------

-16-<PAGE>
The Administrative Agent:

per pro N M ROTHSCHILD & SONS
LIMITED

By: /s/ Andrew Wright
-------------------------------------
Name Printed: Andrew Wright
---------------------------
Title: Assistant Director
----------------------------------

By: /s/ D.R. Beadle
-------------------------------------
Name Printed: D.R. Beadle
---------------------------
Title: Assistant Director
----------------------------------

Address for notices:

New Court
St. Swithin's Lane
London EC4P 4DU
England

Attention: Dr. Michael A. Price
Facsimile No.: 44-171-280-5679
Telex No.: 888031

-17-
<PAGE>
APPENDIX B
CREDIT AGREEMENT

This Credit Agreement, dated as of March 19, 1996 ("Agreement"),
by and between Amax Gold Inc., a Delaware corporation (the
"Borrower"), and Cyprus Amax Minerals Company, a Delaware corporation
(the "Lender");

WITNESSETH:

WHEREAS, on the date of this Agreement the Lender indirectly owns
shares of the Borrower's common stock, par value $0.01 per share
("Common Stock") constituting approximately 51.2% of the Borrower's
outstanding Common Stock;

WHEREAS, the Borrower needs financial support from the Lender to
finance increases in actual and projected capital expenditures
necessary to construct and develop the Fort Knox mine and to provide
working capital, and the Lender is willing to provide to the Borrower
up to $250,000,000 of financing for such needs and for general
corporate purposes, on the terms of this Agreement;

WHEREAS, each party has determined, after consulting with an
independent investment banking firm, that it is in the best interest
of such party that such financing from the Lender be provided on the
terms and conditions set forth in this Agreement;

WHEREAS, the Borrower and the Lender each have had the
transactions contemplated by this Agreement approved by its Board of
Directors (and the Borrower having had such transactions approved
separately by the Special Committee of the Borrower's Board of
Directors, which consists solely of those Directors who are
unaffiliated with the Lender);

NOW THEREFORE, the parties hereby agree to the following terms
and conditions:

ARTICLE I

AMOUNTS AND TERMS OF THE LOAN

SECTION 1.01 Amount of Credit. Subject to the terms and
conditions hereof, the Lender agrees to make one or more loans
(individually a "Loan" and collectively the "Loans") to the Borrower
from time to time during the period that commences on the date hereof
and ends on the earlier of (i) December 31, 2001 or (ii) the date on
which the Lender notifies Borrower that Loans will no longer be made
available hereunder (the expiration date determined by (i) or (ii) is
herein called the "Expiration Date"), in an aggregate principal amount
up to but not exceeding at any one time outstanding the sum of
$250,000,000 (the "Maximum Loan Amount"). During such period the
Borrower may borrow, pay and prepay in whole or in any part, all in
accordance with the terms and conditions hereof. Each borrowing and
cash prepayment of principal, if any, shall be in an amount equal to
an integral multiple of $1,000,000.

SECTION 1.02 Making the Loans. The Borrower shall give the Lender
notice of each borrowing hereunder not later than 11:00 a.m. Denver,
Colorado, time at least two (2) Business Days prior to the date a Loan
is requested to be made, specifying the inception date, the amount
thereof and the initial Interest Period for such Loan.

<PAGE>
The Lender shall have no obligation to make any Loans hereunder. The
Lender shall advise the Borrower prior to the end of the Business Day
prior to the date upon which a Loan is requested to be made whether
the Lender has agreed to make the Loan. If the Lender agrees to make a
Loan hereunder, the Lender will arrange the Loan and confirm the
details in writing to the Borrower. On the inception date of the
borrowing, the Lender will make the proceeds of the Loan available to
the Borrower in immediately available funds at the Borrower's account
with Chemical Bank, New York (or any successor thereto), or as the
Borrower may otherwise direct in such notice.

Without regard to the applicable Interest Period of any Loan, the
Loans hereunder shall be payable upon demand by Lender specifying the
amount of Loans to be repaid and the date of payment.

The Loans to the Borrower shall be evidenced by a grid Note of
the Borrower substantially in the form of Exhibit A hereto (the
"Note"). The Note will evidence the obligation of the Borrower to pay
the aggregate unpaid principal amount of all Loans made by the Lender
upon demand by the Lender pursuant to Section 1.01 of this Agreement,
together with all accrued interest on such Loans. Entries made on the
grid schedules of the Note by the Lender reflecting borrowings,
payments and interest rate calculations under this Agreement shall
constitute, absent proven error, prima facie evidence of the
transactions represented by such entries. The Note shall (i) be dated
the date of the initial Loan hereunder, (ii) be payable in accordance
with its terms and the terms of this Agreement and (iii) evidence the
obligation of the Borrower to pay interest on each Loan made hereunder
from the date of such Loan on the unpaid principal amount thereof
outstanding from time to time, calculated in accordance with the
provisions of Section 1.03 and the outstanding principal amount of
such Loan in accordance with Section 1.06 or Section 1.07 of this
Agreement pursuant to the repayment notice given by the Borrower under
the applicable section of this Agreement. Except for the payment
referenced in Section 1.07 hereof, the Borrower shall make each
payment (including any cash prepayment) hereunder and under the Note,
not later than the close of business of the day when due by wire
transfer, in lawful money of the United States of America to the
Lender, at its address referred to in Section 7.02 or as otherwise
directed by the Lender, in immediately available funds.

SECTION 1.03 Payment of Interest. Each Loan made by the Lender
pursuant to this Agreement shall bear interest on the principal
balance thereof from time to time unpaid at an annual rate equal to
the LIBOR Rate (as defined herein) for the interest period selected by
the Borrower at its option for a period of one, three or six months,
or such other periods as are agreed between the Borrower and the
Lender (each, an "Interest Period"), and as set forth in the notice of
borrowing referred to in Section 1.02 hereof or the notice of Interest
Period selection referred to in Section 1.05 hereof, as the case may
be, plus 2.25% per annum, except as otherwise provided in this
Section. Interest on each Loan shall be due and payable in full on the
earlier of (i) last day of the Interest Period applicable to such Loan
and (ii) the date upon which the Lender demands that the Loan be
repaid, and, in the case of any Interest Period in excess of three
months, at the end of each calendar quarter occurring during the term
thereof. The term "LIBOR Rate" shall have the meaning ascribed to it
in the Revolving Credit Agreement, dated as of April 15, 1994, between
the Lender and the Borrower, whether or not such Agreement shall have
been terminated at the time of such interest calculation. If the
Borrower fails to make any payment to the Lender of the principal of
or interest on any Loan when such payment becomes due, such Loan shall
accrue interest at a rate that is 1.0% per annum higher than the rate
otherwise payable with respect to such Loan and such higher rate shall
continue until such default in payment by the Borrower is cured. All
computations of interest under the Note shall be made by the Lender on
the basis of a year of 360 days, consisting of twelve 30-day months,
for the actual number of days (including the first day but excluding
the last day) elapsed.

SECTION 1.04 Prepayments in Cash. On any interest payment date,
or as otherwise agreed by the Lender, the Borrower may make cash
prepayments of principal of one or more Loans (which Loans shall be
designated by the Borrower) in an amount equal to an integral multiple
of $1,000,000, and shall be made without premium or penalty, but
together with interest accrued, if any, on the amount of each prepaid
Loan (at the interest rate

-2-<PAGE>
applicable to such Loan) to the date of prepayment and shall be
applied to the Loans as requested by the Lender. The Borrower shall
give Lender at least ten (10) Business Days notice of any such
prepayment; provided, that, if the Lender shall require additional
time to obtain the approvals that are necessary to elect to accept
such payment in Common Stock pursuant to Section 1.07, the Lender may
extend such payment date for a reasonable period of time. All such
cash payments shall be made by wire transfer in immediately available
funds to an account designated by the Lender.

SECTION 1.05 Interest Period Selection. The Borrower shall have
the option to select a new Interest Period for each Loan, which period
shall take effect at the end of the then current Interest Period with
respect to such Loan. The Borrower shall give the Lender notice of
such Interest Period selection pursuant to this Section 1.05 not later
than 11:00 a.m. Denver, Colorado, time at least two (2) Business Days
prior to the last day of the applicable Interest Period, specifying
the new Interest Period for such Loan. If the Borrower does not
deliver such notice of Interest Period selection to the Lender as set
forth herein, the Interest Period for such Loan shall be the same
number of months as the immediately preceding Interest Period for such
Loan. The selection of a subsequent Interest Period shall not be
deemed to constitute a new Loan for purposes of this Agreement.

SECTION 1.06 Payment on Non-Business Days. Whenever any payment
to be made hereunder or under the Note shall be stated to be due on a
date which is a Saturday, Sunday or a public holiday or the equivalent
for Lender or for banks generally under the laws of the State of
Colorado (any other day being a "Business Day"), such payment may be
made on the next succeeding Business Day and such extension of time
shall in such case be included in the computation of interest due.

SECTION 1.07 Payment in Common Stock. At the Lender's election,
which may be exercised by its giving written notice to the Borrower at
least two (2) Business Days prior to the date (i) upon which the
Lender has demanded payment of the Note, (ii) upon which any interest
payment is due, or (iii) on which any repayment or prepayment of the
Note is to be made in accordance with Section 1.04 (unless such date
is extended for a reasonable period of time by the Lender at the
Lender's election), the Lender may require the Borrower to issue to
the Lender Common Stock in lieu of a payment of amounts outstanding
under the Note; provided, that such issuance shall be subject to (a)
the acceptance by the New York Stock Exchange (the "NYSE") of a
listing application for the issuance of shares of Common Stock of the
Borrower therefor and (b) shareholder approval by the shareholders of
the Borrower as to such issuance. The number of shares of Common Stock
that shall be issued shall be equal to (I) the dollar amount of
payment demanded or due on such date divided by (II) the Average
Market Price (as defined below). The "Average Market Price" shall
equal the average of the closing prices of the Common Stock on the
NYSE over the five (5) NYSE trading days ending on the Business Day
prior to the date that such demand is made, provided, that such
Average Market Price shall be subject to adjustment for extraordinary
dividends or distributions, stock splits, stock dividends and similar
capital events occurring during such five (5) NYSE trading-day period.

SECTION 1.08 Regulatory Approvals. As a condition precedent to
issuing any Common Stock to the Lender pursuant to Section 1.07
hereof, the Borrower shall have obtained all authorizations and
approvals of, and all other actions required to be taken by, any
applicable governmental authority or regulatory body or stock exchange
and shall have given all notices to, and made all filings with, any
such governmental authority or regulatory body or stock exchange, that
may be required in connection with such issuance of such Common Stock.

SECTION 1.09 Failure to Obtain Regulatory Approvals. In the event
the Borrower is unable to obtain all authorizations and approvals
required for the issuance of any Common Stock pursuant to Section 1.08
hereof, such failure shall not constitute a default. If the Common
Stock was to be issued to pay an interest or principal payment due
under the Note, such payment shall be made by the Borrower in
immediately available funds on the date such payment is due in
accordance with Section 1.03 or 1.04 of this Agreement, as the case
may be, and the Note.

-3-<PAGE>
ARTICLE II

CONDITIONS OF LENDING

SECTION 2.01 Conditions Precedent to Making the Initial Loan. The
obligation of the Lender to make the initial Loan is subject to the
following conditions precedent:

(a) The Lender shall have received on or before the day the
initial Loan is made all of the following, in form and substance
reasonably satisfactory to the Lender:

(i) The Note duly executed by the Borrower;

(ii) Copies of the borrowing resolutions of the
Board of Directors of the Borrower authorizing the execution
and delivery of this Agreement and the Note as well as the
Borrower's performance of all of the covenants, obligations
and other undertakings of the Borrower contemplated by this
Agreement and the Note and of all documents evidencing other
necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the Note, certified
by the Secretary or an Assistant Secretary of the Borrower;

(iii) A certificate of the Secretary or an
Assistant Secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized
to sign this Agreement and the Note and any other documents
to be delivered hereunder;

(iv) A favorable opinion of counsel of the
Borrower, as to matters referred to in Section 3.01 of this
Agreement; and

(v) A Notice of Borrowing under Section 1.02.

(b) On the date of such Loan the following statements shall
be true:

(i) The representations and warranties of the
Borrower contained in Section 3.01 are true and correct in
all material respects and shall be deemed to have been made
on and as of the date of such Loan (or of a subsequent Loan
for the purposes of Section 2.02);

(ii) No event has occurred and is continuing, or
would result from such Loan (or from a subsequent Loan for
the purposes of Section 2.02), which constitutes an Event of
Default (as defined in Article V) or would constitute an
Event of Default but for the requirement that notice be
given or time elapse or both; and

SECTION 2.02 Conditions Precedent to Subsequent Loans. The
obligation of the Lender to make each subsequent Loan is subject to
the conditions precedent that on the date of any such subsequent Loan
the statements made in Section 2.01(b)(i) and (ii) shall be true.

-4-<PAGE>
ARTICLE III

REPRESENTATIONS AND WARRANTIES

SECTION 3.01 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power to execute,
deliver and perform its obligations under this Agreement and the
Note.

(b) The execution, delivery and performance by the Borrower
of this Agreement and the Note have been, or in the case of the
issuance of Common Stock will be on or prior to the date of
issuance, duly authorized by all necessary corporate action
(including authorization of the Board of Directors of the
Borrower to issue the Common Stock required to be issued pursuant
to Articles of this Agreement) and do not (and, in the case of
the Common Stock, such Common Stock will not at the time the same
is to be issued):

(i) violate any provision of the Certificate of
Incorporation, as amended, or By-Laws of the Borrower or any
law, order, writ, judgment, decree, determination or award,
in each case as presently in effect and having applicability
to the Borrower; or

(ii) result in a breach of or constitute a default
under any material indenture, bank loan agreement, credit
agreement, bullion loan or other material agreement to which
the Borrower is a party or by which any of its properties or
the properties of any of its Subsidiaries, are presently
bound. As used in this Agreement, the term "Subsidiary"
shall mean, as to the Borrower, any corporation of which at
least a majority of the outstanding shares of stock, having
by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency), is at the time directly or indirectly owned or
controlled by the Borrower or one of more of its
Subsidiaries.

(c) No authorization or approval of, or other action by,
and no notice to or filing with, any governmental authority or
regulatory body, other than the Securities and Exchange
Commission ("SEC"), is required for the due execution, delivery
and performance by the Borrower of this Agreement (except for
such notices, any necessary shareholder approvals, registrations,
stock exchange listings or filings as may be required in
connection with issuing the Common Stock) or the Note.

(d) This Agreement is, and the Note when executed and
delivered will be, legal, valid and binding obligations of the
Borrower enforceable against it in accordance with their
respective terms (subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles).

(e) The Common Stock, when issued in accordance with the
terms of this Agreement will be validly issued, fully paid and
nonassessable.

-5-<PAGE>

ARTICLE IV

COVENANTS OF THE BORROWER

SECTION 4.01 Payment of Principal, Premium and Interest. The
Borrower duly and punctually will pay or cause to be paid the
principal of and interest on the Loans evidenced by the Note according
to the terms thereof.

SECTION 4.02 Reports, etc. The Borrower will furnish to the
Lender the following reports, information and documents:

(i) within 15 days after the Borrower is required to
file the same with the SEC, copies of the annual reports on Form
10-K, proxy statements, quarterly reports on Form 10-Q, and of
such reports, notices, documents and other information (or copies
of such portions of any of the foregoing as the SEC may from time
to time by rules and regulations prescribe) that the Borrower may
be required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended,
or with the principal securities exchange (or successor thereto)
in the United States on which securities of the Borrower are
listed and, upon distribution thereof, a copy of each report,
proxy statement, notice, document or other information sent by
the Borrower to all of its stockholders; and

(ii) promptly upon demand, such other information
respecting the financial condition, operations and properties of
the Borrower and its consolidated Subsidiaries as the Lender
reasonably may request; provided that the Lender shall maintain
the confidentiality thereof in the same manner as the Lender
maintains the confidentiality of its own information of like
nature.

SECTION 4.03 Inspection. So long as this Agreement is in effect
or the Note is outstanding, the Borrower will permit the Lender or any
of its authorized representatives, at the Lender's expense, to inspect
at all reasonable times all properties, books and records of the
Borrower or any of its consolidated Subsidiaries reasonably related to
the overall financial and business condition of the Borrower and its
consolidated Subsidiaries or to the observance and performance by the
Borrower of its obligations hereunder and under the Note, and to
discuss the business and affairs of the Borrower and its consolidated
Subsidiaries with its officers and independent accountants (and by
this provision the Borrower authorizes said accountants to discuss
with the Lender or such authorized representatives, the finances and
affairs of the Borrower and its consolidated Subsidiaries), all as
often as reasonably may be requested, subject to appropriate
obligations of confidentiality.

SECTION 4.04 Compliance With Laws. The Borrower shall comply, in
all material respects, with all applicable laws, rules, regulations
and orders, except where the failure would not have a material adverse
effect on the Borrower's ability to perform under this Agreement and
the Note.

SECTION 4.05 Listing Approval. The Borrower promptly shall use
all reasonable efforts to obtain the acceptance of the NYSE of a
listing application for the Common Stock to be issued pursuant to the
terms of this Agreement and, if so required as a condition to such
listing, to obtain the approval of a majority of its shareholders for
the issuance for such Common Stock.

SECTION 4.06 Security for Obligations. As security for the full
and punctual payment when due of all obligations arising under this
Agreement (including all such amounts that would become due but for
the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code,
11 U.S.C. Sections 502(b) and 506(b), and any other similar provisions
arising under applicable law), the Borrower hereby grants to the
Lender

-6-<PAGE>
a security interest in all of the Borrower's right, title and
interest, whether now existing or hereafter arising or acquired, in
the Collateral (as defined in the Collateral Agreements referred to in
the Loan Agreement pursuant to which the Borrower is financing the
construction of the Fort Knox Mine) in the form and manner
contemplated by the Collateral Agreements. The Borrower agrees to
execute such documents and to make such filings as shall be necessary
and desirable in the opinion of the Lender to perfect and protect the
security interest granted hereby over the Collateral as soon as
practicable after the date hereof.

ARTICLE V

EVENTS OF DEFAULT

SECTION 5.01 Events of Default. If any of the following events
(each, an "Event of Default") shall occur and be continuing:

(a) The Borrower shall (i) fail to pay the principal of or
any interest on the Note when due, or (ii) fail to perform or
observe any other term, covenant or condition contained in this
Agreement or in the Note on its part to be performed or observed
and any such failure shall remain unremedied for five (5)
Business Days in the case of clause (i) and thirty (30) days in
the case of clause (ii) after the same is discovered by any
Senior Officer of the Borrower; or

(b) Any representation or warranty made by the Borrower
herein or by the Borrower (or any of its officers) in any
certificate or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material
respect when made and such incorrect representation or warranty
shall not have been corrected within ten (10) days after the same
is discovered by any Senior Officer of the Borrower; or

(c) The Borrower shall admit in writing its inability to
pay its debts, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against
the Borrower or seeking to adjudicate it a bankrupt or insolvent
or seeking reorganization, arrangement, adjustment, or
composition of it or its debts under the law of any jurisdiction
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its
property and, with respect to any involuntary proceeding
instituted against the Borrower, such proceeding shall not be
dismissed within sixty (60) days;

then, and in any such event, the Lender, by notice to the Borrower,
may take either or both of the following actions: (i) terminate this
Agreement; or (ii) declare the principal balance outstanding under the
Note and all interest accrued and unpaid thereon, and all other sums
due hereunder, to be due and payable without presentment, demand,
protest, or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that upon the
occurrence of an Event of Default specified in subparagraph (c) above,
(x) the Borrower's ability to borrow hereunder automatically shall be
terminated and (y) the Note, all such principal and interest and all
such other sums due hereunder automatically shall become and be due
and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.

-7-<PAGE>
ARTICLE VI

PROVISIONS REGARDING COMMON STOCK

SECTION 6.01 Reservation of Shares of Common Stock. The Borrower
agrees that it will, at all times prior to the Expiration Date,
undertake all such further acts and assurances as may be reasonably
required to reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares of Common
Stock for the purpose of enabling it to satisfy any obligation to
issue shares of Common Stock pursuant to Section 1.07, shares of
Common Stock deliverable pursuant to Section 1.07. Before taking any
action that would cause an issuance of shares of Common Stock below
the then par value (if any) of the shares of Common Stock issuable
pursuant to Section 1.07, the Borrower shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that
the Borrower may validly and legally issue fully paid and
non-assessable shares of Common Stock.

SECTION 6.02 Transfer Taxes, Etc. The Borrower shall pay any and
all documentary stamp, issue or transfer taxes, and any other similar
taxes payable in respect of the issue or delivery of shares of Common
Stock issuable pursuant to Section 1.07; provided, however, that the
Borrower shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the Lender and no such issue
or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Borrower the amount of any such tax
or has established, to the satisfaction of the Borrower, that such tax
has been paid.

SECTION 6.03 Consolidation or Merger or Sale of Assets.
Notwithstanding any other provision herein to the contrary, in case of
any consolidation or merger, sale or transfer to which the Borrower is
a party and pursuant to which there is a change in the Common Stock of
the Borrower, then lawful provision, in a manner and on terms
reasonably satisfactory to counsel for the Lender, shall be made by
the corporation formed by such consolidation or the corporation whose
securities, cash or other property will immediately after the merger
or consolidation be owned, by virtue of the merger or consolidation,
by the holders of Common Stock immediately prior to the merger or
consolidation, or the corporation which shall have acquired such
assets or securities of the Borrower (collectively the "Formed,
Surviving or Acquiring Corporation"), as the case may be, providing
that the Lender shall have the right thereafter to receive shares of
common stock of such Formed, Surviving or Acquiring Entity pursuant to
Section 1.07. The above provisions of this Section 6.06 shall
similarly apply to successive consolidations, mergers, sales, leases
or transfers.

SECTION 6.04 Transfer Restrictions.

(a) Legends on Common Stock.

(i) Until the third anniversary of the date of
original issuance of the shares of Common Stock,
certificates representing the shares of Common Stock issued
pursuant to Section 1.07 and not otherwise registered
pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act")
shall bear a legend substantially to the following effect:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY SIMILAR STATE SECURITIES LAWS
AND THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION

-8-<PAGE>
STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER
SAID ACT AND LAWS."

The shares of Common Stock issued pursuant to
Section 1.07 and not otherwise registered pursuant to an
effective registration statement under the Securities Act
shall be subject to the restrictions on transfer set forth
in the legends referred to above until the third anniversary
of the date of original issuance of such shares of Common
Stock; provided, however, and notwithstanding the foregoing,
such shares of Common Stock may be resold under and pursuant
to the terms and conditions of Regulation S of the
Securities Act, prior to the end of the third anniversary
date of the issuance of such shares.

(ii) The certificates evidencing shares of Common
Stock issued to the Lender pursuant to Section 1.07 and not
otherwise registered pursuant to an effective registration
statement under the Securities Act shall bear, until such
time as the Borrower and the transfer agent for the Common
Stock shall have received evidence satisfactory to each of
them that the transfer of such shares of Common Stock has
been effected in accordance with the limitations on transfer
set forth in paragraph (a)(i) above, the following
additional legend:

"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH
CERTIFICATES, OPINIONS OF COUNSEL AND OTHER INFORMATION
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."

(b) Transfer Agent Requirements. The transfer agent and
registrar for the Common Stock shall not be required to accept
for registration of transfer any Common Stock bearing the legend
contained in paragraph (a)(ii) above, except upon presentation of
satisfactory evidence that the restrictions on transfer of the
Common Stock referred to in the legend in paragraph (a)(i) have
been complied with, all in accordance with such reasonable
regulations and procedures as the Borrower may from time to time
agree with the transfer agent and registrar for the Common Stock.

ARTICLE VII

MISCELLANEOUS

SECTION 7.01 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender and the Borrower, in
the case of an amendment, or by the party to be charged, in the case
of a waiver or a consent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.

SECTION 7.02 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and delivered to an officer
of the other party or mailed or transmitted by facsimile; if to the
Lender to its address at 9100 East Mineral Circle, Englewood, Colorado
80112-3299, Attention: Chief Financial Officer (Fax No. 303-643-5269);
if to the Borrower, to its address at 9100 East Mineral Circle,
Englewood, Colorado 80112-3299, Attention: Chief Financial Officer
(Fax No. 303-643-5505) or, as to each party, to such other address as
shall be designated by such party in a written notice to the other
party. All such notices and communications shall, when

-9-<PAGE>
delivered to an officer of the other party, be effective upon such
delivery and, when mailed or transmitted by facsimile, be effective
when deposited in the mails or when transmitted respectively,
addressed as aforesaid; except that notices by the Borrower to the
Lender or by the Lender to the Borrower pursuant to the provisions of
Section 1.05 shall not be effective until received by the Lender or
the Borrower, as the case may be, but such notices may be given by
telephone and confirmed in writing or by facsimile on the same day and
shall be effective upon such telephonic notice.

SECTION 7.03 No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder or
under the Note, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder or under the Note
preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

SECTION 7.04 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Lender and their
respective successors and assigns, except that (i) the Borrower shall
not have the right, to assign its rights hereunder or any interest
herein except to a successor by merger, consolidation or sale of all
or substantially all of the Borrower's assets, in each case if
permitted under Section 4.07 above, without the prior written consent
of the Lender, and (ii) the Lender shall not assign any of its rights
or obligations hereunder or under the Note, except to a successor by
merger, consolidation or sale of substantially all of the Lender's
assets without the prior written consent of the Borrower.

SECTION 7.05 Use of Proceeds. The proceeds of the Loans shall be
used by the Borrower to finance increases in actual and projected
capital expenditures necessary to construct and develop the Fort Knox
mine and to provide working capital, and for general corporate
purposes.

SECTION 7.06 Demand Registration Rights.

(i) At any time after the issuance of Common Stock
pursuant to Section 1.07, the Lender may make one or more written
requests to the Borrower (a "Demand") for registration under and
in accordance with the provisions of the Securities Act of all or
part (but not less than 1,000,000 shares per Demand) of the
shares of Common Stock issued to the Lender pursuant to Section
1.07 of this Agreement ("Registrable Shares"). Each such request
shall specify the aggregate number of Registrable Shares proposed
to be registered and the intended method of disposition thereof.

(ii) Upon receipt of a Demand, the Borrower shall use
its best efforts to effect such registration to permit the sale
of Registrable Shares in accordance with the intended method of
disposition thereof and pursuant thereto, the Borrower shall as
expeditiously as possible:

(a) execute and deliver all such instruments and
documents and do or cause to be done all such other acts and
things as may be necessary or, in the opinion of the Lender,
advisable to register such Registrable Shares under the
provisions of the Securities Act, and to use reasonable
efforts to cause the registration statement relating thereto
to become effective and to remain effective for such period
as prospectuses are required by law to be furnished, and to
make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Lender, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the SEC applicable thereto;

(b) use its best efforts to qualify the
Registrable Shares under the applicable state securities or
"Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of

-10-<PAGE>
the Registrable Shares, as requested by the Lender,
provided, that in no event shall the Borrower be obligated
to qualify to do business or file a general consent to
service of process in any jurisdiction;

(c) make available to the Lender, as soon as
practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and

(d) do or cause to be done all such other acts
and things as may be necessary to make such sale of the
Registrable Shares or any part thereof valid and binding and
in compliance with applicable law.

(iii) If any such Demand is made at a time when the
Lender directly or indirectly owns less than five percent 5% of
the number of shares of Common Stock outstanding, the Borrower
may, if its Special Committee of its Board of Directors
determines in the good faith exercise of its reasonable judgment
that it would be inadvisable to effect a demand registration,
defer such demand registration until the earliest practicable
time at which such demand registration can be reasonably
effected, which period shall not exceed three (3) months.

(iv) All Registration Expenses incurred in connection
with the first registration statement to be filed hereunder shall
be paid by the Borrower. All Registration Expenses incurred in
connection with each additional registration statement to be
filed hereunder shall be paid by the Lender. For purposes of this
Agreement, "Registration Expenses" shall mean any and all
expenses incident to performance of or compliance with this
Section 7.06, including, without limitation, (i) all SEC and
stock exchange registration and filing fees, (ii) all fees and
expenses of complying with state securities or "Blue Sky" laws
(including fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Shares and
determination of the eligibility of the Registrable Shares for
investment under the laws of such jurisdiction as the Lender may
indicate), (iii) all printing, messenger and delivery expenses,
(iv) all fees and expenses incurred in connection with the
listing of Registrable Shares on any exchange, and (v) the fees
and disbursements of counsel for the Borrower and of its
independent public accountants, but excluding underwriting
discounts and commissions, brokerage fees, transfer taxes, if
any, fees and disbursements of counsel, accountants or other
experts or advisors to the Lender, and National Association of
Securities Dealers Inc. registration and filing fees.

SECTION 7.07 Fees and Expenses. The Borrower shall pay (i) all
reasonable out-of-pocket expenses of the Lender, including reasonable
fees and disbursements of special counsel for the Lender, in
connection with the preparation of this Agreement, any waiver or
consent hereunder or any amendment hereof or any default or alleged
default hereunder and (ii) if an Event of Default occurs, or upon the
occurrence of an event that with notice or the lapse of time or both
would constitute an Event of Default, all reasonable out-of-pocket
expenses incurred by the Lender, including reasonable fees and
disbursements of counsel, in connection with such actual or potential
Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings, actions or negotiations resulting therefrom.
The Borrower shall indemnify the Lender against any transfer taxes,
documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery to the Lender of
this Agreement, or any Note.

SECTION 7.08 Prior Agreement. This Agreement and the Note issued
hereunder shall supersede in their entirety any prior negotiations,
discussions, understandings or arrangements between the Lender and the
Borrower pertaining to the subject matter of this Agreement.

-11-<PAGE>
SECTION 7.09 Governing Law. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State
of Colorado.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

AMAX GOLD INC.

By /s/ Mark A. Lettes
---------------------------------
Title: Vice President and Chief
Financial Officer
ATTEST:

_____________________________

CYPRUS AMAX MINERALS COMPANY

By /s/ Francis J. Kane
--------------------------------
Title: Vice President Investor
Relations and Treasurer
ATTEST:

____________________________

-12-<PAGE>
EXHIBIT A

CREDIT NOTE

$250,000,000.00 Date: March 19, 1996

FOR VALUE RECEIVED, Amax Gold Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Cyprus Amax Minerals
Company, a Delaware corporation (the "Lender"), upon demand by the
Lender at the office of the Lender located at 9100 East Mineral
Circle, Englewood, Colorado 80112, or at such other place as the
Lender may direct in writing, in lawful money of the United States of
America and in immediately available funds, the principal amount of
Two Hundred Fifty Million Dollars ($250,000,000) or, if less than such
principal amount, the aggregate unpaid principal amount of all Loans
made by the Lender to the Borrower pursuant to Article I of the
Agreement referred to below in accordance with the respective
Schedules applicable to such Loans attached to and made part of this
Note; provided, that to the extent that the Borrower repays (including
any prepayment) any principal amount of Loans in Common Stock pursuant
to and as defined in Section 1.07 of the Agreement prior to the
Expiration Date (as defined below), the Maximum Loan Amount shall
automatically be reduced by the amount of any Common Stock so issued,
based upon the value of such Common Stock at the time of issuance as
determined in accordance with Section 1.07 of the Agreement. The
Lender shall have the right to demand payment of the Loans at any
time. Loans may be made to the Borrower from time to time during the
period that commences on the date hereof and ends on the earlier of
(i) December 31, 2001 or (ii) the date on which the Lender notifies
Borrower that Loans will no longer be made available hereunder (the
expiration date determined by (i) or (ii) is herein called the
"Expiration Date").

The Borrower further promises to pay interest at said office in
like money, from the date hereof on the unpaid principal amount hereof
outstanding from time to time, at the rates and at the times set forth
in Article I of such Agreement. Notwithstanding anything contained
herein to the contrary, at the election of the Lender, the principal
of and interest on this Note may be paid by the Borrower in Common
Stock of the Borrower, in accordance with the provisions of Section
1.07 of the Agreement, subject to satisfaction of the conditions set
forth in Section 1.08 of such Agreement.

This Note is the Note referred to in Section 1.02 of the Credit
Agreement between the Borrower and the Lender dated as of March 19,
1996, as the same may hereafter from time to time be amended or
supplemented in accordance with the terms thereof ("Agreement"), is
entitled to the benefits thereof and subject to the terms and
conditions set forth therein (including, without limitation, the
Lender's rights to accelerate the due date hereof) and may be paid and
prepaid as provided therein.

Upon the occurrence of any of the Events of Default specified in
the Agreement, all amounts then remaining unpaid on this Note may be
declared to be or shall automatically become immediately due and
payable as provided therein.

Amax Gold Inc.

By______________________________________
ATTEST:

_____________________________
Secretary

-13-<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF LOANS AND PAYMENTS
MADE UNDER NOTE DATED MARCH 19, 1996
FROM AMAX GOLD INC.<F1>
TO CYPRUS AMAX MINERALS COMPANY

Principal Amount of the Initial Loan: $__________
Date of the Initial Loan: __________
Interest Rate for the Initial Loan: __________

PRINCIPAL BORROWINGS
AND PAYMENTS OF THIS NOTE

Amount Interest Principal Unpaid
Date Borrowed Rate Paid Paid Balance
- ---- -------- ---- -------- --------- -------
<S> <C> <C> <C> <C> <C>
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
% $ $ $
____________________
<FN>
<F1> All terms used in this Schedule shall have the meanings given them in the Agreement.
</FN>
</TABLE>
<PAGE>
APPENDIX C

March 19, 1996

Cyprus Amax Minerals Company
9100 E. Mineral Circle
Englewood, Colorado 80112

Dear Sirs:

Reference is made to (i) the Guaranty (the

"Guaranty"), dated the date hereof, by Cyprus Amax Minerals

Company ("Cyprus Amax") in favor of N M Rothschild & Sons

Limited, in its capacity as the administrative agent for the

Lender Parties referred to in the Guaranty, and (ii) the Credit

Agreement, dated as of the date hereof ("the Credit

Agreement"), by and between Amax Gold Inc. ("AGI") and

Cyprus Amax. Copies of the Guaranty and Credit Agreement

are attached to this letter.

In consideration of the execution and delivery by

Cyprus Amax of the Guaranty and the Credit Agreement and in

consideration of the obligation by Cyprus Amax to maintain

the Guaranty until the Fort Knox Economic Completion Date

(as defined in the Loan Agreement, as amended (the "Loan

Agreement")), AGI hereby agrees to pay to Cyprus Amax:

<PAGE>
Cyprus Amax Minerals Company -2-

(i) an upfront fee (the "Upfront Fee") of

$10,000,000 payable by AGI to Cyprus Amax on any date

after the date hereof upon Cyprus Amax' giving AGI at

least two (2) Business Days prior written notice of a

demand for payment; and

(ii) a commitment fee (the "Commitment Fee") on

each date upon which accrued interest is payable under

Section 3.2.3 of the Loan Agreement, or such later date

as Cyprus Amax may designate, equal to the product of

(A) the portion of the Guaranteed Obligations (as

defined in the Guaranty) constituting principal under

the Loan Agreement to the extent that accrued interest

is due on such principal amount on such interest

payment date times (B) 1.75% per annum, on the basis

and at the times that such interest is calculated and

due pursuant to the Loan Agreement.

AGI agrees to pay (i) all reasonable out-of-pocket

expenses of Cyprus Amax, including reasonable fees and

disbursements of special counsel for Cyprus Amax, in

connection with the preparation of the Guaranty, any waiver

or consent thereunder or any amendment thereof and (ii) if

Cyprus Amax is required to make any payments under the

Guaranty, all reasonable out-of-pocket expenses of Cyprus

Amax, including reasonable fees and disbursements of
<PAGE>
Cyprus Amax Minerals Company -3-

counsel, in connection with any collection, bankruptcy,

insolvency or other enforcement proceedings, actions or

negotiations resulting therefrom. AGI also agrees to

indemnify Cyprus Amax against any transfer taxes,

documentary taxes, assessments or charges made by any

governmental authority by reason of the execution or

delivery by Cyprus Amax of the Guaranty. The expenses,

taxes and other amounts set forth in this paragraph are

hereinafter referred to as the "Other Expenses". The Other

Expenses shall be payable from time to time by AGI to Cyprus

Amax on any date after the date incurred upon Cyprus Amax'

giving AGI at least two (2) Business Days prior written

notice of a demand for payment.

At the election of Cyprus Amax, which may be

exercised by its giving written notice to AGI at least two

(2) Business Days prior to the date upon which payment of

the Upfront Fee or the Other Expenses is demanded or a

Commitment Fee payment is due and subject to (i) the

acceptance by the New York Stock Exchange (the "NYSE") of a

listing application for the issuance of shares of Common

Stock of AGI therefor and (ii) shareholder approval by the

shareholders of AGI as to such issuance, Cyprus Amax may

request that the Upfront Fee, the Other Expenses, the

Commitment Fee or any part thereof shall be paid in shares

<PAGE>
Cyprus Amax Minerals Company -4-

of Common Stock of AGI equal to (a) the dollar amount of the

Upfront Fee, the Other Expenses, the Commitment Fee or any

part thereof demanded or due, as the case may be, on such

date divided by (b) the Average Market Price (as defined

below). The "Average Market Price" shall equal the average

of the closing prices of the Common Stock of AGI on the NYSE

over the five (5) NYSE trading days ending on the Business

Day prior to the date upon which payment in Common Stock of

AGI is requested, provided, that such Average Market Price

shall be subject to adjustment for extraordinary dividends

or distributions, stock splits, stock dividends and similar

capital events occurring during such five (5) NYSE trading-

day period.

AGI further agrees that, until the occurrence of

the Fort Knox Economic Completion Date, AGI will not make

any borrowing under the Revolving Credit Agreement, dated

April 15, 1994, by and between AGI and Cyprus Amax for

purposes other than making a payment of the Obligations

under the Loan Agreement without the prior written consent

(subject to the DOCLOC Support Agreement, dated

November 3, 1995, between Cyprus Amax on the one hand and

AGI and N M Rothschild & Sons Limited on the other hand, in

respect of the Refugio project) of Cyprus Amax.
<PAGE>
Cyprus Amax Minerals Company -5-

This letter shall be governed by and construed in

accordance with the laws of the State of Colorado.

Very truly yours,

AMAX GOLD INC.

/s/ Mark A. Lettes
-------------------------
Mark A. Lettes
Vice President and Chief
Financial Officer

ACCEPTED AND ACKNOWLEDGED:

CYPRUS AMAX MINERALS COMPANY

/s/ Francis J. Kane
- ------------------------
Francis J. Kane
Vice President and Treasurer
<PAGE>
AMAX GOLD INC.
9100 East Mineral Circle
Englewood, Colorado 80112

March 19, 1996

Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112

Dear Sirs:

Reference is made to the Guaranty, dated the date
hereof (the "Guaranty"), by Cyprus Amax Minerals Company
("Cyprus Amax") in favor of N M Rothschild & Sons Limited
("Rothschild"), in its capacity as the administrative agent
for the Lender Parties referred to in the Guaranty, a copy
of which Guaranty is attached to this letter as Exhibit A.
Reference is also made to the Collateral Sharing, Priority
and Agency Agreement, dated as of March 19, 1996 (the
"Collateral Agreement"), among Cyprus Amax, Rothschild,
LaSalle National Trust, N.A., Amax Gold Inc. ("AGI"),
Fairbanks Gold Mining, Inc., Lassen Gold Mining, Inc., Melba
Creek Mining, Inc. and Fairbanks Gold Canada Limited, a copy
of which Collateral Agreement is attached to this letter as
Exhibit B.

In consideration of the execution and delivery by
Cyprus Amax of the Guaranty, AGI is entering into this
letter agreement and undertaking the obligations set forth
below.

AGI hereby agrees to reimburse Cyprus Amax for (i)
all payments made by Cyprus Amax under the Guaranty, (ii)
all reasonable out-of-pocket expenses of Cyprus Amax,
including reasonable fees and disbursements of counsel,
incurred in connection with the performance of Cyprus Amax's
obligations under the Guaranty, and (iii) all transfer
taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the performance of
Cyprus Amax's obligations under the Guaranty. Any such
reimbursement obligation that arises shall be in the nature
of a demand loan obligation bearing interest as set forth in
the immediately succeeding paragraph and payable in cash (or
such other consideration as may be agreed by AGI and Cyprus
Amax at the time of such payment) by AGI to Cyprus Amax
within five (5) Business Days (as defined in the Loan
<PAGE>
Agreement referred to in the Guaranty) after receipt by AGI
of a written notice of demand from Cyprus Amax.

Any such demand loan obligation shall bear
interest at an annual rate equal to the LIBOR Rate (as
defined herein) for an interest period selected by Cyprus
Amax at its option for a period of one, three or six months,
or such other periods as are agreed between AGI and Cyprus
Amax (each, an "Interest Period"), plus 3.25% per annum,
except as otherwise provided herein. Interest on each
amount shall be due and payable in full on the earlier of
(i) last day of the Interest Period applicable to such
amount and (ii) the date upon which Cyprus Amax demands that
the amount be repaid, and, in the case of any Interest
Period in excess of three months, at the end of each
calendar quarter occurring during the term thereof. The term
"LIBOR Rate" shall have the meaning ascribed to it in the
Revolving Credit Agreement, dated as of April 15, 1994,
between Cyprus Amax and AGI, whether or not such Agreement
shall have been terminated at the time of such interest
calculation. All computations of interest hereunder shall
be made by Cyprus Amax on the basis of a year of 360 days,
consisting of twelve 30-day months, for the actual number of
days (including the first day but excluding the last day)
elapsed.

As security for the full and punctual payment when
due of all obligations arising under this letter agreement
(including all such amounts that would become due but for
the operation of the automatic stay under Section 362(a) of
the United States Bankruptcy Code, 11 U.S.C. Section 362(a),
and the operation of Sections 502(b) and 506(b) of the
United States Bankruptcy Code, 11 U.S.C. Sections 502(b) and
506(b), and any other similar provisions arising under
applicable law), AGI hereby grants to Cyprus Amax a security
interest in all of AGI's right, title and interest, whether
now existing or hereafter arising or acquired, in the
Collateral (as defined in the Collateral Agreement) in the
form and manner contemplated by the Collateral Agreement.
AGI agrees to execute such documents and to make such
filings as shall be necessary and desirable in the opinion
of Cyprus Amax to perfect and protect the security interest
granted hereby over the Collateral as soon as practicable
after the date hereof.

AGI agrees, if and to the extent requested by
Cyprus Amax, to execute such documents and to make such
filings as shall be necessary to grant to Cyprus Amax
security interests in the Guanaco project and the Refugio
project with the highest priority permitted after giving
effect to all prior security interests in such projects, and

-2-<PAGE>
subject to the receipt of any necessary governmental and
other approvals from third parties (including, without
limitation, the lenders to such projects).

AGI agrees to indemnify and hold harmless Cyprus
Amax for any losses, claims, damages or liabilities to which
Cyprus Amax may become subject as a result of executing or
delivering the Guaranty or performing the obligations
contemplated thereby.

This letter shall be governed by and construed in
accordance with the laws of the State of Colorado.

Very truly yours,

AMAX GOLD INC.

/s/ Mark A. Lettes
-------------------------
Mark A. Lettes
Vice President and Chief
Financial Officer
ACCEPTED AND ACKNOWLEDGED:

CYPRUS AMAX MINERALS COMPANY

/s/ Francis J. Kane
- -------------------------
Francis J. Kane
Vice President and Treasurer

-3-
<PAGE>
AMAX GOLD INC.
WRITTEN CONSENT OF STOCKHOLDER

Pursuant to Section 228 of the General Corporation Law of the
State of Delaware, the undersigned, as the record holder of shares of
common stock, par value $.01 per share (the "Common Stock"), of Amax
Gold Inc., a Delaware corporation (the "Company"), hereby takes the
following action with respect to all of the shares of the Company's
Common Stock of which the undersigned is the record holder on June __,
1996:

[ ] CONSENTS [ ] WITHHOLDS CONSENT [ ] ABSTAINS

To the financing arrangement described in the Consent Solicitation
Statement with Cyprus Amax Minerals Company ("Cyprus Amax"), under
which Cyprus Amax has guaranteed (the "Cyprus Amax Guaranty") the
Company's $250 million secured financing (the "Loan") until economic
completion of the Fort Knox project and has provided the Company with
a $250 million demand loan facility (the "Demand Loan Facility"), in
exchange for which the Company will (i) pay Cyprus Amax a financing
and guaranty fee of $10 million (the "Financing and Guaranty Fee"),
(ii) pay Cyprus Amax 1.75 percent on amounts outstanding under the
Loan (the "Interest Differential Payments"), (iii) reimburse Cyprus
Amax for any payments made or costs incurred under the Cyprus Amax
Guaranty (the "Reimbursement Payments"), (iv) make no additional
borrowings under the existing $100 million convertible line of credit
with Cyprus Amax ("DOCLOC I") without the prior consent of Cyprus
Amax, and (v) grant Cyprus Amax a first priority security interest in
the collateral for the Loan, and if requested, security interests in
additional assets to the extent available; all of the Company's
obligations to Cyprus Amax are payable in cash or, at the election of
Cyprus Amax, in shares of Common Stock, valued at the time of issuance
of the shares. Stockholder approval shall include, but not be limited
to, the authorization and issuance of shares of Common Stock to Cyprus
Amax under the foregoing arrangement (the "Proposal").

The undersigned acknowledges receipt of the Consent Solicitation
Statement.

<PAGE>
Cyprus has agreed to consent to the Proposal and has advised the
Company that Cyprus will deliver its written consent at the Expiration
Time (5:00 p.m., Mountain Time, on August __, 1996). Upon receipt of
the written consent of Cyprus, the Proposal will be adopted. Prior to
the Expiration Time, consents may be revoked. Subsequent to the
Expiration Time, the Company will not consider any additional consents
and consents previously delivered may not be revoked.

IF THE UNDERSIGNED HAS FAILED TO CHECK A BOX MARKED "CONSENTS" OR
"WITHHOLDS CONSENT" OR "ABSTAINS" TO THE PROPOSAL, THE UNDERSIGNED
AGREES THAT HE, SHE OR IT SHALL BE DEEMED TO HAVE CONSENTED TO THE
ACTIONS DESCRIBED IN THE PROPOSAL.

X____________________________________________
(Signature of Stockholder)

X____________________________________________
(Signature of Stockholders if held jointly)

Dated _______________________________________
(Please date this Consent)

NOTE: Your signature should appear as your
name appears hereon. In signing as attorney,
executor, administrator, trustee or guardian,
indicate such capacity. All joint tenants
should sign. When the Consent is given by a
corporation, it should be signed by an
authorized officer.
The Company requests that you sign and date
the Consent and return it in the enclosed
postpaid envelope.

THIS CONSENT IS BEING SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS.

IMPORTANT - YOUR CONSENT WILL NOT BE VALID IF IT IS NOT SIGNED, DATED
AND RECEIVED BY THE COMPANY PRIOR TO 5:00 P.M., MOUNTAIN TIME, ON
AUGUST __, 1996.