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                                                                    EXHIBIT 10.3

                          SPONSOR GUARANTEE AGREEMENT

          SPONSOR GUARANTEE AGREEMENT, dated February 9, 1998 (the "Agreement"),
between Cyprus Amax Minerals Company, a Delaware corporation ("Cyprus Amax"),
and Amax Gold Inc., a Delaware corporation ("Amax Gold" and, together with
Cyprus Amax, the "Sponsors").

          WHEREAS, Cyprus Foote Mineral Company ("Cyprus Foote") and Cyprus
Specialty Metals Company ("Cyprus Metals") have agreed to subscribe for common
shares of Compania Minera Amax Guanaco ("Guanaco") on the Closing Date (as
defined below) as nominees for Guanaco Mining Company Inc. ("GMC") pursuant to a
Nominee Agreement, dated as of the date hereof (the "Nominee Agreement"), among
Cyprus Foote, Cyprus Metals and GMC;

          WHEREAS, Minera Cyprus Amax Chile Limitada ("MCCL") has agreed to
extend a loan to Guanaco on the Closing Date in an amount equal to US$7 million
as contemplated by the Recognition of Debt, to be dated as of the Closing Date
(the "Recognition of Debt"), between MCCL and Guanaco, and the Letter Agreement,
dated February 9, 1998 (the "Letter Agreement"), between MCCL and Guanaco, such
loan to be repaid solely from the proceeds, if any, of a refund of first-
category Chilean income taxes previously paid by Sociedad Chilena de Litio
Limitada and MCCL to be procured by Guanaco after the consummation of the
transactions contemplated by the Nominee Agreement (the "Tax Refund") ;

          WHEREAS, Amax Gold or its subsidiaries (other than Guanaco) will
retain, after withholding for certain Chilean taxes, approximately US$6.1
million of the proceeds of the share subscription and the MCCL loan in
consideration of their participation in the transactions contemplated hereby;

          WHEREAS, Cyprus Amax indirectly owns all of the outstanding capital
stock of Cyprus Foote, Cyprus Metals and MCCL, Amax Gold owns all of the
outstanding capital stock of GMC, and GMC owns 90% of the outstanding capital
stock  of Guanaco; and

          WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Nominee Agreement on the Closing Date that each
Sponsor execute and deliver this Agreement;

          NOW, THEREFORE, in consideration of the premises and to induce the
parties to enter into the Nominee Agreement, the Recognition of Debt and the
Letter Agreement, the Sponsors hereby agree as follows.
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          1.  Guarantees.  (a)  Cyprus Amax hereby guarantees (i) to GMC, the
     prompt and complete payment and performance by each of Cyprus Foote and
     Cyprus Metals of all its obligations under the Nominee Agreement and (ii)
     to Guanaco, the prompt and complete payment and performance by MCCL of all
     its obligations under the Letter Agreement and the Recognition of Debt.
     Each of GMC and Guanaco shall be a third party beneficiary of the
     obligations of Cyprus Amax under this Agreement.

          (b)  Amax Gold hereby guarantees (i) to MCCL the prompt and complete
     payment and performance by Guanaco of all its obligations under the
     Recognition of Debt and the Letter Agreement, and (ii) to Cyprus Foote and
     Cyprus Metals, the prompt and complete payment and performance by GMC of
     all its obligations under the Nominee Agreement.  Each of MCCL, Cyprus
     Foote and Cyprus Metals shall be a third-party beneficiary of the
     obligations of Amax Gold under this Agreement.

          (c)  Each Sponsor (i) agrees that its obligations under clauses (a)
     and (b) above shall be unconditional, irrespective of the invalidity or
     unenforceability of, or any amendment or modification to, the Nominee
     Agreement, the Recognition of Debt or the Letter Agreement, or the
     insolvency or bankruptcy of any of Cyprus Foote, Cyprus Metals, MCCL, GMC
     or Guanaco (each, an "Obligor") and (ii) waives diligence, presentment,
     demand of payment, filing of claims, protest, notice and all demands
     whatsoever.  In the event that any payment by an Obligor is rescinded or
     must otherwise be returned for any reason, each Sponsor shall remain liable
     for such obligations to the extent provided for herein as if such payment
     had not been made.

          2.  Indemnity; Expenses.  (a) Subject to clause (b) below, Cyprus Amax
     shall indemnify and hold harmless Amax Gold and each of its subsidiaries,
     together with their respective and former directors, officers and employees
     (each, an "Indemnified Party"), from any cost, expense, liability, loss,
     penalty or tax incurred as a result of (i) the execution and delivery of
     this Agreement, the Nominee Agreement, the Recognition of Debt or the
     Letter Agreement, (ii) the performance of this Agreement, the Nominee
     Agreement, the Recognition of Debt or the Letter Agreement, (iii) the
     procurement or retention of the Tax Refund, or (iv) any claim made against
     Guanaco for any amounts purporting to be due and owing under the
     Recognition of Debt in excess of the amount of any Tax Refund actually
     received  by Guanaco, provided that this clause (a) shall not apply to any
     cost, expense, liability, loss, penalty or tax (A) in respect of U.S.
     income taxes, (B) in respect of any claim by ENAMI arising out of its lease
     of property and mineral rights to Guanaco, (C) incurred as a result of the
     indemnity obligations of GMC under the 

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     Nominee Agreement or (D) arising out of the breach of this Agreement, this
     Nominee Agreement, the Recognition of Debt or the Letter Agreement by any
     Indemnified Party. Without limiting the generality of the foregoing, the
     obligation of Cyprus Amax to indemnify and hold harmless under this Section
     2(a) shall include the obligation to indemnify against any Chilean or other
     non-United States withholding or other taxes incurred in connection with
     the consummation of the Share Subscription, the procurement by Guanaco of
     the Tax Refund, the extension of the MCCL loan, the payment US$59 million
     of principal and interest due on intercompany notes from Guanaco to GMC,
     this Agreement, the Nominee Agreement, the Recognition of Debt or the
     Letter Agreement (or any other agreement related hereto or thereto).

          (b)  In no event shall the aggregate obligations of Cyprus Amax under
     this Section 2 exceed US$13.5 million.

          (c)  With respect to third party claims, promptly after receipt by a
     person entitled to indemnification under Section 2(a) (an "Indemnified
     Party") of notice of the commencement of any action or the presentation or
     other assertion of any claim which could result in a claim for
     indemnification, such Indemnified Party shall give prompt written notice
     thereof to Cyprus Amax, and Cyprus Amax shall be entitled to assume the
     defense thereof.  Any Indemnified Party shall have the right to employ
     separate counsel in any such action and participate in the defense thereof
     at the expense of such Indemnified Party.  In addition, if (i) Cyprus Amax
     has failed promptly to assume the defense and employ counsel or (ii) the
     named parties to such action (including any impleaded parties) include any
     Indemnified Party and Cyprus Amax or any of its affiliates, and such
     Indemnified Party has received written advice of counsel that there may be
     one or more legal defenses available which are different from or in
     addition to those available to Cyprus Amax (or any of its affiliates) and
     which could create a conflict of interest between Cyprus Amax (or such
     affiliates) and such Indemnified Party, then such Indemnified Party shall
     have the right to participate in the defense thereof with separate counsel
     at the expense of Cyprus Amax; provided that, Cyprus Amax shall not be
     responsible for the fees and expenses of more than one firm of separate
     counsel in connection with any such action in the same jurisdiction, in
     addition to any local counsel.  Cyprus Amax shall have the right to settle
     or compromise any claim or liability subject to indemnification; provided,
     however, that, unless such settlement or compromise includes a full release
     of such Indemnified Party, any such settlement or compromise shall require
     the consent of such Indemnified Party, which consent shall not be
     unreasonably withheld. The parties agree to provide all reasonable
     cooperation in connection with any claim for which indemnification is or
     may be sought under this Agreement.

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          (d)  Cyprus Amax shall pay, or reimburse Amax Gold, Guanaco, GMC and
     their affiliates (an "AGI Party") for, all reasonable and documented legal,
     administrative and other expenses incurred by any AGI Party in respect of
     the consummation of the Share Subscription, the procurement and retention
     by Guanaco of the Tax Refund, the extension of the MCCL loan, the execution
     and delivery of this Agreement, the Nominee Agreement, the Recognition of
     Debt or the Letter Agreement, the transfer to GMC of the shares acquired as
     a result of the Share Subscription pursuant to Section 1(d) of the Nominee
     Agreement, the disposition of such shares to a third-party designee of GMC
     pursuant to Section 1(f) thereof (to the extent such expenses do not exceed
     the expenses that would be incurred if such shares were transferred to GMC
     itself) or the unwinding pursuant to Section 6 of the Nominee Agreement of
     the transactions contemplated thereby.

          3. Transaction Fee.  On the Closing Date and subject to receipt by
     Cyprus Foote and Cyprus Metals on the Closing Date of the reimbursement
     payments due to them under Section 2 of the Nominee Agreement, Cyprus Amax
     shall pay to Amax Gold a fee in respect of the participation by Amax Gold
     and its affiliates in the transactions contemplated hereby in an amount
     equal to US$6.7 million minus the amount of the proceeds of the Share
     Subscription and the MCCL loan, after withholding for Chilean taxes,
     retained by Amax Gold or its affiliates.  The parties currently expect that
     the amount of this transaction fee will be approximately US$600,000.

          4.  Effectiveness.  This Agreement shall become effective on the date
     specified in the Nominee Agreement as the Closing Date (the "Closing
     Date").

          5.  Miscellaneous.  (a)  This Agreement shall be binding upon the
     Sponsors, and shall inure to the benefit of the Sponsors, Cyprus Foote,
     Cyprus Metals, MCCL, GMC, Guanaco, and each other Indemnified Party, in
     each case, together with their respective successors and assigns.

          (b)  If any provision of this Agreement is held to be invalid, void or
     unenforceable, the remainder of this Agreement shall remain in full force
     and effect.

          (c)  This Agreement may not be modified except in a writing signed by
     both Sponsors.

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          (d)  No failure or delay by any person in exercising any right, power
     or privilege under this Agreement (whether or not consistent with any prior
     course of dealing between the Sponsors or their respective subsidiaries)
     shall constitute a waiver thereof, nor shall any partial exercise of any
     right, power or privilege preclude any other or further exercise.

          (e)  This Agreement may be executed in any number of separate
     counterparts, each of which when so executed and delivered shall be an
     original, but all the counterparts together shall constitute one and the
     same instrument.

          (f)  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
     WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF
     LAWS PRINCIPLES THEREOF.

          IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first written above.

                            CYPRUS AMAX MINERALS COMPANY


                            By:______________________________
                               Name:
                               Title:


                            AMAX GOLD INC.


                            By:_______________________________
                               Name:
                               Title:

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