<PAGE>
 
                                                             [EXECUTION COPY]

                                                       (Operation Number 209)

                                 LOAN AGREEMENT

                                    between

                           OMOLON GOLD MINING COMPANY

                                      and

                                 EUROPEAN BANK
                       FOR RECONSTRUCTION AND DEVELOPMENT

                            Dated as of 30 June 1995
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE> 
<S>                                                                      <C> 
ARTICLE I - DEFINITIONS ..............................................    1
       Section 1.01. General Definitions .............................    1
       Section 1.02. Interpretation ..................................   19

ARTICLE II - REPRESENTATIONS AND WARRANTIES ..........................    9
       Section 2.01. Project Costs and Financing Plan ................   19
       Section 2.02. Representations as to the Company ...............   20
       Section 2.03. Representations as to the Financing and Project
                     Agreements ......................................   22
       Section 2.04. Acknowledgement and Warranty ....................   24

ARTICLE. III - LOAN ..................................................   24
       Section 3.01. Amount and Currency .............................   24
       Section 3.02. Interest ........................................   25
       Section 3.03. Disbursements ...................................   26
       Section 3.04. Suspension and Cancellation .....................   26
       Section 3.05. Commitment Charge and Commission ................   27
       Section 3.06. Repayment .......................................   28
       Section 3.07. Voluntary and Mandatory Prepayment ..............   28
       Section 3.08. Payments ........................................   30
       Section 3.09. Insufficient Payments ...........................   31
       Section 3.10. Default Interest ................................   32
       Section 3.11. Increased Costs .................................   32
       Section 3.12. Taxes ...........................................   34
       Section 3.13. Unwinding Costs .................................   34
       Section 3.14. Illegality ......................................   35
       Section 3.15. Loan Account ....................................   35

ARTICLE IV - CONDITIONS OF DISBURSEMENT ..............................   35
       Section 4.01. Conditions of First Disbursement ................   35
       Section 4.02. Conditions for Any Disbursement .................   40
       Section 4.03. Pari Passu Disbursement .........................   41

ARTICLE V - AFFIRMATIVE COVENANTS ....................................   41
       Section 5.01. Project Implementation ..........................   41
       Section 5.02. Maintenance and Conduct of Business .............   42
       Section 5.03. Insurance .......................................   42
       Section 5.04. Accounting ......................................   42
       Section 5.05. Continuing Governmental and Other Approvals .....   43
       Section 5.06. Security ........................................   43
       Section 5.07. Compliance with Other Obligations ...............   43
       Section 5.08. Taxes; Stamp Duties .............................   43
       Section 5.09. Project Agreements ..............................   44
       Section 5.10. Offshore Bank Account ...........................   44
       Section 5.11. Disbursement Subaccount .........................   44
</TABLE> 

                                      (i)
<PAGE>
 
<TABLE> 
       <S>                                                              <C> 
       Section 5.12. Sales and Revenue Subaccounts .................    44
       Section 5.13. Cash Collateral Subaccount ....................    47
       Section 5.14. Russian Bank Accounts..........................    47
       Section 5.15. Debt Service Coverage Ratios ..................    48
       Section 5.16. Further Documents .............................    48
       Section 5.17. Costs and Expenses ...........................     48
       Section 5.18. Annual Budgets ................................    50
       Section 5.19. Furnishing of Information .....................    50
       Section 5.20. Development Plan ..............................    53

ARTICLE VI - NEGATIVE COVENANTS ....................................    54
       Section 6.01. Dividends .....................................    54
       Section 6.02. Capital Expenditures ..........................    54
       Section 6.03. Leases ........................................    55
       Section 6.04. Indebtedness ..................................    55
       Section 6.05. Liens .........................................    55
       Section 6.06. Hedging .......................................    56
       Section 6.07. Arm's Length Transactions .....................    56
       Section 6.08. Profit-Sharing and Management Arrangements ....    56
       Section 6.09. Investments ...................................    57
       Section 6.10. Changes in Business, Capital and Charter ......    57
       Section 6.11. Prepayment of Long-term Debt ..................    58
       Section 6.12. Sale of Assets; Merger ........................    58

ARTICLE VII - EVENTS OF DEFAULT ....................................    58
       Section 7.01. Events of Default .............................    58
       Section 7.02. Acceleration in Events of Default .............    62
       Section 7.03. Automatic Acceleration ........................    62

ARTICLE  VIII - MISCELLANEOUS ......................................    62
       Section 8.01. Term of Agreement .............................    62
       Section 8.02. Entire Agreement; Amendment and Waiver ........    62
       Section 8.03. Notices .......................................    62
       Section 8.04. Certificate of Incumbency and Authority .......    63
       Section 8.05. English Language ..............................    63
       Section 8.06. Financial Calculations ........................    64
       Section 8.07. Rights, Remedies and Waivers ..................    64
       Section 8.08. Indemnification ...............................    65
       Section 8.09. Severability ..................................    65
       Section 8.10. Governing Law .................................    66
       Section 8.11. Arbitration and Jurisdiction ..................    66
       Section 8.12. Waiver of Sovereign Immunity ..................    72
       Section 8.13. Successors and Assigns ........................    72
       Section 8.14. Counterparts ..................................    73
</TABLE> 

Schedule A   -   Form of Contract Pledge

Schedule B   -   Form of Cyprus Amax Guaranty

                                     (ii)
<PAGE>
 
Schedule C   -   Form of Cyprus Magadan Guaranty

Schedule D   -   Form of Cyprus Magadan Share Pledge

Schedule E   -   Form of Cyprus Support Agreement

Schedule F   -   Form of Enterprise Mortgage

Schedule G   -   Environmental Standards

Schedule H   -   Form of Equipment Pledge

Schedule I   -   Banking Case Procedures

Schedule J   -   Form of Goods Pledge

Schedule K   -   Form of Immovables Mortgage

Schedule L   -   Form of Insurance Assignment

Schedule M   -   Form of Letter of Credit

Schedule N   -   Form of Note

Schedule O   -   Form of Offshore Account Pledge

Schedule P   -   Form of Omolon Share Pledge

Schedule Q   -   Project Completion

Schedule R   -   Form of Reclamation Agreement

Schedule S   -   Form of Russian Account Pledge

Schedule T   -   Form of Russian Shareholders Support Agreement

Schedule U   -   Form of Security Sharing Agreement

Schedule V   -   Major Construction, Environmental and Operating Permits and
                 Approvals

Schedule W   -   Form of Disbursement Application

Schedule X   -   Security Perfection Requirements

Schedule Y   -   Form of Certificate of Incumbency and Authority

Schedule Z   -   Form of Letter to Auditors

Schedule AA  -   Form of Process Agent Acceptance

Schedule BB  -   Form of Opinion of Special Russian Counsel to the Company

                                     (iii)
<PAGE>
 
Schedule CC  -   Form of Opinion of Special English Counsel to the Company

Schedule DD  -   Form of Opinion of Special New York Counsel to the Company

Schedule EE  -   Form of Opinion of Special English Counsel to the Project
                 Lenders

Schedule FF  -   Insurance Requirements

                                     (iv)
<PAGE>
 
                                LOAN AGREEMENT

AGREEMENT, dated as of 30 June 1995 between THE CLOSED JOINT STOCK COMPANY
"OMOLON GOLD MINING COMPANY", a closed joint stock company organized and
existing under the laws of the Russian Federation (herein called the "Company"),
and EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (herein called the "Bank").

                            ARTICLE I - DEFINITIONS

Section 1.01. General DeFinitions

     Wherever used in this Agreement, including the Schedules hereto, unless the
context otherwise requires, the following terms have the following meanings:

"Affiliate"         means, with respect to any entity, any other entity or
                    person, directly or indirectly, controlling, controlled by,
                    or under common control with, such entity. For the purposes
                    of this definition, "control" (including, with correlative
                    meanings, the terms "controlled by" and "under common
                    control with"), as used with respect to any entity, shall
                    mean the possession, directly or indirectly, of the power to
                    direct or cause the direction of the management and policies
                    of such entity, whether through the ownership of voting
                    shares or by contract or otherwise.

"Amax Gold"         means Amax Gold, Inc., a corporation organized
                    and existing under the laws of the State of Delaware.

"Association of
Native Peoples"     means the Association of Northern Native
                    Peoples of the Severo-Evensk District

"Auditors"          means such firm of independent public accountants as the
                    Company may from time to time appoint as auditors of the
                    Company in accordance with Section 5.04.

"Blocked Account
Agreement"          means a blocked account agreement to be entered into among
                    the Company, Roskomdragmet, Citibank, N.A., London Branch
                    and such other parties as may be agreed by the Bank,
                    regarding the Roskomdragmet Sales Subaccount, which
                    agreement shall be as contemplated

                                       1
<PAGE>
 
                    by the Roskomdragmet Agreement and in form and substance
                    satisfactory to the Bank.

"Business Day"      means a day which is both a New York Banking Day and a
                    London Banking Day.

"Cash Collateral
Subaccount"         means the subaccount of the Offshore Bank Account designated
                    as such in accordance with Section 5.10.

"Charter"           means, in respect of any company, corporation, partnership,
                    governmental agency or other enterprise, its founding act,
                    articles of incorporation and bylaws, memorandum and
                    articles of association, statute or similar instrument.

"Commitment Period" means the period commencing on the date of this
                    Agreement and terminating on the earliest of (a) the date 
                    24 months from the date of this Agreement, as such date
                    shall be extended for a period (not to exceed, in the
                    aggregate, 12 months) equal to the duration of any
                    suspension by the Bank of the right of the Company to
                    Disbursements pursuant to Section 3.04 and for a period (not
                    to exceed, in the aggregate, six months) equal to the
                    duration of any Force Majeure Event occurring during the
                    Commitment Period, (b) the date Disbursements in an
                    aggregate principal amount of $47,500,000 have been made by
                    the Bank, (c) the first Repayment Date, and (d) the date the
                    obligation of the Bank to make Disbursements hereunder
                    terminates in accordance with the terms of this Agreement.

"Construction 
Contract"           means, collectively, such construction management
                    and engineering services contracts as may be entered into
                    between the Company and/or Cyprus Magadan and the Contractor
                    in connection with the Project, which contracts shall be in
                    form and substance satisfactory to the Bank.

"Contractor"        means Davy International Canada Limited, a corporation
                    organized under the laws of the Province of Ontario, Canada
                    and a subsidiary of Davy International, a division of
                    Trafalgar House, Inc., or such other Subsidiary of Trafalgar
                    House, Inc. as may be approved by the Bank.

"Contract Pledge"   means the instrument pursuant to which the Company
                    grants to the Project Lenders a security interest in all of
                    its rights, interests and benefits under the Management
                    Agreement, the Construction Contract, the Marketing

                                       2
<PAGE>
 
                    Agreements and the Reclamation Agreement, and all
                    performance bonds, warranties, guaranties and undertakings
                    issued thereunder (including subcontractor's warranties
                    issued directly to the Company under the Construction
                    Contract), together with the notices and acknowledgements
                    and consents in the forms attached thereto, which instrument
                    shall be substantially in the form of Schedule A.

"Cyprus Amax"       means Cyprus Amax Minerals Company, a corporation
                    organized and existing under the laws of the State of
                    Delaware.

"Cyprus            
Amax Guaranty"      means the irrevocable guaranty to be entered into by Cyprus
                    Amax in favor of the Project Lenders,which guaranty shall
                    be substantially in the form of Schedule B.

"Cyprus Gold"       means Cyprus Gold Company, a corporation organized and
                    existing under the laws of the State of Delaware.

"Cyprus Magadan"    means Cyprus Magadan Gold Corporation, a corporation
                    organized and existing under the laws of the State of
                    Delaware.

"Cyprus Magadan 
Guaranty"           means the irrevocable guaranty to be entered into by Cyprus
                    Magadan in favor of the Project Lenders, which guaranty
                    shall be substantially in the form of Schedule C.

"Cyprus Magadan 
Share Pledge"       means the instrument pursuant to which Cyprus Gold pledges
                    in favor of the Project Lenders all of the issued and
                    outstanding shares of Cyprus Magadan, which instrument shall
                    be substantially in the form of Schedule D.

"Cyprus Support 
Agreement"          means the Project support agreement to be entered into among
                    the Company, Cyprus Amax, Cyprus Magadan and the Project
                    Lenders, which agreement shall be substantially in the form
                    of Schedule E.

"Debt"              means the aggregate (as of the date of calculation) of all
                    obligations of the Company then outstanding for the payment
                    or repayment of money including, without limitation:

                    (a) any amounts payable by the Company under leases or
                    similar arrangements over their respective periods;


                                       3
<PAGE>
 
                    (b) any credit to the Company from a supplier of goods or
                    under any installment purchase or other similar arrangement;
                    and

                    (c) the aggregate amount then outstanding of liabilities and
                    obligations of third parties to the extent that they are
                    guaranteed by the Company.

"Default Interest 
Period"             means, with respect to any amount overdue under this
                    Agreement, a period commencing on the Business Day on which
                    such payment becomes overdue or, as the case may be, on the
                    last Business Day of the previous Default Interest Period,
                    and ending on a Business Day selected by the Bank or, as the
                    case may be, determined in accordance with Section 3.10(d).

"Default Interest 
Rate"               means the interest rate applicable to amounts overdue under
                    this Agreement, as determined in accordance with 
                    Section 3.10.

"Development Plan"  means the development plan for the Project approved by the
                    Project Lenders in accordance with Section 5.20, as such
                    development plan may be amended from time to time in
                    accordance with the requirements of Section 6.10(a).

"Disbursement"      means any amount of the Loan which is disbursed from time to
                    time pursuant to Section 3.03.

"Disbursement       
Subaccount"         means the subaccount of the Offshore Bank Account designated
                    as such in accordance with Section 5.10.

"Discount Rate"     means, for each calendar year, the weighted average
                    (expressed as a rate per annum) of all interest charges
                    which are projected (on the basis of the Financial Model) to
                    be applicable to all amounts of the Tranche 1 Loan and the
                    OPIC" Tranche 1 Loan outstanding from time to time during
                    such calendar year

"Dollars" or "$"    means the lawful currency of the United States of America.

"Dukat"             means Dukatsky Mining and Beneficiation Complex.

"Elektrum"          means Elektrum Limited Liability Company.

"Enterprise         
Mortgage"           means a mortgage in favor of the Project Lenders over all of
                    the equipment, assets and property of the


                                       4
<PAGE>
 
                    Company, which mortgage shall be substantially in the form
                    of Schedule F.

"Environmental      
Standards"          means the environmental.performance criteria,
                    standards, practices and procedures for the Project set
                    forth in Schedule G, as amended by the Company from time to
                    time with the prior written approval of the Bank (such
                    approval not to be unreasonably withheld).

"Equipment Pledge"  means the instrument pursuant to which the Company
                    grants to the Project Lenders a security interest in all of
                    the Company"s equipment and other tangible movable assets,
                    which instrument shall be substantially in the form of
                    Schedule H.

"Evenskoye Field"   means the Evenskoye gold and silver field located in
                    the Magadan Region of the Russian Federation as described in
                    Section 2. 1 of the License Agreement.

"Event of Default"  means any one of the events specified in Section
                    7.01.

"Excess Cash Flow"  means, for any period, the Gross Revenues during
                    such period less the sum of (a) all amounts paid out of the
                    Revenue Subaccount during such period in accordance with
                    Sections 5.12(d)(1) through 5.12(d)(6), and (b) reasonable
                    and prudent reserves established during such period in res
                    of contingent liabilities.

"Export Sales 
Subaccount"         means the subaccount of the Offshore Bank
                    Account designated as such in accordance with Section 5.10.

"Financial Model"   means the financial model agreed by the Bank and used
                    by the Company to prepare the financial projections for the
                    Project, as amended from time to time pursuant to the
                    provisions of Schedule I.

"Financial          
Statements"         means the unconsolidated financial statements of
                    the Company prepared in a manner consistent with its books
                    of account and in accordance with Generally Accepted
                    Accounting Principles in the United States.

"Financial Year"    means the accounting year of the Company commencing
                    each year on 1 January and ending on the following 31
                    December, or such other accounting period of the Company as
                    the Company may, with the Bank"s consent, from time to time
                    designate as the accounting year of the Company.

                                       5
<PAGE>
 
"Financing         
Agreements"         means this Agreement, the OPIC Finance Agreement, the Notes,
                    the promissory notes issued under the OPIC Finance
                    Agreement, the Cyprus Magadan Guaranty, the Cyprus Amax
                    Guaranty, the Security Documents, the Security Sharing
                    Agreement, the Cyprus Support Agreement, the Russian
                    Shareholders Support Agreement, the OPIC Funding Documents,
                    the Letter of Credit, the letter agreement relating to the
                    front-end commission referred to in Section 3.05Co), the
                    Disbursement applications referred to in Section 3.03(a) and
                    any other agreements entered into by the parties hereto in
                    connection with this Agreement or the transactions
                    contemplated hereby, and, in the singular, means any one of
                    such agreements.

"Financing Plan"    means the financing plan set out in Section 2.01(b).

"Force Majeure 
Event"              means an event which is not within the reasonable control of
                    the Company and that has a material adverse effect on the
                    ability of the Company to construct the Project or to mine,
                    produce, process, transport or market ore or dore as
                    contemplated by the Development Plan, including;

                    (a) fire, landslide, earthquake, adverse weather conditions
                    or other acts of God;

                    (b) explosion, breakage or accident to Project equipment and
                    facilities;

                    (c) strikes (excluding, for the avoidance of doubt, any
                    strike or series of related strikes, to the extent that the
                    duration of such strike or series of related strikes is in
                    excess of 30 days, by employees of the Company, the
                    Contractor or any subcontractor relating solely to disputes
                    with management of the Company, the Contractor or such
                    subcontractor and not to the mining sector generally or
                    other matters); or

                    (d) political events, shortages of material or labor
                    resulting directly from control or diversion by the Russian
                    government, embargo or terrorism.

"Foundation 
Agreement"          means the foundation agreement on establishment of the
                    Company dated 26 February 1993, as amended by a first
                    amendment and supplemental agreement with respect to the
                    foundation agreement on establishment of the Company dated 4
                    September 1993, a second amendment to the foundation
                    agreement on the establishment of the

                                       6
<PAGE>
 
                    Company, the charter of the Company dated 10 January 1994, a
                    third amendment to the foundation agreement on the
                    establishment of the Company and the charter of the Company
                    dated 24 March 1995 and a fourth amendment agreement to the
                    foundation agreement on the establishment of the Company
                    and the charter of the Company to be entered into in form
                    and substance satisfactory to the Bank.

"Future Net Income" means, for any period, the projected Gross Revenues expected
                    to be realized by the Company during such period less the
                    sum of the Operating Costs payable in currencies other than
                    Roubles which are projected for such period, all in
                    accordance with the Financial Model.

"Generally 
Accepted 
Accounting 
Principles"         means accounting principles generally accepted in the United
                    States or Russia, as the case may be, and in each case
                    consistently applied.

"Geometal"          means Geometal Joint Stock Gold-Mining Company.

"Goods Pledge"      means the instrument pursuant to which the Company grants to
                    the Project Lenders a security interest in all of the
                    Company"s gold, silver and dore, and all receivables, 
                    receipts and proceeds from the sale or transfer thereof,
                    which instrument shall be substantially in the form of
                    Schedule J.

"Gross Revenues"    means, for any period, the Company"s gross revenues in
                    freely convertible currencies other than Roubles from all
                    sources during such period (including, without limitation,
                    all revenues from the sale of dore, the proceeds of any
                    insurance or other claim with respect to delay in
                    completion, business in--on or loss or destruction of gold
                    or dore and all refunds of taxes, but excluding interest
                    earned on the Offshore Bank Account or the Russian Bank
                    Accounts) which are received in the Revenue Subaccount and
                    are not subject to mandatory conversion into Roubles or, at
                    such time, transfer to the Russian Federation.


"Guaranteed 
Portion"            means, at any time with respect to any amount payable under
                    this Agreement:

                    (a) prior to the Project Completion Date, 100% of such
                    amount; and

                                       7
<PAGE>
 
                    (b) thereafter, in the case of any amount other than the 
                    principal amount of me Tranche 2 Loan and interest accruing
                    thereon after the Project Completion Date, the portion of
                    such amount which is, at such time, guaranteed by Cyprus
                    Magadan pursuant to the Cyprus Magadan Guaranty.

         
"Immovables         
 Mortgage"          means a mortgage in favor of the Project Lenders
                    over all of the Company's; removable property, which
                    mortgage shall be substantially in the form of Schedule K.

"Increased Costs"   has the meaning given to it in Section 3.11.

"Indebtedness"      means, in regard to any person:

                    (a) all indebtedness of such person for borrowed money or
                    arising out of any credit facility or financial
                    accommodation or for the deferred purchase price of property
                    or services;

                    (b) all guarantees of such person (or other obligations of
                    such person which am the economic equivalent of a guarantee,
                    including without limitation any obligation of such person
                    to purchase, to provide funds for payment, to supply funds
                    to or otherwise to invest in any other person) in respect of
                    the indebtedness of any other person for borrowed money or
                    arising out of any credit facility or financial
                    accommodation or for the deferred purchase price of property
                    or services;

                    (c) all indebtedness or other or1igations of any other
                    person for borrowed money or aris out of any credit facility
                    or financial accommodation or for the deferred purchase
                    price of property or services secured by (or for which the
                    holder of such indebtedness has an existing right,
                    contingent or otherwise, to be secured by) any Lien upon
                    property (including without limitation accounts receivable
                    and contract rights) owned by such person, whether or not
                    such person has assumed or become liable for the payment of
                    such indebtedness or obligations; and

                    (d) obligations of such person in respect of any lease of
                    goods (or property which, if not affixed to realty, would be
                    personalty) by such person which under Generally Accepted
                    Accounting Principles would be required to be capitalized on
                    the balance sheet of such person.


                                       8
<PAGE>
 
"Independent       
 Engineer"          means Pincock Allen & Holt Inc. or such other firm
                    of engineers as may be selected from time to time by the
                    Project Lenders after consultation with the Company, and any
                    subcontractors of such engineer.
           

"Insurance          
 Assignment"        means the assignment pursuant to which the Company
                    assigns to the Project Lenders all of its rights,
                    interests and benefits under all insurance maintained by the
                    Company and all other insurance relating to the design,
                    construction, operation and maintenance of the Project,
                    together with the notices and acknowledgements and consents
                    in the forms attached thereto (or in such other forms as may
                    be approved by the Bank), which assignment shall be
                    substantially in the form of Schedule L.
          

"Interbank Rate"    means, for each Interest Period; the offered rate
                    which appears on the Telerate Page 3750 as of 11:00 am.,
                    London time, on the Interest Determination Date for such
                    Interest Period for one month, two months, three months,
                    four months, five months or six months, whichever period is
                    closest to the duration of the relevant Interest Period (or,
                    if two periods are equally close to the duration of the
                    relevant Interest Period, the average of the two relevant
                    rates); provided that, if, for any reason, the Interbank
                    Rate cannot be determined by .reference to the Telerate Page
                    3750 on such Interest Determination Date or the services of
                    the Telerate Page 3750 cease to be available as a re.suit of
                    discontinuation of such services, the Interbank Rate shall
                    be the interest rate per annum which the Bank determines to
                    be the arithmetic " mean (rounded upwards, if necessary, to
                    the nearest 1/16%) of the offered rates advised to the Bank
                    by three major banks active in the Dollar interbank market
                    in London selected by the Bank after consultation with the
                    Company. 

                     
"Interest           
 Determination      
 Date"              means, for any Interest Period, the date two London
                    Banking Days prior to the first day of such
                    Interest Period.

"Interest Payment  
 Date"              means any day which is 15 June or 15 December in any
                    year, provided, however, that, if any Interest Payment Date
                    would fall on a day which is not a New York Banking Day,
                    such Interest Payment Date shall be changed to the next
                    succeeding New York Banking Day.
               



                                       9
<PAGE>
 
"Interest Period"   means each period of six months commencing on an
                    Interest Payment Date and ending on the next following
                    Interest Payment Date,. except in the case of the first
                    Interest Period applicable to each Disbursement when it
                    shall have the following meaning:

                    (1) if such disbursement is made at least 15 Business Days
                    prior to the next Interest Payment Date, the period
                    commencing on the date on which such Disbursement is made
                    and ending on the next Interest Payment Date, and

                    (2) if such disbursement is made less than 15 Business Days
                    prior to the next Interest Payment Date, the period
                    commencing on the dam on which such Disbursement is made and
                    ending on the Interest Payment Date succeeding the next
                    Interest Payment Date.

"Interest Rate"     means, for each Interest Period with respect to each
                    portion of each tranche of the Loan, the rate of interest
                    payable on such portion of such tranche of the Loan during
                    such Interest Period, determined in accordance with Section
                    3.02.

"Kubaka Field"      means the Kubaka gold and silver field located in the
                    Magadan Region of the Russian Federation approximately 600
                    miles north-northeast of the City of Magadan, as described
                    in Section 2.1 of the License Agreement.

"Letter of Credit"  means an irrevocable "evergreen" standby letter of credit,
                    substantially in the form of Schedule M, issued in
                    accordance with paragraph l(b)(1) of Schedule Q in favor of
                    the Bank and OPIC by a financial institution acceptable to
                    the Bank in a face amount not to exceed $2,500,000 securing
                    principal and interest payable by the Company under this
                    Agreement and the OPIC Finance Agreement.

"License"           means the license for the right to use subsurface, series
                    MAP, number 10141, license type 53, issued to the Company by
                    the Committee of the Russian Federation for Geology and Use
                    of the Subsurface and the Magadan Regional Soviet of
                    People's Deputies, including all annexes thereto, as amended
                    by an amendment dated 24 March 1995 among the Magadan Oblast
                    Duma, the Committee of the Russian Federation for Geology
                    and Use of the Subsurface and the Company.


                                          10
<PAGE>
 
"License Agreement" means the license agreement between the Magadan
                    Oblast Duma (as successor to the Magadan Regional Soviet of
                    People's Deputies) and the Committee of the Russian
                    Federation for Geology and Use of the Subsurface and the
                    Company, which is attached as Annex 1 to the License.

"Lien"              means any mortgage, pledge, charge, privilege, priority,
                    hypothecation, encumbrance, assignment, lien, attachment,
                    set-off or other security interest of any kind upon or with
                    respect to, or any segregation of or other preferential
                    arrangement with respect to, any present or future assets,
                    revenues or rights, including, without limitation, any
                    designation of loss payees or beneficiaries or any similar
                    arrangement under any insurance policy.

"Loan"              means, collectively, the Tranche 1 Loan and the Tranehe 2
                    Loan or, as the context may require, the aggregate of the
                    principal amounts thereof from time to time outstanding.

"Loan Life Debt 
 Service Coverage 
 Ratio"             means, on any date, (a) the net present value, discounted at
                    the Discount Rate, of all Future Net Income for the period
                    from such date to 15 June 2001, divided by (b) the aggregate
                    principal mount of the Tranche 1 Loan and the OPIC Tranche 1
                    Loan outstanding on such date less the sum of the mount on
                    deposit in the Cash Collateral Subaccount and the face
                    amount of the Letter of Credit (if any) on such date.

"London Banking     means a day on which commercial banks and foreign exchange
 Day"               markets are open for the transaction of business in the
                    Dollar interbank market in London, England.

"Long-term Debt"    means the aggregate (as of the date of calculation) of
                    all those component parts of the Debt which fall due or
                    whose final payment is due more than one year after such
                    date of calculation.

"Magadan Gold"      means Magadan Gold and Silver Joint Stock Company.

"Management 
 Agreement"         means the amended and restated management,
                    technical and other services agreement dated as of 13 April
                    1995 between Cyprus Magadan and the Company.

"Margin"            means (a) with respect to the Guaranteed Portion of the
                    Loan, 3.25% per annum, and (b) with respect to the
                    Unguaranteed Portion of the Loan, 4.25 % per annum.

                                       11
<PAGE>
 
"Marketing          
Agreements"         means, collectively, the Roskomdragmet Agreement, the
                    Rosvneshtorgbank Agreement and any other marketing, sales or
                    dore transportation agreements entered into by the Company
                    in accordance with the terms of this Agreement, and, in the
                    singular, means any one of such agreements.

"Material           
Adverse Effect"     means a material adverse effect on:

                    (1) the Project, including without limitation the projected
                    costs of construction of the Project in accordance with the
                    Development Plan (to the extent that funding of such costs
                    has not been committed) or the projected costs of operation
                    or maintenance of the Project in accordance with the
                    Development Plan;

                    (2) the business, operations or condition of the Company,
                    Cyprus Amax or Cyprus Magadan;

                    (3) the ability of any party to any Financing Agreement or
                    Project Agreement to timely perform its obligations
                    thereunder in full in accordance with the terms thereof;

                    (4) the validity or enforceability of any Financing
                    Agreement or Project Agreement or the fights or remedies of
                    either Project Lender thereunder; or

                    (5) the security;

                    provided that a reduction in the market price of gold shall
                    not, by itself, be considered to have a Material Adverse
                    Effect unless the average market price of gold over the
                    preceding 30 days falls below $275 per ounce.

"Memorandum of 
Understanding"      means the protocol of the meeting on the Kubaka project
                    development held in Anchorage, Alaska on 20 and 21 November
                    1994.

"New York Banking 
Day"                means a day (other than a Saturday or Sunday) on which
                    commercial banks are not authorized or required to close in
                    New York.

"Note"              means a promissory note issued by the Company to the Bank,
                    substantially in the form of Schedule N, evidencing the
                    indebtedness of the Company to the Bank resulting ::ore a
                    Disbursement or any promissory note issued by the Company at
                    the request of the Bank in extension, renewal or
                    substitution therefor.

                                       12
<PAGE>
 
"Offshore           
Account Pledge"     means the instrument pursuant to which the Company grants to
                    Moscow Narodny Bank Limited, as security trustee for the
                    Project Lenders, a security interest in the Company"s right,
                    rifle and interest in and to the Offshore Bank Account,
                    together with the notices and acknowledgements and consents
                    in the forms attached thereto, which instruments shall be
                    substantially in the form of Schedule O.

"Offshore Bank 
Account"            has the meaning given to it in Section 5.10.

"Offshore Bank
Account Agreement"  means the accounts agreement to be entered into among the
                    Company, Citibank, N.A., London Branch and Moscow Narodny
                    Bank Limited relating to the Offshore Bank Account, which
                    agreement shall be in form and substance satisfactory to the
                    Bank.

"Omolon Share 
Pledge"             means, collectively, the instruments pursuant to which the
                    Shareholders pledge in favor of the Project Lenders all of
                    the issued and outstanding shares of the Company, which
                    instruments shall be substantially in the form of Schedule
                    P.

"Operating Costs"   means:

                    (a) all costs and expenses (including capital expenditures)
                    incurred by the Company in operating and maintaining the
                    Project, including transportation costs, reimbursement at
                    cost for goods and services procured by Cyprus Amax or its
                    Affiliates on behalf of the Company from unaffiliated
                    entities on an ann"s length basis and an amount not to
                    exceed (unless otherwise approved by the Bank, such approval
                    not to be unreasonably withheld) $500,000 (or the equivalent
                    thereof in other currencies at then current "rates of
                    exchange) per year in properly documented travel and other
                    reimbursable expenses payable to Cyprus Magadan under the
                    Management Agreement;

                    (b) all license fees paid by the Company under the License;

                    (c) insurance premiums paid by the Company in maintaining
                    any of the insurance required by this Agreement;

                    (d) administrative overhead expenses incurred by the Company
                    from time to time, including engineering, data

                                       13
<PAGE>
 
                    processing, accounting, legal and purchasing costs and
                    charges, which axe attributable to the Project, but
                    excluding any "such amount in respect of which the Company
                    is entitled to be reimbursed by any person (until such
                    amount is converted on the accounts of the Company to a loss
                    following non-payment);

                    (e) any fees payable by the Company to the banks at which
                    the Offshore Bank Account and the Russian Bank Accounts
                    axe located and to any security trustee with respect to such
                    accounts;

                    (f) any fees, commissions, charges, costs and expenses due
                    and payable pursuant to this Agreement, the OPIC Finance
                    Agreement and the other Financing Agreements to either
                    Project Lender, including the fees and expenses of the
                    Independent Engineer and the Bank"s insurance and
                    environmental consultants; and

                    (g) all taxes, rates, charges, assessment, duties and
                    tariffs which at any rime arc imposed or assessed on the
                    Company or its income, profits, revenues, imports of goods
                    and services, production, sales or exports;

                    but excluding, for the avoidance of doubt, depreciation,
                    amortization and other non-cash items, costs met from
                    insurance proceeds not ire to be reflected in the Company"s
                    financial accounts under Generally Accepted Accounting
                    Principles in the United States, management fees,
                    reimbursable expenses in excess of the amount referred to in
                    (a) above and other amounts payable to Cyprus Magadan or any
                    Affiliate of Cyprus Magadan under the Management Agreement
                    or otherwise except to the extent referred to in (a) a bove,
                    principal and interest due and payable under this Agreement
                    or the OPIC Finance Agreement and any insurance premiums
                    payable to OPIC.

"OPIC"              means the Overseas Private Investment Corporation, an agency
                    of the United States of America.

"OPIC Finance 
Agreement"          means the finance agreement dated as of the date hereof
                    between the Company and OPIC.

"OPIC Funding 
Documents"          means the agreements pursuant to which OPIC receives formal
                    and binding commitments from one or more financial
                    institutions to fund the full amount of the OPIC Loan.

                                       14
<PAGE>
 
"OPIC Loan"         means, collectively, the OPIC Tranche 1 Loan and the
                    OPIC Tranche 2 Loan or, as the context may require, the
                    aggregate of the principal amounts thereof from time to time
                    outstanding.

"OPIC Tranche 1
Loan"               means the loan specified in Section 3.01(a) of the OPIC
                    Finance Agreement or, as the context may require, the
                    principal amount thereof from time to time outstanding.

"OPIC Tranche 2 
Loan"               means the loan specified in Section 3.01(b) of the OPIC
                    Finance Agreement or, as the context may require, the
                    principal amount thereof from time to time outstanding.

"Permitted Liens"   means the Liens set forth in Sections 6.05(1), 6.05(2),
                    6.05(3) and 6.05(4).

"Potential Event 
of Default"         means any event which, with lapse of time or notice and
                    lapse of time as specified in Section 7.01, may become an
                    Event of Default.

"Project"           means the commercial development of the Kubaka Field,
                    containing proven and probable recoverable reserves of
                    approximately 2,200,000 ounces of gold and 1,700,000 ounces
                    of silver to be produced during a mine life of approximately
                    seven years, providing for open pit mining of the ore and
                    processing, at a rate of 1,750 tons per day, of the ore into
                    "dore" (an alloy of gold and silver produced from initial
                    melting) which will be sold by the Company for further
                    refining into gold and silver, as further described in the
                    Development Plan.

"Project 
Agreements"         means the License (including the License Agreement), the
                    Construction Contract, the Management Agreement, the
                    Memorandum of Understanding, the Marketing Agreements, the
                    Offshore Bank Account Agreement, the Blocked Account
                    Agreement, the Russian Blocked Account Agreement, the
                    Reclamation Agreement, the Foundation Agreement and the
                    Company's Charter, and, in the singular, means any one of
                    such agreements.

"Project            
Completion"         has the meaning given to it in Schedule Q.

"Project           
Completion Date"    means the date on which the Bank and OPIC have jointly
                    delivered to the Company a written notice stating that they
                    are satisfied that Project Completion has occurred.

"Project Costs"     means costs incurred by the Company in connection
                    with the design and construction of the Project, including
                    interest, commitment charge and other financing costs


                                       15

<PAGE>
 
 
                    payable by the Company under this Agreement and the OPIC
                    Finance Agreement during design and construction of the
                    Project, Operating Costs incurred by the Company during
                    construction of the Project and insurance premiums payable
                    to OPIC during construction of the Project, as such costs
                    are estimated in Section 2.01(a).

"Project Lenders"   means, collectively, the Bank and OPIC.

"Qualified          
Political Event"    has the meaning given to it in the Cyprus Magadan Guaranty.

"Reclamation        
Agreement"          means an agreement between the Company and Cyprus Amax,
                    Cyprus Magadan and the Russian Shareholders, substantially
                    in the form of Schedule R.

"Repayment Date"    means each of the dates for repayment of principal of
                    the Loan as set forth in Section 3.06(a).

"Retrospective      
Debt Service 
Coverage Ratio"     means, for any Interest Period, the result obtained by
                    dividing (a) the Gross Revenues for such Interest Period
                    less the sum of the Operating Costs payable in currencies
                    other than Roubles during such Interest Period by (b) the
                    sum of all principal and interest due and payable in of the
                    Tranche 1 Loan and the OPIC Tranche 1 Loan at the end of
                    such Interest Period.

"Revenue 
Subaccount"         means the subaccount of the Offshore Bank Account designated
                    as such in accordance with Section 5.10.

"Roskomdragmet"     means the Committee of the Russian Federation for Precious
                    Metals and Precious Stones.

"Roskomdragmet      
Agreement"          means the purchase-sales contract dated 29 May 1995 between
                    the Company and Roskomdragmet.

"Roskomdragmet      
Sales Subaccount"   means the subaccount of the Offshore Bank Account designated
                    as such in accordance with Section 5.10.

"Rosvneshtorgbank"  means the Bank for Foreign Trade of Russia, an authorized
                    Russian bank.

"Rosvneshtorgbank
Agreement"          means the agency agreement dated 9 June 1995 between the 
                    Company and Rosvneshtorgbank.



                                       16

<PAGE>
 
 
"Roubles" or "Rb."  means the lawful currency of the Russian Federation.

"Russian Account 
Pledge"             means the instrument pursuant to which the Company grants to
                    the Project Lenders a security interest in the Company's
                    right, title and interest in and to the Russian Bank
                    Accounts, together with the notices and acknowledgements and
                    consents in the forms attached thereto, which instrument
                    shall be substantially in the form of Schedule S.

"Russian Bank 
Accounts"           has the meaning given to it in Section 5.14.

"Russian Blocked
Account Agreement"  means the Russian blocked account agreement to be entered
                    into among the Company, Roskomdragmet and Citibank T/O
                    regarding the Russian Bank Account into which sales proceeds
                    in Roubles under the Roskomdragmet Agreement are to be paid,
                    which agreement shall be as contemplated by the
                    Roskomdragmet Agreement and in form and substance
                    satisfactory to the Bank.

"Russian            
Shareholders"       means, collectively, the Association of Native Peoples,
                    Geometal, Dukat, Magadan Gold, Elektrum and Rossiisky Kredit
                    Commercial Bank.

"Russian           
Shareholders 
Support Agreement"  means the Project support agreement to be entered into among
                    the Company, the Russian Shareholders and the Project
                    Leaders, which agreement shall be substantially in the form
                    of Schedule T.

"Security"          means the security created in favor of the Project Leaders
                    by the Company over all of its assets, by the Shareholders
                    over all of their shares in the Company and by Cyprus Gold
                    over all of its shares in Cyprus Magadan to secure all
                    amounts owing by the Company to the Project Lenders under
                    this Agreement, the OPIC Finance Agreement and the other
                    Financing Agreements.

"Security 
Documents"          means the Contract Pledge, the Cyprus Magadan Share Pledge,
                    the Enterprise Mortgage, the Equipment Pledge, the Goods
                    Pledge, the Immovables Mortgage, the Insurance Assignment,
                    the Offshore Account Pledge, the Omolon Share Pledge and the
                    Russian Account Pledge, and, in the singular, means any one
                    of such documents.


  
                                       17

<PAGE>
 
"Security           
Sharing Agreement"  means the security sharing agreement to be entered into
                    between the Project Lenders providing for, inter alia, the
                    sharing of the Security between the Project Lenders, which
                    agreement shall be substantially in the form of Schedule U.

"Shareholder        
Distribution"       means any payment or transfer from the Offshore Bank Account
                    or the Russian Bank Accounts for any purpose other than (a)
                    a payment to the Bank or OPIC pursuant to this Agreement,
                    the OPIC Finance Agreement or any other Financing Agreement,
                    and (b) a payment of Project Costs or Operating Costs in
                    accordance with the Development Plan or as otherwise
                    approved by the Bank.

"Shareholders"      means, collectively, the Russian Shareholders and Cyprus
                    Magadan.

"Short-term Debt"   means all Debt (as of the date of calculation) other than
                    the Long-term Debt.

"Subordinated       
Shareholder Loans"  means Debt of the Company owing to any Shareholder and which
                    is subordinated to the payment of all amounts payable under
                    this Agreement and the OPIC Finance Agreement pursuant to
                    the Cyprus Support Agreement or the Russian Shareholders
                    Support Agreement.

"Subsidiary"        means, with respect to any entity, any other entity over 
                    50% of whose capital is owned, directly or indirectly, by
                    the entity or which is otherwise effectively controlled by
                    the entity.

"Telerate Page 
3750"               means the display of London interbank offered rates
                    (commonly known as "LIBOR") of major banks for deposits in
                    Dollars, designated as page 3750 on the Telerate Service (or
                    such other page as may replace the Telerate Page 3750 for
                    the purpose of displaying such London interbank offered
                    rates for deposits in Dollars).

"Tranche 1 Loan"    means the loan specified in Section 3.01(a) or, as the
                    context may require, the principal amount thereof from time
                    to time outstanding.

"Tranche 2 Loan"    means the loan specified in Section 3.01(b) or, as the
                    context may require, the principal amount thereof from time
                    to time outstanding.

"Unguaranteed       
Portion"            means, at any time after the Project Completion Date:




                                       18

<PAGE>
 
                    (a) with respect to the principal amount of the Tranche 2
                    Loan and interest accruing thereon after the Project
                    Completion Date, 100% of such amount; and

                    (b) with respect to any other amount payable by the Company
                    under this Agreement, the portion of such amount which is
                    not, at such time, guaranteed by Cyprus Magadan pursuant to
                    the Cyprus Magadan Guaranty.

Section 1.02. Interpretation

(a) In this Agreement, unless the context otherwise requires, words denoting the
singular include the plural and vice versa, and words denoting persons include
corporations, partnerships, and other legal persons.

(b)  In this Agreement, references to a specified Article, Section or Schedule
shall be construed as a reference to that specified Article, Section or Schedule
of this Agreement.

(c)  The headings and the Table of Contents are inserted for convenience of
reference only and shall not affect the interpretation of this Agreement.

(d)  In this Agreement, references to statutes, laws, rules, regulations and
decrees of the Russian Federation, or any political subdivision thereof,
including environmental, health and safety standards and requirements
promulgated thereunder, shall refer only to such statutes, laws, rules,
regulations and decrees which are published or publicly available or of which
the Company otherwise has knowledge or which the Company could have ascertained
upon reasonable investigation.


                  ARTICLE II - REPRESENTATIONS AND WARRANTIES


Section 2.01. Project Costs and Financing Plan

     The Company represents as follows:

(a)  The total estimated cost of the Project is approximately $180,000,000.



                                       19

<PAGE>
 
(b) Under the Financing Plan, the proposed sources of financing the approximate
Project costs referred to in Section 2.01(a) are as follows:

<TABLE> 
<CAPTION> 
------------------------------------------------------------------------
Source                                                          Dollars
<S>                                                         <C> 
Equity

      Association of Native Peoples                           5,280,000
      Geometal                                               14,345,000
      Magadan Gold                                            5,280,000
      Elektrum                                                7,840,000
      Rossiisky Kredit Commercial Bank                        4,800,000
      Dukat                                                   2,455,000
      Cyprus Magadan                                         40,000,000

      Total Equity                                           80,000,000

Long-term Debt

      Tranche 1 Loan                                         42,500,000
      Tranche 2 Loan                                          5,000,000
      OPIC Tranche 1 Loan                                    47,500,000
      OPIC Tranche 2 Loan                                     5,000,000
      Total Long-term Debt                                  100,000,000

Total Financing                                             180,000,000
------------------------------------------------------------------------
</TABLE> 

Section 2.02.    Representations as to the Company

      The Company represents and warrants as follows:

(a)   The Company is a closed joint stock company duly organized and validly
existing under the laws of the Russian Federation and registered with all
relevant registration bodies in the Russian Federation and has full power to own
the properties which it owns and proposes to own for the purposes of the Project
and to carry out the business which it carries out and proposes to carry out for
the purposes of the Project. The Company has no Subsidiaries.

(b)   The Company has an authorized capital of Rb. 388,480,000,000 (the
equivalent of $80,000,000) consisting of 80,000 sea with a nominal value of Rb.
4,856,000 each. The following is a list of the shareholders in the Company as of
the date of this Agreement, together with the number of shares and the
percentage of all shares in the Company that will be held by each of such
shareholders upon execution and registration of the fourth amendment agreement
to the foundation agreement on the establishment of the Company and the charter
of the Company:

                                       20
<PAGE>
 
<TABLE> 
<CAPTION> 
Shareholder                             Number of Shares       Percentage
<S>                                     <C>                    <C> 

Association of Native Peoples                 5,280              6.60000
Geometal                                     14,345             17.93125
Magadan Gold                                  5,280              6.60000
Elektrum                                      7,840              9.80000
Rossiisky Kredit Commercial Bank              4,800              6.00000
Dukat                                         2,455              3.06875
Cyprus Magadan                               40,000             50.00000

Total                                        80,000            100.00000
</TABLE> 

The only issued shares of the Company axe registered shares. Them axe no
options, warrants or instruments convertible into shares or other agreements
relating to the existing shares of the Company or for the issuance of additional
shares of any class or description of the Company, except for the Foundation
Agreement. No person has any right (other than as a shareholder or in res of the
Tranche 2 Loan and the OPIC Tranche 2 Loan) to share in the profits of the
Company.

(c)   As of the date of this Agreement, the Directors of the Company are I.S.
Rosenblum, A.I. Nevolin, R.A. Kauffman, S.W. Harapiak, L.D. Clark and V.P.
Krachavets, the General Manager of the Company is S.W. Harapiak the ViceGeneral
Manager of the Company is Valery Glazatov, the Financial Manager of the Company
is Sergey Trofimov and the Chief Accountant of the Company is Elena Ryzhaikina.

(d)   The balance sheet of the Company as at 1 January 1995 and the related
statement of profit and loss of the Co any for the Financial Year ending on that
date, certified by the Chairman of the Board of Directors of the Company, fairly
and accurately present the financial condition of the Company as of the date of
such balance sheet and were prepared in conformity with Generally Accepted
Accounting Principles in Russia. The Company had, as of the date of such balance
sheet, no material contingent obligatio ns, liabilities for taxes or unusual
forward or long term commitments not disclosed by, or reserved against in, such
balance sheet or the notes thereto. Since the date of such balance sheet, the
Company has not suffered any change in its business prospects or financial
condition which has a Material Adverse effect, incurred any substantial or
unusual loss or liability or undertaken or agreed to undertake any substantial
or unusual obligation (except under the Financing Agreements and the Project
Agreements), in any such case, of a type which would appear on the Financial
Statements in accordance with Generally Accepted Accounting Principles in the
United States.

(e)   The Company owns, free of all Liens other than Permitted Liens, all of its
assets (including real property, personal property, intellectual property and
any other assets the ownership of which is reflected on its most recent balance
sheet referred to in Section 2.02(d) or which are referred to in the Security
Documents, but excluding the Kubaka Field and the Evenskoye Field which the
Company has the exclusive right to use pursuant to the License for the purposes
of commercial development of the

                                       21
<PAGE>
 
Kubaka Field and exploration and subsequent development of the Evenskoye Field)
that have a book value in excess of $10,000 equivalent each. The Company's
assets axe not subject to any Lien, and the Company is not subject to any
contract, arrangement or statute, whether conditional or unconditional, pursuant
to which any such Lien may be created, except for Permitted Liens. The Company's
assets axe insured against such risks and in such amounts as are customary
internationally for businesses of a like nature.

(f)   As of the date hereof, the Company is not a party to, or committed to
enter into, any agreement, other than the Financing Agreements and the Project
Agreements, that would or might affect the judgment of a prospective lender.

(g)   The Company is not in violation of any material statute, law, regulation,
judgment, rule, order or decree presently in effect. which is applicable to the
Company or its assets. To the best of the Company!s knowledge after due inquiry,
no statute, law, rule, regulation or decree has been proposed and no judgment or
order is expected which may have a Material Adverse Effect. All tax returns and
reports of the Company required by law to be filed have been duly filed and all
tax assessments, fees and other governmental charges upon the Company, its
properties and its income, which are due and payable, have been paid, other than
those currently payable without penalty or interest. The Company is not in
default under any agreement, obligation or duty to which it is a party or by
which it or any of its properties or assets is bound and there exists no Event
of Default and no Potential Event of Default.

(h)   To the best of the Company's knowledge after due inquiry, the Company and
its businesses, operations, assets, equipment, property, leaseholds and other
facilities are in compliance with the Environmental Standards. AS of the date of
this Agreement, the Company has been issued all permits, licenses, certificates
and approvals then required under applicable law relating to, and, except as
disclosed to the Bank in writing, has received no material complaint, order,
directive, citation or notice from any governmental authority or any other
material public complaint with to, (1) air emissions, (2) discharges to surface
water or ground water, (3) noise emissions, (4) solid or liquid waste disposal,
(5) the use, generation, storage, transportation or disposal of toxic or
hazardous substances or wastes, or (6) other environmental, health or safety
matters.

(i)   The Company is not engaged in nor, to the best of its knowledge,
threatened by, any litigation, arbitration or administrative proceeding, the
outcome of which may reasonably be expected to have a Material Adverse Effect.

Section 2.03.    Representations as to the Financing and Project Agreements

      The Company represents and warrants as follows:

(a)   The Company has the corporate power to enter into and perform this
Agreement and the other Financing Agreements and Project Agreements to which it
is a party.

                                       22
<PAGE>
 
(b)   This Agreement has been, and the other Financing Agreements and Project
Agreements to which the Company is a party when executed and delivered will have
been, duly authorized by the Company. This Agreement has been duly executed by
the Company and this Agreement constitutes, and the other Financing Agreements
and Project Agreements to which the Company is a party when executed and
delivered (in the case of the Notes and the promissory notes issued under the
OPIC Finance Agreement, for value) will const itute, valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms. The making of this Agreement and the other Financing Agreements and
Project Agreements and the compliance with the terms thereof (1) will not
result in violation of the Company's Charter or any provision contained in any
statute, law, role, regulation, judgement, decree or order applicable to the
Company, (2) will not conflict with or result in the breach of any provision of,
or require any consent under, or result in the imposition of any Lien under, any
agreement or instrument to which the Company is a party or by which the Company
or any of its assets is bound, and (3) will not constitute a default or an event
that, with the giving of notice or the passing of time or both, would constitute
a default under any such agreement or instrument.

(c)   As of the date of this Agreement, no governmental licenses, approvals,
consents, CUings or registrations axe required for the due execution, delivery
or performance by the Company of this Agreement, any other Financing Agreement
or any Project Agreement, or the validity or enforceability thereof, except for
(1) the authorization of the Central Bank of Russia for the incurrence and
repayment of the Indebtedness incurred under this Agree eat and the OPIC Finance
Agreement and the establishment and operat ion of the Offshore Bank Account as
contemplated herein, (2) registration of the Enterprise Mortgage with the Local
Registration on Chamber and the State Registration Chamber attached to the
Ministry of the Economy of the Russian Federation, (3) registration of the
Immovables Mortgage with the local and registry and the municipal department
which registers buildings, (4) those listed in Schedule X, (5) the major
construction, environmental and operating and listed in Schedule V, and (6)
other construction, environmental and operating permits and approvals not fisted
in Schedule V which are routinely issued in the course of designing,
constructing and operating the Project and which there is no reason to believe
the Company will not be able to obtain at the time such permits and approvals
are needed for the Project.

(d)   This Agreement constitutes a direct, unconditional and secured general
obligation of the Company and ranks in priority of payment at least pari passu
                                                                    ---- -----
with all other present and future indebtedness of the Company.

(e)   Each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when executed and delivered and when the documents,
recordings, filings, notifications and registrations listed in Schedule X have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
by the Company under this Agreement, the OPIC Finance Agreement and the other
Financing Agreements, which security interest and Lien will rank senior to all
other security interests and Liens on

                                       23
<PAGE>
 
such collateral other than Permitted Liens. The Company is not a party to any
other security agreement or instrument creating or purporting to create a
security interest in and Lien on such collateral.

(f)   Each of the License, the Management Agreement and the Marketing Agreements
is in full force and effect without material modification from the form referred
to in Section 1.01. There has occurred no breach, and no event which with the
giving of notice or the passing of time or both would constitute a breach, by
the Company of any such Project Agreement. The Company has no knowledge of any
breach, or event which with the giving of notice or the passing of time or both
would constitute a breach, by any other party of any such Project Agreement.

(g)   All permits, licenses, trademarks, patents and agreements with respect to
the usage of technology and other intellectual property necessary for the
Project have been obtained and are in full force and effect. All utility
services necessary for the Project, including, to the extent necessary, water
supply, storm and sanitary sewer, gas, electric and telephone services and
facilities, are available or will be made available to the Project and
arrangements in respect thereof have been made on commercially reasonable terms.

Section 2.04.    Acknowledgement and Warranty

      The Company acknowledges that it has made the representations referred
to in Sections 2.01, 2.02 and 2.03 with the intention of persuading the Bank to
enter into thin Agreement and that the Bank has entered into this Agreement on
the basis of, and in full reliance on, each of such representations. The Company
has no knowledge of any additional facts or matters which would or might
reasonably affect the judgment of a prospective lender regarding leading to the
Company. The Company warrants to the Bank that each of such reputations is true
and correct in all material respects as of the date of thin Agreement and that
none of them omits any matter the omission of which makes any of such
representations misleading.

                              ARTICLE III - LOAN

Section 3.01.    Amount and Currency

      Subject to the terms and conditions of this Agreement, the Bank agrees to
lend to the Company, and the Company agrees to borrow from the Bank, a Loan in
an amount not to exceed $47,500,000 made up of:

(a)   the Tranche 1 Loan in an amount not to exceed $42,500,000; and

(b)   the Tranche 2 Loan in the amount of $5,000,000.

                                       24
<PAGE>
 
Section 3.02.    Interest

      Except as otherwise provided under Section 3.11, interest on the Loan
shall be determined, and the Company shall pay interest on the Loan, as follows:

(a)   The principal amount of the Loan from time to time outstanding (or, in the
case of the first Interest Period in respect of each Disbursement, the principal
amount of such Disbursement from time to time outstanding) shall bear interest
during each Interest Period, calculated in accordance with this Section:

       (1)  in the case of the Guaranteed Portion of the Loan, at the Interest
       Rate for such Interest Period with respect to the Guaranteed Portion of
       the Loan;

       (2)  in the case of the Unguaranteed Portion of the Tranche 1 Loan, at
       the Interest Rate for such Interest Period with respect to the
       Unguaranteed Portion of the Tranche 1 Loan; and

       (3)  in the case of the Unguaranteed Portion of the Tranche 2 Loan, at
       the Interest Rate for such Interest Period with respect to the
       Unguaranteed Portion of the Tranche 2 Loan.

(b)   Interest shall accrue from day to day, be pro-rated on the basis of a
360-day year for the actual number of days in the relevant Interest Period and
be due and payable on the Interest Payment Date which is the last day of the
relevant Interest Period; provided that, if, on such Interest Payment Date, the
Company is not permitted, pursuant to Section 6.08(c)(3) or 6.08(c)(4), to make
payments of management fee to Cyprus Magadan under the Management Agreement,
interest on the Unguaranteed Portion of the Tranche 2 Loan shall, to the extent
accruing at a rate exceeding the rate specified in Section 3.02(c)(3)(A), be
due and payable by the Company only at such time as the Company is no longer
prohibited, pursuant to Section 6.08(c)(3) or 6.08(c)(4), from making such
payments of management fee.

(c)   The Interest Rate for each Interest Period shall be:

       (1)  with respect to the Guaranteed Portion of the Loan, the sum of the
       Margin for the Guaranteed Portion of the Loan and the Interbank Rate for
       such Interest Period;

       (2)  with respect to the Unguaranteed Portion of the Tranche I Loan, the
       sum of the Margin for the Unguaranteed Portion of the Loan and the
       Interbank Rate for such Interest Period; and

       (3)  with respect to the Unguaranteed Portion of the Tranche 2 Loan, the
       greater of (A) the sum of the Margin for the Unguaranteed Portion of the
       Loan and the Interbank Rate for such Interest Period, and (B) to the
       extent that funds are available in the Revenue Subaccount on the relevant
       Interest Payment Date or on the next succeeding Interest Payment Date for
       the purpose of paying interest in accordance with Section 5.12(d)(5), 14%
       per annum.

                                       25
<PAGE>
 
(d)  On each Interest Determination Date, the Bank shall, in accordance with
this Section, determine the Interest Rates applicable for the relevant Interest
Period and promptly give notice thereof to the Company. Each determination by
the Bank of the Interest Rates shall be final and conclusive and shall be
binding upon the Company unless shown by the Company to the satisfaction of the
Bank that any such determination has involved any error.

Section 3.03.  Disbursements

(a)  The Loan shall be disbursed by the Bank from time to time on any Business
Day during the Commitment Period upon the Company's application therefor in the
form of Schedule W and in substance satisfactory to the Bank, an original of
which shall be delivered to the Bank at least 15 Business Days prior to the
proposed date of the Disbursement.

(b)  Disbursements of the Tranche 1 Loan shall be made in amounts (except with
respect to the last such Disbursement) of not less than $5,000,000 and in
integral multiples thereof. The Tranche 2 Loan shall be disbursed in a single
Disbursement in the amount of $5,000,000.

(c)  Against each Disbursement, the Company shall deliver to the Bank an
original promissory note in the form of Schedule N and in substance satisfactory
to the Bank.

Section 3.04.  Suspension and Cancellation

(a)  From time to time while the all is being disbursed, the Bank may, by notice
to the Company, suspend or cancel the right of the Company to further
Disbursements as follows:

     (1)   if the first Disbursement shall not have been made by the date 12
     months from the date hereof, or such other date as may be agreed by the
     parties hereto; or

     (2)   if the Board of Governors of the Bank shall have decided in
     accordance with Article 8, paragraph 3, of the Agreement Establishing the
     Bank that access by the Russian Federation to Bank resources should be
     suspended or otherwise modified.

Upon the giving of such notice, the right of the Company to further
Disbursements shall be suspended or cancelled as indicated in the notice. The
exercise by the Bank of the right of suspension shall not preclude the Bank from
exercising its right of cancellation as provided in this Section 3.04(a), either
for the same or another reason, and shall not limit any other provision of this
Agreement.

(b)  From time to time while the Loan is being disbursed, the Bank may, by
notice to the Company, suspend the right of the Company to further Disbursements
as follows:

                                      26
<PAGE>
 
     (1)   if an Event of Default or a Potential Event of Default shall have
     occurred and be continuing, or if the Event of Default specified in Section
     7.01(e) shall, in the reasonable opinion of the Bank, be imminent;

     (2)   if at any time there shall have occurred a change of circumstances
     which, in the reasonable opinion of the Bank, has a Material Adverse
     Effect; or

     (3)   if OPIC shall have suspended the fight of the Company to further
     disbursements of the OPIC Loan.

Upon the giving of such notice, the fight of the Company-to further
Disbursements shall be suspended for so long as such event shall, in the opinion
of the Bank, be continuing. The exercise by the Bank of the fight of suspension
shall not preclude the Bank from exercising its fight of cancellation as
provided in Section 3.04(a) and shall not limit any other provision of this
Agreement.

(c)  At any time, the Company may, by not less than 30 days' prior written
notice to the Bank, cancel in whole or in part the fight of the Company to
further Disbursements of the Tranche 1 Loan and in whole but not in part the
fight of the Company to the Disbursement of the Tranche 2 Loan, provided that:

     (1)   all accrued commitment charge on the principal mount of the Loan to
     be cancelled is paid at the same time;

     (2)   in the case of partial cancellation of the Tranche 1 Loan, such
     cancellation shall be in an amount of not less than $1,000,000;

     (3)   a notice from the Company of cancellation of the Tranche 2 Loan shall
     be deemed also to constitute notice of cancellation in full of the
     Tranche 1 Loan;

     (4)   the Company shall simultaneously cancel its fight to further
     disbursements of a pro rata amount of the OPIC Tranche 1 Loan and the
     OPIC Tranche 2 Loan; and

     (5)   the Company shall pay to the Bank on the date of cancellation a
     cancellation administrative fee of 0.125 % of the principal amount of the
     Loan to be cancelled.

Upon termination of the Commitment Period, the Company shall be deemed to have
cancelled any then undisbursed portion of the Loan and shall pay to the Bank on
the date of such termination the cancellation administrative fee referred to
above. Amounts of the Loan which are cancelled by the Company may not be
reinstated.

Section 3.05.  Commitment Charge and Commission

(a)  The Company shall pay to the Bank a commitment charge which shall be at the
rate of 0.5 % per annum on so much of the Loan as shall not, from time to time,
have been cancelled by the Bank or the Company or disbursed to the Company. The
commitment charge shall accrue from day to day from the date which is 30 days
after

                                      27
<PAGE>
 
the date of this Agreement. The commitment charge shall be prorated on the basis
of a 360-day year for the actual number of days elapsed in the relevant period.
The commitment charge shall be payable on Interest Payment Dates (even though no
interest may be payable on such date), the first such payment to be due on the
first Interest Payment Date after the date hereof.

(b)  The Company shall also pay to the Bank a front-end commission in an amount
as separately agreed between the Company and the Bank in a letter agreement
dated the date hereof, to be paid within 30 days after the date of this
Agreement, but in any event before any Disbursement.

Section 3.06.  Repayment

(a)  The Company shall repay the Loan to the Bank as follows:

     (1)   The Tranche 1 Loan shall be repaid in eight equal (or as nearly equal
     as possible) semi-annual installments on 15 December 1997, 15 June 1998, 15
     December 1998, 15 June 1999, 15 December 1999, 15 June 2000, 15 December
     2000 and 15 June 2001.

     (2)   The Tranche 2 Loan shall be repaid in full in a single installment in
     the amount of $5,000,000 on 15 December 2001.

(b)  The dates for payment of principal of the Loan are intended to coincide
with the relevant Interest Payment Dates. If, in any case, the corresponding
Interest Payment Date is affected by the proviso to the definition of "Interest
Payment Date", then the corresponding date for payment of principal set out in
Section 3.06(a) shall be changed to coincide with the relevant Interest Payment
Date.

Section 3.07.  Voluntary and Mandatory Prepayment

(a)  In addition to the prepayment rights set out in Section 3.11(c), the
Company shall have the right at any time, on not less than 45 days' notice to
the Bank, to prepay, on any Interest Payment Date, all or part of the principal
amount of the Tranche 1 Loan then outstanding and all, but not part only, of the
principal amount of the Tranche 2 Loan then outstanding; provided that:

     (1)   all accrued interest and Increased Costs (if any) on the principal
     amount of the Loan to be prepaid and all other amounts due hereunder are
     paid at the same time;

     (2)   in the case of partial prepayment of the Tranche 1 Loan, such
     prepayment shall be in an amount of not less than $1,000,000 and shall be
     applied to prepay the outstanding repayment installments of the Tranche I
     Loan in inverse order of maturity;

     (3)   the Company shall not prepay the Tranche 2 Loan unless the Tranche 1
     Loan has been repaid (or, as the case may be, prepaid) in full;

                                      28
<PAGE>
 
     (4)   the Company shall simultaneously prepay a pro rata amount of the OPIC
     Tranche 1 Loan and the OPIC Tranche 2 Loan; and

     (5)   in the case of prepayment of the Tranche 2 Loan, the Company shall
     pay the Bank, on the date of prepayment, a prepayment charge equal to the
     following percentage of the principal amount of the Tranche 2 Loan to be
     prepaid:
<TABLE> 
<CAPTION> 
              Date of Prepayment                               Percentage
              <S>                                              <C>  
              On or prior to December 1997                        44
              June 1998                                           40
              December 1998                                       35
              June 1999                                           30
              December 1999                                       25
              June 2000                                           20
              December 2000                                       13
              June 2001                                           7
</TABLE> 
Upon delivery of such notice, the Company shall be obligated to effect
prepayment in accordance with the terms thereof.

(b)  On each Repayment Date for the Tranche 1 Loan, the Company shall prepay the
Tranche 1 Loan and the OPIC Tranche 1 Loan in an aggregate principal amount
equal to:

     (1)   50 % of the Excess Cash Flow for the Interest Period preceding the
     Interest Period then ending, if, on the date 60 days prior to such
     Repayment Date, the Loan Life Debt Service Coverage Ratio is less than 2.0;
     or

     (2)   30 % of the Excess Cash Flow for the Interest Period preceding the
     Interest Period then ending, otherwise;

or, if less, the aggregate principal amount of the Tranche 1 Loan and OPIC
Tranche 1 Loan then outstanding, provided that:

           (A)   the Company shall not be required to pre-pay the Tranche 1 Loan
           and the OPIC Tranche 1 Loan pursuant to this Section 3.07(i) in an
           aggregate amount exceeding $9,000,000 during any 12-month period;

           (B)   such prepayment shall be applied to prepay the Tranche 1 Loan
           and the OPIC Tranche 1 Loan pro rata in accordance with the principal
           amounts thereof then outstanding;

           (C)   such prepayment shall be applied to prepay the outstanding
           repayment instalments of the Tranche 1 Loan in inverse order of
           maturity; and

                                      29
<PAGE>
 
           (D)   no prepayment charge shall be payable in respect of such
           prepayment.

Not less than 45 days prior to each Repayment Date, the Company shall furnish to
the Bank a certificate setting forth, in a form satisfactory to the Bank and
with sufficient detail and information as may be required by the Bank, the
Company's calculation of the Excess Cash Flow for the Interest Period preceding
the Interest Period ending on such Repayment Date and the amount of the
mandatory prepayment of the Tranche 1 Loan required to be made by the Company on
such Repayment Date. Such certificate shall be accompanied by such supporting
documentation as the Bank may request.

(c)  In the event that the assets comprising the Project become an actual,
constructive, compromised or arranged total loss, the Company shall, at the
request of the Bank, forthwith prepay in full the aggregate principal amount of
the Loan and the OPIC Loan then outstanding, together with all accrued interest
and Increased Costs (if any) thereon and all other amounts payable hereunder and
under the OPIC Finance Agreement and the other Financing Agreements. In the
event that all or any portion of the tangible assets comprising the Project
shall otherwise have been lost, damaged or destroyed and, in accordance with the
provisions of the Insurance Assignment, the Project Lenders shall have retained
the proceeds of any related claim under any insurance policy as additional
security for amounts payable to the Project Lenders under the Financing
Agreements, the Company shall, at the request of the Bank, forthwith prepay the
Loan and the OPIC Loan in an aggregate principal amount equal to the amount of
such proceeds or, if less, the aggregate principal amount of the Loan and the
OPIC Loan then outstanding, together with all accrued interest and Increased
Costs (if any) on the principal amount of the Loan and the OPIC Loan to be
prepaid, provided that:

     (1)   such prepayment shall be applied to prepay the Loan and the OPIC Loan
     pro rata in accordance with the principal amounts thereof then outstanding;
     and

     (2)   in the case of partial prepayment of the Tranche 1 Loan, such
     prepayment shall be applied to prepay the outstanding repayment
     installments of the Tranche 1 Loan in inverse order of maturity.

No prepayment charge shall be payable in respect of any such prepayment.

(d)  Amounts of the Loan prepaid by the Company may not be reborrowed.

Section 3.08.  Payments

(a)  Payments of principal, interest, commitment charge, from-end commission,
prepayment administrative fee, prepayment charge, default interest and any other
amount due to the Bank under thin Agreement shall be made in Dollars, for value
on the date one New York Banking Day prior to the due date, at such bank or
banks in New York, New York, as the Bank shall from time to time designate.

                                      30
<PAGE>
 
(b)  The sums to be disbursed by the Bank to the Company hereunder shall be
payable in Dollars in New York, New York, for value on the date of the
Disbursement, to the account of the Bank for the benefit of the Company. In the
case of such sums disbursed by the Bank to the Company to pay interest due and
payable on the Loan or commitment charge, the Company hereby irrevocably
authorizes and instructs the Bank to apply such sums in payment of such interest
and commitment charge. In the case of all other such sums, the Company hereby
irrevocably authorizes and instructs the Bank, at the Company's expense, to
transfer such sums to the Disbursement Subaccount.

(c)  If any date for any payment under this Agreement shall not be a New York
Banking Day, then such payment shall be made on the next succeeding New York
Banking Day and interest (or commitment charge) shall continue to accrue until
such next succeeding New York Banking Day.

(d)  The Bank shall have the right, to the fullest extent permitted by law, to
apply any amount on deposit or account with the Bank or any of its branches,
Subsidiaries or Affiliates to or for the credit of the Company in any currency
and whether or not matured, in reduction of amounts past due hereunder, whether
or not the Bank shall have demanded payment hereunder. The Bank may deduct from
any Disbursement any fees and expenses then due and payable by the Company to
the Bank under this Agreement or any other Financing Agreement and the credit
advice of the Bank shall reflect such deduction.

Section 3.09.  Insufficient Payments

(a)  If the Bank shall at any time receive less than the full amount then due
and payable to it under this Agreement, the Bank shall allocate and apply such
payment in the following order: first, against costs, expenses and indemnifies;
second, against front-end commission, commitment charge and other fees,
commissions and charges; third, against default interest, if any; fourth,
against interest due on the Loan (other than interest on the Unguaranteed
Portion of the Tranche 2 Loan to the extent exceeding interest accruing at the
rate specified in Section 3.02(c)(3)(A)), fifth, against principal of the
Tranche 1 Loan then due and payable; sixth, against principal of the Tranche 2
Loan then due and payable; seventh, against interest due on the ; Unguaranteed
Portion of the Tranche 2 Loan to the extent exceeding interest accruing at the
rate specified in Section 3.02(c)(3)(A); eighth, against prepayment of the
Tranche 1 Loan; and, ninth, against prepayment of the Tranche 2 Loan.

(b)  The obligation of the Company to make payments in Dollars in accordance
with Section 3.08(a) shall not be deemed to have been novated, discharged or
satisfied by any tender of (or recovery under judgement expressed in) any
currency other than Dollars, except to the extent to which such tender (or
recovery) shall result in the effective payment of such aggregate amount in
Dollars at the place specified pursuant to this Agreement and, accordingly, the
amount (if any) by which such tender (or recovery) shall fall short of such
aggregate amount shall be and remain due to the

                                      31
<PAGE>
 
Bank as a separate obligation, unaffected by judgment having been obtained (if
such is the case) for and other amounts due under or in respect of this
Agreement.

Section 3.10.  Default Interest

(a)  If the Company fails to pay any amount payable by it under this Agreement,
the overdue amount shall bear interest at the relevant Default Interest Rate,
calculated in accordance with this Section.

(b)  Default interest in respect of the Loan shall (1) accrue from day to day
from the due date to the date of actual payment, after as well as before
judgment, (2) be prorated on the basis of a 360-day year for the actual number
of days in the relevant Default Interest Period, (3) be compounded at the end of
each Default Interest Period, and (4) be payable upon demand.

(c)  Except as provided in Section 3.10(d), the Default Interest Rate for any
overdue amount shall be the sum of (1) 2 % per annum, (2) in the case of the
Guaranteed Portion of such overdue amount, the Margin for the Guaranteed Portion
of the Loan and, in the case of the Unguaranteed Portion of such overdue amount,
the Margin for the Unguaranteed Portion of the Loan, and (3) the rate of
interest offered in the London interbank market for a deposit in Dollars of an
amount comparable to the overdue amount for a period equal to the Default
Interest Period for such overdue amount; provided, however, that, if the Bank
determines that deposits in Dollars are not being offered in the London
interbank market in such amounts or for such period, the Default Interest Rate
shall be determined by reference to the cost of funds to the Bank from whatever
sources it selects.

(d)  If the overdue amount is of principal of the Loan and has become due on a
date other than an Interest Payment Date, the first Default Interest Period with
respect to such overdue amount shall end on the next Interest Payment Date and
the Default Interest Rate during such period shall be the sum of (1) 2% annum,
and (2) the Interest Rate applicable to that amount immediately before it became
due.

(e)  Each determination by the Bank of the Default Interest Period and the
Default Interest Rate shall be final and conclusive and shall be binding upon
the Company absent manifest error.

Section 3.11.  Increased Costs

(a)  On each Interest Payment Date, the Company shall pay, in addition to
interest on the Loan, such amount, if any, which the Bank may notify to the
Company as being the aggregate of the Increased Costs accrued and unpaid prior
to such Interest Payment Date.

(b)  For the purposes of this Agreement, the following terms shall have the
following meanings:

                                      32
<PAGE>
 
     (1)   "Increased Costs" means the amount of any net incremental costs to
     the Bank of making or maintaining the Loan, evidence of which shall be
     provided to the Company in an Increased Costs Certification, which result
     from:

           (A)   any change in applicable law or regulations or in the
           interpretation thereof by any governmental or regulatory authority
           charged with the administration thereof; and/or

           (B)   any compliance with any request from, or requirement of, any
           central bank or other monetary or other authority;

     which in either case, subsequent to the date of this Agreement, shall:

                 (i)   impose, modify or deem applicable any reserve, special
                 deposit or similar requirements against assets held by, or
                 deposits with or for the account of, or loans by, the Bank;

                 (ii)  impose a cost on the Bank as a result of its having made
                 the Loan or reduce the rate of return on the overall capital of
                 the Bank which it would have been able to achieve if it had not
                 made the Loan;

                 (iii) change the basis of taxation on payments received by the
                 Bank in respect of the Loan otherwise than by a change in
                 taxation of the overall net income of the Bank; or

                 (iv)  impose on the Bank any other condition regarding the
                 making or maintaining of the Loan.

     (2)   "Increased Costs Certification" means a certification furnished by
     the Bank, within 90 days of the incurrence of any cost certified therein,
     certifying:

           (A)   the circumstances giving rise to the Increased Costs;

           (B)   that such net costs have increased;

           (C)   that, in the opinion of the Bank, it has exercised reasonable
           efforts to minimize or eliminate such increase; and

           (D)   the amount of the Increased Costs.

(c)  Notwithstanding anything in Section 3.07, the Company shall have the right
on any Interest Payment Date, upon not less than 30 days' prior written notice
to the Bank (which notice shall be irrevocable and shall bind the Company to
make the prepayment specified below) and upon payment of all accrued interest
and Increased Costs (if any) on the amount to be prepaid and any costs, losses
and expenses in accordance with Section 3.13 (but without any prepayment charge
or prepayment administrative fee), to prepay that portion of the Loan on which
the Bank informs the Company that Increased Costs are then being charged.

                                      33
<PAGE>
 
Section 3.12.  Taxes

     The Company shall pay or cause to be paid all present and future taxes,
duties, fees and other charges of whatsoever nature, if any, now or at any time
hereafter levied or imposed by the Government of the Russian Federation, or by
any department, agency, political subdivision or taxing or other authority
thereof or therein or by any organization of which the Russian Federation is a
member, on or in connection with the payment of any and all amounts due under
this Agreement (other than taxes levied on the overall net income of the Bank).
All payments of principal, interest and other amounts due to the Bank under
this Agreement shall be made without set-off or counterclaim and free and clear
of, and without deduction for or on account of, any such taxes, duties, fees or
other charges; provided, however, that, in the event that the Company is
prevented by operation of law or other from paying or causing to be paid such
taxes, duties, fees or other charges, the principal or (as the case may be)
interest or other amounts.due under this Agreement shall be increased to such
amount as may be necessary to yield and remit to the Bank the full amount it
would have received had such payments been made without deduction of such taxes,
duties, fees or other charges.

Section 3.13.  Unwinding Costs

(a)  Upon request by the Bank, the Company shall pay to the Bank any costs,
expenses and losses incurred by the Bank as a result of:

     (1)   any failure by the Company to pay any amount payable under this
     Agreement on its due date;

     (2)   any failure by the Company to borrow in accordance with a request for
     a Disbursement made pursuant to Section 3.02;

     (3)   any failure by the Company to make any prepayment in accordance with
     a notice of prepayment pursuant to Section 3.07 or 3.11(c);

     (4)   any prepayment for any reason of all or any portion of the Loan on a
     date other than an Interest Payment Date; or

     (5)   the occurrence of an Event of Default.

(b)  For the purposes of Section 3.13(a), "costs, expenses and losses' shall
include, without limitation, any interest paid or payable to carry any unpaid
amount and any loss, premium, penalty or expense (excluding lost profit) which
may be incurred in liquidating or employing deposits of or borrowings from third
parties in order to make, maintain or fund the Loan or any portion thereof (but
in the case of a late payment, after taking into account any default interest
received under Section 3.10). The Bank shall certify such costs, expenses and
losses (including a reasonable description thereof) to the Company.

                                      34
<PAGE>
 
Section 3.14.  Illegality

     Notwithstanding anything in this Agreement, if, subsequent to the date of
this Agreement, any change made in any applicable law or regulation or the
interpretation or application thereof by arty governmental authority charged
with the administration thereof shall make it unlawful for the Bank to continue
to maintain or to fund the Loan, the Company shall, upon request by the Bank
(but subject to the approval of the Central Bank of Russia, which the Company
agrees to take all reasonable steps to obtain as quickly as possible, if such
approval is then required), prepay in full and immediately, the principal amount
of the Loan, together with all accrued interest and Increased Costs (if any)
thereon and/or, as the case may be, the right of the Company to disbursement of
that part of the Loan which shall not theretofore have been disbursed shall
terminate immediately.

Section 3.15.  Loan Account

     The Bank shall open and maintain on its books a loan account in the
Company's name showing the Disbursements and repayments and prepayments (if any)
thereof and the computation and payment of interest, commitment charge and other
amounts due and sums paid hereunder. Such loan account shall be conclusive and
binding on the Company as to the amount at any time due from the Company
hereunder, absent manifest error.

                    ARTICLE IV - CONDITIONS OF DISBURSEMENT

Section 4.01.  Conditions of First Disbursement

     The obligation of the Bank tO make the first Disbursement of the Loan
shall be subject to the performance by the Company of all its obligations
theretofore to be performed under this Agreement and to the fulfilment, in form
and substance satisfactory to the Bank, prior to or concurrently with the making
of such first Disbursement, of the following further conditions:

(a)  Financing Agreements.  The following agreements, each in form and substance
satisfactory to the Bank, shall have been entered into by the respective parties
thereto (if they have not already been entered into) and shall have become (or,
as the case may be, shall remain) unconditional and fully effective in
accordance with theft respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of any of such
agreements):

     (1)   the OPIC Finance Agreement; 

     (2)   the OPIC Funding Documents; 

     (3)   the Cyprus Magadan Guaranty;

                                      35
<PAGE>
 
     (4)   the Cyprus Amax Guaranty;

     (5)   the Security Sharing Agreement;

     (6)   the Cyprus Support Agreement; and

     (7)   the Russian Shareholders Support Agreement;

and the Bank shall have received a duly executed original (or, in the case of
the OPIC Finance Agreement and OPIC Funding Documents, a certified copy) of each
such agreement.

(b)  Project Agreements. The following agreements, each in form and substance
satisfactory to the Bank, shall have been entered into by the respective parties
thereto (if they have not already been entered into) and shall have become (or,
as the case may be, shall remain) unconditional and fully effective in
accordance with their respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of any of such
agreements):

     (1)   the License (including the License Agreement);

     (2)   the Construction Contract;

     (3)   the Management Agreement;

     (4)   the Roskomdragmet Agreement;

     (5)   the Rosvneshtorgbank Agreement;

     (6)   the Offshore Bank Account Agreement;

     (7)   the Blocked Account Agreement;

     (8)   the Russian Blocked Account Agreement;

     (9)   the Reclamation Agreement;

     (10)  the Foundation Agreement; and

     (11)  the Memorandum of Understanding;

and the Bank shall have received a certified copy of each such agreement.

(c)  Security. The Security shall have been validly created and perfected in a
manner satisfactory to the Bank pursuant to the following Security Documents:

     (1)   the Contract Pledge;

     (2)   the Cyprus Magadan Share Pledge;

     (3)   the Enterprise Mortgage;

                                      36
<PAGE>
 
      (4)  the Equipment Pledge;

      (5)  the Goods Pledge;

      (6)  the Immovables Mortgage;

      (7)  the Insurance Assignment;

      (8)  the Offshore Account Pledge;

      (9)  the Omolon Share Pledge; and

      (10) the Russian Account Pledge;

and the Bank shall have received a duly executed original of each such Security
Docent, together with any other documents, recordings, filings, notifications
and registrations which am required for the creation, validity, perfection or
priority of the Security and the Liens of the Project Lenders in or under the
Security Documents as listed in Schedule X.

(d) Charters. The Charter of the Company shall be in form and substance
satisfactory to the Bank, and the Bank shall have received certified copies of
(1) the alter of the Company, (2) the certificates of registration on of the
Company with the Russian Agency for International Cooperation and Development
and the Administration of the Magadan Region, and O) the Char (and, if relevant,
the certificates of registration and certificates of good standing) of Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and, at the request of the
Bank, any other parties to the Financing Agreements and Project Agreements, each
as amended to date.

(e) Approvals. There shall have been obtained or made all governmental,
corporate, creditors', shareholders' and other necessary licenses, approvals,
consents, filings and registrations for:

    (1) the financing by the Bank under this Agreement and by OPIC under the
    OPIC Finance Agreement and any Subordinated Shareholder Loans;

    (2) the carrying on of the business of the Company as it is presently
    carried on and is contemplated to be carried on in accordance with the
    Development Plan;

    (3) the construction and operation of the Project and the carrying out of
    the Financing Plan;

    (4) the due execution and delivery of, and performance under, this
    Agreement, the Financing Agreements, the Project Agreements and the
    Security, and any other documents in implementation thereof, by the Company,
    the Shareholders, the Contractor and the other parties thereto, and the
    validity and enforceability thereof;

                                       37
<PAGE>
 
    (5) the establishment and maintenance of the Offshore Bank Account, the
    Disbursement Subaccount, the Roskomdragmet Sales Subaccount, the Export
    Sales Subaccount, the Revenue Subaccount and the Cash Collateral Subaccount;

    (6) the sale and export of dore and gold as contemplated by the Development
    Plan and the Marketing Agreements; and

    (7) the remittance to the Bank or its assigns as provided for in thin
    Agreement of all monies payable in respect of this Agreement and the
    Security;

including, without limitation, (A) the authorizations of the persons signing the
Financing Agreements and Project Agreements on behalf of the Company, Cyprus
Amax, Cyprus Gold, the Shareholders, the Contractor and the other parties
thereto to sign such documents and to bind the respective parties thereby, {B)
the authorization of the Central Bank of Russia for the incurrence and repayment
of the Indebtedness incurred under this Agreement and the OPIC Finance Agreement
and the establishment and operation of the Offshore Bank Account as contemplated
herein, and (C) the major construction, environmental and operating permits and
approvals listed in Schedule V (other than any such construction, environmental
operating permit or approval which (i) is not then needed for the Project, (h')
because it is premature, cannot then be obtained, and (iii) there is no reason
to believe the Company will not be able to obtain at the time such permit or
approval is needed for the Project); and the Bank shall have received certified
copies of an such licenses, approvals, consents, filings and registrations.

(f) Specimen Signatures. The Bank shall have received (1) the certificate of
incumbency and authority referred to in Section 8.04, substantially in the form
of Schedule Y, and (2) a certificate of an appropriate officer of Cyprus Amax,
Cyprus Gold, each Shareholder, the Contractor and, at the request of the Bank,
any other party to the Financing Agreements and Project Agreements certifying
the name and specimen signature of each person authorized to sign on behalf of
such party the Financing Agreements and Project Agreements to be entered into
and performed by such party.

(g) Equity. The Bank shall have received satisfactory evidence that (1) the
Shareholders have contributed in a manner satisfactory to the Bank at least
$80,000,000 (or the equivalent thereof in other currencies at then current rates
of exchange) in paid-in capital to the Company, and (2) the Company has
expended, or allocated for expenditure on imports of goods and services,
substantially all of such paid-in capital on Project Costs, including a list of
Project Costs paid by the Company to Shareholders, which list shall be
satisfactory to the Bank.

(h) Insurance. The Bank shall have received the insurance certificate referred
to in Section 5.19(d) showing that all insurance policies, certificates and
endorsements required to be in effect at such time pursuant to Section 5.03 are
in full force and effect.

(i) Development Plan. The Bank shall have received the Development Plan, in
form and substance satisfactory to the Bank and the Independent Engineer.

                                       38
<PAGE>
 
(j) Bank Accounts. The Bank shall have received evidence satisfactory to the
Bank that the Offshore Bank Account, the Disbursement Subaccount, the Revenue
Subaccount, the Cash CoLlateral Subaccount and the Russian Bank Accounts have
been duly established.

(k) Surface Rights. The Bank shall have received evidence satisfactory to the
Bank that the Company has been granted all appurtenant surface rights required
for the Project.

(1) Auditors Letter. The Bank shall have received a certified copy of a letter
to the Auditors from the Company Substantially in the form of Schedule Z.

(m) Process Agent Appointments. The Bank shall have received written
confirmations from the agents for service of process appointed by the Company
pursuant to Section 8.11Co), by Cypras Magadan pursuant to tiao Cyprus Magadan
Guaranty, the Cyprus Support Agreement and the Omolon Sham Pledge, by Cyprus
Amax pursuant to the Cyprus Amax Guaranty and the Cyprus Support Agreement, by
Cyprus Gold pursuant to the Cyprus Magadan Share Pledge and by the Russ
Shareholders pursuant to the Russian Shareholders Support Agreement and the
Omolon Share Pledge of their acceptances of such appointments, each
substantially in the form of Schedule AA.

(n)  Legal Opinions. The Bank shall have received:

     (1) the favorable opinion of special Russian counsel to the Company
     acceptable to the Bank regarding such matters incident to the transactions
     contemplated by thin Agreement as the Bank shall reasonably request, which
     opinion shall be in form and substance satisfactory to the Bank, together
     with a reliance opinion thereon of Coudert Brothers, special New York
     counsel to the Borrower, substantially in the form of Schedule BB;

     (2) the favorable opinion of Coudert Brothers, special English counsel to
     the Company, substantially in the form of Schedule CC;

     (3) the favorable opinion of Coudert Brothers, special Now York counsel to
     the Company, substantially in the form of Schedule DD;

     (4) the favorable opinion of Freshfields, special Russian counsel to the
     Project Lenders, regarding such matters incident to the transactions
     contemplated by this Agreement as the Bank shall reasonably request, which
     opinion shall be in form and substance satisfactory to the Bank; and

     (5) the favorable opinion of Freshfields, special English counsel to the
     Project Lenders, substantially in the form of Schedule EE.

                                       39
<PAGE>
 
Section 4.02. Conditions for Any Disbursement

    The obligation of the Bank to make any Disbursement shall also be subject to
the fulfillment, in form and substance satisfactory to the Bank, of the
conditions that, on the date of the Company's request for such Disbursement and
on the date of such Disbursement:

(a) Continuing Validity of Documents. All documents and instruments delivered
to the Bank pursuant to Section 4.01 shall be in full force and effect.

(b) Representations and Warranties. The representations and warranties confirmed
or made by the Company in Article II and all other representations and
warranties made by the Company, Cyprus Amax, Cyprus Gold, the Shareholders and
the Contractor in the Financing Agreements and the Project Agreements shall be
true on and as of such dams with the same effect as though such representations
and warranties had been made on and as of such dates.

(c) No Default. No Event of Default and no Potential Event of Default shall have
occurred and be continuing and the Company shall not, as a result of such
Disbursement, be in violation of its Charter, any provision contained in any
agreement or instrument to which the Company is a party (including this Agree
eat) or by which the Company is bound or any law, statute, rule, regulation,
judgment, decree or order applicable to the Company.

(d) No Material Adverse Change. Nothing shall have occurred which might have
a Material Adverse Effect.    

(e) No Political Event. No Qualified Political Event and no event that, with the
passage of time or otherwise, might become a Qualified Political Event shall
have occurred and be continuing and no political violence claim in respect of a
material or substantial part of the Company's assets or expropriation claim
shall have been made under any contract of insurance issued by OPIC in support
of the Project.

(f) Use of Proceeds. The proceeds of such Disbursement shall, at the time of
request therefor, be needed by the Company solely for the purpose of financing
Project Costs and the Bank shall have received such evidence as to the proposed
utilization of the proceeds of such Disbursement and the utilization of the
proceeds of any prior Disbursement as the Bank shall reasonably require,
including, in the case of any Disbursement which is being used in whole or in
part to finance amounts owing under the Construction Contract or any supply or
other contract entered into thereunder, the invoice of the Contractor or the
relevant supplier.

(g) Disbursement Application. The Bank shall have received the Company's
timely Disbursement application substantially in the form of Schedule W.

(h) Note. The Bank shall have received an undated Note evidencing such
Disbursement duly executed by the Company.

                                       40
<PAGE>
 
(i) Development Plan. The Project as developed to date shall conform in all
material respects with the detailed description thereof included in the
Development Plan for such stage of development, except as otherwise agreed with
the Project Lenders.

(j) Cost Overruns. The Bank shall be satisfied, on the basis of the opinion of
the Independent Engineer, that the Project Costs (including, without limitation,
financing costs) necessary to achieve physical completion of the Project will
not exceed by more than $10,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) the total amount thereof set forth
in Section 2.01(a) or, if the Bank is not so satisfied as a result of delay in
completion or otherwise, the Bank shall h ave received satisfactory evidence
that the Shareholders have contributed not less than 50 % of the full amount of
such excess in paid-in capital or Subordinated Shareholder Loans to the Company
and that the Company has expended 100% of such paid-in capital and Subordinated
Shareholder Loans on the Project.

(k) Tranche 2 Loan. In the case of any Disbursement of the Tranche 1 Loan, the
Tranche 2 Loan shall have previously been disbursed in full in the amount of
$5,000,000.

(1) Other. The Ball shall have received such other documents and opinions as the
Bank may reasonably request.

Section 4.03. Pari Passu Disbursement

      Notwithstanding anything provided in the Agreement, the obligation of the
Bank to make any Disbursement shall also be subject to the condition that the
total amount of the Loan disbursed by the Bank shall not at any time exceed by
more than $5,000,000 the amount of the OPIC Loan theretofore or
contemporaneously disbursed by OPIC under the OPIC Finance Agreement.

                       ARTICLE. V- AFFIRMATIVE COVENANTS

      Unless the Bank shall otherwise agree in writing:

Section 5.01. Project Implementation

     The Company shall carry out the Project substantially in accordance with
the Development plan and cause the financing specified in the Financing Plan to
be applied exclusively to the Project.

                                       41
<PAGE>
 
Section 5.02. Maintenance and Conduct of Business

(a) The Company shall (1) maintain its corporate existence in compliance with
all applicable laws and regulations, (2) conduct its business efficiently, in
accordance with sound engineering, financial and business practices, in a good
workmanlike manner, with due regard for the environment and in compliance with
all applicable statutes, laws, regulations, rules, orders and decrees of the
Russian Federation and any other applicable jurisdiction, (3) keep and maintain
all of its assets required for the Project in good repair, working order and
condition, and (4) ensure that the Project is constructed, maintained and
operated in accordance with good international practices in the gold mining
industry. Without limiting the foregoing, the Company shall comply with the
Environmental Standards and its obligations under the Reclamation Agreement.

(b) Without limiting the foregoing, the Company shall (1) observe all applicable
laws relating to the minimum age of employment of children, minimum wages, hours
of work and occupational health and safety, (2) not take any action to prevent
its employees from lawfully exercising their rights of association and to
organize and bargain collectively, and (3) not utilize forced labor.

Section 5.03. Insurance

    The Company shall keep its properties and business insured with financially
sound and reputable insurers against loss or damage in accordance with the
requirements of Schedule FF.

Section 5.04. Accounting

    The Company shall promptly and diligently install, and thereafter maintain,
an accounting and cost control system satisfactory to the Bank and maintain
books of account and other records adequate to reflect truly and fairly the
financial condition of the Company and the results of its operations (including
the progress of the Project) in conformity with Generally Accepted Accounting
Principles. The Company shall maintain Price Waterhouse, or such other firm of
independent public accountants as may be acceptable to the Bank, as Auditors of
the Company and authorize, by letter substantially in the form of Schedule Z,
the Auditors to communicated directly with the Bank at any time regarding the
Company's accounts and operations. The Bank shall provide notice to the Company
of any intended communications with the Auditors and, for the purpose of
minimizing expenses, shall, in the case of any requested information, give the
Company a reasonable opportunity to provide such information directly to the
Bank, provided that, if the Bank is not satisfied with the response of the
Company to its request for information, the Bank may communicate directly with
the Auditors.

                                      42
<PAGE>
 
Section 5.05. Continuing Governmental and Other Approvals

      The Company shall obtain or make, and shall maintain in force (or, where
appropriate, renew), all governmental, corporate, creditors', shareholders' and
other necessary licenses, approvals, consents, filings and registrations
required for the purposes described in Section 4.01(e) (other than any
construction, environmental or operating permit or approval which (i) is not
then needed for the Project, (ii) because it is premature, cannot then be
obtained, and (iii) there is no reason to believe the Company will not be able
to obtain at the time such permit or approval is needed for the Project), and
comply in all material respects with all conditions and obligations to which
such licenses, approvals, consents, filings and registrations may be subject.

Section 5.06. Security

      The Company shall, at its own cost, create, perfect and maintain (or,
where appropriate, renew) the Security in a manner satisfactory to the Bank and
take all actions requested by the Bank which are necessary to ensure that the
Liens created by the Security Documents constitute valid and perfected Liens of
first priority over the collateral purported to be covered thereby, securing
payment of all obligations of the Company under this Agreement and the other
Financing Agreements and ranking senior to the claims of all third parties other
than claims secured by Permitted Liens.

Section 5.07. Compliance with Other Obligations

      The Company shall comply with all agreements to which it is a party or by
which it or any of its properties or assets is bound.                   

Section 5.08. Taxes; Stamp Duties

(a)   The Company shall pay when due all of its taxes, rates, charges and
assessments, including without limitation any taxes, rates, charges and
assessments against any of its properties, other than taxes, rates, charges or
assessments which are being contested in good faith and by proper proceedings
and as to which adequate reserves have been set aside for the payment thereof.
The Company shall make timely filings of all tax returns and governmental
reports required to be filed or submitted under any applicable law or
regulation.

(b)   The Company shall pay all taxes (including stamp taxes), duties, fees or
other charges payable on, or in connection with, the execution, issue, delivery,
registration or notarization of this Agreement, any other Financing Agreement,
any Project Agreement and any other documents related to this Agreement. Upon
notice from the Bank, the Company shall reimburse the Bank or its assigns for
any such taxes, duties, fees or other charges paid by the Bank or its assigns
thereon.

                                      43
<PAGE>
 
Section 5.09. Project Agreements

(a) The Company shall maintain all Project, Agreements and Financing Agreements
to which the Company is a party in full force and effect without material
modification and perform its obligations under, and not commit any material
breach of or default under, any such Project Agreement.

(b) The Company shall not terminate, amend in any material respect or grant any
material waiver in respect of any provision of any of the Project Agreements or
Financing Agreements to which it is a party, or consent to any assignment of any
Project Agreement by any other party thereto; provided that the Bank shall not
unreasonably withheld its consent to a termination of a Project Agreement if the
Company enters into a substitute agreement in form and substance satisfactory to
the Bank with a third party acceptable to the Bank and grants to the Project
Lenders a security interest in all of its rights, interests and benefits under
such substitute agreement pursuant to an amendment to the Contract Pledge in
form and substance satisfactory to the Bank, in which case such substitute
agreement shall become a Project Agreement hereunder.

Section 5.10. Offshore Bank Account

    The Company shall establish and maintain a bank account denominated in
Dollars at the principal London branch of Citibank, N.A. (the "Offshore Bank
Account"), which account shall be pledged to Moscow Narodny Bank Limited, as
security trustee for the Project Lenders, as security for all amounts payable by
the Company under this Agreement, the OPIC Finance Agreement and the other
Financing Agreements. The Company shall maintain five subaccounts of the
OffShore Bank Account designated as the Disbursement Subaccount, the
Roskomdragmet Sales Subaccount, the Export Sales Subaccount, the Revenue
Subaccount and the Cash Collateral Subaccount.

Section 5.11. Disbursement Subaccount

    All Disbursements under this Agreement and all disbursements under the OPIC
Finance Agreement shall be deposited into the Disbursement Subaccount. Amounts
in the Disbursement Subaccount may be withdrawn by the Company without the prior
approval or authorization of the Bank only for the purpose of paying Project
Costs in accordance with the Development Plan and the annual capital expenditure
and operating budgets approved by the Bank pursuant to Section 5.18.

Section 5.12. Sales and Revenue Subaccounts

(a) The Company shall ensure that all amounts paid to the Company by
Roskomdragmet under the Roskomdragmet Agreement in currencies other than Roubles
are deposited into the Roskomdragmet Sales Subaccount, and (2) upon release of
such amounts in accordance with Article 9 of the Roskomdragmet

                                      44
<PAGE>
 
Agreement and with the Blocked Account Agreement, such mounts are transferred
from the Roskomdragmet Sales Subaccount to the Revenue Subaccount. Amounts may
be withdrawn from the Roskomdragmet Sales Subaccount only for the purpose of
transferring such amounts to the Revenue Subaccount or paying such amounts back
to Roskomdragmet in accordance with Article 9.2(a) of the Roskomdragmet
Agreement and with the Blocked Account Agreement. The Company shall not withdraw
funds from the Roskomdragmet Sales Subaccount for any other purpose without the
prior written consent of the Bank.

(b) The Company shall ensure that all amounts paid to the Company in respect of
the sale of dore outside of the Russian Federation, whether through
Rosvneshtorgbank pursuant to the Rosvneshtorgbank Agreement or otherwise, and
all other export revenues are, except as provided in Section 5.14, deposited
into the Export Sales Subaccount. If any such amounts axe received by the
Company in any other account or place, it shall immediately transfer such
amounts to the Export Sales Subaccount. Amounts may be withdrawn from the
Export Sales Subaccount only for the purpose of transferring such amounts to one
of the Russian Bank Accounts to the extent (and only to the extent) that such
amounts axe subject, in accordance with then applicable law, to mandatory
conversion into Roubles and transfer to the Russian Federation. The Company
shall ensure that any amounts remaining in the Export Sales Subaccount after any
such mandatory conversion and transfer to the Russian Federation are transferred
to the Revenue Subaccount. The Company shall not withdraw funds from the Export
Sales Subaccount for any other purpose without the prior written consent of the
Bank.

(c) Except as provided in Sections 5.12(a) and 5.12(b), the Company shall ensure
that all revenues of the Company and any other payments made to the Company,
including without limitation any payment made to the Company under the
Construction Contract, the Marketing Agreements and the other Project
Agreements, other than any such amounts which are received in Roubles or which
the Company is required by applicable law to convert into Roubles or retain in
or remit to the Russian Federation and other than refunds of Russian value added
tax financed by the value added tax facility referred to in Section 6.04(a)(5),
are deposited into the Revenue Subaccount.

(d) As long as no Event of Default or Potential Event of Default has occurred
and is continuing, amounts in the Revenue Subaccount may be withdrawn by the
Company pursuant to payment instructions issued in accordance with the Offshore
Account Pledge without the prior approval or authorization of the Bank only for
the purpose of transferring funds to the Russian Rank Accounts to the extent
(and only to the extent) required by the authorization issued by the Central
Bank of Russia for the establishment and operation of the Offshore Bank Account
or for the purpose of making the following payments in the following order.

    (1) Operating Costs denominated in currencies other than Roubles in
    accordance with the Development plan and annual capital expenditure and
    operating budgets approved by the Bank in accordance with Section 5.18;

                                      45
<PAGE>
 
    (2) interest due and payable on the Loan and the OPIC Loan (other than
    interest due and payable on the Unguaranteed Portion of the Tranche 2
    Loan to the extent exceeding interest accruing at the rate specified in
    Section 3.02(c)(3)(A) and the portion of interest due and payable on the
    Unguaranteed Portion of the OPIC Tranche 2 Loan which is attributable to
    the "Tranche 2 Supplemental Spread" as defined in the OPIC Finance
    Agreement);
    
    (3) scheduled repayment installments of principal of the Loan due and
    payable under Section 3.06(a) and scheduled repayment installments of
    principal of the OPIC Loan due and payable under Section 3.05 of the OPIC
    Finance Agreement;
    
    (4) transfers to the Cash Collateral Subaccount until the balance of the
    Cash Collateral Subaccount equals the lesser of the mount specified in
    Section 5.13(1) and the mount specified in Section 5.13(2);
    
    (5) in equal amounts, (A) interest due and payable on the Unguaranteed
    Portion of the Tranche 2 Loan to the extent exceed!rig interest accruing
    at the rate specified in Section 3.02(c)(3)(A) and the portion of interest
    due and payable on the Unguaranteed Portion of the OPIC Tranche 2 Loan
    which is attributable to the "Tranche 2 Supplemental Spread" as defined
    in the OPIC Finance Agreement, and (B) to the extent permitted by Section
    6.08(c), management fees payable under the Management Agreement in an
    amount not to exceed 4% of the Company's gross sales;
    
    (6) management fees due and payable under the Management Agreement to the
    extent that such management fees exceed those payable under sub-category
    (5)(B) above;
    
    (7) prepayment of principal of the Loan as required by Section 3.07(b)
    and prepayment of principal of the OPIC Loan as required by Section
    3.06(a) of the OPIC Finance Agreement; and
    
    (8) to the extent that, after payments are made in respect of categories
    (1) through (7) above, the balances of the Revenue Subaccount and the
    Russian Bank, accounts exceed in the aggregate the lesser of (A) the
    equivalent of $3,000,000 and (3) estimated Operating Costs for the next
    following 45 days, prepayment of principal of the Loan in accordance with
    Section 3.07(a), prepayment of principal of the OPIC I. Loan in
    accordance with Section 3.07 of the OPIC Finance Agreement and transfers
    to the Russian Bank Accounts for the purpose of making Shareholder
    Distributions to the extent permitted by Section 6.01.

The amounts of the payments to be made by the Company out of the Revenue
Subaccount under categories (2) through (8) above shall be calculated on the
date two Business Days prior to each Interest Payment Date and payments shall be
made by the Company out of the Revenue Subaccount under categories (2) through
(8) above only in accordance with the amounts as so calculated. In the event
that the balance of the Revenue Subaccount is insufficient to pay any such
category (or any sub-category) in

                                      46
<PAGE>
 
full as of such date, the Company shall, except as otherwise specified for
category (5) and except in the case of category (8) (but subject to Section
6.11), apply the mounts available in the Revenue Subaccount to pay each party
entitled to payment in such category (or sub-category) on a pro rata basis in
accordance with the amount due to each such party in such category (or
sub-category).

(e) If an Event of Default or Potential Event of Default has occurred and is
continuing, the Company shall not be permitted to withdraw any amounts from the
Revenue Subaccount for any purpose without the prior written consent of the
Bank.

Section 5.13. Cash Collateral Subaccount

    At all times on and after the Project Completion Date, the Company shall
maintain a balance in the Cash Collateral Subaccount equal to not less than the
lesser of:

    (1) an amount equal to (A) $13,500,000 less the face amount of the Letter
    of Credit, if any, issued in accordance with Schedule Q, multiplied by
    (B) a fraction, the denominator of which is $100,000,000 and the
    numerator of which is the aggregate mount of all Disbursements and all
    disbursements made under the OPIC Finance Agreement; and

    (2) an amount equal to the sum of (A) the outstanding principal amount of
    the Tranche 1 Loan, (B) the outstanding principal amount of the OPIC
    Tranche 1 Loan, and (C) $5,000,000, less (D) the face amount of the
    Letter of Credit, if any, issued in accordance with paragraph l(b)(1) of
    Schedule Q.

Amounts may be withdrawn by the Company from the Cash Collateral Subaccount only
for the purpose of paying principal and interest under this Agreement and the
OPIC Finance Agreement or to transfer any amount in excess of the minimum
balance set forth above to the Revenue Subaccount to the extent (and only to the
extent) required by the authorization issued by the Central Bank of Russia for
the establishment and operation of the Offshore Bank Account. The Company shall
not withdraw funds from the Cash Collateral Subaccount for any other purpose
without the prior written consent of the Bank.

Section 5.14. Russian Bank Accounts

    The Company shall establish and maintain one or more bank accounts at such
banks located in the Russian Federation as may be proposed by the Company and
approved by the Bank (the "Russian Bank Accounts"), which accounts shall be
pledged to the Project Lenders as security for all amounts payable by the
Company under this Agreement, the OPIC Finance Agreement and the other Financing
Agreements. The Company shall ensure that all revenues of the Company and any
other payments made to the Company which, in either case, are received in
Roubles or which the Company is required by applicable law to convert into
Roubles or remit to or retain in the Russian Federation, including without
limitation any payments

                                      47
<PAGE>
 
made to the Company in Roubles under the Construction Contract, the Marketing
Agreements and the other Project Agreements, are deposited into one of the
Russian Bank Accounts. As long as no Event of Default or Potential Event of
Default has occurred and is continuing, amounts in the Russian Bank Accounts may
be withdrawn by the Company to pay Project Costs and Operating Costs, to pay
dividends in Roubles to the Shareholders to the extent permitted by Section 6.01
and to convert such amounts into Dollars and transfer such amounts to the
Revenue Subaccount, in each case without the prior approval of the Bank. The
Company shall not withdraw funds from the Russian Bank Accounts for any other
purpose without the prior written consent of the Bank. If an Event of Default or
Potential Event of Default has occurred and is continuing, the Company shall
not be permitted to withdraw any amounts from the Russian Bank Accounts without
the prior written consent of the Bank.

Section 5.15. Debt Service Coverage Ratios

     The Company shall, at all times after the first Repayment Date or, if
earlier, the first Interest Payment Date occurring after the Project Completion
Date, maintain (1) a Retrospective Debt Service Coverage Ratio for the preceding
Interest Period of not less than 1.25, and (2) a Loan Life Debt Service Coverage
Ratio of not less than 1.25.

Section 5.16. Further Documents

     The Company shall execute all such other documents and instruments and do
all such other acts and things as the Bank may determine is necessary or
desirable to give effect to the provisions of this Agreement and the other
Financing Agreements and to cause the Financing Agreements to be duly
registered, notarized and stamped in any applicable jurisdiction. The Company
hereby irrevocably appoints and constitutes the Bank as the Company's true and
lawful attorney with right of substitution (in the name of the Company or
otherwise) to execute such documents and instruments and to do such acts and
things in the name of and on behalf of the Company in order to carry out the
provisions hereof if, within a reasonable period of time (as specified by the
Bank) after notice from the Bank, the Company shall fail to do so.

Section 5.17. Costs and Expenses

(a) The Company shall, whether or not any Disbursement is made, pay to the Bank,
or as the Bank may direct, within 30 days of the Bank furnishing to the Company
the invoice therefor:

     (1) all documented outside mining, engineering, environmental and other
     consulting fees and expenses incurred by the Bank in connection with this
     Agreement and the other Financing Agreements, including without limitation
     the fees and expenses of the Independent Engineer and the Bank's insurance
     and environmental consultants;

                                       48
<PAGE>
 
     (2)  the documented fees and expenses of outside legal counsel to the Bank
     and all other documented out-of-pocket costs and expenses incurred by the
     Bank in connection with:

          (A) the assessment and arrangement of the Loan by the Bank;

          (B) the preparation, review, negotiation, execution and, where
          appropriate, registration and notarization of this Agreement, the
          other Financing Agreements, the Project Agreements and any other
          documents related to this Agreement;

          (C) the obtaining of any legal opinions required by the Bank
          hereunder; and

          (D) the implementation and administration of this Agreement and the
          other Financing Agreements;

     (3)  any insurance premiums paid by the Bank on behalf of the Company in
     connection with insurance that is not obtained by the Company as required
     hereunder;

     (4)  all documented costs of preparing, in a manner satisfactory to the
     Bank, Russian translations of any Financing Agreements as requested by the
     Bank from time to time;

     (5)  all documented costs incurred in connection with the discharge and
     satisfaction of any Liens or other claims existing in violation of any of
     the Financing Agreements;

     (6)  all documented costs incurred by the Bank in connection with creating,
     perfecting, maintaining and enforcing the Security;

     (7)  the documented costs of providing the Bank with four bound copies and
     one unbound copy of all Financing Agreements, all Project Agreements and
     all other documents delivered by the Company or any other party hereunder;
     and

     (8)  all other documented costs and expenses incurred by the Bank in :
     connection with this Agreement, any other Financing Agreement and any
     Project Agreement or any action contemplated thereby.

(b)  The Company shall pay to the Bank, or as the Bank may direct, on demand all
lawyers' and other fees, costs and expenses incurred by the Bank:

     (1)  in the determination of whether them has occurred an Event of Default
     or Potential Event of Default;

     (2)  in respect of the preservation or enforcement of any of its rights
     under this Agreement or any other Financing Agreement and the collection of
     any amount owing to the Bank; and

                                       49
<PAGE>
 
     (3)  the assessment, preparation, review, execution and, where appropriate,
     registration of any amendment of or waiver to this Agreement, any other
     Financing Agreement, any Project Agreement or any other document related to
     this Agreement.

Section 5.18. Annual Budgets

     As soon as available but, in any event, not less than 90 days prior to the
beginning of each Financial Year, the Company shall furnish to the Bank the
Company's proposed annual budget for such Financial Year in form and level of
detail reasonably satisfactory to the Bank, including without limitation capital
expenditure, operating cost and revenue budgets and, prior to the end of the
Commitment Period, a financing plan showing a schedule of the estimated
Disbursements of the Loan and disbursements of the OPIC Loan during such
Financial Year. Within 30 days of receiving such annual budget, the Bank shall
notify the Company whether it approves such budget, which approval shall be
given if such budget does not materially vary from the Development Plan. In the
event that the Bank does not approve such budget, it shall advise the Company of
the reasons therefor and the Company shall make necessary adjustments and
amendments to such budget and resubmit such budget to the Bank for approval. If
the Bank fails tO notify the Company within 30 days after receiving any budget
that it approves or disapproves of such budget, such budget shall, to the extent
that such budget does not materially vary from the Development Plan, be deemed
approved by the Bank. Once approved by the Bank, such budget shall not be
amended in any material respect without the prior written consent of the Bank.

Section 5.19. Furnishing of Information

(a) As soon as available but, in any event, within 60 days after the end of each
quarter of each Financial Year, the Company shall furnish to the Bank:

     (1) two copies of the Company's complete Financial Statements for such
     quarter in form satisfactory to the Bank and certified by an officer of the
     Company, which Financial Statements shall specify the balances of the
     Offshore Bank Account and each subaccount thereof and the Russian Bank
     Accounts at the end of such quarter;

     (2) a report on any factors materially affecting or which might materially
     affect the Company's business and operations or its financial condition;

     (3) during the period prior to the physical completion of the Project, a
     report, in a form satisfactory to the Bank and the Independent Engineer, on
     the implementation and progress of the Project, including details of
     capital expenditures and use of funds withdrawn from the Disbursement
     Subaccount during such quarter, changes in Project Costs and reserves and
     any other factors materially affecting or which would reasonably be
     expected to materially affect

                                       50
<PAGE>
 
     the carrying out of the Project or the implementation of the Financing
     Plan, with sufficient detail and information as may be required by the
     Bank;

     (4) during the period after the physical completion of the Project, a
     report, in a form satisfactory to the Bank, on Project production,
     including data on processing, output and prices achieved for production,
     with sufficient detail and information as may be required by the Bank; and

     (5) a statement, in level of detail reasonably satisfactory to the Bank, of
     all material financial transactions between the Company and each of its
     Affiliates (including Cyprus Amax) and Shareholders, including without
     limitation all payments made to Cyprus Magadan and Cyprus Amax pursuant to
     the Management Agreement.

(b)  As soon as available but, in any event, within 120 clays after the end of
each Financial Year, the Company shall furnish to the Bank:

     (1) two copies of its complete Financial Statements for such Financial
     Year, together with an audit report thereon of the Auditors, all in form
     satisfactory to the Bank;

     (2) a letter from the Auditors commenting on, among other matters, the
     adequacy of the Company's financial control procedures and accounting
     systems, together with a copy of any other corem,relation sent by the
     Auditors to the Company or to its management in relation to the Company's
     financial, accounting and other systems, management and accounts;

     (3) a report of the Auditors certify that the Company was in compliance
     with the financial covenants contained in this Atticle V (other than
     Section 5.15) and in Article VI as of the end of such Financial Year or, as
     the case may be, detailing any non-compliance;

     (4) a management discussion and analysis of results for such Financial
     Year, including a report on any factors materially affecting or which might
     materially affect the Company's business and operations or its financial
     condition, together with a certificate of a duly authorized officer of the
     Company certifying that the Company is in compliance with all of its
     obligations under this Agreement, the other Financing Agreements and the
     Project Agreements and that there exists no Event of Default or Potential
     Event of Default;

     (5) a statement, in level of detail reasonably satisfactory to the Bank, of
     all financial transactions between the Company and each of its Affiliates
     (including Cyprus Amax) and Shareholders, including without limitation
     details of all payments made to Cyprus Magadan and Cyprus Amax pursuant to
     the Management Agreement; and

     (6) a report prepared in accordance with the Environmental Standards.

                                       51
<PAGE>
 
(c) Prior to the physical completion of the Project, the Company shall furnish
to the Bank and the Independent Engineer, as soon as available but, in any
event, within 30 days after the end of each calendar month, a report, in a form
satisfactory to the Bank, of the Contractor on the implementation and progress
of, and expenditures on, construction of the Project through the end of such
calendar month, including estimates of remaining construction-related costs and
an explanation of any material deviations from the budgeted amounts set forth in
the Development Plan, with sufficient detail and information as may be required
by the Bank.

(d) Prior to the first Disbursement and, thereafter, not less than 30 days prior
to the expiration date. of any expiring insurance policy, the Company shall, in
accordance with the requirements of Schedule FF, submit to the Bank a
certificate of insurance for each policy or renewal policy required by Section
5.03 and Schedule FF to be in effect.

(e) The Company shall furnish promptly to the Bank, the Independent Engineer and
the Bank's environmental consultants such information as the Bank, the
Independent Engineer or the Bank's environmental consultants may from time to
time reasonably request. Without limiting the foregoing, the Company shall, at
the request of the Bank, furnish promptly to the Bank statements of all
transactions in relation to the Offshore Bank Account and the Russian Bank
Accounts.

(f) The Company shall permit, and shall procure that the Contractor permits,
representatives of the Bank, the Independent Engineer and the Bank's
environmental consultants, on reasonable notice and during normal business
hours, to visit the Project or any of the other premises where the business of
the Company is conducted or where the Project is being carried out and to have
access to its book/of account and records. Without limiting the foregoing, the
Independent Engineer shall, at the Bank's direction a nd at the Company's
expense, visit the Kubaka Field once in each calendar year for the purpose of
confirming residual ore body reserves.

(g) The Company shall promptly inform the Bank of:

    (1) any proposed change in any material respect in the nature or scope of
    the Project or of the Development Plan or the business or operations of
    the Company;
    
    (2) any event, condition or change of circumstances, including without
    limitation any pending or threatened litigation, arbitration, claim or
    government investigation, which might have a Material Adverse Effect;
    
    (3) any proposed change of Russian law of which the Company has knowledge
    which might have a Material Adverse Effect; and
    
    (4) any material claims under insurance policies.

(h) Forthwith upon becoming aware of the occurrence of any Event of Default, any
Potential Event of Default, any Qualified Political Event or any event that,
with the passage of time or otherwise, might become a Qualified Political Event
or cause

                                      52
<PAGE>
 
compensation to become payable under any contract of insurance issued by OPIC in
support of the Project, the Company shall give the Bank notice thereof by
facsimile transmission or telex specifying the nature of such Event of Default,
Potential Event of Default, Qualified Political Event or event and any steps
the Company is taking to remedy the same.

(i) Forthwith upon the occurrence of any incident or accident relating to the
Project, including but not limited to any such incident or accident likely to
have a material adverse effect on the environment or worker health or safety,
the Company shall give the Bank notice thereof by facsimile transmission or
telex specifying the nature of such incident or accident and any steps the
Company is taking to remedy the same. Without limiting the generality of the
foregoing, an incident or accident is likely to have a material adverse effect
on the environment or worker health or safety if (1) any relevant Russian law
requires notification of such incident or accident to the authorities, (2) such
incident or accident involves worker fatality or multiple serious injuries
requiring hospitalization, or (3) such incident or accident has become public
knowledge whether through media coverage or otherwise.

(j) The Company shall give to the Bank, by telex or facsimile transmission,
notice of the calling of any meeting of its shareholders or board of directors
indicating the agenda thereof no later than at the time that it gives official
notice of any such meeting to its shareholders or directors, as relevant, and
furnish promptly to the Bank two copies of (1) all notices, reports and other
communications of the Company to its shareholders, and (2) the minute of all
meetings of its shareholders and board of directors. The Company shall permit a
representative of the Bank to attend, at the Company's, the annual meeting of
the Company's shareholders, which meeting shall immediately follow the meeting
of the Company's board of directors at which the Company's annual budget is
discussed.

(k) The Company shall conduct environmental audits of the Project in accordance
with the Environmental Standards and engage a reputable environmental consulting
firm of international standing acceptable to the Bank to confirm the results of
such audits. Promptly after completion of each such audit, the Company shall
furnish the results thereof to the Bank.

(l) The Company shall undertake such additional development drilling and
exploration work on the Kubaka Field which a prudent operator of a comparable
gold mine would undertake under similar circumstances, including without
limitation in-fill and development drilling and additional check sampling of the
unsampled exploration adits (or, if not possible, other exploratory work) during
the summer of 1995, and furnish all results of such exploratory work to the
Independent Engineer and the Bank.

Section 5.20. Development Plan

    Not later than 30 days prior to the date of the first Disbursement, the
Company shall submit to the Bank for approval the proposed development plan for
the Project, including, without limitation, detailed technical plans and
specifications, a financing plan, an estimated construction schedule and budget,
operating plans and procedures,

                                      53
<PAGE>
 
descriptions of proposed transportation and marketing arrangements and a list of
major equipment. Upon approval of such plan by the Project Lenders, such plan
shall constitute the Development Plan for purposes of this Agreement.

                        ARTICLE VI - NEGATIVE COVENANTS

       Unless the Bank shall otherwise agree in writing:

Section 6.01. Dividends

       The Company shall not declare or pay any dividend, or make any
distribution on its share capital, or purchase, redeem or otherwise acquire any
shares of capital of the Company or any option over the same, or make any
payment of principal or interest on any Subordinated Shareholder Loan or any
other Shareholder Distribution (other than payments of management fees pursuant
to the Management Agreement as provided in Section 5.12(d), to the extent
permitted by Section 6.08(c)) prior to the later of (A) the Project Completion
Date and (15) 15 December 1997, and then only if;

       (1) the Loan Life Debt Service Coverage Ratio is not less than 1.4 and
       the Retrospective Debt Service Coverage Ratio for the preceding Interest
       Period is not less than 1.25;

       (2) no Event of Default, no Potential Event of Default, no Qualified
       Political Event and no event that, with the passage of time or otherwise,
       might become a Qualified Political Event or cause compensation to become
       payable under any contract of insurance issued by OPIC in support of the
       Project has occurred and is continuing or is likely to occur;

       (3) the Company gives the Bank not less than 45 days' prior written
       notice of such payment;

       (4) such payment is made only on a Interest Payment Date; and

       (5) to the extent that such payment is in a currency other than Roubles,
       such payment is made only in accordance with the provisions of Section
       5.12(d).

Section 6.02. Capital Expenditures

       The Company shall not incur expenditures or commitments for expenditures
for fixed and other non-current assets, other than expenditures required for
carrying out the Project or for maintenance, repairs or replacements essential
to the operation of the Project, in an aggregate amount in excess of $500,000
(or the equivalent thereof in other currencies at then current rates of
exchange) in any Financial Year.

                                      54
<PAGE>
 
Section 6.03. Leases

       The Company shall not enter into any agreement or arrangement to
acquire by lease the use of any property or equipment of any kind, except to the
extent that the aggregate payments by the Company in respect of such leases do
not exceed $250,000 (or the equivalent thereof in other currencies at then
current rates of exchange) in any Financial Year.

Section 6.04. Indebtedness

(a)    The Company shall not incur, assume or permit to exist any Indebtedness
except:

       (1) that provided in the Financing Plan, including the Loan and the OPIC
       Loan;

       (2) Subordinated Shareholder Loans to finance Project Cost overruns;

       (3) Short-term Debt incurred in the ordinary course of business other
       than for money borrowed, including without limitation prepayments by
       Roskomdragmet to the Company under the Roskomdragmet Agreement;

       (4) Short-term Debt in Roubles in an aggregate amount not to exceed the
       equivalent in Roubles of $4,000,000 or, if less, 50% of the Company's
       short-term assets, incurred solely to finance the Company's working
       capital requirements in Roubles; and 

       (5) Indebtedness in an aggregate amount not to exceed the equivalent in
       Roubles of $5,000,000 (or such higher amount as may be agreed by the
       Bank), incurred solely to finance refundable Russian value added tax paid
       in connection with construction of the Project.

(b)    The Company shall not enter into any agreement or arrangement to
guarantee or, in any way or under any condition, to become obligated for all or
any part of any financial or other obligation of another person.

Section 6.05. Liens

       The Company shall not create or permit to exist any Lien on any
property, revenues or other assets, present or future, of the Company, except:

       (1) the Security;

       (2) Liens over refunds of Russian value added tax to secure the
       Indebtedness referred to in Section 6.04(a)(5);

                                      55
<PAGE>
 
     (3) the right of Roskomdragmet, in accordance with Article 9.2(a) of the
     Roskomdragmet Agreement, to refunds from the Roskomdragmet Sales Subaccount
     of prepayments made under the Roskomdragmet Agreement; or

     (4) any tax or other non-consensual Lien arising by operation of law or
     other statutory Lien arising in the ordinary course of business, provided
     that such Lien is for a sum which is not yet delinquent or the validity or
     amount of such Lien or the sum secured by such Lien is being contested in
     good faith and by proper proceedings and adequate reserves have been set
     aside for the payment of such sum.

Section 6.06. Hedging

     The Company shall not, without the prior written consent of the Bank (not
to be unreasonably withheld), enter into any interest rate or currency swap,
interest rate cap or collar, forward rate agreement or other interest rate,
currency or commodity (including gold) hedge.

Section 6.07. Arm's Length Transactions

     The Company shall not enter into any transaction with any person except in
the ordinary course of business, on ordinary commercial terms and on the basis
of arm's length arrangements, or enter into any transaction whereby the Company
would pay more all the ordinary commercial price for any purchase or would
receive less than the full ex-works commercial price (subject to normal trade
discounts) for its products.

Section 6.08. Profit-Sharing and Management Arrangements

(a) The Company shall not enter into any partnership, profit-sharing or royalty
agreement or other similar arrangement whereby the Company's income or profits
are, or might be, shared with any third party other than pursuant to the
Management Agreement, the License, the Tranche 2 Loan and the OPIC Tranche 2
Loan.

(b) The Company shall not enter into any management contract or similar
arrangement whereby its business or operations are managed by any other person
except as contemplated by the Management Agreement and the Construction
Contract.

(c) The Company shall not pay any management fee to Cyprus Magadan under the
Management Agreement (1) prior to the later of the Project Completion Date and
15 December 1907, (2) on a day other than an Interest Payment Date, 3) if an
Event of Default or a Potential Event of Default has occurred and is continuing,
or (4) if Cyprus Magadan has notified the Bank, pursuant to the Cyprus Magadan
Guaranty, that a Political Event (as defined in the Cyprus Magadan Guaranty) has
commenced and such notification has not been withdrawn by Cyprus Magadan
pursuant to the Cyprus Magadan Guaranty. Except to the extent permitted by
Section 6.01 and this

                                       56
<PAGE>
 
Section 6.08(c), the Company shall not make any payments to Cyprus Magadan or
Cyprus Amax or any Affiliate thereof other than of Operating Costs consisting of
reimbursable expenses payable pursuant to the Management Agreement.

Section 6.09. Investments

     The Company shall not form or have any Subsidiary, or make or permit to
exist loans or advances (other than a loan to the new subsurface user of the
Evenskoye Field in an amount not to exceed $8,000,000, if such loan is required
by Section 4.9 of the License Agreement) to, or deposits (other than deposits in
the Offshore Bank Account, the Russian Bank Accounts and the accounts
established in connection with the working capital facility referred to in
Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5)) with, other persons or equity or other investments in any person or
enterprise; provided, however, that the funds deposited in the Offshore Bank
Account and the Russian Bank Accounts may be invested by the banks at which such
accounts are located in short-term investment grade marketable securities.
Without limiting the foregoing, the Company shall not open or maintain any bank
accounts other than the Offshore Bank Account, the Russian Bank Accounts and the
accounts established in connection with the working capital facility referred
to in Section 6.04(a)(4) and the value added tax facility referred to in Section
6.04(a)(5) and shall not open or maintain any subaccounts of the Offshore Bank
Account other than the Disbursement Subaccount, the Roskomdragmet Sales
Subaccount, the Export Sales Subaccount, the Revenue Subaccount and the Cash
Collateral Subaccount.

Section 6.10. Changes in Business, Capital and Charter

(a) The Company shall not make changes to the nature of its contemplated
business or operations. The Company shall not make any material change in the
nature or scope of the Project or the Development Plan, including without
limitation any such change which would involve an increase in Project Costs of
more than 15% or a delay in Project Completion of more than 120 days.

(b) The Company shall not carry out any business or activity other than
businesses or activities substantially related to the Project as contemplated by
the Development Plan.

(c) The Company shall not make changes, or permit changes to be made, to its
capital except in accordance with the Financing Plan. The Company shall not
permit any change in the equity interest of, or any transfer of any shares held
in its registered capital by, any Shareholder other than a transfer of shares in
the Company by one Russian Shareholder to another Russian Shareholder provided
that such shares remain subject to the Omolon Share Pledge.

(d) The Company shall not make changes, or permit changes to be made, to its
Charter in any manner which would be inconsistent with the provisions of this
Agreement.

                                       57
<PAGE>
 
Section 6.11. Prepayment of Long-term Debt

     The Company shall not (whether voluntarily or involuntarily) make any
prepayment, repurchase or early redemption of any Long-term Debt (including,
without limitation, the OPIC Loan, but excluding prepayments under the
Construction Contract in exchange for discounts), or make any repayment of any
Long-term Debt pursuant to any provision of any agreement or note which provides
directly or indirectly for acceleration of repayment in time or amount, unless
in any such case it shall contemporaneously make a proportionate prepayment of
the principal amount then outstanding of the Loan in accordance with the
provisions of Section 3.07(a).

Section 6.12. Sale of Assets; Merger

(a) The Company shall not sell, transfer, lease, grant a license to use or
otherwise dispose of all or a substantial part of its capital assets (whether in
a single transaction or in a series of transactions, related or otherwise).

(b) The Company shall not undertake or permit any merger, consolidation or
reorganization.

                        ARTICLE VII- EVENTS OF DEFAULT

Section 7.01. Events of Default

     Each of the following events and ocurrences shall constitute an Event of
Default under this Agreement:

(a) Payment Default. The Company shall have failed to pay when due any principal
of, or interest on, the Loan as required by this Agreement or the OPIC Loan as
required by the OPIC Finance Agreement.

(b) Negative Covenant Default. The Company shall have failed to perform any of
its obligations under Article VI.

(c) Other Obligations Default. The Company or any other party (other than a
Project Lender) shaft have failed to perform any of its obligations under this
Agreement, any other Financing Agreement, any Project Agreement or any other
agreement between the Company on the one hand and the Bank or OPIC on the other
hand, the failure to perform which is not an Event of Default referred to
elsewhere in this Section 7.01, an.d any such failure to perform shall have
continued for a period of 30 days (in the case of a failure to perform by the
Company, any Affiliate of the Company or any Shareholder) or 60 days (in the
case of a failure to perform by any other party) after notice thereof shall have
been given to the Company by the Bank.

(d) Representation Default. Any representation or warranty made or confirmed by
the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the Contractor in

                                       58
<PAGE>
 
Article II, in any Financing Agreement, in any Project Agreement or in any
request for a Disbursement under this Agreement or for a disbursement under the
OPIC Finance Agreement shall have been false, incorrect or misleading in respect
of a material fact when made or confirmed.

(e) Nationalization Default. Any government or governmental authority shall have
condemned, nationalized, seized or otherwise expropriated all or any substantial
part of the property or other assets of the Company or of its share capital or
shall have assumed custody or control of such property or other assets or of the
business or operations of the Company or of its share capital or shall have
taken any action for the dissolution or disestablishment of the Company or any
action that would prevent the Company from carrying on its business or
operations, or a substantial part thereof, or otherwise prevent the completion
or operation of the Project; or the Company or any Shareholder shall have made a
claim under any insurance issued by OPIC (or similar insurance issued by any
other insurer) in connection with the Project.

(f) Bankruptcy Default. There shall have been entered against the Company,
Cyprus Amax, Cyprus Gold or any Shareholder a decree or order by a court
adjudging the Company, Cyprus Amax, Cyprus Gold or such Shareholder bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company, Cyprus
Amax, Cyprus Gold or such Shareholder under any applicable law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company, Cyprus Amax, Cyprus Gold or such Shareholder or of any
substantial part, of its property or assets, or ordering the winding up or
liquidation of its affairs; or the Company, Cyprus Amax, Cyprus Gold or any
Share older shall have instituted ' proceedings to be adjudicated bankrupt or
insolvent, or consented to the institution of bankruptcy or insolvency
proceedings against it, or filed a petition or answer or consent seeking
reorganization and or relief under any applicable law, or consented to the
filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company, Cyprus
Amax, Cyprus Gold or such Shareholder or of any substantial part of its
property, or made an assignment for the benefit of creditors, or admitted in
writing its inability to pay its debts generally as they become due; or any
other event shall have occurred which under any applicable law would have an
effect analogous to any of the events listed in thin subsection; provided that
any such event in respect of a Russian Shareholder shall be an Event of Default
only if it has a Material Adverse Effect.

(g) Cross Default. A default shall have occcured with respect to any
Indebtedness of Cyprus Amax in excess of $20,000,000 (or the equivalent thereof
in other currencies) or any Indebtedness of the Company (other than the Loan or
the OPIC Loan) or Cyprus Magadan or under any agreement pursuant to which there
is outstanding any such Indebtedness, and such default shall have continued
beyond any applicable period of grace; or an event of default shall have
occurred under the OPIC Finance Agreement.

(h) Abandonment Default. The Company shall have ceased to carry on its business;
or the Project shall have been abandoned by the Company; or, following the

                                       59
<PAGE>
 
Project Completion Date, the operation of the Project shall have been
interrupted for a period in excess of 90 consecutive days or any periods in the
aggregate in excess of 120 days during any period of 12 consecutive months.

(i) Project Completion Default. Physical completion of the Project (as certified
by the Company and Cyprus Magadan in accordance with Schedule Q) shall not have
occurred by the date 24 months from the date of this Agreement, as such dam
shall be extended for a period (not to exceed, in the aggregate, 12 months)
equal to the duration of any suspension by the Bank of the fight of the Company
to Disbursements pursuant to Section 3.04 and for-a period (not to exceed, in
the aggregate, six months) equal to the duration of any Force Majeure Event
occurring during the Commitment Period; or the Project Completion Date shall not
have occurred by the date 18 months after physical completion of the Project.

(j) Agreement Default. Any Financing Agreement or Project Agreement or any other
agreement required in connection with the construction or operation of the
Project or ancillary services shall have been terminated, rescinded or cancelled
for any reason (unless the Bank shall have consented to such termination in
accordance with Section 5.09(b)); or any Project Agreement shall have been
modified or amended without the prior written consent of the Bank; or any
Financing Agreement or Project Agreement shall be or become void or
unenforceable or shall be claimed to be so by any party thereto (other than a
Project Lender).

(k) Judgment Default. A final judgment or order for the payment of money in
excess of $2,000,000 (or the equivalent thereof in other currencies at then
current rates of exchange) shall be rendered against the Company or any of its
properties and such judgment or order shall continue to be unsatisfied for a
period of 30 consecutive days; or any legal proceeding (whether criminal or
civil) shall be instituted which, if adversely determined, might have a Material
Adverse Effect; or any injunction or other judicial order which might have a
Material Adverse Effect shall be issued against the Company.

(1) Security Default. Any Security Document (other than the Immovables Mortgage
or the Enterprise Mortgage) for any reason (other than an act or omission of the
Bank or OPIC) shall have ceased to constitute a valid and perfected first
priority security interest in and Lien on any of the collateral purported to be
covered thereby; or the Company shall have created or permitted to exist any
Lien (other than a Permitted Lien) on any of its property, revenues or assets.

(m) Approvals Default. Any license, approval, consent, filing or registration
now or hereafter required for the execution, delivery or performance by any
party of any Financing Agreement or Project Agreement or to contract, own,
operate or maintain the Project or exploit the Kubaka Field shall have been
modified, revoked, withdrawn or withheld or shall have ceased to remain in full
force and effect, and such occurrence shall have a Material Adverse Effect.

(n) Cyprus Amax Default. The credit rating given to Cyprus Amax by Standard &
Poor's Corporation shall have fallen below BB- at any time that any amounts are

                                       60
<PAGE>
 
guaranteed by Cyprus Magadan pursuant to the Cyprus Magadan Guaranty; or Cyprus
Amax or Amax Gold shall have failed at any time to own indirectly 50% of the
shares in the Company; or Cyprus Amax or Amax Gold shall have ceased at any time
to be entitled, either directly or indirectly, to exercise such-control over the
management of the Company as is provided for Cyprus Amax in the Company's
Charter as it exists on the date hereof or such management control shall have
been reduced from that provided for in the Company's Charter as it exists on
the date hereof; or all or pan of Cyprus Amax's indirect shareholding in Cyprus
Magadan shall have been transferred to Amax Gold and Amax Gold shall have ceased
to be an Affiliate of Cyprus Amax.

(o) Adverse Change Default. There shall have occurred a change of law or of any
regulation having the force of law which has a Material Adverse Effect; or it
shall have become unlawful for the Company, Cyprus Amax, Cyprus Gold, any
Shareholder or the Contractor to perform any material obligation under this
Agreement, any other Financing Agreement or any Project Agreement; or there
shall have occurred any action by any governmental body or agency or any
enactment, modification or change in the interpretation of any law, de, order
or regulation which restricts or prohibits in any material way the perform by
the Company, Cyprus Amax, Cyprus Gold, any Shareholder or the Contractor of
their respective obligations under this Agreement, any other Financing Agreement
or any Project Agreement; or there shall have occurred a change in the political
or economic situation in the Russian Federation or other adverse change in
circumstances or in the business situation of the Company, any Shareholder or
the Contractor which, in the reasonable opinion of the Bank, has a Material
Adverse Effect.

(p) Environment Default. The Company or its businesses, operations, assets;
equipment, progeny, leaseholds or other facilities shall have failed in any
respect to comply with the Environmental Standards.

(q) Cost Overrun Default. The Bank shall have determined that the Project Costs
(including, without limitation, financing costs) necessary to achieve physical
completion of the Project will, as a result of delays in completion or
otherwise, exceed by more than $10,000,000 (or the equivalent thereof in other
currencies at then current rates of exchange) the total amount the thereof set
forth in Section 2.01(a) and the Shareholders shall have failed, within 60 days
of such determination, to maim cash contributions of paid-in capital or
Subordinated Shareholder Loans to the Company in the amount of 50% of the full
amount of such excess.

(r) Bank Account Default. The Company shall have withdrawn any funds from the
Offshore Bank Account, or any subaccount thereof, or the Russian Bank Accounts
for any purpose not permitted by this Agreement or otherwise in any manner
contrary to the terms of this Agreement, the Offshore Account Pledge or the
Russian Account Pledge; or, at any time after the Project Completion Date, the
balance of the Cash Collateral Subaccount shall be less than the minimum amount
specified in Section 5.13 for a period in excess of 15 consecutive days.

                                       61
<PAGE>
 
Section 7.02. Acceleration in Events of Default

     If any one or more Events of Default shall have occurred and be
continuing, then the Bank may, by notice to the Company, declare the principal
of, and all accrued interest on, the Loan (together with any other amounts
accrued or payable under this Agreement) to be, and the same shall thereupon
become, immediately due and payable (anything in this Agreement to the contrary
notwithstanding) without any further notice and without any presentment, demand
or protest of any kind, all of which are hereby expressly waived by the
Company.

Section 7.03. Automatic Acceleration

     If the Company shall have become voluntarily or involuntarily dissolved, or
become bankrupt or insolvent (however such bankruptcy or insolvency may be
evidenced), the principal of, and all accrued interest on, the Loan (together
with any other amounts accrued or payable under thin Agreement)shall thereupon
become immediately due and payable (anything in this Agreement to the contrary
notwithstanding) without any presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived by the Company.

                         ARTICLE VIII - MISCELLANEOUS

Section 8.01. Term of Agreement

     This Agreement shall continue in force until all monies payable hereunder
shall have been fully paid in accordance with the provisions hereof; provided
that the indemnities of the Company shall survive repayment of the Loan.

Section 8.02. Entire Agreement; Amendment and Waiver

     This Agreement and the documents referred to heroin constitute the entire
obligation of the parties hereto with respect to the subject matter hereof and
shall supersede any prior expressions of intent or understandings with respect
to this transaction, including the LeVer of Information dated 6 June 1994 from
the Company to the Bank. Any amendment hereto or waiver of any of the terms
hereof shall be in writing, signed by each party to be bound or burdened
thereby.

Section 8.03. Notices

     Any notice, application or other communication to be given or made under
this Agreement to the Bank or the Company shall be in writing. Subject to the
provisions of Sections 5.31(f), 5.31(g) and 5.31(h), such notice, application or
other communication shall be deemed to have been duly given or made when it
shall be delivered by hand, airmail, telex or facsimile transmission to the
party to which it is

                                       62
<PAGE>
 
required or permitted to be given or made at such party's address specified
below or at such other address as such party shall have designated by notice to
the party giving or making such notice, application or other communication.

For the Company:

       Omolon Gold Mining Company
       Proletariat Street, 14
       685000 Magadan
       Russian Federation                               

       Telex:           145122
       Answerback:      NEGA SU
       Fax:             (70) (413) (22) 2-45-15

For the Bank:

       European Bank for Reconstruction and Development 
       One Exchange Square
       London EC2A 2EH
       United Kingdom

       Attention:       Operation Administration Unit

       Telex:           8812161
       Answerback:      EBRD L G
       Fax:             (44) (171) 338-6100

Section 8.04. Certificate of Incumbency and Authority

      The Company shall furnish or cause to be furnished to the Bank evidence,
in the form of Schedule Y and in substance satisfactory to the Bank, of the
authority of the person or persons who will, on behalf of the Company, sign the
applications and certifications provided for in this Agreement or take any other
action or execute any other document required or permitted to taken or executed
by the Company under this Agreement, and the authenticated specimen signature of
each such person.

Section 8.05. English Language

      All documents to be furnished or communications to be given or made under
this Agreement shall be in the English language or, if in another language,
shall be accompanied by a translation into English certified by a representative
of the Company. The English language version or translation of each Financing
Agreement shall be the governing version between the Company and the Bank.

                                       63
<PAGE>
 
Section 8.06. Financial Calculations

(a) All financial calculations to be made under, or for the purposes of, this
Agreement shall be determined in accordance with Generally Accepted Accounting
Principles in the United States and, except as otherwise required to conform to
the definitions contained in Section 1.01 or any other provisions of this
Agreement, shall be calculated from the then most recently issued quarterly
Financial Statements which the Company is obligated to furnish to the Bank from
time to time, as provided in Section 5.19(a) ; provided, however, that, (1) if
the relevant quarterly Financial Statements should be in respect of the last
quarter of a Financial Year then, at the Bank's option, such calculations may
instead be made from the audited Financial Statements for the relevant Financial
Year, and (2) if there should occur any material adverse change in the financial
condition of the Company after the end of the period covered by the relevant
Financial Statements, then such material adverse change shall also be taken into
account in calculating the relevant figures.

(b) The Company shall, in consultation with the Bank and using the Financial
Model, prepare a banking case once every six months in accordance with the
procedures set forth in Schedule I. The first such banking case shall be
prepared prior to the first Repayment Date or, if earlier, the first Interest
Payment Date following the Project Completion Date. All calculations of Loan
Life Debt Service Coverage Ratios shall be made on the basis of such banking
cases.

Section 8.07. Rights, Remedies and Waivers

(a) The rights and remedies of the Bank in relation to any misrepresentations or
broach of warranty on the part of the Company shall not be prejudiced by any
investigation by or on behalf of the Bank into the affairs of the Company, by
the execution or the performance of this Agreement or by any other act or thing
which may be done by or on behalf of the Bank in connection with thin Agreement
and which might, apart from this Section, prejudice such rights or remedies.

(b) No course of dealing or waiver by the Bank in connection with any condition
of Disbursement under this Agreement shall impair any right, power or remedy of
the Bank with respect to any other condition of Disbursement, or be construed to
be a waiver thereof; nor shall the action of the Bank in respect of any
Disbursement affect or impair any right, power or remedy of the Bank in respect
of any other Disbursement.

(c) Unless otherwise notified to the Company by the Bank and without prejudice
to the generality of Section 8.07(b), the fight of the Bank to require
compliance with any condition under this Agreement which may be waived by the
Bank in respect of any Disbursement is expressly preserved for the purposes of
any subsequent Disbursement.

(d) No course of dealing and no delay in exercising, or omission to exercise,
any right, power or remedy accruing to the Bank upon any default under this
Agreement or any other agreement shall impair any such right, power or remedy or
be construed

                                       64
<PAGE>
 
to be a waiver thereof or an acquiescence therein; nor shall the action of the
Bank in respect of any such default, or any acquiescence by it therein, affect
or impair any fight, power or remedy of the Bank in respect of any other
default.

Section 8.08. Indemnification

(a) The Company assumes full liability for, and agrees to and shall indemnify
and hold harmless the Bank and its officers, directors, employees, agents and
servants and any manager appointed by the Bank pursuant to any Security Document
against and from any and all liabilities, obligations, losses, damages
(compensatory, punitive or otherwise), penalties, claims, actions, taxes,
duties, suits, costs and expenses (including, without limitation, reasonable
legal counsel's fees and expenses and costs of inves tigation) of whatsoever
kind and nature, including, without prejudice to the generality of the
foregoing, those aria g in contract or tort (including, without limitation,
negligence) or by re, Set liability or otherwise, which are imposed on, incurred
by or asserted against the Bank' or any of its officers, directors, employees
agents or servants or any manager appointed by the Bank pursuant to any Security
Document (whether or not also indemnified by any other person under any other
document) and which in any way relate to or arise out of, whether directly or
indirectly, (1) any of the transactions contemplated by any Financing Agreement
or Project Agreement or the execution, delivery or performance thereof, (2) the
development, design, construction, completion, operation or maintenance of the
Project, the Kubaka Field or the Evenskoye Field or the ownership, control or
posen thereof by the Company, or (3) the exercise by the Bank of any of its
rights and remedies under any of the Security Documents or any of the other
Financing Agreements; provided that the Bank shall not have any right to be
indemnified hereunder for its own gross negligence or willful misconduct.

(b) Without limiting the generality of the foregoing, the Company agrees to and
shall indemnify and hold harmless the Bank and its officers, directors,
employees, agents and servants against and from any such liabilities,
obligations, losses, damages, penalties, claims, actions, taxes, duties, suits,
costs or expenses arising under any environmental law or other applicable law as
a result of the past, present or future operations of the Company (or any
predecessor or successor in interest to the Company), or the past, present or
future condition of any site or facility owned, operated or leased by the
Company (or any such predecessor or successor in interest), or any release or
use or threatened release of any pollutants or ham materials at any such site or
facility, including any such release or use or threatened release which shall
occur during any period when either Project Lender shall be in possession of any
such site or facility following the exercise by either Project Lender of any of
its rights and remedies hereunder or under any Financing Agreement.

Section 8.09. Severability

     If any one or more of the provisions contained in this Agreement or any
document executed in connection herewith shall be invalid, illegal or
unenforceable,

                                       65
<PAGE>
 
the validity, legality and enfoceability of the remaining provisions contained
herein shall not in any way be affected or impaired.

Section 8.10. Governing Law

      This Agreement shall be governed by and construed in accordance with the
laws of the State of New York in the United States of America.

Section 8.11. Arbitration and Jurisdiction

(a) The Bank shall have the option in its sole discretion to refer any dispute,
controversy or claim arising out of or relating to thisAgreement, the Notes or
any other Financing Agreement to which the Company and the Bank are parties or
axe among the parties, or the breach, termination or validity hereof or thereof,
including any dispute concerning the scope of this arbitration clause, for final
settlement by arbitration. In no event shall the Company be entitled to refer
any such dispute, controversy or claim to arbitration pursuant to this section
or otherwise . Upon the election by the Bank to refer any such dispute,
controversy or claim to arbitration pursuant hereto, the Company shall be
obligated to settle such dispute, controversy or claim by arbitration as
provided herein. The Company hereby expressly and irrevocably submits to the
jurisdiction of the arbitral tribunal appointed in with the procedures set forth
below with respect to any dispute, controversy or claim that is referred by the
Bank to arbitration, to the exclusion of the jurisdiction of the legal,
equitable or arbitral courts of the Russian Federation or of any other country
or jurisdiction. The following provisions shall apply to any such arbitration:

     (1) Except as otherwise provided herein, such arbitration shall be governed
     by the International Arbitration Rules of the American Arbitration
     Association in effect at the time of such arbitration (for purposes of this
     section, the "AAA Rules").

     (2) The seat of such arbitration shall be New York, New York, unless the
     Bank determines that the seat of such arbitration shall instead be London,
     England or Washington, D.C. The language of the arbitration proceedings and
     of all written decisions shall be English. All pleadings and documentary
     evidence shall be presented in English, except that, if any original
     documentary evidence is not in English, the offering patty shall provide
     English translations thereof (which, in the event of any dispute with re
     spect to such translation, the arbitral tribunal may require to be
     certified translations) to the arbitral tribunal and to the other party.

     (3) The arbitral tribunal shall consist of three arbitrators, each of whom,
     in addition to meeting the qualification requirements of the AAA Rules:

          (A) shall be fluent in the English language; and

                                       66
<PAGE>
 
          (B) shall be an attorney qualified to practice law in the State of New
          York with experience in representing lenders and borrowers in
          international project finance lending to private sector borrowers.

     One arbitrator shall be appointed by the Bank and one arbitrator shall be
     appointed by the Company. Each party shall notify the other of the name of
     its appointee within 10 days of the receipt by the Company of notice from
     the Bank of its election to refer any dispute, controversy or claim to
     arbitration pursuant hereto. The third arbitrator shall be appointed by the
     Bank with the concurrence of the Company. The third arbitrator shall be the
     chair of. the arbitral tribunal. The Company shall be deemed to a ccept the
     Bank's nomination of the third arbitrator if the Company fails to object to
     such nomination (or any subsequent nomination) within seven days of
     receiving notice from the Bank of such nomination. If the Company does not
     accept (and has not been deemed to have accepted) the Bank's first
     nomination, the Bank shall submit a second nimination for the third
     arbitrator. If the Company does not accept (and has not been deemed to have
     accepted) such second nomination, the Batik shall submit a third nomina
     tion for the third arbitrator. If the Company fails to appoint its
     arbitrator for any reason in the manner or within the period specified
     above or the Company does not accept (and has not been deemed to have
     accepted) the third arbitrator nominated by the Bank, then the arbitrator
     that the Company failed to appoint or such third arbitrator or both such
     arbitrators, as the case may be, shall be appointed by the Administrator
     (as defined in the AAA Rules).

     (4) Each party shall send any challenge to the appointment of an arbitrator
     to the Administrator within seven days after receiving notice of the
     appointment of such arbitrator. The Administrator shall nile on any
     challenge to the appointment of an arbitrator as quickly as reasonably
     possible and, in any event, within seven days. If an arbitrator appointed
     by the Bank withdraws or must be replaced for any reason, the Bank shall
     appoint a substitute arbitrator in accordance with Section 8.11(a)O) within
     a re asonable period of time. If an arbitrator appointed by the Company
     withdraws or must be replaced for any reason, the Company shall appoint a
     substitute arbitrator in accordance with Section 8.11(a)(3) within three
     days. If the arbitrator appointed by the Bank with the concurrence of the
     Company withdraws or must be replaced, the Bank shall nominate a substitute
     arbitrator with the concurrence of the Company in accordance with Section
     8.11(a)(3). If an arbitrator appointed by the Administrator withdraws or
     must be replaced, the Administrator shall appoint a substitute arbitrator.

     (5) In the event that OPIC commences an arbitration in acco anco with the
     OPIC Finance Agreement or any other Financing Agreement and the Bank and
     OPIC agree to consolidate such arbitration with any arbitration hereunder,
     the Bank and OPIC shall jointly exercise the rights of the Bank under
     Sections 8.11 (a)(2), 8.11 (a)(3) and 8.11 (a)(4), but otherwise the Bank
     shall be entitled to exercise independently the rights granted to it
     herein.

                                       67
<PAGE>
 
     (6) Between the date of appointment of an arbitrator and he date the
     arbitral tribunal is fully constituted, all communications between the
     parties and such arbitrator shall be made through the Administrator Each
     party shall provide the other with copies of any communication with the
     arbitral tribunal.

     (7) The Bank shall communicate its statement of claim in writing to the
     Company and the arbitral tribunal within a period of time to be determined
     by the arbitral tribunal. The Bank's statement of claim shall include a
     statement of facts supporting its claim, the points at issue and the relief
     or remedy sought. A copy of this Agreement shall be attached to the Bank's
     statement of claim.

     (8) The Company shall file a statement of defense in writing within 20 days
     of its receipt of the Bank's statement of claim. The Company's statement of
     defense shall reply to the particulars of the Bank's statement of claim.
     The Company shall attach to its statement of defense all documents on which
     it relies for its defense and identify all documents or other evidence it
     will submit. The failure to timely and completely file such statement of
     defense (absent good cause) shall be construed by the arbitral tribunal as
     an admission of the allegations made by the Bank in its statement of claim
     and the arbitral tribunal shall enter an award for the relief or remedy
     requested by the Bank without any further hearing or review of evidence.

     (9) In any arbitral proceeding, the certificate of the Bank as to any
     amount due to the Bank under this Agreement shall be prima facie evidence
     of such amount.

     (10) Each arbitral tribunal established hereunder shall make its decisions
     entirely on the basis of the evidence adduced and on the basis of the
     governing law set forth in Section 8.10. No such arbitral tribunal shall
     have the power to reform any provisions of this Agreement or to impose any
     obligation on any of the parties to the arbitration or take any other
     action which could not be imposed or taken by a federal court located in
     the State of New York.

     (11) The parties irrevocably agree that, if the seat of any arbitration
     hereunder is London, England:

          (A) no leave to appeal under section 1 (3)(b) of the U.K. Arbitration
          Act of 1979 shall be sought with respect to any question of law
          arising from an award;

          (B) if the Bank has directed that the arbitral tribunal issue a
          written award stating only its conclusions and not the reasons
          therefor, no application shall be made under section l(5)(b) of the
          U.K. Arbitration Act of 1979 with respect to any award; and

          (C) no application shall be made under section 2(1)(a) of the U.K.
          Arbitration Act of 1979 with respect to any question of law.

                                      68
<PAGE>
 
     (12) Each party may be represented or assisted by legal counsel of its
     choice. The names and addresses of such legal counsel shall be communicated
     in writing to the other party in its statement of claim or statement of
     defense (as the case may be) specifying whether the appointment is' being
     made for the purposes of representation or assistance.

     (13) The parties shall agree on the date on which the arbitral tribunal
     will commence taking evidence in respect of the matter in issue, which date
     shaft not be more than 20 days after the Company's submission of its
     statement of defense (unless the Bank otherwise directs). Decisions or
     rulings on questions of procedure shall be made by a majority of the
     arbitral tribunal. Both parties shall have a right to be heard at the
     hearing, unless the parties have agreed to a documents-only arbitration or
     unless, in the case of the Company, the Company has not filed a timely
     statement of defense in accordance with Section 8.1l(a)(8).

     (14) At least 10 days before the first hearing date, there shall be an
     exchange of exhibits, brief descriptions of the testimony the parties
     propose to offer, the names of those who will testify (including expert
     witnesses) and any additional documents or other written evidence that will
     be submitted to the arbitral tribunal for consideration.

     (15) The arbitral tribunal shall have the discretion to allow, refuse or
     limit the appearance of witnesses, whether witnesses of fact or expert
     witnesses. Any witness who gives evidence may be questioned by the other
     pan or its attorneys under the control of the arbitral tribunal. The
     arbitral tribunal may put questions at any stage of the examination of the
     witnesses. The testimony of witnesses may be presented in written form,
     either as signed statements or by duly sworn affidavits. Subject to the
     discretion of the arbitral tribunal, either party may request that such
     witness should attend for oral examination at a hearing. If the witness
     fails to attend, the arbitral tribunal may place such weight on the written
     testimony as it thinks fit or exclude it all together. If any expert is
     appointed by the arbitral tribunal, the parties hereto shall have the right
     to examine such experts report to the arbitral tribunal and, subject to the
     discretion of the arbitral tribunal, to question such expert at an oral
     hearing. Subject to mandatory provisions of applicable procedural law, any
     party or its attorneys shall have the right to interview any witness or
     potential witness (including expert witnesses) prior to his appearance at
     any hearing.

     (16) To facilitate the comprehensive and consistent resolution of all
     disputes arising out of or in connection with any of the Financing
     Agreements, the Bank may, at its sole option, direct the arbitral tribunal
     to, and upon such direction the arbitral tribunal shall, consolidate with
     the arbitration proceeding hereunder any other arbitration or other dispute
     proceeding involving any of the parties to any of the Financing Agreements
     and arising out of or in connection with any of the Financing Agreements.
     In the event of any such consolidation, any arbitral tribunal constituted
     in respect of such other proceeding shall be dissolved effective upon such
     consolidation. the arbitral tribunal constituted hereunder

                                      69
<PAGE>
 
     shall determine all matters referred to arbitration in accordance with the
     rules and procedures applicable to the proceeding hereunder and no party
     shall have any right to challenge any arbitrator already nominated or
     appointed to such arbitral tribunal. Such arbitral tribunal shall be
     authorized to determine, in a manner consistent with the general tenor of
     the AAA Rules, the appropriate procedure to achieve the above objective and
     shall issue one final and comprehensive arbitral award in respect of all 
     such disputes so consolidated.

     (17) The arbitral tribunal shall issue a written decision and award stating
     the conclusions of the arbitral tribunal and the reasons upon which its
     conclusions am based, unless the Bank directs, in its sole discretion, that
     the arbitral tribunal issue a written decision and award stating only its
     conclusions and not the reasons therefor. The arbitral tribunal shall issue
     its award as soon as possible and, in any event, within one month after the
     conclusion of the relevant proceedings. Any money award shall be made and
     shall be payable in Dollars. Any award in favor of the Bank shall include
     an award of attorneys' fees and costs of arbitration, payable in Dollars.
     The award shall otherwise be limited to the scope of the submission. In no
     circumstance shall the arbitral tribunal render an award ex aequo et bono
                                                              -- ----- -- ----
     or as amiable compositeurs. Any award of the arbitral tribunal shall be
           ------- ------------
     final and binding and judgment upon any arbitral award may be entered and
     enforced by any court or judicial authority of competent jurisdiction.

     (18) Either party may, within 10 days after any award, submit a request
     that the arbitral tribunal interpret the award, correct any clerical,
     typographical or computation errors or make an additional award as to
     claims presented but omitted from the award. If the arbitral tribunal
     considers such request justified after considering the contention of the
     parties, the arbitral tribunal shall promptly comply with such request.

     (19) Neither the arbitral tribunal nor the Company shall be authorized to
     seek from any judicial authority, and the arbitral tribunal shall not be
     authorized to take or provide, any interim measures or pre-award relief
     against the Bank, any provisions of the AAA Rules notwithstanding.

(b)  The Company hereby irrevocably consents that any legal action or proceeding
against it or any of its properties or assets with respect to any of its
obligations arising under or relating to this Agreement, the Notes or any of the
other Financing Agreements or the arbitral tribunal's decision pursuant to
Section 8.11(a) may, at the option of the Bank, be brought in any court of the
State of New York or any Federal court of the United States of America located
in the City and State of New York or in the District of Columbia or the courts
of England, as the Bank may elect, and, by execution and delivery of thin
Agreement, the Company hereby submits to and accepts with regard to any such
action or proceeding for itself and in respect of its properties and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Company hereby irrevocably designates, appoints and empowers (1) CT Corporation
System. presently located at 1633 Broadway, New York, New York 10019, U.S.A. as
its agent to receive for and on its behalf service of process in the State of
New

                                      70
<PAGE>
 
York, (2) CT Corporation System, presently located at 1025 Vermont Avenue, N.W.,
4th Floor, Washington, D.C. 20005, U.S.A. as its agent to receive for and on its
behalf service of process in the District of Columbia, and (3) The Law Debenture
Corporation p.l.c., presently located at Princes House, 95 Gresham Street,
London EC2V 7LY, England as its agent to receive for and on its behalf service
of process in England in any legal action or proceeding with respect to this
Agreement, the Notes or any of the other Financing Documents. A copy of any such
process served on such agent shall be promptly forwarded by airmail by the Bank
to the Company at its address referred to in Section 8.03, but the failure of
the Company to receive such copy shall not affect in any way the service of such
process as aforesaid. The Company further irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified airmail, postage prepaid, to the Company at its address
referred to in Section 8.03. The foregoing, however, shall not limit the rights
of the Bank to serve process in any other manner permitted by law or to bring
any legal action or proceeding or to obtain execution of judgment in any other
jurisdiction, including without limitation the Russian Federation. The Company
further agrees that, to the extent permitted by law, final judgment against it
in any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction within or outside the United States of America or England by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of its indebtedness.

(c) The Company hereby irrevocably waives (1) any right it may have under the
laws of any jurisdiction to a trial by jury in respect of any legal action or
proceeding with respect to this Agreement, the Notes or any of the other
Financing Agreements, (2) any right it may have under the laws of any
jurisdiction (other than New York) to commence by publication any such legal
action or proceeding, (3) any objection which it may now or hereafter have to
the laying of the venue of any such legal action or proceeding in the State of
New York, the District of Columbia or England, and (4) any claim that the State
of New York, the District of Columbia or England is not a convenient forum for
any such legal action or proceeding.

(d) The Company hereby (1) irrevocably waives its right to, and agrees not to
request, plead or claim that the Bank post, pay or offer, any cautio judicatum
                                                              ------ ---------
solvi bond, litigation bond or any other bond, fee, payment or security measure
-----
provided by any provision of applicable law as a condition to commencing or
maintaining any such legal action or proceeding and (2) irrevocably waives any
objection that it may now or hereafter have to the Bank's claim that the Bank
should be exempt or immune from posting, paying, making or offering any such
bond, fee, payment or security measure.

(e) Notwithstanding anything herein to the contrary, no provision of this
Agreement shall be construed as a waiver by the Bank of any of the immunities,
privileges and exemptions granted to the Bank under the Agreement Establishing
the European Bank for Reconstruction and Development and applicable law.

                                      71
<PAGE>
 
Section 8.12. Waiver of Sovereign Immunity

     The Company represents and warrants that this Agreement and the Loan and
the incurring by the Company of the Loan are commercial rather than public or
governmental acts and that the Company is not entitled to claim immunity from
legal proceedings with respect to itself or any of its assets on the grounds of
sovereignty or otherwise under any law or in any jurisdiction where an action
may be brought for the enforcement of any of the obligations arising under or
relating to this Agreement, the Notes or the other Financing Agreements. To the
extent that the Company or any of its assets has or hereafter may acquire any
right to immunity from set-off, legal proceedings, attachment prior to
judgment, other attachment or execution of judgment on the grounds of
sovereignty or otherwise, the Company hereby irrevocably waives such rights to
immunity in respect of its obligations arising under or relating to this
Agreement, the Notes or the other Financing Agreements.

Section 8.13. Successors and Assigns

(a)  This Agreement shall bind and inure to the benefit of the respective supra
and assigns of the parties hereto, except that the Company may not assign or
otherwise transfer all or any part of its rights or obligations under this
Agreement without the prior consent of the Bank. The Bank may sell, transfer,
assign or otherwise dispose of (other than by means of a participation) all or
part of its rights or obligations under this Agreement and the other Financing
Agreements with the consent of the Company (not to be unreasonably withheld
and-not to be withheld solely on the basis thai the assignee might at some
future date be entitled to claim mounts in respect of tax reimbursements or
gross-ups pursuant to Section 3.12). The Bank may grant participations in its
rights or obligations under this Agreement without the consent of the Company,
provided that (1) the Bank shall promptly notify the Company of such
participation and (2) the participant would not, on the basis of facts and
circumstances in effect on the date of the participation, be entitled to claim
amounts in respect of tax reimbursements or gross-ups, Increased Costs or other
mounts pursuant to Section 3.11, 3.12 or 3.14 and Section 8.13(b) exceeding
those claimed by the Bank (it being understood that nothing in this sentence
shall in any way limit any rights of such participant under Section 3.11, 3.I2
or 3.14 and under Section 8.13(b) with respect to circumstances or conditions
arising after the date of such participation).

(b)  Upon any sale, transfer, assignment, participation or other disposition by
the Bank, the purchaser, transferee, assignee or participant shall be entitled,
to the extent of the interest transferred, to all of the benefits of this
Agreement as if originally named as a party hereto, including without limitation
the benefits of the indemnities, Increased Costs and tax reimbursements and
gross-ups provided for pursuant to the provisions of this Agreement and any
rights of set-off as permitted by law. The acts of the Bank or the failure of
the Bank to act hereunder shall in all circumstances be conclusive and binding
on any purchaser, transferee, assignee or participant of the Bank's interest
hereunder.

                                      72
<PAGE>
 
Section 8.14. Counterparts

      This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.

IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized
representatives, have caused this Agreement to be signed in their respective
names as of the date first above written.

                                   THE CLOSED JOINT STOCK COMPANY 
                                    "OMOLON GOLD MINING COMPANY"


                                    By: /s/ J. S. Rosenblum
                                       --------------------------
                                  Name: J. S. Rosenblum
                                       --------------------------
                                 Title: Chairman
                                        --------------------------

                                    By: /s/ S. W. Haraplak
                                       --------------------------
             [SEAL APPEARS HERE]  Name: S. W. Haraplak
                                       --------------------------
                                 Title: General Director
                                       --------------------------
                                           
                                    By: /s/ E. S. Ryzhaikina
                                       --------------------------
                                  Name: E. S. Ryzhaikina
                                       --------------------------
                                 Title: Chief Accountant
                                       --------------------------

           EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

                                    By: /s/ Jacque de Larosiere
                                       --------------------------
                                  Name: Jacque de Larosiere
                                       --------------------------
                                 Title: President
                                       --------------------------

                                      73
<PAGE>
 
                                                                [EXECUTION COPY]

                     AMENDMENT AGREEMENT TO LOAN AGREEMENT

THIS AMENDMENT AGREEMENT is made as of the 7th day of November 1995 between THE
CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").

WHEREAS:

(A) the Company has entered into a loan agreement dated as of 30 June 1995
(the "Loan Agreement") with the Bank, pursuant to which the Bank has agreed to
make a loan to the Company in an amount not to exceed US$47,500,000, subject to
the terms and conditions of the Loan Agreement; and

(B) the Company has requested that the Loan Agreement be amended in certain
respects and the Bank has agreed to so amend the Loan Agreement, subject to the
terms and conditions of this Amendment Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Definitions

     Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.

Section 2. Amendments to Loan Agreement

(a) The definition of "Russian Blocked Account Agreement" in Section 1.01 of the
Loan Agreement is hereby amended by deleting "Citibank T/O" in the third line
and inserting "Rossiisky Kredit Commercial Bank" in place thereof.

(b) Section 5.14 of the Loan Agreement is hereby amended by deleting "in
Roubles" in the 14th and 15th lines.

(c) Annex 2 to Schedule Q to the Loan Agreement is hereby amended by inserting
"per metric ton of ore processed" after "$_______ "in the second line of
paragraph (g), by deleting "$5,200,000" in footnote 12 and inserting "$35 per
metric ton of ore processed" in place thereof, and by deleting paragraph (h) in
its entirety.

                                       1
<PAGE>
 
(d) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
"material" before "claim or dispute" in the last line of paragraph (g).

Section 3. Representations and Warranties


    The Company represents and warrants to the Bank as follows:

(a) it has all requisite power and authority, corporate or otherwise, to
execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement;

(b) it has taken all necessary action to authorize the execution, delivery and
performance by it of this Amendment Agreement and the Loan Agreement as amended
by this Amendment Agreement;

(c) this Amendment Agreement has been duly executed and delivered by it and this
Amendment Agreement and the Loan Agreement as mended by this Amendment Agreement
constitute its valid and legally binding obligations, enforceable against it in
accordance with their respective terms;

(d) all consents, authorizations and actions of any kind necessary for its valid
execution, delivery and performance of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement have been obtained and are in
full force and effect;

(e) the execution, delivery and performance by it of this Amendment Agreement
and the Loan Agreement as amended by this Amendment Agreement do not require the
consent or approval of any of its creditors (other than OPIC, whose consent has
been obtained) and will not conflict with or constitute a breach or default
under or violate any provision of its Charter or any agreement, law, rule,
regulation, order, writ, judgement, injunction, decree, determination or award
applicable to it; and

(f) each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the documents, recordings, filings,
notifications and registrations listed in Schedule X of the Loan Agreement have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
under the Loan Agreement as amended by this Amendment Agreement, which security
interest and Lien ranks senior to all other security interests and Liens on such
collateral other than Permitted Liens.

Section 4. Effectiveness

    Section 2 of this Amendment Agreement shall become effective as of the date
hereof subject to the due execution of this Amendment Agreement by Cyprus Amax,
Cyprus Magadan and Cyprus Gold.

                                       2
<PAGE>
 
Section 5.    Expenses

     Without limiting the generality of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by the Bank, including but not limited to fees and expenses of counsel, in
connection with the preparation, negotiation, execution, registration,
administration and enforcement of this Amendment Agreement.

Section 6.    Miscellaneous

(a) All references to the Loan Agreement in the Loan Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement.

(b) Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Loan Agreement, the
Security Documents and the other Financing Agreements and all other instruments
and agreements executed thereunder remain in full force and effect. This
Amendment Agreement may be amended only by an instrument in writing signed by
the Company and the Bank.

(c) This Amendment Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.

Section 7.    Governing Law

     This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.

                                       3
<PAGE>
 
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be executed by their duly authorized representatives on the day and year first
above written.

                                            THE CLOSED JOINT STOCK COMPANY 
                                             "OMOLON GOLD MINING COMPANY"

                                                 By: /s/ Faroikh S. Hakimi
                                                     --------------------------
                                               Name: Faroikh S. Hakimi
                                                     --------------------------
                                              Title: General Director/Manager
                                                     --------------------------
                                                     (By Power of Attorney)

                                                 By: /s/ Faroikh S. Hakimi
                                                     --------------------------
                                               Name: Faroikh S. Hakimi
                                                     --------------------------
                                              Title: Chief Accountant
                                                     --------------------------
                                                     (By Power of Attorney

                                                 By:
                                                     --------------------------
                                               Name:
                                                     --------------------------
                                              Title:
                                                     --------------------------

                                                                   EUROPEAN BANK
                                              FOR RECONSTRUCTION AND DEVELOPMENT

                                                 By: /s/ Gunther Vowinckel
                                                     --------------------------
                                               Name: Gunther Vowinckel
                                                     --------------------------
                                              Title: Acting Co-Team Leader
                                                     --------------------------


Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby (a) acknowledge and consent
to the foregoing Amendment Agreement, (b) conf'irm that the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the
Cyprus Magadan Share Pledge remain in full force and effect, and (c) agree that
all references to the Loan Agreement in the Cyprus Amax Guaranty, the Cyprus
Magadan Guaranty, the Cyprus Support Agreement and the Cyprus Magadan Share
Pledge shall for all purposes refer to the Loan Agr eement as amended by the
foregoing Amendment Agreement.

                                                    CYPRUS AMAX MINERALS COMPANY


                                                By: /s/ Faroikh S. Hakimi
                                                    --------------------------
                                              Name: Faroikh S. Hakimi
                                                    --------------------------
                                             Title: Director Finance/Assistant
                                                    --------------------------
                                                                     Treasurer


                                       4
<PAGE>
 
                                                 CYPRUS MAGADAN GOLD CORPORATION



                                                By: /s/ Faroikh S. Hakimi
                                                    --------------------------
                                              Name: Faroikh S. Hakimi
                                                    --------------------------
                                             Title: Assistant Treasurer
                                                    --------------------------
                                                             
                                                             CYPRUS GOLD COMPANY


                                                By: /s/ Faroikh S. Hakimi
                                                    --------------------------
                                              Name: Faroikh S. Hakimi
                                                    --------------------------
                                             Title: Assistant Treasurer
                                                    --------------------------


                                       5
<PAGE>
 
                                                                [EXECUTION COPY]

                  SECOND AMENDMENT AGREEMENT TO LOAN AGREEMENT

THIS AMENDMENT AGREEMENT is made as of the 22nd day of April 1996 between THE
CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").

WHEREAS:

(A) the Company has entered into a loan agreement dated as of 30 June 1995, as
amended by an amendment agreement to loan agreement dated as of 7 November 1995
(such loan agreement as so amended, the "Loan Agreement"), with the Bank,
pursuant to which the Bank has agreed to make a loan to the Company in an amount
not to exceed U$$47,500,000, subject to the terms and conditions of the Loan
Agreement; and

(B) the Bank and the Company have agreed to amend the Loan Agreement, subject
to the terms and conditions of this Amendment Agreement.

NOW, THEREFORE the parties hereto agree as follows:

Section 1.    Definitions

       Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.

Section 2.    Amendments to Loan Agreement

(a) Section 8.03 of the Loan Agreement is hereby amended by deleting "Sections
5.31(f), 5.31(g) and 5.31(h)" in the third Line and inserting "Sections 
5.19(h), 5.19(i) and 5.19(j)" in place thereof.

(b) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
", and such balance has been generated by Project revenues" at the end of
paragraph (o).

(c) Annex 4 to Schedule Q to the Loan Agreement is hereby amended by inserting
"other than the Cash Collateral Subaccount" after "all subaccounts thereof" in
the first line of paragraph (s).


                                       1
<PAGE>
 
Section 3.    Representations and Warranties

     The Company represents and warrants to the Bank as follows:

(a) it has all requisite power and authority, corporate or otherwise, to
execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement;

(b) it has taken all necessary action to authorize the execution, delivery and
performance by it of this Amendment Agreement and the Loan Agreement as amended
by this Amendment Agreement;

(c) this Amendment Agreement has been duly executed and delivered by it and this
Amendment Agreement and the Loan Agreement as amended by this Amendment
Agreement constitute its valid and legally binding obligations, enforceable
against it in accordance with their respective terms;

(d) all consents, authorizations and actions of any kind necessary for its valid
execution, delivery and performance of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement have been obtained and are in
full force and effect;

(e) the execution. delivery and performance by it of this Amendment Agreement
and the Loan Agreement as amended by this Amendment Agreement do not require
the consent or approval of any of its creditors (other than OPIC, whose consent
has been obtained) and will not conflict with or constitute a breach or default
under or violate any provision of its Charter or any agreement, law, rule,
regulation, order, writ, judgement, injunction, decree, determination or award
applicable to it; and

(f) each Security Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the documents, recordings, filings,
notifications and registrations listed in Schedule X of the Loan Agreement have
been executed or made, constitute a valid and completed security interest in,
and a Lien of first priority on, the collateral covered by such Security
Document, securing payment of all principal, interest and other amounts payable
under the Loan Agreement as amended by this Amendment Agreement, which security
interest and Lien ranks senior to all other security interests and Liens on such
collateral other than Permitted Liens.

Section 4.    Effectiveness

     Section 2 of this Amendment Agreement shall become effective as of the date
hereof subject to the due execution of this Amendment Agreement by Cyprus Amax,
Cyprus Magadan and Cyprus Gold.

Section 5.    Expenses

     Without limiting the generality of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by

                                       2
<PAGE>
 
the Bank, including but not limited to fees and expenses of counsel, in
connection with the preparation, negotiation, execution, registration,
administration and enforcement of this Amendment Agreement.

Section 6.    Miscellaneous

(a) All references to the Loan Agreement in the Loan Agreement, the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement.

(b) Except to the extent each is expressly amended by the terms of this
Amendment Agreement, all terms and conditions of the Loan Agreement, the
Security Documents and the other Financing Agreements and all other instruments
and agreements executed thereunder remain in full force and effect. This
Amendment Agreement may be amended only by an instrument in writing signed by
the Company and the Bank.

(c) This Amendment Agreement may be executed in several counterparts, each of
which shah be deemed an original, but all of which together shall constitute one
and the same agreement.

Section 7.    Governing Law

     This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be executed by their duly authorized representatives on the day and year first
above written.

                                                 THE CLOSED JOINT STOCK COMPANY
                                                   "OMOLON GOLD MINING COMPANY"


                                                By: /s/ Farokh S. Hakimi
                                                    --------------------------
                                                    by Power of Attorney on
                                                    behalf
                                              Name: S. V. Haradiak
                                                    --------------------------
                                             Title: General Manager
                                                    --------------------------
                                                                   
                                                   
                                                By: /s/ Farokh S. Hakimi
                                                    --------------------------
                                                    by Power of Attorney on
                                                    behalf
                                              Name: E. S. Ryzhaikina
                                                    --------------------------
                                             Title: Chief Accountant
                                                    --------------------------

                                       3
<PAGE>
 
                                                                   EUROPEAN BANK
                                              FOR RECONSTRUCTION AND DEVELOPMENT



                                                By: /s/ [SIGNATURE ILLEGIBLE]
                                                    --------------------------
                                              Name: [SIGNATURE ILLEGIBLE]
                                                    --------------------------
                                             Title: Deputy Vice President
                                                    --------------------------


Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby (a) acknowledge and consent
to the foregoing Amendment Agreement, (b) confirm that the Cyprus Amax Guaranty,
the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the Cyprus Magadan
Share Pledge remain in full force and effect, and (c) agree that all references
to the Loan Agreement in the Cyprus Amax Guaranty, the Cyprus Magadan Guaranty,
the Cyprus Support Agreement and the Cyprus Magadan Share Pledge shall for all
purposes refer to the Loan Agreement as amended by the foregoing Amendment
Agreement.

                                                    CYPRUS AMAX MINERALS COMPANY


                                                By: /s/ Farokh S. Hakimi
                                                    --------------------------
                                              Name: Farokh S. Hakimi
                                                    --------------------------
                                             Title: Assistant Treasurer
                                                    --------------------------



                                                 CYPRUS MAGADAN GOLD CORPORATION


                                                By: /s/ Farokh S. Hakimi
                                                    --------------------------
                                              Name: Farokh S. Hakimi
                                                    --------------------------
                                             Title: Assistant Treasurer
                                                    --------------------------

                                                             CYPRUS GOLD COMPANY


                                                By: /s/ Farokh S. Hakimi
                                                    --------------------------
                                              Name: Farokh S. Hakimi
                                                    --------------------------
                                             Title: Assistant Treasurer
                                                    --------------------------


                                       4
<PAGE>
 
                                                                [EXECUTION COPY]

                  THIRD AMENDMENT AGREEMENT TO LOAN AGREEMENT

THIS AMENDMENT AGREEMENT is made as of the 20th day of November, 1996 between
THE CLOSED JOINT STOCK COMPANY "OMOLON GOLD MINING COMPANY" (the "Company") and
EUROPEAN. BANK FOR RECONSTRUCTION AND DEVELOPMENT (the "Bank").

WHEREAS:

(A) the Company has entered into a loan agreement dated as of 30 5une 1995, as
amended by an amendment agreement to loan agreement dated as of 7 November 1995
and a second amendment agreement to loan agreement dated as of 22 April 1996
(such loan agreement as so amended, the "Loan Agreement"), with the Bank.
pursuant to which the Bank has agreed to make a loan to the Company in an amount
not to exceed US$47,500,000 subject to the terms and condition of the Loan
Agreement and

(B) the Company has requested that the Loan Agreement be amended, inter alia, to
increase the maximum principal amount of the loan under the Loan Agreement to
US$62,500,000 and the Bank has agreed to so amend the Loan Agreement subject
to the terms and conditions of this Amendment Agreement

NOW, THEREFORE, the parties hereto agree as follows:

Section 1.        Definitions

      Wherever used in this Amendment Agreement, unless the context shall
otherwise require, the terms defined in the Loan Agreement and not separately
defined herein shall have the same meanings when used in this Amendment
Agreement.

Section 2.        Amendments to Loan Agreement

(a) The definition of "Commitment Period" in Section 1.01 of the Loan Agreement
is hereby amended by deleting "$47,500.000" in the 11th line and inserting
"$62,500,000" in place thereof.

(b) The definition of "Letter of Credit" in Section 10.1 of the Loan Agreement
is hereby amended by deleting "paragraph l(b)(1)" in the third line and
inserting "paragraph I(b)" in place thereof

(c) The definition of "Margin" in Section 1.01 of the Loan Agreement is hereby
amended by deleting "425% per annum" in the third line and inserting "4.4% per
annum" in place thereof.
<PAGE>
 
(d) The definition of "Permitted Liens" in Section l.01 of the Loan Agreement is
hereby amended in its entirety to read as follows:

   "Permitted Liens"      means the Liens set forth in Sections 6.05(I), 6.05(2)
                          and 6.05(3)"

(e) The definition of "Subordinated Shareholder Loans" in Section 1.01 of the
Loan Agreement is hereby mended in its entirety to read as follows:

      ""Subordinated
      Shareholder Loans"            means Debt of the Company owing to or
                                    guaranteed by any Shareholder (or an
                                    Affiliate of any Shareholder) and which is
                                    subordinated to the payment of all amounts
                                    payable under this Agreement and the OPIC
                                    Finance Agreement pursuant to the Cyprus
                                    Support Agreement or the Russian 
                                    Shareholders Support Agreement or otherwise
                                    on terms acceptable to the Project Lenders."

(f) Section 2.01(a) of the Loan Agreement is hereby amended by deleting
"$180,000,000" and inserting "$230,000,000" in place thereof.

(g) Section 2.01(b) of the Loan Agreement is hereby amended by replacing the
table therein with the following table:

<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------
Source                                                        Dollars
<S>                                                           <C> 
Equity

     Association of Native Peoples                              5,676,000
     Geometal                                                  24,052,039
     Magadan Gold                                               5,676,000
     Rossiisky Kredit Commercial Bank                           5,160,000
     Dukat                                                      2,435,961
     Cyprus Magadan                                            43,000,000

Total Equity                                                   86,000,000

Cyprus Magadan Subordinated Shareholder Loan                   14,000,000


Long-term Debt

     Tranche 1 Loan                                            53,750,000
     Tranche 2 Loan                                             8,750,000
     OPIC Tranche 1 Loan                                       58,750,000
     OPIC Tranche 2 Loan                                        8,750,000

     Total Long-term Debt                                     130,000,000

Total Financing                                               230,000,000

--------------------------------------------------------------------------------
</TABLE> 

                                       2
<PAGE>
 
(h)  The first two sentences of Section 2.02(b) of the Loan Agreement are hereby
amended in their entirety, to read as follows:

     "The Company has an authorized capital of Rb, 420,880,000,000 (the
     equivalent of $86.000.000) consisting of 80.000 shares with a nominal value
     of Rb. 5,261,000 each. The following is a list of the shareholders in the
     Company as of 20 November 1996, together with their percentage
     shareholdings in the Company:

<TABLE> 
<CAPTION> 

     Shareholder                                                Percentage
     <S>                                                        <C> 
     Association of Native Peoples                                6.6000000000
     Geometal                                                    27.9674871698
     Magadan Gold                                                 6.6000000000
     Rossiisky Kredit Commercial                                  6.0000000000
     Bank
     Dukat                                                        2.8325128302
     Cyprus Magaden                                              50.0000000000
     
     Total                                                      100.0000000000"

</TABLE> 

(i) Section 3.01 of the Loan Agreement is hereby amended in its entirety to read
as follows:

     "Section 3.01. Amount and Currency.

          Subject to the terms and conditions of this Agreement, the Bank agrees
     to lend to the Company, and the Company agrees to borrow from the Bank, a
     Loan in an amount not to exceed $62.500.000 made up of:

     (a) the Tranche I Loan in an amount not to exceed $53.750,000: and

     (b) the Tranche 2 Loan in the amount of $8.750,000."

(j)  The last sentence of Section 3 03(b) of the Loan Agreement is hereby
amended in its entirety to read as follows:

     "The Tranche 2 Loan shall be disbursed in two Disbursements in the amounts
     of $5,000,000 and $3.750,000. respectively"

(k)  The second sentence of Section 3.05(a) of the Loan Agreement is hereby
amended in its entirety to read as follows:

     "The commitment charge shall accrue from day to day, (1) in the case of a
     portion of the Tranche I Loan in the amount of $42.500,000 and a portion of
     the Tranche 2 Loan m the amount of $5,000,000, from 30 July 1995, and (2)
     in the case of the remainder of the Loan, from 18 December 1996."

(l) Section 306(a) of the Loan Agreement is hereby amended in its entirety to
read as follows:
<PAGE>
 
     "(a) The Company shall repay the Loan to the Bank as follows:

          (1) The Tranche 1 Loan shall be repaid in nine equal (or as nearly
          equal as possible) semi-annual installments on 15 December 1997, 15
          June 1998, 15 December 1998, 15 June 1999. 15 December 1999, 15 June
          2000, 15 December 2000, 15 June 2001 and 15 December 2001.

          (2) The Tranche 2 loan shall be repaid in full in a single installment
          in the amount of $8,750.000 on 15 December 2001."

(m) Section 307(b)(A) of the Loan Agreement is hereby amended by deleting
"$9,000,000" in the third line and inserting  "$11,250,000" in place thereof. 

(n) Section 4.02(j) of the Loan Agreement is here~ amended in its entirety to
read as follows:

    "(j) Cost Overruns. The Bank shall be satisfied. on the basis of the opinion
    of the Independent Engineer, that the Project Costs including, without
    limitation financing costs) necessary to achieve physical completion of the
    Project will not exceed the total amount thereof set forth m Section 2.01(a)
    or, if the Bank is not so satisfied as a result of delay in completion or
    otherwise. the Bank shall have received satisfactory evidence that the
    Shareholders have contributed not less than the full amount of such excess
    in paid-in capital or Subordinated Shareholder Loans to the Company and that
    the Company has expended 100% of such paid-in capital and Subordinated
    Shareholder Loans on the Project."

(o) Section 4.02(k) of the Loan Agreement is hereby amended by deleting "in the
amount of $5,000,000" in the second and third lines.

(p) Section 5.13(1) of the Loan Agreement is hereby amended by deleting
"$13.500.000" in the first line and inserting "$16.500,000" in place thereof and
by deleting "$100.000,000" in the third line and inserting "$130.000,000" in
place thereof

(q) Section 5.13(2) of the Loan Agreement is hereby amended by deleting
"$5,000,000" in the third line and inserting "$8,750,000" in place thereof.

(r) Section 5.18 of the Loan Agreement is hereby amended by deleting "90" in the
first line and inserting "45" in place thereof.

(s) Section 604(a) of the Loan Agreement is hereby amended by inserting "and" at
the end of Section 604(a)(3), deleting Section 604(a)(5) and amending Section
604(a)(4) in its entirety to read as follows:

      "(4) Short-term Debt in an aggregate amount not to exceed $20,000,000
      (or the equivalent thereof in other currencies at then current rates of
      exchange) or, if less, 100% of the Company's short-term assets."

                                       4
<PAGE>
 
(t) Section 6.05 of the Loan Agreement is hereby amended by deleting sub-
paragraph (2) and renumbering existing sub-paragraphs (3) and (4) as sub-
paragraphs (2) and (3), respectively.

(u) Section 7.01(i) of the Loan Agreement is hereby amended by deleting "24" in
the third line and inserting "27" in place thereof anti by deleting "18" in the
eighth line and inserting "24" in place thereof.

(v) Section 7.01(q) of the Loan Agreement is hereby amended in its entirety to
read as follows:

     "(q) Cost Overrun Default. The Bank shall have determined that the Project
     Costs (including without limitation. financing costs) necessary. to achieve
     physical completion of the Project will, as a result of delays in
     completion or otherwise. exceed the total amount thereof set forth in
     Section 2.01(a) and the Shareholders shall have failed, within 60 days of
     such determination, to make cash contributions of paid-in capital or
     Subordinated Shareholder Loans to the Company in the flail amount of such
     excess. "

(w) Paragraph 2.10 of Schedule G to the Loan Agreement is hereby amended by
inserting the following sentence after the first sentence of Such paragraph:

     "Such technical environmental person shall. until at least 30 .Tune 1997,
     be a qualified expatriate environmental specialist."

(x) Paragraph 1(b) of Schedule Q to the Loan Agreement is hereby amended in its
entirety to read as follows:

     "(b) Letter of Credit. The Project Lenders shall have received a duly
     executed original of the Letter of Credit. if any, used in calculating the
     minimum balance of the Cash Collateral Subaccount in accordance with
     Section 5.13"

(y) Paragraph l(d) of Schedule Q to the Loan Agreement is hereby amended by
inserting the following new sub-paragraph (I) and renumbering existing
sub-paragraphs (1). (2) and (3) as sub-paragraphs (2), (3) and (4),
respectively:

     "(1) paid. from Project revenues, $2,5,000.000 in the aggregate to the Bask
     and OPIC by way of repayments or prepayments of principal of the Tranche 1
     Loan and the OPIC Tranche 1 Loan:"

(z) Schedule Q to the Loan Agreement is hereby amended by inserting the
following new paragraph 1(j):

     "(j) Successor to Roskomdragmet. The Project Lenders shall have received
     satisfactory evidence that the Ministry of Finance of the Russian
     Federation or another entity acceptable to the Project Lenders has
     succeeded to the obligations of Roskomdragmet under the Roskomdragmet
     Agreement and that the Roskomdragmet Agreement is valid and legally binding
     on such entity and enforceable against such entity. in accordance with its
     terms."


                                       5
<PAGE>
 
(a) Annex 4 of Schedule Q to the Loan Agreement is hereby amended by deleting
paragraph (s) and renumbering existing paragraph (t) as paragraph (s).

Section 3.    Representations and Warranties

     The Company represents and warrants to the Bank as follows:

(a) The Company has all requisite power and authority, corporate or otherwise.
to execute, deliver and perform all of its obligations under this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement.

(b) The Company has taken all necessary action to authorize the execution.
deliver, and performance by it of this Amendment Agreement and the Loan
Agreement as amended by this Amendment Agreement. 

(c) This Amendment Agreement has been duly executed and delivered by the 1
Company and this Amendment Agreement and the Loan Agreement as amended by this
Amendment Agreement constitute its valid and legally binding obligations,
enforceable against it in accordance with their respective terms.

(d) All consents, authorisations and actions of any kind necessary. for the
valid execution. delivery and performance by the Company of this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement have
been obtained and are in full force and effect.

(e) The execution, delivery and performance by the Company of this Amendment
Agreement and the Loan Agreement as amended by this Amendment Agreement do not
require the consent or approval of any of its creditors (other than OPIC, whose
consent has been obtained) and will not conflict with or constitute a breach or
default under or violate any provision of its Charter or any agreement, law,
rule. regulation. order. with, judgement, injunction. decree, determination or
award applicable to it.

(f) Each Security, Document (other than the Immovables Mortgage and the
Enterprise Mortgage) will, when the Amendments to Financing Agreements (as
defined below) have been executed and delivered, constitute a valid and
completed security interest in, and a Lien of first priority on, the collateral
covered by such Security Document securing payment of all principal merest and
other amounts payable under the Loan Agreement as amended by this Amendment
Agreement, which security merest and Lien will rank senior to  all other
security interests and Liens on such collateral other than Permitted Liens.

(g) As of the date of this Amendment Agreement, the Directors of the Company are
I.S. Rosenblum, S W. Harapiak L.D. Clark. VP. Karchavets, F.S. Hakim. L.E
Yefanova and S.S. Shellhaas, the General Manager of the Company is S.W.
Harapiak. the Vice-General Manager of the Company is Valery. (Glazarov, the
Financial Manager of the Company is K. Smith and the Chief Accountant of the
Company is Elena Ryzhaikina.

(h) The revised Development Plan delivered to the Bank pursuant t to Section
4(c) of this Amendment Agreement will not contain any untrue statement of a
material fact or


                                       6
<PAGE>
 
omit to state any material fact necessary. to make the statements and
information contained therma not misleading in light of the circumstances under
which such statements are made or such information is furnished, provided that.
to the extent that any such statement or information is based upon estimates.
forecasts or professional opinions, such estimates. forecasts or opinions
(except as otherwise warranted herein or therein) will be made in good faith
and based upon the best available information. but otherwise the Company does
not warrant that such estimates forecasts or opinions will ultimately prove to
be correct.

Section 4.    Conditions Precedent

      Section 2 of this Amendment Agreement shall not become effective unless
and until the following conditions precedent shall have been satisfied in form
and substance satisfactory to the Bank:

(a) The Bank shall have received certified copies of amendments to the OPIC
Finance Agreement and the OPIC Funding Documents (the "OPIC Amendments"), each
in form and substance satisfactory. to the Bank. pursuant to which the OPIC
Finance Agreement and the OPIC Funding Documents shall have been amended,' inter
alia, to increase the maximum principal amount of the loan under the OPIC
Finance Agreement to S67.500,000, and the OPIC Amendments shall have become
unconditional and fully effective in accordance with   their respective terms
(except for this Amendment Agreement having become unconditional and fully
effective, if that is a condition of any such amendment).

(b) The Bank shall have received duly executed originals of the following
amendments to the Financing Agreements (the "Amendments to Financing
Agreements"), each in form and substance satisfactory. to the Bank and the
Amendments to Financing Agreements shall have become unconditional and fully
effective in accordance with their respective terms (except for this Amendment
Agreement having become unconditional and fully effective, if that is a
condition of any such document):

     (1) an amendment to the Cyprus Support Agreement;

     (2) an amendment to the Security Sharing Agreement: and

     (3) an amendment to each Security Document;

together with any other documents, recordings, filings, notifications and
registrations which are required thereunder for the continued validity,
perfection or priority of the Security and the Liens of the Project Lenders
under the Security Documents (other than the Immovables Mortgage and the
Enterprise Mortgage) as amended thereby and to ensure that each Security
Document (other than the Immovables Mortgage and the Enterprise Mortgage)
constitutes a valid and completed security interest in, and a Lien of first
priority. on. the collateral covered by such Security Document. securing payment
of all principal, interest and other amounts payable under the Loan Agreement as
amended hereby, the OPIC Finance Agreement as amended by the OPIC Amendments and
the other Financing Agreements as amended by the Amendments to Financing
Agreements


                                       7
<PAGE>
 
and that such security interest and Lien ranks sen:or to all other security
interests and Liens on such collateral.

(c) The Bank shall have received the revised Development Plan, in form and
substance satisfactory to the Bank.

(d) The Bank shall have received a front-end commission in respect of this
Amendment Agreement in an amount as separately agreed between the Company and
the Bank in a letter agreement entered into on or prior to the date hereof.

(e) The Bank shall have received satisfactory evidence that:

     (1) the Russian Shareholders have contributed, in a manner satisfactory to
     the Bank, at least $3.000.000 (or the equivalent thereof in other
     currencies at men current rates of exchange) as additional paid-m capital
     to the Company and Cyprus Magadan has contributed. in a manner satisfactory
     to the Bank, at least $14,000,000 (or the equivalent thereof in other
     currencies at then current rates (of exchange) as Subordinated Shareholder
     Loans to the Company and the Company has expended substantially all of such
     additional paid-in capital and Subordinated Shareholder Loans on Project
     Costs: and

     (2) Cyprus Magadan has committed to contribute. in a manner satisfactory to
     the Bank. at least $3.000.000 (or the equivalent thereof in other
     currencies at then current rates of exchange) as additional paid-in capital
     either in cash or in kind to me Company not later than (A) the date on
     which the Company and Cyprus Magadan deliver the Final Completion
     Certificate referred to in Schedule Q to the Loan Agreement or (B) 15 April
     1997, whichever occurs first.

(f) The Bank shall have received, in form and substance satisfactory to the
Bank, certified copies of all governmental, corporate. creditors', shareholders'
and other necessary licenses, approvals, consents, filings and registrations
for the due execution, delivery. and performance by the Company, the
Shareholders, Cyprus Gold and Cyprus Amax of this Amendment Agreement. the Loan
Agreement as amended by this Amendment Agreement, the OPIC Amendments. the OPIC
Finance Agreement and OPIC Funding Documents as amended by the OPIC Amendments,
the Amendments to Financing Agreements, the Financing Agreements as amended by
the Amendments to Financing Agreements and the other documents contemplated
hereby.

(g) The Bank shall have received satisfactory evidence of the authorisation of
the persons signing this Amendment Agreement, the OPIC Amendments, the
Amendments to Financing Agreements and the other documents contemplated hereby
on behalf of the Company, the Shareholders, Cyprus Gold and Cyprus Amax to sign
such documents and to bind the Company, the Shareholders, Cyprus Gold and Cyprus
Amax thereto.

(h) The Bank shall have received the first amendment to the Amended and Restated
Charter of the Company, in form and substance satisfactory to the Bank.

(i) The Bank shall have received favorable legal opinions of special Russian and
English counsel to the Project Lenders and of special Russian, English and New
York


                                       8
<PAGE>
 
counsel to the Company regarding the matters set forth in Sections 3, 4(a),
4(b), 4(f), 4(g) and 4(h) of this Amendment Agreement.

(j) The Bank shall have received such other documents aria opinions as the Bank
may reasonably request.

Section 5.    Condition Subsequent

     The Company shall procure that the first: amendment to the Amended and
Restated Charter of the Company, in form and substance satisfactory to the Bank.
shall have been rendered with the State Registration Chamber by no later than
(1) the date on which the Company and Cyprus Magadan deliver the Final
Completion Certificate referred to in Schedule Q to the Loan Agreement or (2) 15
May 1997, whichever occurs first.

Section 6.    Expenses

     Without limiting the generality. of Section 5.17 of the Loan Agreement, the
Company shall pay to the Bank, or as the Bank may direct, all expenses incurred
by the Bank. including but not limited to fees and expenses of counsel. in
connection with the preparation. negotiation. execution. registration.
administration and enforcement of this Amendment Agreement. the OPIC Amendments.
the Amendments to Financing Agreements and the other documents contemplated
hereby,

Section 7.    Miscellaneous

(a) All references to the Loan Agreement in the Loan Agreement. the Security
Documents and the other Financial Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the Loan Agreement as
amended by this Amendment Agreement. All references to the OPIC Finance
Agreement and OPIC Funding Documents in the Loan Agreement the Security
Documents and the other Financing Agreements and all instruments and agreements
executed thereunder shall for all purposes refer to the OPIC Finance Agreement
and the OPIC Funding Documents as amended by the OPIC Amendments. All references
to the other Financing Agreements in the Loan Agreement the Security. Documents
and the other Financing Agreements and all instruments and agreements executed
thereunder shall for all purposes refer to such Financing Agreements as amended
by the Amendments to Financing Agreements.

(b) All references to the Financing Agreements in the Loan Agreement, the
Security. Documents and the other Financing Agreements and all instruments and
agreements executed thereunder shall include this Amendment Agreement.

(c) Except to the extent each is expressly amended by the terms of this
Amendment Agreement all terms and conditions of the Loan Agreement, the Security
Documents and the other Financing Agreements and all other instruments and
agreements executed thereunder remain in full force and effect. This Amendment
Agreement may be amended only by an instrument in writing signed by the Company
and the Bank.


                                       9
<PAGE>
 
(d) This Amendment Agreement cement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.

Section 8.    Governing Law

     This Amendment Agreement shall be governed by and construed in accordance
with the laws of the State of New York in the United States of America.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement, to
be executed by their duly authorized representatives as of the day and year
first above written.

                                                  THE CLOSED JOINT STOCK COMPANY
                                                    "OMOLON GOLD MINING COMPANY"


                                                     By: /s/ I. S. Rosenblum
                                                         -----------------------
                                                   Name: I. S. Rosenblum
                                                         -----------------------
                                                  Title: Chairman of the Board
                                                         -----------------------



                                                     By: /s/ S. W. Harapiak
                                                         -----------------------
                [SEAL APPEARS HERE]                Name: S. W. Harapiak
                                                         -----------------------
                                                  Title: General Manager
                                                         -----------------------



                                                     By: /s/ E. Ryzhaikina
                                                         -----------------------
                                                   Name: E. Ryzhaikina
                                                         -----------------------
                                                  Title: Secretary and Chief
                                                         -----------------------
                                                         Accountant
                                                         -----------------------

                                                                   EUROPEAN BANK
                                              FOR RECONSTRUCTION AND DEVELOPMENT


                                                     By: /s/ Gunther Vowinckel
                                                         -----------------------
                                                   Name: Gunther Vowinckel
                                                         -----------------------
                                                  Title: Acting Co-Team Leader
                                                         -----------------------



                                      10
<PAGE>
 
Cyprus Amax, Cyprus Magadan and Cyprus Gold hereby:

(a) acknowledge and consent to the foregoing Amendment Agreement, including
without limitation the increase in the maximum principal amount of the Loan and
the amendments to the definition of Project Completion in ScheduLe Q of the Loan
Agreement, as provided therein:

(b) confirm that the Cyprus Amax Guaranty, the Cyprus Magadan Guaranty, the
Cyprus Support Agreement and the Cyprus Magadan Share Pledge remain in full
force and effect:

(c) agree that all references to the Loan Agreement in the Cyprus Amax Guaranty,
the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the Cyprus
Magadan Share Pledge shall for all purposes refer to the Loan Agreement as
amended by the foregoing Amendment Agreement;

(d) agree that all references to the OPIC Finance Agreement in the Cyprus Amax
Guaranty, the Cyprus Magadan Guaranty, the Cyprus Support Agreement and the
Cyprus Magadan Share Pledge shall for all purposes refer to the OPIC Finance
Agreement as amended by the 0PIC Amendments: and

(e) agree that in respect of the additional $30,000.000 to be advanced to the
Company in accordance with this Amendment Agreement and the second amendment
agreement to the OPIC Finance Agreement. no failure of the State Registration
Chamber to register the first amendment to the Amended and Restated Charter of
the Company or of the ,Ministry. of Finance to register or reregister the
issuance of shares by the Company shall constitute a Political Event under the
Cyprus Magadan Guaranty; provided that this paragraph (e) shall not affect the
rights of Cyprus Magadan under Section 4.01(3) of the Cyprus Magadan Guaranty
in respect of any other event.

                                                    CYPRUS AMAX MINERALS COMPANY


                                                     By: /s/ Faroikh S. Hakimi
                                                         -----------------------
                                                   Name: Faroikh S. Hakimi
                                                         -----------------------
                                                  Title: Assistant Treasurer
                                                         -----------------------


                                                 CYPRUS MAGADAN GOLD CORPORATION

                                                     By: /s/ Faroikh S. Hakimi
                                                         -----------------------
                                                   Name: Faroikh S. Hakimi
                                                         -----------------------
                                                  Title: Assistant Treasurer
                                                         -----------------------


                                      11
<PAGE>
 
                                                             CYPRUS GOLD COMPANY


                                                     By: /s/ Faroikh S. Hakimi
                                                         -----------------------
                                                   Name: Faroikh S. Hakimi
                                                         -----------------------
                                                  Title: Assistant Treasurer
                                                         -----------------------

                                      12