8-K

                SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549


                            FORM 8-K


       PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                      EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported): January 3, 1997

                        _______________

                           USMX, INC.
     (Exact name of registrant as specified in its charter)
                         ______________


     Delaware                    0-9370        84-1076625
(State or other jurisdiction   (Commission   (I.R.S. Employer
 of incorporation)            File Number)  Identification No.)


141 Union Boulevard, Suite 100
Lakewood, Colorado                                    80228
(Address of principal executive offices)            (Zip Code)

                         (303) 985-4665
      (Registrant's telephone number, including area code)



                                        
                           USMX, INC.

Item 5.  Other Events

     USMX, INC.

Item 5.  Other Events

     On January 3, 1997, USMX, Inc. (the "Company") or ("USMX")
entered into a letter agreement in principle with Dakota to merge
(the "Merger") with Dakota Mining Corporation ("Dakota").  Dakota
is a Canadian federal corporation headquartered in Denver,
Colorado, with interests in gold mines in the United States.
Dakota is a publicly-held company; its shares are traded on the
American Stock Exchange, The Toronto Stock Exchange and the
Berlin Stock Exchange.  It is intended that each holder of 1.10
outstanding shares of USMX common stock will receive one common
share of Dakota in a tax-free reorganization to be effected as a
reverse triangular merger whereby an indirect wholly-owned
subsidiary of Dakota organized under Delaware law will merge with
and into USMX.  USMX would thus become an indirect wholly-owned
subsidiary of Dakota at the effective time of the Merger.  The
Merger is subject to satisfactory completion of financing by
Dakota as set forth below, approval by The Toronto Stock
Exchange, stockholder and creditor approval, review by regulatory
authorities, a definitive merger agreement and other conditions.
The full text of the letter agreement is included as Exhibit 2 to
this Report.

     Dakota has engaged three Canadian securities firms to
conduct a "special warrants" financing of Cdn. $40 million on a
"best effort" basis.  The special warrants will be  exerciseable
into unsecured convertible debentures.  A portion of the proceeds
of the offering will be loaned by Dakota to USMX pending
completion of the Merger, with the balance of the proceeds of the
offering to be held in escrow pending consummation of the Merger.
A substantial portion of the proceeds to be realized from the
offering are expected to be used in connection with development
of the Company's Illinois Creek Project in Alaska.

     The Company has prepared a revised development and operating
plan (the "Plan") for the Illinois Creek Project.  Based on the
revised Plan, the Company anticipates that it will require
additional funding of approximately $12.1 million to achieve
production at the Illinois Creek Mine.  The Company also
presently estimates that several million dollars of additional
funding will be required to comply with the financial covenants
of the Project loan from N M Rothschild & Sons Limited
("Rothschild") and for general corporate purposes until the
Illinois Creek Mine is generating cash flow, which the Company
presently forecasts will occur in the fourth quarter of 1997.

     The current capital estimate, including pre-construction and
acquisition costs, for the completion and start-up of the
Illinois Creek Mine is $47.8 million.  The increase is due to the
delay in projected start-up from November 1996 to May 1997,
increased capital costs and higher working capital requirements.
The Company is not in compliance with several financial covenants
in its credit agreements with Rothschild and is in discussions
with Rothschild to extend a waiver of compliance until the merger
with Dakota is consummated.  The consent of Rothschild is a
condition to consummation of the Merger.



Item 7.  Financial Statements and Exhibits

     (c)  Exhibits.

     2.   Letter agreement in principle regarding proposed
business combination of USMX, Inc. and Dakota Mining Corporation,
dated January 3, 1997.

                           SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                             USMX, INC.
                         (Registrant)


Date:  January 13, 1997   By: /s/ Donald P. Bellum
                              ---------------------------			      	
                              Donald P. Bellum, President

EX-10.A

Mr. Donald P. Bellum
January 3, 1997

                   DAKOTA MINING CORPORATION
                           Suite 2450
                     410 Seventeenth Street
                        Denver, Colorado
                             80202

January 3, 1997

Mr. Donald P. Bellum, President
USMX, INC.
141 Union Blvd., Suite 100
Lakewood, CO 80228

Dear Mr. Bellum:

     The purpose of this letter is to confirm our various
discussions and the agreement in principle we have reached
regarding the proposed business combination (the "Merger") of
USMX, INC. ("USMX"), a Delaware corporation, and Dakota Mining
Corporation ("Dakota"), a Canadian corporation and certain
transactions ancillary thereto (together with the Merger (the
"Transaction")).  Our further discussions will culminate in a
definitive agreement (the "Merger Agreement") on terms and
conditions consistent with this letter.  It is our mutual desire
and objective that the Merger Agreement be executed as promptly
as feasible, but no later than January 30, 1997.  The Merger
Agreement should provide for, among other matters, the following:

     1.   At the closing of the Merger (the "Closing"), each
holder of 1.10 outstanding shares ("USMX Shares") of USMX common
stock will receive one common share ("Dakota Share") of Dakota
(the "Exchange Ratio").  The Merger is intended to be adopted and
treated as a tax-free reorganization under Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the
"Code"), and to be effected as a reverse triangular merger under
the General Corporation Law of the State of Delaware (the
"DGCL"), whereby an indirect wholly-owned subsidiary of Dakota
(the "Merger Subsidiary") to be incorporated and organized under
the DGCL will merge with and into USMX.  USMX, as the surviving
corporation, will become an indirect wholly-owned subsidiary of
Dakota and, at the effective time (the "Effective Time") of the
Merger, a number of other steps will occur simultaneously
culminating in each outstanding USMX Share being converted on the
basis of the Exchange Ratio into Dakota Shares issued by Dakota
and contributed to the Merger Subsidiary as merger consideration.
Notwithstanding the foregoing, the Merger may be effected in such
other manner, whether pursuant to the DGCL or other applicable
corporate law, as Dakota and USMX may agree to, provided that in
any event the manner in which the Merger is effected qualifies as
a tax-free reorganization under Section 368(a) of the Code.
Dakota and USMX will use their respective reasonable best efforts
to effect the Merger in a manner that generally provides tax-
deferred treatment under the Income Tax Act (Canada), as amended
(the "Canadian Tax Act") to holders of USMX shares who, for
purposes of the Canadian Tax Act, are resident or deemed to be
resident in Canada, provided that the availability of such tax-
deferred treatment will not be a condition to the consummation of
the Merger.



     2.   At the Closing, pursuant to the Merger or otherwise
pursuant to the Transaction, each of then outstanding options,
warrants, convertible or exchangeable securities and other rights
granted or issued by USMX entitling the holders thereof to
purchase or otherwise acquire USMX Shares ("USMX Convertible
Securities") will be cancelled and replaced by or exchanged for
similar securities of and rights in Dakota, or will continue as
obligations of USMX (as the surviving corporation under the
Merger) and be assumed by Dakota and deemed to constitute rights
in Dakota, entitling the holders thereof to purchase or otherwise
acquire, on the same terms and conditions as were applicable to
such USMX Convertible Securities, a number of Dakota Shares based
on the Exchange Ratio for each USMX Share underlying such USMX
Convertible Securities and with the exercise, conversion or
exchange price for such USMX Convertible Securities adjusted
accordingly.

     3.   The obligations of Dakota and USMX to enter into the
Merger will be subject to satisfaction of the following
conditions:

                    (a)  The approval of the holders of USMX
               Shares and, if required, the holders of Dakota
               Shares;

                    (b)  By no later than January 30, 1997, the
               written consent of N M Rothschild & Sons Limited,
               on terms and conditions satisfactory to Dakota,
               and of such other third parties whose consents are
               required under any agreements or other instruments
               to which USMX or Dakota or any of their affiliates
               is a party or by which any of them is bound;

                    (c)  USMX and Dakota shall have obtained any
               regulatory clearances and approvals necessary to
               effect the Merger;

                    (d)  By no later than January 30, 1997,
               Dakota shall have issued and sold, on terms and
               conditions reasonably satisfactory to Dakota and
               USMX, Dakota Shares or securities directly or
               indirectly convertible into or exchangeable or
               exercisable for Dakota Shares for aggregate gross
               proceeds of not less than Cdn. $40 million (the
               "Canadian Offering"), provided that a portion of
               such proceeds (not in excess of the amount of such
               proceeds less the amount of the Loan referred to
               below) may be held in escrow pending consummation
               of the Merger;

                    (e)  By no later than January 30, 1997,
               Dakota will lend US $5 million to USMX (the
               "Loan") on terms and conditions to be mutually
               agreed upon;

                    (f)  The date of Closing shall be no later
               than April 30, 1997, provided, however, that the
               date of Closing will be automatically extended to
               no later than May 31, 1997 in the event that on
               April 30, 1997 (i) the Proxy Statement/Prospectus
               filed with the U.S. Securities and Exchange
               
               
               
               Commission ("SEC") has either not been cleared by
               the SEC or clearance has been obtained, but
               without sufficient time (under applicable law) to
               hold the stockholder meeting(s), or (ii) other
               regulatory clearances or approvals necessary to
               effect the Merger have not been obtained; and

                    (g)  The Merger Agreement shall also contain
               representations, warranties and covenants
               customary for transactions of the nature
               contemplated hereby.

     4.   After the Closing, the Board of Directors of Dakota
will consist of nine persons.  The Board shall be comprised of
five persons designated by Dakota and four persons designated by
USMX; provided, however, the designated persons will be agreeable
to both USMX and Dakota.  Of the four persons designated by USMX,
one person will be selected by Pegasus Gold Inc., the largest
stockholder of USMX.

     5.   At the Closing, the Board will elect Alan R. Bell to be
the President and Chief Executive Officer of Dakota and Donald P.
Bellum will be elected to serve as the Chairman of the Board of
Directors of Dakota.

     Dakota and USMX covenant and agree with each other as set
forth in Schedule A hereto, which is incorporated by reference
herein and the provisions of which shall be binding upon Dakota
and USMX.

     It is also our mutual desire and objective, by no later than
the time the Merger Agreement is executed, to procure from
Pegasus Gold Inc. and North Pacific Mining Corporation (the
"Major Shareholders") agreements ("Support Agreements") pursuant
to which each of the Major Shareholders will agree, subject to
customary conditions, to (i) vote its USMX Shares in favor of
resolutions to approve the merger, (ii) not exercise any dissent
rights with respect to its USMX Shares in connection with the
merger, and (iii) not dispose of any of its USMX shares without
the consent of Dakota.

     Dakota and USMX each confirm that their respective boards of
directors have approved the Exchange Ratio and the other terms
and conditions of the Transaction set out in this letter.

     Upon execution of this letter by Dakota and USMX, Dakota and
USMX will issue promptly a joint press release approved by both
parties announcing the proposed Transaction.  Thereafter, Dakota
and USMX may issue such press releases, and make such other
disclosure regarding the Transaction, as each determines (after
consultation with legal counsel) are required under applicable
securities laws and stock exchange rules, provided that to the
extent reasonably practicable each party making any such
disclosure will provide advance notice to the other of the form
and content of such disclosure and the opportunity to comment
thereon, and shall in any case promptly deliver to the other
party a copy of such disclosure in the form released.



     We have discussed that time is of the essence in
consummating the proposed Transaction.  Accordingly, we have each
instructed our respective counsel to work with each other
promptly after the execution of this letter to prepare the Merger
Agreement.  It is understood that Dakota, with the cooperation of
USMX, will continue its efforts in connection with the Canadian
Offering in order to obtain commitments for the total amount of
the offering by no later than January 10, 1997.

     If this letter meets with your approval, kindly so signify
by signing the enclosed duplicate copy of this letter, whereupon
Schedule A shall constitute a binding agreement between us and
otherwise this letter shall constitute a letter of intent between
us.

                                   Yours truly,

                                   Dakota Mining Corporation


                                   By:
                                        Alan R. Bell, President


The foregoing is confirmed on
this 3rd day of January, 1997:

USMX, INC.


By:
     Donald P. Bellum, President

We confirm that we intend to support the
Transaction and enter into a Support Agreement:

PEGASUS GOLD INC.


By:
     Executive Officer




                           Schedule A

1.        Each of Dakota and USMX covenants and agrees as to
itself and with respect to each of its subsidiaries (the
"Subsidiaries") that, from and after the date of the letter (the
"Letter") to which this Schedule A is attached until the
Effective Time, except insofar as the other party shall otherwise
consent or except as otherwise contemplated hereby or by the
Letter:

          (a)  the business of it and its Subsidiaries will be
          conducted only in the ordinary and usual course in all
          material respects and, to the extent consistent
          therewith, it and its Subsidiaries will use all
          reasonable efforts to preserve their business
          organizations intact and maintain their existing
          relations with customers, suppliers, employees and
          business associates;

          (b)  it will not (i) sell or pledge or agree to sell or
          pledge any shares or capital stock owned by it in any
          of its Subsidiaries, (ii) amend its constating
          documents, (iii) subdivide, split, combine, consolidate
          or reclassify any of its outstanding shares or capital
          stock, (iv) declare, set aside or pay any dividend or
          make any other distribution payable in cash, shares,
          stock, securities or property with respect to any of
          its shares or capital stock, (v) repurchase, redeem or
          otherwise acquire, or permit any Subsidiary to purchase
          or otherwise acquire, directly or indirectly, any of
          its shares or capital stock or any securities
          convertible into or exchangeable or exercisable for any
          of its shares or capital stock, or (vi) enter into any
          material transaction not in the ordinary course of its
          business, consistent with past practice, other than, in
          the case of USMX, a definitive agreement with Pegasus
          Gold Inc. ("Pegasus") relating to the previously
          disclosed proposed sale of USMX's interest in the
          Montana Tunnels property to Pegasus for, and the
          concurrent release of USMX from its obligation to repay
          loans owing to Pegasus in the amount of, US$4.5
          million;

          (c)  neither it nor any of its Subsidiaries will
          (i) issue, sell, pledge, dispose of or encumber, or
          authorize or propose the issuance, sale, pledge,
          disposition or encumbrance of, any of its shares or
          capital stock, or any securities convertible into or
          exchangeable or exercisable for, or options, puts,
          warrants, calls, commitments or rights of any kind to
          acquire, any of its shares or capital stock other than
          (x), in the case of Dakota, Dakota Shares or securities
          directly or indirectly convertible into or exchangeable
          or exercisable for Dakota Shares pursuant to the
          Canadian Offering or Dakota Shares issuable pursuant to
          options outstanding on the date of the Letter and (y),
          in the case of USMX, debentures or notes convertible
          into USMX Shares as contemplated in clause (ii) below
          or USMX Shares issuable pursuant to USMX Convertible
          Securities outstanding on the date of the Letter,
          (ii) transfer, lease, license, sell, mortgage, pledge,
          encumber or dispose of any property or assets or incur,
          guarantee, assume or modify any indebtedness or other
          liability other than in the ordinary and usual course
          of business consistent with past practice or other than
     
          
          (x), in the case of Dakota, convertible debentures or
          notes issued by Dakota pursuant to the Canadian
          Offering and (y), in the case of USMX, transactions
          relating to the agreement with Pegasus referred to in
          clause (vi) of subparagraph (b) above and convertible
          debentures or notes issued by USMX or other
          indebtedness incurred by USMX in an aggregate principal
          amount of up to US $3 million on terms and conditions
          acceptable to Dakota, acting reasonably,
          (iii) authorize capital expenditures other than in the
          ordinary and usual course of business consistent with
          past practice, or (iv) make any material acquisition
          of, or investment in, assets, shares, capital stock or
          other securities of any other person or entity other
          than its wholly-owned subsidiaries or in the ordinary
          and usual course of business consistent with past
          practice;

          (d)  except as may be required to satisfy contractual
          obligations existing as of the date of the Letter and
          the requirements of applicable law, neither it nor any
          of its Subsidiaries will establish, adopt, enter into,
          make, amend in any material respect or make any
          material elections under any collective bargaining,
          bonus, profit sharing, thrift, compensation, stock
          option, restricted stock, pension, retirement, employee
          stock ownership, deferred compensation, employment,
          termination, severance or other plan, agreement, trust,
          fund, policy or arrangement for the benefit of any
          directors, officers or employees;

          (e)  it will not implement any change in its accounting
          principles, practices or methods, other than as may be
          required by generally accepted accounting principles;
          and

          (f)  neither it nor any of its Subsidiaries will
          authorize or enter into any agreement to take any of
          the actions referred to in subparagraphs (a) through
          (e) above.

2.        (a)  From and after the date of the Letter until the
          earlier of the Effective Time or the termination of
          this Schedule A in accordance with its terms, USMX and
          its Subsidiaries shall not, and shall use their best
          efforts to ensure that their respective directors do
          not, and shall not permit their respective officers,
          employees, representatives, investment bankers, agents
          and affiliates to, directly or indirectly, (i) solicit,
          initiate or engage in discussions or negotiations with
          any person, encourage submission of any inquiries,
          proposals or offers by, or take any other action
          intended or designed to facilitate the efforts of any
          person, other than Dakota, relating to the possible
          acquisition of, or business combination with, USMX or
          any of its Subsidiaries (whether by way of merger,
          consolidation, take-over bid, tender offer, purchase of
          shares, purchase of assets or otherwise) or any
          material portion of its or their shares or capital
          stock or assets (with any such efforts by any such
          person, including a firm proposal to make such an
          acquisition or combination, herein referred to as a
          "Competing Transaction"), (ii) provide non-public
          information with respect to USMX or its Subsidiaries,
          or afford any access to the properties, books or
          records of USMX or its Subsidiaries, to any person,
      
      

          other than Dakota, relating to a possible Competing
          Transaction by any person other than Dakota, (iii) make
          or authorize any statement, recommendation or
          solicitation in support of any possible Competing
          Transaction by any person, other than by Dakota, or
          (iv) enter into an agreement with any person, other
          than Dakota, providing for a possible Competing
          Transaction.  USMX, its Subsidiaries, and their
          respective directors, officers, employees,
          representatives, investment bankers, agents and
          affiliates, shall immediately cease any and all
          existing activities, discussions or negotiations with
          any parties conducted heretofore with respect to any of
          the foregoing.

          (b)  Notwithstanding subparagraph (a) above, prior to
          the approval of the Merger by the holders of USMX
          Shares, nothing contained in this Schedule A shall
          prevent the USMX Board of Directors (or its agents
          pursuant to its instructions) from (i) engaging in
          discussions or negotiations with (but not soliciting or
          initiating such discussions or negotiations or
          encouraging inquiries from) a party concerning an
          unsolicited proposal for a Competing Transaction, (ii)
          providing non-public information with respect to USMX
          or its Subsidiaries that has previously been provided
          to Dakota or (iii) making any statement or
          recommendation in support of any Competing Transaction,
          in each case if the USMX Board of Directors first
          determines in good faith, after consultation with and
          receiving written advice from its outside legal counsel
          (which advice need not constitute an opinion), that
          such action is required by reason of the fiduciary
          duties of the directors of USMX to the USMX
          shareholders under applicable law, provided that in
          each such event USMX promptly notifies Dakota of such
          determination and provides Dakota with the fact that it
          is furnishing information to, or entering into
          discussions or negotiations with, a person or entity
          and USMX keeps Dakota informed of the status (but not
          the terms or the identity of the person or entity) of
          any such discussions or negotiations.  Except to the
          extent expressly provided in this subparagraph (b),
          nothing in this subparagraph shall relieve USMX from
          its obligation to comply with the other terms of this
          Schedule A.  If USMX or any of its Subsidiaries
          receives any unsolicited offer or proposal to enter
          negotiations relating to a Competing Transaction, USMX
          shall immediately notify Dakota thereof.  USMX shall be
          responsible for any breach of this paragraph 2 by any
          of its (or its Subsidiaries') directors, officers,
          employees, representatives, investment bankers, agents
          and affiliates.

          (c)  Dakota may, in its sole discretion, prior to the
          holding of the meeting of USMX shareholders to approve
          the Merger, amend the terms of the Merger to increase
          the consideration payable to holders of USMX Shares
          pursuant thereto, by delivering such amended terms of
          the Merger to USMX before the holding of such meeting,
          provided that such amendment shall not materially delay
          the consummation of the Merger.

          (d)  Notwithstanding any other provisions hereof, USMX
          shall not (i) enter into a Competing Transaction until
          at least (x) ten business days following the first
      
      
      
          notification by USMX to Dakota that it has entered into
          discussions with a third party in respect of such
          Competing Transaction and (y) five business days
          following delivery of written notice by USMX to Dakota
          of the identity of the parties to and the terms and
          conditions of such Competing Transaction or (ii) for a
          period of ten business days following termination of
          this Schedule A pursuant to subparagraphs 3(j) or (k)
          hereof, grant or agree to grant to any third party, in
          connection with a Competing Transaction, an option to
          purchase treasury securities or assets of USMX or any
          of its Subsidiaries, pay or agree to pay to any such
          third party, termination, expense reimbursement,
          "topping" or similar fees in the event of non-
          consummation of such Competing Transaction or otherwise
          commit to any inducement to any such third party.

3.        This Schedule A and any obligations under the Letter
may be terminated at any time:

          (a)  by mutual written agreement of Dakota and USMX;

          (b)  by either Dakota or USMX, if the Merger Agreement
          has not been executed and delivered by each of Dakota
          and USMX on or before January 30, 1997;

          (c)  by Dakota, if a Support Agreement has not been
          executed and delivered by Pegasus on or before the date
          the Merger Agreement is executed and delivered;

          (d)  by either USMX or Dakota, if, after January 10,
          1997 and on or before January 13, 1997, either USMX or
          Dakota gives written notice to the other that it is not
          satisfied, acting reasonably, with the amount of
          commitments or expressions of interest obtained for the
          Canadian Offering, provided that such notice may not be
          given if, on or before January 10, 1997, Dakota has
          delivered to USMX a copy of a letter addressed to
          Dakota from Canaccord Capital Corporation to the effect
          that it is highly confident that not less than
          Cdn. $40 million of aggregate gross proceeds can be
          raised under the Canadian Offering;

          (e)  by either Dakota or USMX, if the condition set
          forth in subparagraph 3(b) of the Letter is not
          satisfied;

          (f)  by either USMX or Dakota, if the conditions set
          forth in subparagraphs 3(d) or (e) of the Letter are
          not satisfied;

          (g)  by Dakota, if there has been a breach by USMX of
          any of its covenants or agreements set forth in this
          Schedule A or if a Material Adverse Change (as defined
          below) has occurred with respect to USMX;



          (h)  by USMX, if there has been a breach by Dakota of
          any of its covenants or agreements set forth in this
          Schedule A or if a Material Adverse Change has occurred
          with respect to Dakota;

          (i)  by either Dakota or USMX, if a permanent
          injunction or other order by any court having
          jurisdiction shall have been issued and shall have
          become final and non-appealable which would (i) make
          illegal or otherwise restrain or prohibit the
          consummation of the Merger, (ii) prohibit Dakota's
          ownership or operation of all or any material portion
          of the business or assets of USMX and its Subsidiaries
          or (iii) compel Dakota to dispose of or hold separate
          all or any material portion of the business or assets
          of USMX or its Subsidiaries;

          (j)  by Dakota, if the USMX Board shall have made any
          recommendation to the USMX shareholders against the
          Merger or in support of a Competing Transaction or if
          USMX shall have entered into a Competing Transaction;

          (k)  by USMX, if the USMX Board of Directors determines
          in good faith, after consultation with and receiving
          written advice from its outside legal counsel (which
          advice need not constitute an opinion), that it is
          required, by reason of the fiduciary duties of the
          directors of USMX to the USMX shareholders under
          applicable law, to recommend to the USMX shareholders
          that they vote against the Merger and approve instead a
          Competing Transaction that the USMX Board of Directors
          has determined in good faith, after consultation with
          its outside financial advisors, is financially more
          favourable to the USMX shareholders than the Merger
          (including any adjustment to the terms and conditions
          of the Merger proposed by Dakota in response to such
          Competing Transaction), is the subject of a firm
          written offer from a third party that is capable of
          consummating such Competing Transaction and is likely
          to be successful, taking into account any amendments to
          the Merger contemplated by subparagraph 2(c) hereof and
          the conditions and valid and binding character of such
          offer (a "Superior Competing Transaction"), provided
          that a Superior Competing Transaction shall not be
          committed to or entered into by USMX or effected until
          at least five business days following delivery to
          Dakota of the notice contemplated by clause (y) of
          subparagraph 2(d)(i) hereof.

For purposes of this paragraph 3, the term "Material Adverse
Change" used with respect to a party means any event, change or
effect, that is, or is reasonably likely to be, adverse to the
condition (financial or otherwise), properties, assets,
liabilities, businesses, operations, results of operations or
prospects of such party and its subsidiaries, taken as a whole,
provided that a Material Adverse Change shall not include or be
deemed to result from any change in the market value of USMX
Shares or Dakota Shares or any adverse effect resulting from
changes in general economic conditions or conditions generally
affecting gold prices.

Any termination of this Schedule A under this paragraph 3 will be
effective by the delivery of written notice by the terminating
party to the other party hereto.



In the case of any termination of this Schedule A as provided by
this paragraph 3 or in paragraph 4 hereof, this Schedule A shall
be of no further force and effect (except as provided in
paragraphs 6 and 7 hereof) and nothing herein shall relieve any
party from liability for any breach of this Schedule A.

4.        As an inducement and consideration for Dakota agreeing,
subject to the terms and conditions of the Letter and this
Schedule A, to effect the Merger, USMX agrees to grant to Dakota
an option (the "Option") to purchase up to 810,000 USMX Shares,
at a price equal to US $1.75 per Share, exercisable at any time
after this Schedule A is terminated (i) by Dakota pursuant to
subparagraph 3(j) hereof or (ii) by USMX pursuant to subparagraph
3(k) hereof and on or before the day that is six months after
such termination, provided that the Option shall not be
exercisable after the Termination Fee (as defined below) has been
paid to Dakota.  The granting of the Option is subject to
acceptance for filing of notice of the grant of the Option by The
Toronto Stock Exchange (the "TSE").  USMX covenants and agrees to
promptly file such notice with the TSE and to use its reasonable
best efforts to obtain the acceptance for filing of such notice
by the TSE.  The terms and conditions of the Option (including
customary anti-dilution provisions) shall be set forth in an
agreement (the "Option Agreement"), in form and content
reasonably acceptable to Dakota, to be executed and delivered by
Dakota and USMX promptly after such condition is satisfied.  If
the Option is not granted, and the Option Agreement is not
executed and delivered, on or before January 30, 1997 by reason
of the failure of the TSE to accept for filing notice of the
grant of the Option, Dakota may terminate this Schedule A by
giving written notice thereof to USMX on or before such date.

5.        If this Schedule A is terminated (i) by Dakota pursuant
to subparagraph 3(j) hereof or (ii) by USMX pursuant to
subparagraph 3(k) hereof, then USMX may pay to Dakota (by wire
transfer of immediately available funds) a fee (the "Termination
Fee") of US $500,000 within 30 days after the delivery of the
notice of termination pursuant to paragraph 3 hereof, provided
that USMX shall not be entitled to make such payment if at any
time prior to the making of such payment, Dakota shall have
exercised the Option.

The issuance by USMX to Dakota of the USMX Shares issuable upon
exercise of the Option or the payment by USMX to Dakota of the
Termination Fee is in lieu of any damages or any other payment
which USMX might otherwise be obligated to pay to Dakota as a
result of any termination for which payment is due hereunder.
USMX agrees that, in view of the nature of the issues likely to
arise in the event of such a termination, it would be
impracticable or extremely difficult to fix the actual damages
resulting from such termination and proving actual damages,
causation and foreseeability in the case of such termination
would be costly, inconvenient and difficult.  In requiring USMX
to issue the USMX Shares issuable upon exercise of the Option or
to pay the Termination Fee as set forth in the Option Agreement
or herein, it is in the intent of the parties to provide, as of
the date of the Letter, for a liquidated amount of damages to be
paid by USMX to Dakota.  Such liquidated amount shall be deemed
full and adequate damages for such termination and is not
intended by either party to be a penalty.



6.        Each of Dakota and USMX will bear its respective
expenses incurred with respect to the Transaction.

7.        Prior to the Effective Time and for one year from any
termination of this Schedule A, each of the parties hereto will
hold, and will use commercially reasonable efforts to cause its
officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential documents and
information concerning the other party furnished to such party by
such other party in connection with the Transaction, except to
the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by such party, (ii)
in the public domain through no fault of such party or (iii)
later acquired by such party from sources other than such other
party so long as, to the knowledge of such party, such sources
are not subject to a contractual or fiduciary duty of
confidentiality with respect to such information; provided that
such party may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the Transaction so long as such
persons are informed by such party of the confidential nature of
such information and are directed by such party to treat such
information confidentially.  The obligations of the parties
hereto to hold any such information in confidence shall be
satisfied if it exercises the same care with respect to such
information as it would take to preserve the confidentiality of
its own similar information.  If this Schedule A is terminated,
each of the parties hereto will, and will use its best efforts to
cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the
other party all documents and other materials, and all copies
thereof, obtained by such party from such other party in
connection with the Transaction that are subject to such
confidence.