Press Releases

Breakwater Resources Ltd.'s 2009 Year-End and Fourth Quarter Financial and Operating Results

CONTACT: Ann Wilkinson, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

TORONTO, CANADA/February 25/Breakwater Resources/ -- Breakwater Resources Ltd. is a mining, exploration and development company which produces zinc, copper, lead and gold concentrates. During 2009, the Company's concentrate production was derived from mines located in Canada, Chile and Honduras. The Company also owns base metal and gold exploration properties in Canada, Honduras, Chile and Tunisia. On November 2, 2008, the Company temporarily suspended operations at Langlois due to the decline in commodity prices and the general deterioration of the economic outlook globally. The unforeseen temporary suspension of Langlois affects all aspects of the Company's financial results which makes comparisons between years difficult.

The reporting currency is Canadian dollars ("C$" or "$") and all amounts disclosed are in Canadian dollars unless otherwise indicated.

Throughout 2009 management tenaciously focused on: cost containment; extraction of higher value mineralized material; spending a minimum of capital required to operate the mines; and, raising additional capital. The price of zinc bottomed in February and gradually moved increasingly higher for the balance of the year. By mid-2009 any concern that Breakwater would not survive had been put to rest and by the end of the year, the Company had $41.1 million in the bank, working capital of $70.7 million and a portion of future earnings protected by the purchase of zinc put options giving shareholders the benefit of higher zinc prices.

The Company realized net earnings of $0.8 million or $0.00 per share in 2009 compared with a net loss of $88.3 million or $0.20 per share in 2008. Included in the $0.8 million net earnings was $4.4 million of price protection program costs related to the purchase of zinc put options, which largely expired out-of-the-money, to protect the minimum price on certain zinc sales while retaining further price increase exposure. The unforeseen temporary suspension of operations at Langlois in the fourth quarter of 2008 significantly impacts the comparability of the 2009 and 2008 year-over-year results.

Concentrate produced in 2009 decreased by 32% to 214,660 tonnes largely due to Langlois being placed on temporary care and maintenance in November 2008.

On April 9, 2009, the Company closed a public offering for gross proceeds of $20 million (the "Offering"). A total of 200,000,000 units were issued at a price of $0.10, with each unit ("Unit") comprising one common share ("Common Share") and one-half of a warrant (a "Warrant"). Each whole Warrant entitles the holder to purchase one Common Share at a price of $0.12 per share until April 9, 2014. The Common Shares continue to trade under the symbol "BWR" and the Warrants began trading on the Toronto Stock Exchange (the "TSX") on closing under the symbol "BWR.WT.A". The Company granted to the underwriters an over-allotment option to purchase up to 30,000,000 additional Units at a price of $0.10 for each additional Unit on the same terms and conditions of the Offering. On April 16, 2009, the Company completed the sale of an additional 30,000,000 Units for gross proceeds of $3,000,000, pursuant to the exercise of the underwriters' over-allotment option (the "Over-Allotment Exercise"). Net proceeds of the Offering, including the over-allotment option, was approximately $21.4 million. Dundee Corporation purchased 57,960,000 Units under the Offering (equal to 25.2% of the total number of Units that were issued on closing plus the Units issued in respect of the Over-Allotment Exercise) to maintain its approximate 25.2% equity interest in the Company.

In 2009, the Company entered into three royalty agreements whereby the Company sold a "Basic Royalty" on a portion of the payable zinc production, over the life of the Myra Falls mine. The Company received $95.6 million which included royalty income of $86.1 million and fees and interest of $9.6 million. Of the funds received, $86.1 million were placed with a financial institution, for which the Company took back a restricted promissory note. The remaining funds of $9.6 million were available for working capital purposes.

The collective bargaining agreement at Myra Falls was renewed during 2009 for three years and has an expiry date of September 30, 2012.