Metco Resources inc.
TSX VENTURE : MKO

Metco Resources inc.

January 08, 2008 17:30 ET

Friendly Takeover Offer: Breakwater Offers 7,000,000 Breakwater Shares for 100% of Metco

MONTREAL, CANADA--(Marketwire - Jan. 8, 2008) - Metco Resources Inc. ("Metco") (TSX VENTURE:MKO) has reached an agreement with Breakwater Resources Ltd. ("Breakwater") whereby Breakwater will acquire 100% of Metco for 7,000,000 common shares of Breakwater. This agreement is subject to normal closing conditions including the approval of regulatory authorities and Metco shareholders at a special and general meeting expected to be held mid-March being more than one month after Metco's Annual Meeting which is scheduled for February 8th, 2008.

This transaction allows Metco's shareholders to participate in the potential offered by Breakwater shares while enabling Breakwater to consolidate its land position in the Lebel-sur-Quevillon Camp, gain entry into a large and prospective land package in the Matagami Camp and also secure additional long-term feed to its Langlois concentrator.

In Lebel-sur-Quevillon, Metco and Breakwater have a 50:50 joint venture on properties extending over 15 km (186 claims, 3,402 ha) in the same deformation corridor as Breakwater's current deposits. The companies also share 50:50 the Orphee Deposit where a two phase 14,000m diamond drill program in 36 holes was completed early in November 2007.

The best massive sulphide intersection obtained during the second phase, 4,000 m drilling program on the lower periphery and at the western side of the Orphee deposit is 12.1m @ 10.87% Zn, 0.16% Cu and 15.8 g/t Ag from 351.0m to 363.1m in drill hole 07-ORP-132. This intersection does not seem to be related directly to the Orphee lens as it is separated from it by a 55m thick diabase dyke, oriented N-15 degrees-E and dipping 78 degreesE. The possibility of extension of the zone is limited to the west as the intersection is located at the western limit of the Orphee property. The downward extension of the zone is limited by a drill-hole 100m vertically below. Although limited by the dyke, the deposit is open towards to surface, offering potential for extension onto Breakwater's wholly-owned property adjacent to the west. Therefore it is expected that obvious development synergies and production economies of scale could be unlocked if Breakwater and Metco/Breakwater owned portions of the Orphee deposit are combined as one operation.

As the assay results from the current program have almost all been received, the resource calculation will resume shortly as well as the continuation of the Orphee Prefeasibility Study. The current assays were conducted at Techni-Lab of Ste-Germaine Boule, Quebec.

The Orphee deposit was estimated by Cambior in 1998 to contain an inferred resource of 1,800,000 tonnes at an average grade of 4.25% Zn, 0.54% Cu and 11.75 g/t Ag (Press Release dated Feb 1st, 2007).

In Matagami, Metco owns 100% of the Caber and Caber North deposits. On July 18th, 2007, Metco announced that the results of a NI43-101 compliant prefeasibility study (GENIVAR and Scott Wilson RPA) determined that the Caber Deposit contains probable mineral reserves of 589,000 tonnes at an average grade of 8.58% Zn, 0.84% Cu, 8.89 g/t Ag and 0.13 g/t Au. The prefeasiblity study assumed truck haulage a distance of 38km to railhead in Matagami then by rail for a further 110km to Breakwater's Langlois concentrator. The Caber deposit contains an additional inferred resource of 171,000 tonnes at an average grade of 8.4% Zn, 1.3% Cu, 11 g/t Ag and 0.17 g/t Au. The Caber North deposit, located 1.2 km from the Caber Deposit, contains inferred resource of 2.6Mt at an average grade of 4.26% Zn, 1.59% Cu and 21.06 g/t Ag.

Metco's exploration properties in Matagami extend for some 60km along the prospective West Flank where the Key Tuffite horizon has been intersected in many locations. The properties include the wholly-owned Galinee property (217 claims, 3,451 ha) and La Gauchetiere property (8 claims, 128 ha) as well as properties explored in Joint Venture 50:50 with SOQUEM Inc., namely Du Dome-Matagami, B6-20 McIvor, Caber and Samson (493 claims, 19,922 ha).

Metco also owns 100% interest in three (3) base metal properties (89 claims, 1,815 ha) in Rouyn-Noranda and one (1) gold property (36 claims, 735 ha) in Chibougamau.

In the Gaspe Peninsula, Metco has a joint venture with Regal Consolidated Ventures Ltd on the Mont de l'Observation copper property (399 claims, 22,283 ha).

About Metco: Metco's corporate strategy is to search for, acquire, explore and develop mining properties with strong base metal potential throughout Canada. Its properties are located in the well-known Matagami, Lebel-sur-Quevillon, Rouyn-Noranda, Chibougamau and Gaspe mining camps. Two of its projects, Caber (100% Metco) and Orphee (50% Metco, 50% Breakwater), are presently at the prefeasibility stage.

For more information, please consult the Company's website at www.metco.ca.

Florent Gauthier, P.Eng., is the qualified person who has reviewed the content of this news release.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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