Breakwater Resources Ltd.

Breakwater Resources Ltd.

August 01, 2006 13:24 ET

Sale of Caribou and Restigouche Mines Completed

TORONTO, ONTARIO--(Marketwire - Aug. 1, 2006) -

Attention Business Editors:

Breakwater Resources Ltd. (TSX:BWR) is pleased to announce that Breakwater and its wholly-owned subsidiary, CanZinco Ltd., have completed the sale of CanZinco's Caribou and Restigouche mines to Blue Note Metals Inc.

Under the terms of the agreement, Blue Note Metals Inc. has acquired the Caribou and Restigouche mines by replacing Breakwater's reclamation deposits of approximately $5.9 million with the Government of New Brunswick for environmental rehabilitation and by issuing to Breakwater a C$15 million unsecured subordinated convertible debenture with a maturity of five years. Breakwater has the right to convert the debenture into a direct 20% property interest following commencement of commercial production and the expenditure by Blue Note of at least $1.5 million of exploration on the properties. Breakwater will receive a one to two percent net smelter return royalty on zinc metal production provided the price of zinc is above US$0.65 per pound as determined by the London Metals Exchange.

Following the expiration of the conversion period, if Breakwater has not converted the debenture, Blue Note Metals may redeem the debenture for cash or its shares as its option.

Breakwater is a mineral resource company engaged in the acquisition, exploration, development and mining of base metal and precious metal deposits in the Americas and North Africa. Breakwater has three producing zinc mines: the Myra Falls mine in British Columbia, Canada; the El Mochito mine in Honduras; and the El Toqui mine in Chile. The Company is currently developing the underground Langlois mine in Canada, which is expected to achieve commercial production in mid-2007.

Certain statements included in this news release are forward-looking statements, which are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. They include estimates and statements that describe the Company's future plans, objectives and goals, including words to the effect that the Company or management expects a stated condition or result to occur. When used herein, words such as, "will acquire", "commencement", "will receive", "issuing", "becomes", "following", "may redeem" and other similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve inherent risks and uncertainties and subject to other factors, many of which are beyond our control, that may cause the actual results or performance to differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others, asset impairment, metal price volatility, fluctuations in foreign exchange rates, economic and political events affecting metal supply and demand, fluctuations in ore grade or ore tonnes milled, geological, operating and environmental risks, problems during the development, construction and start-up phases of an underground mine, inadequacy of environmental insurance. For a more comprehensive review of risk factors, please refer to the Company's most recent annual report under "Management's Discussion and Analysis of Financial Results" and Form 20-F under "Risk Factors" on file with the U.S. Securities and Exchange Commission and Canadian provincial securities regulatory authorities filed on SEDAR at The Company disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise. Readers are cautioned not to put undue reliance on these forward-looking statements.

Contact Information

  • Breakwater Resources Ltd. William M. Heath Executive Vice President (416) 363-4798 Ext. 267
    Breakwater Resources Ltd. Ann Wilkinson Vice President, Investor Relations (416) 363-4798 Ext. 277