Breakwater Resources Ltd.
TSX : BWR

Breakwater Resources Ltd.

February 28, 2008 17:01 ET

Breakwater Reports Mineral Reserve and Mineral Resource Estimates

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2008) - Breakwater Resources Ltd. (TSX:BWR) today announced its December 31, 2007 mineral reserve and mineral resource estimates, prepared in accordance with National Instrument 43-101 (NI 43-101).

As shown in the tables below, mineral reserves at the end of 2007 were estimated to total 20.9 million tonnes grading 6.9% zinc resulting in a 35% increase year-over-year. Specifically, mineral reserves at Langlois increased by 115% and at Toqui, mineral reserves increased by 64%, principally due to the addition of the Porvenir deposit, for which a production decision has been made. Measured and indicated mineral resource estimates totaled 24.1 million tonnes grading 7.9% zinc, a 22% increase over 2006 primarily due to increases at Langlois and Toqui, despite decreases at Mochito and Myra Falls. Inferred mineral resources have been estimated to total 12.6 million tonnes, representing a 5% decrease year-over-year.

During 2007, Breakwater spent $38.4 million on capitalized and expensed exploration of the Company's assets resulting in substantial increases to the mineral reserves at Langlois and Toqui as well as advancing a number of greenfield and brownfield exploration targets. This expenditure represents a substantial increase from past years and reflects both recent successes in target identification and a strategic effort to address past underinvestment in exploration of the Company's assets.

For 2008, Breakwater plans to spend up to $36.9 million on exploration, with $20 million being allocated for minesite exploration within and around the four operating mines. It is anticipated that this expenditure will further enhance the Company's mineral reserves and resources.



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Proven Mineral Reserves
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 4,787 5.3 0.5 1.0 47 1.3 5,202 5.5 0.5 1.0 41 1.2
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Mochito 1,129 6.3 2.3 - 83 - 1,036 6.6 2.9 - 107 -
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Toqui 846 7.3 0.5 - - 2.2 438 7.8 - - - 3.6
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Langlois 1,725 7.7 - 0.4 31 - 507 8.3 - 0.5 32 0.1
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Total 8,487 6.1 - - - - 7,183 6.0 - - - -
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Probable Mineral Reserves
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 1,048 5.8 0.5 1.1 36 1.2 932 6.6 0.5 1.0 41 1.2
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Mochito 1,406 5.7 2.1 - 64 - 1,863 5.8 2.6 - 79 -
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Toqui 3,869 7.3 0.6 0.1 14 0.8 2,431 8.3 - - - 0.9
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Langlois 6,154 8.2 - 0.5 39 0.1 3,151 10.4 - 0.8 52 0.1
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Total 12,477 7.4 - - - - 8,377 8.3 - - - -
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Proven and Probable Mineral Reserves
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 5,835 5.4 0.5 1.0 45 1.3 6,134 5.7 0.5 1.0 41 1.2
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Mochito 2,535 6.0 2.2 - 72 - 2,899 6.1 2.7 - 89 -
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Toqui 4,715 7.3 0.5 0.1 11 1.1 2,869 8.2 - - - 1.3
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Langlois 7,879 8.1 - 0.5 37 0.1 3,658 10.1 - 0.8 49 0.1
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Total 20,964 6.9 - - - - 15,560 7.3 - - - -
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Measured Mineral Resources(i)
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 5,058 7.1 0.6 1.2 60 1.6 5,912 6.8 0.6 1.2 53 1.6
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Mochito 1,298 6.8 2.6 - 90 - 1,189 7.1 3.1 - 116 -
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Toqui 1,137 8.2 - - - 2.4 602 9.2 - - - 3.4
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Langlois 2,596 8.6 - 0.5 37 - 708 8.8 - 0.5 30 0.1
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Total 10,089 7.6 - - - - 8,411 7.2 - - - -
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Indicated Mineral Resources(i)
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 1,265 8.0 0.6 1.5 51 1.8 1,312 8.5 0.6 1.5 64 2.2
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Mochito 1,711 6.1 2.2 - 70 - 2,010 6.4 2.7 - 85 -
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Toqui 4,209 8.1 0.6 0.1 16 1.0 2,995 8.8 - - - 0.9
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Langlois 6,778 8.7 - 0.6 43 0.1 4,991 11.0 - 0.8 54 0.1
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Total 13,963 8.1 - - - - 11,308 9.3 - - - -
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Measured and Indicated Mineral Resources(i)
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 6,323 7.3 0.6 1.3 58 1.6 7,224 7.2 0.6 1.2 55 1.7
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Mochito 3,009 6.4 2.4 - 79 - 3,199 6.7 2.8 - 97 -
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Toqui 5,346 8.1 0.5 0.1 13 1.3 3,597 8.9 - - - 1.3
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Langlois 9,374 8.7 - 0.6 41 0.1 5,699 10.7 - 0.8 51 0.1
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Total 24,052 7.9 - - - - 19,719 8.4 - - - -
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(i) Includes proven and probable reserves but excludes inferred resources

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Inferred Mineral Resources
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December 31, 2007 December 31, 2006
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Tonnes Zn Pb Cu Ag Au Tonnes Zn Pb Cu Ag Au
(000's) (%) (%) (%) (g/t) (g/t) (000's) (%) (%) (%) (g/t) (g/t)
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Myra Falls 3,777 7.8 0.9 1.0 90 2.2 4,431 6.9 0.8 1.0 81 2.0
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Mochito 1,821 5.8 2.2 - 67 - 2,480 5.7 2.3 - 75 -
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Toqui 4,761 7.1 0.5 0.1 15 0.6 4,626 8.5 - - - 0.5
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Langlois 2,290 6.4 - 0.5 39 0.1 1,808 8.8 - 0.5 39 0.1
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Total 12,649 7.0 - - - - 13,345 7.5 - - - -
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NOTES TO INVESTORS CONCERNING ESTIMATES

Cautionary note to investors concerning estimates of Measured and Indicated Resources.

This news release may use the terms "measured resources" and "indicated resources". Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.

Cautionary note to investors concerning estimates of Inferred Resources.

This news release may also use the term "inferred resources". "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Metal Price Assumptions

For the December 31, 2007 mineral reserve estimates, metal prices, including premiums, used to determine economic viability were US$1.12/lb. zinc, C$/US$ exchange rate of 1.09, US$600/oz. gold, US$12.00/oz. silver, US$2.55/lb. copper and US$0.54/lb. lead. For Grevet B, the satellite deposit at Langlois, the metal prices used were US$1.45/lb. zinc, C$/US$ exchange rate of 1.09, US$12.00/oz. silver and US$3.27/lb. copper. Higher prices were used on this deposit as it is expected that it will be mined over the next two years.

Scientific and Technical Data

The Company is reporting mineral resource and reserve estimates in accordance with the CIM guidelines for the estimation, classification and reporting of resources and reserves. The Canadian Securities Administrators' NI 43-101 requires mining companies to disclose reserves and resources using the subcategories of "proven" reserves, "probable" reserves, "measured" resources, "indicated" resources and "inferred" resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

A mineral reserve is the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allows for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. A probable mineral reserve is the economically mineable part of an indicated mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.

A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. A measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. An indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. An inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Mineral resources which are not mineral reserves do not have demonstrated economic viability.

Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

The effective date of the Company's mineral reserve and mineral resource estimates is December 31, 2007. The 2007 estimated measured and indicated mineral resource and the estimated inferred mineral resource were prepared under the supervision of Torben Jensen, P.Eng., who is employed by the Company as VP, Engineering and who is a Qualified Person under NI 43-101.

Mochito

The qualified person responsible for the Mochito mineral reserve and mineral resource estimates is Torben Jensen, P.Eng., VP Engineering. The mineral resource and mineral reserve estimates for the Mochito mine are developed using Gemcom modeling software utilizing a 5% zinc equivalent cut-off grade.

A true grade block model has been created using an inverse distance (1/D2) interpolation method which employs three search ellipsoid sizes to interpolate the grade of a block. Block sizes are 3m x 3m x 3m. Skarn is the host rock for mineralization. All blocks to be considered as part of the mineral resource must be within the skarn rock model. Only grade estimation is permitted within this volume or envelope.

Three ellipsoid sizes, each with two different shapes, were used. Ellipsoid size selection took into consideration the 15m drill spacing used with a polygonal estimation method of previous years. Two different ellipsoid shapes were used. An oblate ellipsoid (Frisbee shape) was used in areas with manto style mineralization. A simple spheroid (ball shape) was employed in areas of chimney-style mineralization. For oblate ellipsoids (manto style mineralization), Category 1 searches are carried out at 15m x 15m x 4.5m. Category 2 searches are carried out at 23m x 23m x 10m. Category 3 searches are carried out at 45m x 45m x 18m. For spheroid ellipsoids (chimney style mineralization), Category 1 searches are carried out at 15m x 15m x 15m. Category 2 searches are carried out at 23m x 23m x 23m. Category 3 searches are carried out at 45m x 45m x 45m.

Grade interpolation is preformed on blocks in which at least one assay (composite drill assay) is found in five of the eight quadrants of a given search ellipsoid. All blocks assigned an estimated grade by this procedure make up the Mineral Resource (Measured, Indicated and Inferred). Blocks whose grade was estimated by the smaller two ellipsoids (Category 1 & 2) are considered as measured and indicated mineral resources. Blocks whose grade was estimated by the larger ellipsoid (Category 3) are considered as an inferred mineral resource.

A mineral reserve was estimated on the mineral resource by application of post pillar, cut and fill mining method and 5% equivalent zinc cut-off. Planned dilution from mining back fill in the floor is accounted for in the reserve estimated. It is expected the grade block model will predict the distribution of ore. Dilution from mining outside of the ore cuts is not planned.

Toqui

The qualified person responsible for the Toqui mineral reserve and mineral resource estimates is Robert McGuire, P.Eng., General Manager, Toqui Mine. The estimation of mineral resources and mineral reserves at Toqui is a two-stage process:

First, all mineral resources are estimated for the main manto unit at a minimum width and cutoff grade based upon metal prices, costs, recoveries and other considerations. Second, mineral reserves are estimated by applying a series of factors and dilution to the mineral resources. The use of a polygonal-block-based method combined with regularly spaced drill holes is believed to provide a reasonably accurate estimate of the mineral resources.

To convert mineral resources to mineral reserves, the following assumptions are made:

Depending on the deposit, dilution is added at a variable rate of between 6% to 25% at zero grade, which is based upon a normal over-break of 0.25 metres within the first five metres on the roof and floor for a typical five metre high room.

Room and pillar mining results in a general recovery factor of 80% before dilution and pillar recovery. A 50% recovery factor is used for the pillars. Specific areas are designed differently if rock quality is low or other issues exist. Geo-mechanical studies are in process to improve recoveries further.

Myra Falls

The qualified person responsible for the Myra Falls mineral reserve and mineral resource estimates is Rick Sawyer, P.Geo. (BC), Chief Geologist. The mineral resource and mineral reserve estimates for the Myra Falls mine are developed using Gemcom modeling software. Separate block models are maintained for the H-W, Battle-Gap, Extension, Lynx Level 6, Ridge, Price and Marshall zones. An historic model created with the Mine Sight modeling software is available for Lynx below level 6. The drill hole databases, from which these models were built, are constantly being updated, and intermediate resource models are calculated periodically.

The block model mineral resources are classified into measured, indicated and inferred categories based on the distance of a block from its nearest composite. Areas with lower levels of confidence in the geological interpretation are clearly identified as inferred resources by assigning a unique rock code to these areas.



Mineral resources comprise mineralized areas which:
i) have been drilled and/or otherwise sampled to the knowledge level
of measured or indicated mineral resources;
ii) are considered accessible and extractable from currently-active mine
workings and are included in the current mining plan; and
iii) have an NSR value equal to or exceeding a predetermined cut-off
value.


A separate extraction factor and dilution rate is applied to each mining area to estimate mineral reserve tonnages and grades. The result is regarded as a mineral reserve with proven and probable status.

Langlois

The qualified person responsible for the Langlois mineral reserve and mineral resource estimates is Donald Gervais, member of l'Ordre des geologues du Quebec, Chief Geologist.

During 2007, reinterpretation and re-modeling of all of the zones at Langlois was carried out taking into account forecast base metal prices, lower cut-off grades and incorporation of all diamond drill intersections and channel samples in order to redefine the economic envelope. A fully integrated 3D block model has been completed which has greatly assisted all mine applications, especially the estimation of new resources and reserves.

The mineral resources and mineral reserves at Langlois and Grevet B mines are estimated using 3D block models with information derived from diamond drilling and underground chip sampling across development faces. During the 2007 review of all existing data including diamond drill hole information, underground opening and chip samples, a complete reinterpretation of the deposits at Langlois and Grevet B mine was carried out. For each drill hole intersection and underground face sampling, new intersects were generated and identified with their own vein number. Based on mining method and design, a variable minimum mining width was considered to define each intersect used in the resource estimate. A 3D wire frame model was constructed for each sulfide zone and then a block model was constructed based on this interpretation. Block model dimensions are 5 metres high by 5 metres long by 1 metres wide which reflects the elongated narrow lenses.

Limits of each zone were determined visually on plan views and vertical sections based on geology, underground openings, sulphide abundance and mineralogy. An arbitrary lower zinc cut-off was not used for determining the limits of the zones. Assay data for zinc, copper, silver gold and lead were density-weighted and composited in one metre increments over the true thickness intersect of each zone. Variography analysis and 3D block model interpolation was performed on the one metre composites for all elements.

Langlois and Grevet B contain nine different lenses and each one has been statistically treated as a specific geological domain. Grades for individual blocks in the model have been defined by inverse distance square interpolation using a minimum of two samples and maximum of 12. Variography analysis was carried out and search ellipses were defined for each lens. According to a statistical review of all tagged assays, capping of the zinc, copper, silver, gold and lead has been applied on assays and then extrapolated to one metre composites. Each lens has a specific cut off for drill hole and chip assays. Drill holes or underground samples that did not intersect the entire width of the mineralized zone were discarded from the calculation.

The Langlois and Grevet B mineralization contains significant values for three elements: zinc, copper and silver. An NSR value was determined by the Company for each metal unit. These metal units were then used to calculate the NSR value of each interpolated block while determining the resource estimates. Zinc, copper, and silver grades of each block have been converted into dollar values based on the smelter parameter.

The minimum mining width used for interpretation of the lenses is 2.0 metres at Grevet B. For Langlois, the minimum mining width used was 3.0 metres in lenses 1 to 4 and 2.2 metres in lenses 97 Main, North and South. All lenses were interpreted from drill holes, chip samples and underground development projected on various level plans from surface to 800 metres below and transversal sections were developed every 10 or 15 metres over a strike length of about 2000 metres.

The mineral reserves were estimated by applying mining recovery and dilution to the measured and indicated resources. Minimum mining widths were applied including 3.0 metres for Zones 3 and 4, 2.2 metres for Zone 97 and 2.0 metres for Grevet B. The mineral reserves consist of contiguous zones of mineralization delineated in the geological model, while isolated areas were not included. Anticipated dilution and recovery for the planned mining method and stope dimensions for Zones 3 and 4 is according to the historic mining information. The dilution and recovery for Zone 97, excluding pillars is comparable to the historical rates realized in Zones 3 and 4.

On February 7, 2008, Metco Resources Inc. ("Metco") announced an updated mineral resource estimate for the Orphee deposit, located six kilometres south east of the Langlois mine. The Orphee deposit is held in a 50:50 joint venture with the Company. The resource update was prepared by Scott Wilson Roscoe Postle Associates Inc. utilizing the following assumptions: US$1.12/lb. zinc, C$/US$ exchange rate of 1.09, US$12.00/oz. silver, US$2.55/lb. copper and a cut-off NSR of $80/t. Indicated mineral resources for the Orphee deposit stand at 607,000 tonnes grading 6.6% zinc, 0.44% copper, 14 g/t silver and 0.12 g/t gold. Inferred mineral resources for the Orphee deposit stand at 276,000 tonnes grading 7.0% zinc, 0.79% copper, 13 g/t silver and 0.08 g/t gold.

Forward-looking Statements

The information in this news release has been prepared as at February 25, 2008. Certain information included in this news release constitutes "forward-looking statements". The words "expect", "will", "intend", "estimate" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to, risks associated with the mining industry such as government regulation, environmental and reclamation risks, title disputes or claims, success of mining activities, future commodity prices, costs of production, possible variation in mineral reserves, mineral resources, grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, the timing of estimated future production, capital expenditures, financial market fluctuations, requirements for additional capital, conclusions of economic evaluations, limitations on insurance coverage, risks associated with using third-party contractors, inflation as well as those factors discussed in the Company's most recent Annual Information Form on file with Canadian provincial securities regulatory authorities.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.


Contact Information

  • Breakwater Resources Ltd.
    Torben Jensen, P.Eng
    Vice President, Engineering
    (416) 363-4798 Ext. 232
    Email: TJensen@breakwater.ca
    or
    Breakwater Resources Ltd.
    Ann Wilkinson
    Vice President, Investor Relations
    (416) 363-4798 Ext. 277
    Email: AWilkinson@breakwater.ca