Breakwater Press Releases

Breakwater's Toqui Mine Undamaged by Chilean Earthquake

Sat, 27 Feb 2010 09:03:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 02/27/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) -

Early this morning a magnitude 8.8 earthquake occurred in central Chile, 114 kilometres (71 miles) NNE (15 degrees) of Concepcion, approximately 1000 kilometres north of Breakwater's Toqui mine. The earthquake was noticed at the Toqui mine site; however, preliminary indications are that there has been no damage to infrastructure at the mine site. We are continuing to monitor the situation; our major concern right now is for the families of our employees and the people of Chile.

Breakwater is a mining, exploration and development company which produces and sells zinc, copper, lead and gold concentrates to customers around the world. The Company's concentrate production is derived from three mines in Chile, Honduras and Canada. Breakwater's Langlois mine in Quebec, Canada is currently on temporary care and maintenance.

Contacts:
Fred Hermann
Chief Operating Officer
647-929-4798
FHermann@breakwater.ca
Breakwater Resources Ltd.



Ann Wilkinson
Vice President, Investor Relations
416-357-5511
AWilkinson@breakwater.ca
Breakwater Resources Ltd.

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

Thu, 25 Feb 2010 18:02:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 02/25/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) 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.

HIGHLIGHTS

Fourth Quarter

The Company realized net earnings of $5.4 million or $0.01 per share in the fourth quarter of 2009 compared with a net loss of $53.5 million or $0.12 per share in the fourth quarter of 2008. The main items affecting the movement to net earnings were:

- $50.4 million (US$36.0 million) or 50% lower gross sales revenue due to a 63% decrease in concentrate sold and a stronger C$ partially offset by higher realized prices for all metals

- $26.7 million or 67% lower treatment and marketing costs primarily due to lower concentrate sales, more favourable smelter terms and lower freight rates

- $58.8 million or 77% lower direct operating costs primarily due to lower concentrate sales and the unforeseen temporary suspension of mining activities at Langlois

- $12.0 million or 72% lower depreciation and depletion primarily due to the temporary suspension of Langlois and lower concentrate sales

- $8.2 million or 77% lower investment and other income primarily due to the sale of the Lapa Royalty and an adjustment to royalty income in 2008 which did not recur in 2009

- $35.5 million lower write-down of mineral properties and fixed assets primarily due to 2008 write-downs of the Myra Falls and Mochito mines

- $6.7 million higher income and mining tax provision primarily due to higher tax provisions at Mochito, Toqui and Langlois

Concentrate produced in the fourth quarter of 2009 decreased by 6% to 61,757 tonnes compared with the fourth quarter of 2008 largely due to the temporary suspension of Langlois.

On December 30, 2009, the Company entered into two 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 $69.4 million which included royalty income of $62.6 million and fees and interest of $6.8 million. Of the funds received, $62.6 million were placed with a financial institution, for which the Company took back a restricted promissory note. The remaining funds of $6.8 million are available for working capital purposes.

At December 31, 2009, the Company estimated that inventories shipped but not recognized for revenue purposes had earnings before tax of $10.3 million on 8,748 tonnes of concentrate compared with earnings before tax of $3.7 million on 11,469 tonnes of concentrate at September 30, 2009.

Year

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. The main items affecting the movement to net earnings were:

- $171.7 million (US$176.0 million) or 43% lower gross sales revenue due to a 42% decrease in concentrate sold and lower realized prices for all metals sold except gold partially offset by a weaker C$

- $71.1 million or 52% lower treatment and marketing costs primarily due to lower concentrate sales, more favourable smelter terms and lower freight rates

- $125.6 million or 55% lower direct operating costs primarily due to lower concentrate sales and cost improvements at all operations

- $24.4 million lower depreciation and depletion primarily due to the temporary suspension of mining activities at Langlois in 2008

- $14.5 million lower investment and other income primarily due to gains on sale of investments and the Lapa Royalty in 2008

- $10.9 million negative movement in foreign exchange expense (income) primarily due to the fluctuations in the C$/US$ exchange rate

- $15.4 million lower exploration expenses primarily due to significantly less exploration activity at all operations and at the Company's joint venture properties

- $46.5 million lower write-down of mineral properties and fixed assets primarily due to 2008 write-downs of the Myra Falls and Mochito mines as well as a write-off of the Company's 20% interest in the Caribou joint venture

- $11.9 million lower income and mining tax provision primarily due to $21.4 million of future tax assets written off in 2008

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.


SELECTED ANNUAL INFORMATION

Statement of Operations and Statement of Cash
 Flow Data                                          Years ended December 31,
----------------------------------------------------------------------------
----------------------------------------------------------------------------
($ millions except for share and per share
 numbers)                                             2009             2008
----------------------------------------------------------------------------

Gross sales revenue                                  226.4            398.1
Treatment and marketing costs                         64.6            135.8
                                                  --------------------------
Net revenue                                          161.8            262.3
Total operating costs                                132.8            280.9
                                                  --------------------------
Contribution (loss) from mining activities            29.0            (18.6)
                                                  --------------------------
Write-down of mineral properties and fixed
 assets                                                  -             46.5
                                                  --------------------------
Net earnings (loss)                                    0.8            (88.3)
                                                  --------------------------
Basic earning (loss) per Common Share                 0.00            (0.20)
Diluted earnings (loss) per Common Share              0.00            (0.20)
Net cash provided by (used in) operating
 activities                                           11.7             (5.8)
Capital expenditures                                  30.2             76.8
----------------------------------------------------------------------------
Basic weighted-average number of Common Shares
 outstanding (000's)                               622,183          441,378
Number of Common Shares outstanding (000's)        684,237          446,843



Balance Sheet Data                                    As at December 31,
----------------------------------------------------------------------------
----------------------------------------------------------------------------
($ millions)                                      2009             2008
----------------------------------------------------------------------------
Cash and cash equivalents                         41.1             20.3
Working capital                                   70.7             32.0
Total assets                                     595.3            495.2
Total debt                                        10.8              6.8
Total long-term liabilities                      219.6            116.2
Shareholders' equity                             313.3            309.7

STATEMENT OF OPERATIONS REVIEW - THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008

Gross Sales Revenue

Sales of concentrate fluctuate period-to-period due to production levels, shipping volumes, ship schedules, price determination terms, and risk and title transfer terms with the Company's various customers. The Company has a relatively conservative revenue recognition policy (see below) and the recognition of sales can be as much as six months after the date of concentrate production. The Company's sales are primarily denominated in US$.


Concentrate Sold            Fourth Quarter                     Year
(tonnes)               2009(1)        2008(2)         2009(1)        2008(2)
----------------------------------------------------------------------------
Zinc:
 Mochito               12,888         13,928          59,295         55,316
 Toqui                  4,597         16,618          41,652         73,488
 Myra Falls            15,133         21,197          54,721         68,361
 Langlois                   -         29,078           3,618         81,730
----------------------------------------------------------------------------
                       32,618         80,821         159,286        278,895
----------------------------------------------------------------------------
Copper
 Myra Falls             1,943          9,436          16,318         23,500
 Langlois                   -          4,152             322         11,818
----------------------------------------------------------------------------
                        1,943         13,588          16,640         35,318
----------------------------------------------------------------------------
Lead
 Mochito                1,929          6,610          18,439         20,669
 Toqui                    458          2,087           1,578          6,828
----------------------------------------------------------------------------
                        2,387          8,697          20,017         27,497
----------------------------------------------------------------------------
Gold
 Toqui                  1,368          1,192           6,677          4,894
 Myra Falls                85              1              94              1
----------------------------------------------------------------------------
                        1,453          1,193           6,771          4,895
----------------------------------------------------------------------------
All Metals             38,401        104,299         202,714        346,605
----------------------------------------------------------------------------
(1) Due to the Company's revenue recognition policy, certain concentrate
    produced prior to the temporary suspension on November 2, 2008 was not
    recognized in revenue until the first quarter of 2009.
(2) On November 2, 2008, Langlois operations were temporarily suspended.



                                    Fourth Quarter 2009
                       Concentrate                Realized     Gross sales
                              sold     Payable     price(2)        revenue
                           (tonnes)    metal(2)       (US$)        ($000's)
----------------------------------------------------------------------------
Zinc                        32,618      14,564       2,119          30,861
Copper                       1,943         488       6,249           3,050
Lead                         2,387       1,385       2,313           3,204
Gold(3)                      1,453       6,964       1,094           7,622
Silver                         n.a.    216,068       17.75           3,836
Price protection loss          n.a.                                 (1,497)
                           --------                               ---------
                            38,401
                           --------
                           --------
Gross sales revenue in US$                                          47,076
Exchange rate                                                       1.0567
                                                                  ---------
Gross sales revenue in C$                                           49,744
                                                                  ---------
                                                                  ---------


                                    Fourth Quarter 2008
                       Concentrate                Realized     Gross sales
                              sold     Payable     price(2)        revenue
                           (tonnes)    metal(2)       (US$)        ($000's)
----------------------------------------------------------------------------
Zinc                        80,821      36,183       1,331          48,149
Copper                      13,588       3,044       4,020          12,235
Lead                         8,697       5,276       1,189           6,271
Gold(3)                      1,193      10,393         803           8,345
Silver                         n.a.    765,344       10.54           8,069
Price protection loss                                                    -
                           --------                                 --------
                           104,299
                           --------
                           --------
Gross sales revenue in US$                                          83,069
Exchange rate                                                       1.2050
                                                                  ----------
Gross sales revenue in C$                                          100,101
                                                                  ----------
                                                                  ----------

(1) On November 2, 2008, Langlois operations were temporarily suspended.
(2) Payable metal and realized prices for zinc, copper and lead are per
    tonne and for gold and silver are per ounce.
(3) Gold concentrate sales are principally from Toqui while payable gold is
    from all operations except Mochito.

Concentrate sold decreased 63% in the fourth quarter of 2009 compared with the fourth quarter of 2008. The 65,898 tonne decrease in 2009 was due to a decrease of 33,230 tonnes at Langlois and 68%, 28% and 44% fewer tonnes sold at Toqui, Mochito and Myra Falls respectively. In payable metal terms, zinc, copper, lead, gold, and silver sold decreased by 60%, 84%, 74%, 33% and 72% respectively.

Realized prices denominated in US$ increased for all metals in the fourth quarter of 2009 with the most significant increase for zinc and lead at 59% and 95% respectively. The Company periodically hedges against fluctuations in metal prices and foreign exchange rates using forward sales or options. The Company has not applied hedge accounting historically; therefore, mark-to-market gains or losses have been included in gross sales revenue at the end of each period.

During the fourth quarter of 2009, the Company purchased zinc put options at a cost of $1.2 million to guarantee a minimum price on a portion of its zinc production for 2010. During the fourth quarter of 2009, the Company recorded $1.6 million of costs related to the marking-to-market of the puts outstanding at December 31, 2009 and the expiry of put option contracts in the fourth quarter.

Gross sales revenue decreased by US$36.0 million or 43% in the fourth quarter of 2009 due to the significant decline in sales volumes noted above. A stronger C$ resulted in a decrease in the average C$/US$ exchange rate of 12% in the fourth quarter of 2009. In C$ terms, gross sales revenue decreased $50.4 million or 50% in the fourth quarter of 2009 compared with the fourth quarter of 2008


                                                2009(1)
----------------------------------------------------------------------------
                          Concentrate              Realized   Gross sales
                                 sold    Payable    price(3)      revenue
                              (tonnes)  metal(3)       (US$)      ($000's)
----------------------------------------------------------------------------
Zinc                          159,286     70,152      1,545       108,358
Copper                         16,640      3,653      4,475        16,348
Lead                           20,017     12,183      1,654        20,147
Gold(4)                         6,771     35,959        956        34,368
Silver                            n.a. 1,729,954      14.09        24,367
Price Protection Loss                                              (4,034)
Other(5)                          n.a.                               (441)
                             ---------                            ---------
                              202,714
                             ---------
                             ---------
Gross sales revenue in US$                                        199,113
Exchange rate                                                      1.1372
                                                                  ---------
Gross sales revenue in C$                                         226,438
                                                                  ---------
                                                                  ---------


                                                2008(2)
----------------------------------------------------------------------------
                          Concentrate              Realized   Gross sales
                                 sold    Payable    price(3)      revenue
                              (tonnes)   metal(3)      (US$)      ($000's)
----------------------------------------------------------------------------
Zinc                          278,895    122,047      1,882       229,724
Copper                         35,318      7,440      6,042        44,950
Lead                           27,497     16,235      1,930        31,331
Gold(4)                         4,895     37,209        873        32,486
Silver                            n.a. 2,646,450      14.69        38,884
Price Protection Loss                                                   -
Other(5)                          n.a.                             (2,231)
                             ---------                            ---------
                              346,605
                             ---------
                             ---------
Gross sales revenue in US$                                        375,144
Exchange rate                                                      1.0612
                                                                  ---------
Gross sales revenue in C$                                         398,110
                                                                  ---------
                                                                  ---------

(1) Due to the Company's revenue recognition policy, certain concentrate
    produced prior to the temporary suspension of Langlois on November 2,
    2008 was not recognized in revenue until the first quarter of 2009.
(2) On November 2, 2008, Langlois operations were temporarily suspended.
(3) Payable metal and realized prices for zinc, copper and lead are per
    tonne and for gold and silver are per ounce.
(4) Gold concentrate sales are principally from Toqui while payable gold is
    from all operations except Mochito.
(5) Other gross sales revenue represents revaluations of prior period
    concentrate receivables.

Concentrate sold in 2009 decreased 42% to 202,714 tonnes. The 143,891 tonne decrease was due to decreases of 89,608 tonnes, 35,303 tonnes and 20,729 tonnes at Langlois, Toqui and Myra Falls respectively partially offset by a 1,749 tonne increase at Mochito. In payable metal terms sales of all metals in 2009 were lower than in 2008.

Zinc, copper, lead and silver prices, denominated in US$, decreased by 18%, 26%, 14% and 4% respectively in 2009 compared with 2008 while realized prices for gold increased by 10%.

During 2009, the Company purchased zinc put options at a cost of $4.5 million to guarantee a minimum price on a portion of its zinc production during 2009 and 2010. During 2009, the Company recorded $4.4 million of costs related to the marking-to-market of the puts outstanding at December 31, 2009 and the expiry of put option contracts during 2009. The put options outstanding at December 31, 2009 had a fair market value of $0.1 million and their value is recorded in other receivables. In 2010, the Company purchased zinc put options on a portion of its zinc production for the first half of 2010 at a cost of $1.1 million. At February 25, 2010, the Company's zinc put option position consisted of:


----------------------------------------------------------------------------
                                                    Strike price per tonne
Period                              Tonnes               (weighted average)
----------------------------------------------------------------------------
To March 31, 2010                   12,400           US$1,902 (US$0.863/lb.)
Q2 2010                             18,600           US$1,874 (US$0.850/lb.)
----------------------------------------------------------------------------

Gross sales revenues decreased US$176.0 million or 47% in 2009 compared with 2008. In C$ terms, gross sales revenue decreased $171.7 million in 2009 compared with 2008.

The Company's revenue recognition policy requires that, among other things, final pricing of concentrate inventories be known prior to the recognition of revenue. Using commodity prices and exchanges rates prevailing at December 31, 2009, the following schedule provides details regarding inventories shipped but not recognized for revenue purposes and the related provisional payments.


                                           Earnings                Weighted-
                  Net smelter  Inventory     before Provisional     average
     Concentrate       return      value      taxes    payments   months to
            (DMT)     ($000's)   ($000's)   ($000's)    ($000's) settlement
----------------------------------------------------------------------------
Zinc       1,917        1,659        750        909       1,264         1.5
Gold       3,106        9,618      5,282      4,336       9,014         1.9
Lead       3,725        8,905      4,270      4,635       8,832         1.0
---------------------------------------------------------------
           8,748       20,182     10,302      9,880      19,110
---------------------------------------------------------------

As at December 31, 2008, the Company estimated that inventories shipped but not recognized for revenue purposes had earnings before tax of $0.8 million consisting of $10.9 million of net smelter return less $10.1 million of inventory value on 25,407 tonnes of concentrate.

The following table provides the average metal prices and exchange rates for the periods indicated.


                                     Fourth Quarter            Year
Average Metal Prices & Exchange Rate   2009    2008       2009        2008
----------------------------------------------------------------------------
Zinc (US$/tonne)                      2,214   1,185      1,655       1,875
Copper (US$/tonne)                    6,648   3,905      5,150       6,956
Lead (US$/tonne)                      2,293   1,245      1,719       2,091
Gold (US$/ounce)                      1,102     796        973         872
Silver (US$/ounce)                    17.58   10.20      14.65       15.02
C$/US$ exchange rate                 1.0563  1.2124     1.1409      1.0675
----------------------------------------------------------------------------

Treatment and Marketing Costs

Treatment and marketing costs decreased 67% to $13.0 million in the fourth quarter of 2009 from $39.7 million in the fourth quarter of 2008 primarily due to the tonnes of concentrate sold decreasing by 63%, lower freight rates and more favourable smelter terms. Treatment and marketing costs for the fourth quarter of 2009 were 26% of gross revenue compared with 40% in 2008. As a percentage of gross sales revenue, the decrease was largely due to higher metal prices, lower freight rates and more favourable smelter terms.

Treatment and marketing costs decreased 52% to $64.7 million in 2009 from $135.8 million in 2008 primarily due to 42% fewer tonnes of concentrate sold, lower freight rates and more favourable smelter terms. Treatment and marketing costs as a percentage of gross sales revenue in 2009 were 29% compared with 34% in 2008 primarily due to the significantly lower freight rates and more favourable smelter terms partially offset by the impact of lower metal prices.

Direct Operating Costs

Direct operating costs were 77% lower in the fourth quarter of 2009 at $17.3 million compared with $76.2 million in the fourth quarter of 2008. The decreased costs were primarily due to lower concentrate sales and the temporary suspension of Langlois. On a cost per tonne of concentrate sold basis, direct operating costs decreased to $451 in the fourth quarter of 2009 from $730 in 2008 primarily due to the factors noted above.

Direct operating costs were 55% lower in 2009 at $103.7 million compared with $229.3 million in 2008 primarily due to 42% fewer tonnes of concentrate sold and the temporary suspension of Langlois. The average direct operating cost per tonne of concentrate sold decreased to $512 in 2009 compared with $662 in 2008 due to the factors noted above. Also see details of direct operating costs under each mine's Expenses in the Production Results section of this news release.

Depreciation and Depletion

Depreciation and depletion decreased $12.0 million or 72% in the fourth quarter of 2009 compared with the corresponding period in 2008 primarily due to $6.0 million lower depreciation at Langlois due to the temporary suspension of operations, lower concentrate sales and a lower asset base at Myra Falls due to the write-down described below.

Depreciation and depletion decreased $24.4 million in 2009 compared with 2008 primarily due to $19.8 million lower depreciation related to the temporary suspension of operations at Langlois, lower concentrate sales and lower asset base at Myra Falls due to the $25.3 million write-down at December 31, 2008.

Reclamation and Closure Costs

Reclamation and closure costs increased slightly in the fourth quarter of 2009 compared with the corresponding period in 2008.

Reclamation and closure costs increased $1.9 million in 2009 compared with 2008. The increase was primarily due to a $1.8 million increase in 2009 of reclamation cost related to exploration oil and gas wells acquired with the purchase of Myra Falls in 2004.

General and Administrative

General and administrative expenses increased by $4.4 million in the fourth quarter of 2009 compared with 2008. The increase was primarily due to increased bonuses, salaries, severances, benefits and a reversal of bonus accrual in 2008 which did not recur in 2009.

General and administrative expenses increased by $1.5 million in 2009 compared with 2008. The increase was primarily due to increased bonuses, salaries and severances partially offset by decreased consulting fees, travel expenses and legal expenses.

Interest and Financing

Interest and financing costs increased by $1.1 million in the fourth quarter of 2009 and increased by $0.5 million in 2009 compared with the same periods in 2008 primarily due to higher royalty costs associated with the Myra Falls royalty transactions.

For further information on the Myra Falls royalty transactions please see the Company's most recent audited consolidated financial statement filed on SEDAR at www.sedar.com or available at the Company's website at www.breakwater.ca.

Investment and Other Income

Investment and other income was $8.2 million lower in the fourth quarter of 2009 compared with 2008. The decrease was due to a gain on sale of the Lapa Royalty of $7.7 million and an adjustment of $3.6 million to royalty income in 2008 which did not recur in 2009.

For 2009, investment and other income was $14.5 million lower than 2008. The decrease was primarily due to a $7.6 million gain on sale of investments and $7.7 million gain on sale of the Lapa Royalty which occurred in 2008.

Foreign Exchange Expense (Income)

Foreign exchange expense was $1.0 million in the fourth quarter of 2009 compared with income of $3.7 million in 2008. The decrease in foreign exchange expense (income) was primarily due to the impact of the strengthening C$ versus the US$ in the fourth quarter of 2009 compared with a stronger US$ in the fourth quarter of 2008.

For 2009, foreign exchange expense (income) was $10.9 million higher with an expense of $5.7 million compared with income of $5.2 million in 2008. The change in foreign exchange expense (income) was primarily due to the strengthening of the C$ versus the US$ in 2009 compared with a weakening C$ in 2008.

Exploration

Exploration expenses decreased by $2.7 million in the fourth quarter of 2009 compared with 2008 primarily due to significant lower spending at the Company's joint venture properties. In 2009, exploration expenses decreased by $15.4 million primarily due to significantly lower exploration activities at all of the Company's operations and joint venture properties.

Please refer to the exploration section of each mine for details of the exploration activities in 2009.


Exploration               Fourth Quarter              Year
($ millions)            2009        2008(1)      2009      2008(1)
----------------------------------------------------------------------
Mochito                  0.9         0.8          1.2       2.6
Toqui                    0.2         0.1          0.6       1.0
Myra Falls                 -           -            -       1.0
Langlois                (0.5)        0.3            -       3.9
Non-operating              -           -            -       0.5
Corporate                  -         2.1            -       8.2
----------------------------------------------------------------------
Total                    0.6         3.3          1.8      17.2
----------------------------------------------------------------------

(1) On November 2, 2008, Langlois operations were temporarily suspended.

Write-down of Mineral Properties and Fixed Assets

In the fourth quarter of 2008, the Company wrote down the carrying value of the mineral properties and fixed assets at Myra Falls, Mochito, certain non-producing properties and a number of exploration properties as noted below. For the year ended December 31, 2008, the Company wrote-down the carrying value of the mineral properties and fixed assets at Myra Falls, Mochito, its 20% joint venture interest in the Caribou property and certain non-producing properties by $25.3 million, $8.3 million, $11.0 million and $1.3 million respectively. Additionally in 2008, $0.6 million of exploration properties were written-off.

Other Non-Producing Property Costs

Other non-producing property costs increased by $0.9 million and $4.9 million in the fourth quarter of 2009 and the 2009 year respectively compared with the equivalent periods in 2008 primarily due to $1.4 million and $5.9 million of care and maintenance costs respectively at Langlois in 2009.

Income and Mining Tax Provision

In the fourth quarter of 2009, income and mining tax provision increased by $6.7 million compared with the respective 2008 period primarily due to higher tax provisions at Mochito, Toqui and Langlois.

For the year, the tax provision decreased from $18.5 million in 2008 to $6.6 million in 2009. In 2008, future tax write-offs of $13.4 million and $8.0 million were taken at Langlois and Myra Falls respectively, which did not recur in 2009. Please refer to the income and mining tax provision sections for each mine in the Production section of this news release for additional details.

LIQUIDITY AND FINANCIAL POSITION REVIEW

Working Capital

Working capital at the end of 2009 was $70.7 million compared with $32.0 million at the end of 2008, an increase of $38.7 million.

Current Assets

Total current assets increased by $31.8 million to $133.1 million at December 31, 2009 compared with December 31, 2008. The main components of current asset changes were:

- Cash and cash equivalents increased by $20.8 million primarily reflecting higher cash flow from operating activities, lower expenditures on mineral properties and fixed assets and financing activities

- Concentrate inventory increased by $20.0 million primarily due to the tonnes of concentrate in inventory increasing by 12,047 tonnes to 61,133 tonnes at December 31, 2009 and the value of those tonnes increasing to $684 per tonne at December 31, 2009 from $444 per tonne at December 31, 2008

Current Liabilities

Current liabilities decreased by $6.9 million to $62.4 million at December 31, 2009 compared with December 31, 2008. The main components of the current liabilities changes were:

- Accounts payable and accrued liabilities decreased by $15.4 million primarily due to a $7.5 million decrease in accounts payable and accrued liabilities at Langlois related to the temporary suspension of operations and a decrease of $10.8 million of provisional payments refundable to customers partially offset by severance and bonus accruals and cash received from customers for inventory not shipped

- Provisional payments for concentrate inventory shipped and not priced, which represent payments received for concentrate shipments that were not recognized as revenue, increased by $8.6 million. The balance at December 31, 2009 was $19.1 million compared with $10.5 million at December 31, 2008. Refer to the table in Gross Sales Revenue section of this MD&A for additional details

Provisional payments for concentrate inventory shipped and not priced are based on prices prevailing on the date of payment. Recognition of sales can be as much as six months after the date of concentrate production based on contract terms. In the event that prices deteriorate significantly, a portion of the provisional payment may have to be repaid to the customer.

Restricted Reclamation Investments

At December 31, 2009, the Company had restricted reclamation investments of $31.6 million compared with $35.0 million at December 31, 2008. Reclamation deposits of $10.9 million and $20.7 million are held under a safe keeping agreement and a trust indenture respectively to fund future reclamation requirements at Myra Falls.

Restricted Promissory Notes

The Company held six restricted promissory notes at December 31, 2009 totalling $168.4 million compared with three restricted promissory notes totalling $80.9 million at December 31, 2008. All promissory notes are related to Myra Falls royalty transactions completed in 2004, 2005, 2008 and 2009. The interest earned and a portion of the principal of these restricted promissory notes will be used to meet the Company's royalty obligations.

Deferred Income

Deferred income of $9.7 million at December 31, 2009 consisted of deferred indemnity agreement fees and prepaid interest income related to the Myra Falls royalty transactions in 2004, 2005, 2008 and 2009 which will be recognized as income over the terms of the five agreements. During 2009, the Company entered into three additional royalty transactions which increased deferred income by $9.6 million.

Royalty Obligations

The royalty obligations of $164.5 million at December 31, 2009 relate to the royalty amounts received from the 2004, 2005, 2008 and 2009 Myra Falls royalty transactions. The three 2009 royalty transactions increased royalty obligations by $86.1 million. See reclamation deposits and restricted promissory notes above.

For further information on the Myra Falls royalty transactions referred to above please see the Company's most recent audited consolidated financial statement filed on SEDAR at www.sedar.com or available at the Company's website at www.breakwater.ca.

Long-term Debt

Long-term debt increased by $6.2 million to $8.0 million at December 31, 2009 primarily due to a $5.8 million (US$5.5 million) loan entered into in the third quarter of 2009 to finance a wind power plant at Toqui and the movement of a certain debt from short-term to long-term.

Reclamation, Closure Cost Accruals and Other Environmental Obligations

Reclamation, closure cost accruals and other environmental obligations represent the Company's obligation for reclamation and severance costs accrued for its mine sites. At December 31, 2009, total reclamation; closure cost accruals and other environmental obligations were $34.8 million compared with $31.3 million at December 31, 2008.

Of the $34.8 million, $5.4 million is classified as current and is expected to be spent over the next 12 months at Nanisivik, Bouchard-Hebert, Bougrine and Myra Falls. The Company spent $1.1 million in reclamation and closure costs in the fourth quarter of 2009 compared with $2.5 million in the fourth quarter of 2008 and spent $2.9 million in 2009 compared with $5.4 million in 2008. As there is currently no law, regulation or contract in Honduras related to reclamation and closure costs, GAAP does not permit the Company to set up a liability for reclamation at the Mochito mine. Closure and reclamation costs for Mochito are estimated to be $7.1 million (US$6.8 million).


Reclamation and Closure Cost Accruals and Other Environmental
Obligations at December 31, 2009
($ millions)             Current          Long-term              Total
----------------------------------------------------------------------------
Myra Falls                   0.7               19.4               20.1
Mochito(1)                     -                1.0                1.0
Toqui                          -                7.4                7.4
Langlois                       -                1.2                1.2
Bouchard-Hebert              2.5                0.1                2.6
Nanisivik                    1.4                0.4                1.8
Bougrine                     0.8                  -                0.8
----------------------------------------------------------------------------
Total                        5.4               29.5               34.9
----------------------------------------------------------------------------

(1) Reclamation and closure cost accruals for Mochito relate to accrued
    severances.

Employee Future Benefits

Employee future benefits payable relate to Myra Falls and increased $0.4 million in 2009 to $1.4 million at December 31, 2009. The increase was primarily due to an $11.5 million increase in accrued benefit obligations and a $0.5 million decrease in unamortized past service cost partially offset by a $6.4 million increase in unamortized actuarial loss and a $5.2 million increase in the fair value of plan assets. The $5.2 million or 17% increase in the fair value of plan assets was primarily due to the impact of the significant volatility in the financial markets experienced in 2009 on plan asset values. Any deterioration of the financial markets in the future could increase the $15.7 million defined benefit pension plan deficit resulting in greater contributions after the next required actuarial valuation. The $6.4 million increase in unamortized actuarial loss was primarily due to a change in the discount rate used from 7.5% to 6.5%.

Included in employee future benefits is a defined benefit pension plan for the Myra Falls unionized employees. Actuarial reports valuing this defined benefit pension plan are prepared every three years with December 31, 2007 being the most recent valuation. Due to issues related to the conversion to International Financial Reporting Standards, the Company intends to perform an actuarial valuation effective December 31, 2009 which will not be completed until mid-2010. The Company's minimum contribution until the next valuation for the defined benefit pension plan is approximately $2.3 million per annum consisting of $0.8 million for current service costs and $1.5 million for annual special payments.

Future Income Tax Liabilities

Future income tax liabilities increased $2.8 million to $6.0 million at December 31, 2009. The increase was primarily due to a $1.9 million increase in Quebec mining duties liability at Langlois in 2009 and a $0.9 million increase at Toqui related to timing differences.

Shareholders' Equity

Shareholders' equity at December 31, 2009 was $313.3 million compared with $309.7 million at December 31, 2008. The increase of $5.6 million was primarily due to the units offering and net earnings partially off set by other comprehensive losses.


                                                           Other
                                                         compreh-   Total
Shareholders'                                             ensive    share-
 Equity          Capital           Contributed  Retained  income  holders'
($000's)           stock  Warrants     surplus  earnings   (loss)  equity
----------------------------------------------------------------------------
As at December
 31, 2008        212,374     8,538       4,925    80,568   3,257  309,662
Common Shares
 issued to a
 third party          12         -           -         -       -       12
Unit offering     16,865     4,519           -         -       -   21,384
Value ascribed
 to options
 exercised
 under stock-
 based
 compensation         21         -         (21)        -       -        -
Expiry of
 Warrants              -    (8,538)      7,163         -       -   (1,375)
Exercise of
 Warrants            795      (196)          -         -       -      599
Employee share
 option plan
 proceeds of
 options
 exercised            29         -           -         -       -       29
Employee share
 purchase plan       329         -           -         -       -      329
Stock-based
 compensation          -         -         926         -       -      926
Other
 comprehensive
 loss                  -         -           -         - (19,086) (19,086)
Net earnings           -         -           -       809       -      809
----------------------------------------------------------------------------
As at December
 31, 2009        230,425     4,323      12,993    81,377 (15,829) 313,289
----------------------------------------------------------------------------

In 2009, the Company issued the following: 230,000,000 Common Shares and 115,000,000 warrants pursuant to the Offering; 100,000 Common Shares to a third party; 4,992,500 Common Shares pursuant to warrants exercised; 150,000 Common Shares following the exercise of employee share options; 2,151,603 Common Shares pursuant to the Company's employee share purchase plan and 7,055,000 options pursuant to the Company's share option plan.

Capital Expenditures

The Company invested $30.2 million in mineral properties and fixed assets in 2009. At mining operations, $13.0 million, $14.2 million, $1.6 million and $0.1 million were spent at Mochito, Toqui, Myra Falls and Langlois respectively. For details of these expenditures, please refer to the financial results discussion for each mine. Corporate capital expenditures of $1.3 million primarily related to earn-in payments made on certain joint venture properties.

Financial Capability

With the existing working capital, the current metal prices and current C$/US$ exchange rate, the Company expects to be able to carry out its operating, capital, exploration and environmental programs in 2010. The Company's financial capability is sensitive to operating performance, metal prices, smelter treatment charges and the C$/US$ exchange rate.

PRODUCTION RESULTS

The table below contains the Company's production for the periods presented.


                                     Fourth Quarter             Year
All Mines                          2009   2008(1)     2009     2008(1)
----------------------------------------------------------------------------
Tonnes Milled                     425,820   486,727   1,673,434   2,272,740
 Zinc (%)                             6.6       6.4         5.9         6.7

Concentrate Production (tonnes)
Zinc:
 Mochito                           20,339    12,198      68,552      53,757
 Toqui                              9,799    15,253      40,665      64,776
 Myra Falls                        17,549    14,161      57,838      66,051
 Langlois                               -    11,175           -      71,868
----------------------------------------------------------------------------
                                   47,687    52,787     167,055     256,452
----------------------------------------------------------------------------
Copper:
 Myra Falls                         3,802     4,039      14,404      21,569
 Langlois                               -     1,475           -      10,661
----------------------------------------------------------------------------
                                    3,802     5,514      14,404      32,230
----------------------------------------------------------------------------
Lead:
 Mochito                            7,230     4,943      22,110      18,865
 Toqui                                345     1,193       1,927       5,395
----------------------------------------------------------------------------
                                    7,575     6,136      24,037      24,260
----------------------------------------------------------------------------

Gold:
 Toqui                              2,693     1,549       9,162       2,895
 Myra Falls                             -         -           2           -
----------------------------------------------------------------------------
                                    2,693     1,549       9,164       2,895
----------------------------------------------------------------------------
Total                              61,757    65,986     214,660     315,837
----------------------------------------------------------------------------
----------------------------------------------------------------------------
C$ operating costs, production
 basis ($000's)                    30,612    40,657     119,417     192,806
C$ operating cost per tonne
 milled (production basis)             72        84          71          85

(1)
On November 2, 2008, Langlois operations were temporarily suspended.

Concentrate produced in the fourth quarter of 2009 decreased by 4,229 tonnes to 61,757 tonnes primarily due to Langlois being placed on care and maintenance during the fourth quarter of 2008 as well as lower planned zinc and lead concentrate production at Toqui and lower copper concentrate production at Myra Falls partially offset by higher zinc concentrate production at Mochito and Myra Falls, higher lead concentrate production at Mochito and higher gold production at Toqui.

Concentrate produced in 2009 decreased by 32% to 214,660 tonnes largely due Langlois being placed on care and maintenance during the fourth quarter of 2008 as well as lower planned zinc concentrate production at Toqui and Myra Falls, lower lead concentrate production at Toqui and lower copper concentrate production at Myra Falls partially offset by higher zinc and lead concentrate production at Mochito and higher gold production at Toqui.

Aggregate operating costs on a production basis decreased in the fourth quarter of 2009 compared with 2008 primarily due to the temporary suspension of Langlois in 2008 and fewer tonnes milled at Myra Falls partially offset by the impact of a stronger C$ on the costs for Mochito and Toqui.

On a production basis, aggregate operating costs and operating costs per tonne milled decreased in 2009 compared with 2008 primarily due to the temporary suspension of Langlois, reduced operating costs at all mines and the impact of a weaker C$ on the costs for Mochito and Toqui. Also see details under each mine's production in the respective production results section of this news release.

The table below summarizes, on a production basis, the Company's metal contained in concentrate, before smelting deductions, for the periods presented.


                        Fourth Quarter                         Year
Metal in Concentrate    2009    2008(1)    %       2009      2008(1)    %
----------------------------------------------------------------------------
Zinc (tonnes)
 Mochito              10,683     6,470    65%    36,370      28,462    28%
 Toqui                 4,815     7,518   -36%    19,635      31,992   -39%
 Myra Falls            9,113     7,659    19%    30,900      35,762   -14%
 Langlois                  -     6,046     -          -      38,620     -
                     -----------------        ---------------------
                      24,611    27,693   -11%    86,905     134,836   -36%
                     -----------------        ---------------------
Copper (tonnes)
 Myra Falls              893       895     -      3,349       5,024   -33%
 Langlois                  -       281     -          -       1,994     -
                     -----------------        ---------------------
                         893     1,176   -24%     3,349       7,018   -52%
                     -----------------        ---------------------
Lead (tonnes)
 Mochito               4,798     3,305    45%    14,471      12,545    15%
 Toqui                   172       670   -74%     1,025       2,796   -63%
                     -----------------        ---------------------
                       4,970     3,975    25%    15,496      15,341     1%
                     -----------------        ---------------------
Gold (ounces)
 Toqui                13,102     9,758    34%    44,079      23,085    91%
 Myra Falls            5,873     2,870   105%    15,526      13,994    11%
                     -----------------        ---------------------
                      18,975    12,628    50%    59,605      37,079    61%
                     -----------------        ---------------------
Silver (ounces)
 Mochito             540,972   431,849    25% 1,855,018   1,894,835    -2%
 Toqui                51,470    94,899   -46%   233,382     343,457   -32%
 Myra Falls          222,309   134,897    65%   578,008     661,228   -13%
 Langlois                  -    43,424     -          -     298,863     -
                     -----------------        ---------------------
                     814,751   705,069    16% 2,666,408   3,198,383   -17%
                     -----------------        ---------------------

 (1) On November 2, 2008, Langlois operations were temporarily suspended.

Mochito

(i) Mochito Financial Results


                                          Fourth Quarter         Year
($000's)                                   2009     2008     2009     2008
----------------------------------------------------------------------------
Gross sales revenue                      17,666   20,411   89,273   98,596
Treatment and marketing costs            (4,700)  (6,933) (25,417) (28,978)
                                        ------------------------------------
Net revenue                              12,966   13,478   63,856   69,618
Direct operating costs                   (4,851) (15,309) (36,691) (42,463)
Depreciation and depletion               (2,195)  (3,750) (14,150) (10,033)
Reclamation and closure costs              (300)    (389)  (1,307)  (1,314)
                                        ------------------------------------
Contribution (loss) from mining
 activities                               5,620   (5,970)  11,708   15,808
Exploration                                (900)    (821)  (1,219)  (2,609)
Write-down of mineral properties and
 fixed assets                                 -   (8,327)       -   (8,327)
                                        ------------------------------------
                                          4,720  (15,118)  10,489    4,872
Income and mining tax (provision)
 recovery                                (1,683)   1,928   (2,689)  (3,270)
                                        ------------------------------------
Net earnings (loss)                       3,037  (13,190)   7,800    1,602
                                        ------------------------------------
                                        ------------------------------------

Capital expenditures                      3,553    8,315   12,977   28,091
                                        ------------------------------------
                                        ------------------------------------

Revenue:

The following tables and discussion provide details of Mochito's gross sales revenue for the periods indicated:


                                          Fourth Quarter 2009
----------------------------------------------------------------------------
                                                                  Gross
                             Concentrate             Realized     sales
                                    sold   Payable    price(1)  revenue
                                 (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                              12,888     5,776      2,011    11,618
Lead                               1,929     1,150      2,327     2,677
Silver                               n.a.  133,180      18.03     2,402
                                ---------                        --------
                                  14,817
                                ---------
                                ---------
Gross sales revenue in US$                                       16,697
Exchange rate                                                    1.0580
                                                               --------
Gross sales revenue in C$                                        17,666
                                                               --------
                                                               --------


                                          Fourth Quarter 2008
----------------------------------------------------------------------------
                                                                  Gross
                             Concentrate             Realized     sales
                                    sold   Payable    price(1)  revenue
                                 (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                              13,928     6,144      1,129     6,938
Lead                               6,610     4,175      1,248     5,210
Silver                               n.a.  457,899       9.97     4,565
                                ---------                        --------
                                  20,538
                                ---------
                                ---------
Gross sales revenue in US$                                       16,713
Exchange rate                                                    1.2212
                                                               --------
Gross sales revenue in C$                                        20,411
                                                               --------
                                                               --------

(1) Payable metal and realized price(s) for zinc and lead are per tonne
    and for silver is per ounce.

Concentrate sold in the fourth quarter of 2009 was 28% lower primarily due to a decrease in lead concentrate sales. This decrease in concentrate sales was offset by a significant increase in the realized prices of all the metals produced at Mochito and resulted in flat sales revenues in US$ terms. A strengthening C$ resulted in gross sales revenue in C$ terms decreasing by 13% in the fourth quarter of 2009.


                                                 Year 2009
----------------------------------------------------------------------------
                                                                      Gross
                               Concentrate              Realized      sales
                                      sold    Payable    price(1)   revenue
                                   (tonnes)   metal(1)      (US$)   ($000's)
----------------------------------------------------------------------------
Zinc                                59,295     26,615      1,564    41,625
Lead                                18,439     11,390      1,638    18,657
Silver                                 n.a. 1,323,888      14.24    18,858
Other(2)                               n.a.                             33
                                  ---------                        ---------
                                    77,734
                                  ---------
                                  ---------
Gross sales revenue in US$                                          79,173
Exchange rate                                                       1.1276
                                                                   ---------
Gross sales revenue in C$                                           89,273
                                                                   ---------
                                                                   ---------
                                       Year 2008
----------------------------------------------------------------------------
                                                                      Gross
                               Concentrate              Realized      sales
                                      sold    Payable    price(1)   revenue
                                   (tonnes)   metal(1)      (US$)   ($000's)
----------------------------------------------------------------------------
Zinc                                55,316     24,422      1,771     43,244
Lead                                20,669     12,856      2,023     26,006
Silver                                 n.a. 1,736,421      14.61     25,377
Other(2)                               n.a.                          (1,168)
                                  ---------                        ---------
                                    75,985
                                  ---------
                                  ---------
Gross sales revenue in US$                                           93,459
Exchange rate                                                        1.0550
                                                                   ---------
Gross sales revenue in C$                                            98,596
                                                                   ---------
                                                                   ---------

(1) Payable metal and realized price(s) for zinc and lead are per tonne and
    for silver is per ounce.
(2) Other gross sales revenue represents revaluations of prior period
    concentrate receivables.

Concentrate sold in 2009 was 2% higher than in 2008 primarily due to the timing of shipments. Despite greater concentrate sales, lower metal prices and the mix of metals sold resulted in a 15% decrease in gross sales revenues in US$ terms. A weakening of the C$ resulted in gross sales revenue in C$ terms decreasing by 9% in 2009.

Expenses:

Aggregate treatment and marketing costs quarter-over-quarter decreased by 32% primarily due to lower concentrate sales partially offset by more favourable smelter terms and lower freight rates.

For the full year, treatment and marketing costs were lower than in 2008 both in aggregate terms and per tonne sold primarily due to more favourable smelter terms and lower freight rates partially offset by a weaker C$ and increased concentrate sales.

Direct operating costs decreased $10.5 million or 68% in the fourth quarter of 2009 due to the 28% decrease in concentrate sold and lower ground control costs partially offset by higher hydro rates and labour costs. Direct operating cost per tonne of concentrate sold were $327 in the fourth quarter of 2009 compared with $745 in 2008 primarily due to higher head grades.

Direct operating costs for 2009 decreased primarily due to lower ground control costs partially offset by higher hydro rates, labour costs and the 2% increase in concentrate sold.

Depreciation and depletion for the fourth quarter of 2009 decreased $1.6 million or 41% and for the year increased by $4.1 million or 41% when compared with the respective periods in 2008. The decrease for the fourth quarter of 2009 was primarily due to the 28% decrease in concentrate sold. The increase in 2009 was primarily due to the depreciation of capital spares and lower reserves used for depletion purposes.

Exploration expenses in the fourth quarter of 2009 and for the 2009 year were lower compared with the respective periods in 2008. Please refer to the exploration section below for additional details.

Income and mining tax provisions for the fourth quarter of 2009 increased to $1.7 million in 2009 compared to a recovery of $1.9 million in 2008. For the 2009 year, the tax provision was $2.7 million compared to $3.3 million in 2008. The decrease for the fourth quarter and 2009 year were due to lower earnings at Mochito.

Capital Expenditures:

At Mochito, $13.0 million was invested in 2009 as follows: $1.3 million for tailings facilities; $1.2 million for repair and upgrades of roads; $4.6 million for mine development; $3.7 million for various infrastructure projects; and, $2.2 million for capital spares.

(ii) Mochito Production

Mochito's production is set out in the following table:


                                        Fourth Quarter           Year
                                          2009    2008      2009      2008
----------------------------------------------------------------------------
Tonnes Milled                          187,806 162,083   726,818   646,845
 Zinc (%)                                  6.5     4.6       5.7       5.0
 Lead (%)                                  3.0     2.5       2.4       2.4
 Silver (g/t)                              104      94        93       103
Concentrate Production
 Zinc (tonnes)                          20,339  12,198    68,552    53,757
  Recovery (%)                            87.4    87.3      87.8      88.6
  Grade (%)                               52.5    53.1      53.0      53.0
 Lead (tonnes)                           7,230   4,943    22,110    18,865
  Recovery (%)                            85.4    82.8      83.6      82.4
  Grade (%)                               66.4    66.8      65.5      66.5
Metal in Concentrates
 Zinc (tonnes)                          10,683   6,470    36,370    28,462
 Lead (tonnes)                           4,798   3,305    14,471    12,545
Silver (ounces)                        540,972 431,849 1,855,018 1,894,835

US$ operating costs, production basis
 ($000's)                               10,197   9,289    38,449    35,761
US$ operating cost per tonne milled
 (production basis)                         54      57        53        55

Production of zinc in concentrate was 65% higher in the fourth quarter of 2009 compared with the same period in 2008 due to more tonnes milled at a significantly higher zinc head grade. Production of lead in concentrate in the fourth quarter of 2009 was 45% higher than the same period in 2008 due to higher lead grades, higher mill throughput and improved recoveries. Production of zinc in concentrate in 2009 was 28% higher than 2008 primarily due to more tonnes milled at a higher zinc head grade. Production of lead in concentrate in 2009 was 15% higher than 2008 primarily due to more tonnes milled.

Compared with previously disclosed guidance, mill throughput was higher than target with higher zinc grades and lower lead and silver grades than planned resulting in higher zinc and lower lead and silver production on a metal contained in concentrate basis.

(iii) Mochito Drilling

Exploration efforts during 2009 concentrated on finding additional deposits accessible from existing mine workings by extensional drilling along known mineralized trends.

A total of 25,901 metres was drilled from underground during 2009. Definition and valuation drilling accounted for 14,910 metres while exploration and extensional drilling accounted for 10,991 metres.

There are three principal mineral trends that remain open at Mochito as well as numerous secondary mineral trends that remain prospective. Exploration results during 2009 were very favourable on the extension of all three of the main mineral trends and exploration efforts will continue to focus on these trends in 2010; namely, the northeast extension of the Porvenir trend (Deep North and Deep East), the northeast extension of the Salva Vida trend (Santa Rita and Santa Barbara) and the northern extensions of the Barbasco-Imperial and Port Royal trends.

(iv) Mochito Outlook

Ground control issues have affected the mine over the last several years necessitating the mining of mineralized material in unaffected areas. While these issues are thought to be largely resolved, a recurrence could result in the 2010 production being lower than anticipated. The current labour agreement with Mochito employees expires October 1, 2010. Meeting the 2010 production guidance for Mochito assumes a successful conclusion to labour negotiations.

Toqui

(i) Toqui Financial Results


                                          Fourth Quarter         Year
($000's)                                   2009     2008     2009     2008
----------------------------------------------------------------------------
Gross sales revenue                      10,111   18,763   60,179   96,056
Treatment and marketing costs            (1,727)  (9,265) (17,704) (40,187)
                                        ------------------------------------
Net revenue                               8,384    9,498   42,475   55,869
Direct operating costs                   (3,855) (10,985) (18,864) (36,879)
Depreciation and depletion               (1,014)  (3,117)  (6,331)  (9,372)
Reclamation and closure (costs) recovery   (192)    (125)    (718)     449
                                        ------------------------------------
Contribution (loss) from mining
 activities                               3,323   (4,729)  16,562   10,067
Exploration                                (182)    (128)    (642)    (943)
                                        ------------------------------------
                                          3,141   (4,857)  15,920    9,124
Income and mining tax recovery
 (provision)                               (913)     626   (2,633)  (2,051)
                                        ------------------------------------
Net earnings (loss)                       2,228   (4,231)  13,287    7,073
                                        ------------------------------------
                                        ------------------------------------
Capital expenditures                      7,269    3,135   14,171   20,890
                                        ------------------------------------
                                        ------------------------------------

Revenue:

The following tables and discussion provide details of Toqui's gross sales revenue for the periods indicated:


                                           Fourth Quarter 2009
----------------------------------------------------------------------------
                                                                     Gross
                                Concentrate             Realized     sales
                                       sold   Payable    price(1)  revenue
                                    (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  4,597     1,919      1,892     3,630
Lead                                    458       235      2,241       527
Gold                                  1,368     4,507      1,117     5,037
Silver                                  n.a.   21,219      17.38       369
                                    ---------                       --------
                                      6,423
                                    ---------
                                    ---------
Gross sales revenue in US$                                           9,563
Exchange rate                                                       1.0573
                                                                  --------
Gross sales revenue in C$                                           10,111
                                                                  --------
                                                                  --------

                                           Fourth Quarter 2008
----------------------------------------------------------------------------
                                                                     Gross
                                Concentrate             Realized     sales
                                       sold   Payable    price(1)  revenue
                                    (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                 16,618     6,968      1,256     8,749
Lead                                  2,087     1,101        963     1,061
Gold                                  1,192     6,227        795     4,953
Silver                                  n.a.   67,229       9.98       671
                                    ---------                       --------
                                     19,897
                                    ---------
                                    ---------
Gross sales revenue in US$                                           15,434
Exchange rate                                                        1.2157
                                                                   --------
Gross sales revenue in C$                                            18,763
                                                                   --------
                                                                   --------
(1) Payable metal and realized prices for zinc and lead are per tonne and
    for gold and silver are per ounce.

Total concentrate sold in the fourth quarter of 2009 was 68% less than in the fourth quarter of 2008 primarily due to lower planned production levels and the timing of shipments. Lower concentrate sales were partially offset by higher realized prices for all metals produced at Toqui resulting in a 38% decrease in gross sales revenue in US$ terms. A 13% decrease in the exchange rate resulted in 46% lower gross sales revenue in C$ terms.


                                                       Year 2009
----------------------------------------------------------------------------
                                                                     Gross
                                Concentrate             Realized     sales
                                       sold   Payable    price(1)  revenue
                                    (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                 41,652    16,881      1,425    24,060
Lead                                  1,578       793      1,879     1,490
Gold                                  6,677    27,370        960    26,272
Silver                                  n.a.   97,090      14.24     1,383
Other(2)                                n.a.                          (359)
                                    --------                       ---------
                                     49,907
                                    --------
                                    --------
Gross sales revenue in US$                                          52,846
Exchange rate                                                       1.1388
                                                                   ---------
Gross sales revenue in C$                                           60,179
                                                                   ---------
                                                                   ---------


                                                       Year 2008
----------------------------------------------------------------------------
                                                                     Gross
                                Concentrate             Realized     sales
                                       sold   Payable    price(1)  revenue
                                    (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                 73,488    29,926      2,020    60,460
Lead                                  6,828     3,379      1,576     5,325
Gold                                  4,894    25,780        876    22,591
Silver                                  n.a.  218,054      14.54     3,171
Other(2)                                n.a.                          (127)
                                    --------                       ---------
                                     85,210
                                    --------
                                    --------
Gross sales revenue in US$                                          91,420
Exchange rate                                                       1.0507
                                                                  --------
Gross sales revenue in C$                                           96,056
                                                                  --------
                                                                  --------
(1) Payable metal and realized prices for zinc and lead are per tonne and
    for gold and silver are per ounce.
(2) Other gross sales revenue represents revaluations of prior period
    concentrate receivables.

Tonnes of concentrate sold decreased by 41% in 2009 compared with 2008 primarily due to lower planned production levels and the timing of shipments. Lower concentrate sales and a lower zinc price resulted in a 42% decrease in gross sales revenue in US$ terms. An 8% increase in the exchange rate resulted in 37% lower gross sales revenue in C$ terms.

Expenses:

Treatment and marketing costs were 81% lower on an aggregate basis in the fourth quarter of 2009 compared with the fourth quarter of 2008 primarily due to 68% fewer tonnes of concentrate sold, more favourable smelter terms, lower freight rates and a stronger C$. As a percentage of gross revenue, treatment and marketing costs decreased to 17% from 49% in the same period in 2008 primarily due to the factors noted above.

For the full year, treatment and marketing costs were lower than in 2008 both in aggregate terms and per tonne sold primarily due to a decrease in concentrate sold, more favourable smelter terms and lower freight rates partially offset by a weaker C$.

Direct operating costs in the fourth quarter of 2009 were 65% lower than in the same period of 2008 primarily due to 68% lower tonnes of concentrate sold compared to 2008, the impact of cost savings initiatives and lower diesel prices.

Direct operating costs in 2009 were 49% lower than in 2008 primarily due to lower tonnes of concentrate sold, the impact of cost savings initiatives and lower diesel prices.

Income and mining tax provision for the fourth quarter of 2009 and year increased by $1.5 million and $0.6 million respectively primarily due to higher earnings before tax.

Capital Expenditures:

Toqui capital expenditures of $14.2 million in 2009 consisted primarily of: $4.6 million for development; $3.5 million for a thickened tailings facility to be completed in 2010; $3.6 million in instalment payments for a wind power plant; $1.0 million for mobile equipment; and, $1.0 million for definition drilling.

(ii) Toqui Production

Toqui's production is set out in the following table:


                                            Fourth Quarter        Year
                                              2009    2008    2009    2008
----------------------------------------------------------------------------
Tonnes Milled                              130,857 130,893 496,686 519,379
 Zinc (%)                                      4.4     6.6     4.7     7.0
 Lead (%)                                      0.3     0.9     0.4     0.9
 Silver (g/t)                                   31      31      24      28
 Gold (g/t)                                    4.2     3.1     3.7     1.9
Concentrate Production
 Zinc (tonnes)                               9,799  15,253  40,665  64,776
  Recovery (%)                                85.8    88.1    86.0    88.8
  Grade (%)                                   49.1    48.0    48.3    49.1
 Lead (tonnes)                                 345   1,193   1,927   5,395
  Recovery (%)                                59.9    65.6    59.9    61.2
  Grade (%)                                   50.0    56.1    53.2    51.8
 Gold (tonnes)                               2,693   1,549   9,162   2,895
  Recovery (%)                                59.1    56.1    60.0    55.5
  Grade (g/t)                                117.0   127.4   110.7   142.3
 Metal in Concentrates
  Zinc (tonnes)                              4,815   7,518  19,635  31,992
  Lead (tonnes)                                172     670   1,025   2,796
  Gold (ounces)                             13,102   9,758  44,079  23,085
  Silver (ounces)                           51,470  94,899 233,382 343,457

US$ operating costs, production basis
 ($000's)                                    6,217   5,744  21,900  24,269
US$ operating cost per tonne milled
 (production basis)                             48      44      44      47

Production of zinc in concentrate was 36% lower in the fourth quarter of 2009 compared with the same period in 2008 due to lower planned zinc grades and recoveries. Production of lead in concentrate in the fourth quarter of 2009 was 74% lower due to lower planned lead grades. Production of gold in concentrate in the fourth quarter of 2009 was 34% higher due to higher planned gold grades. Production of zinc in concentrate in 2009 was 39% lower than 2008 due to lower planned zinc grades and recoveries. Production of lead in concentrate in 2009 was 63% lower due to lower planned lead grades. Production of gold in concentrate in 2009 was 91% higher due to higher planned gold grades.

As the price of zinc exceeded expected prices in 2009, the Company did not reduce throughput as projected but continued to mine zinc bearing deposits in addition to the gold bearing deposits. Mining the zinc deposits in addition to the gold deposits in the fourth quarter of 2009 resulted in higher cash flows and lower costs per tonne than planned.

(iii) Toqui Drilling

Exploration potential in the Toqui district is considered excellent for identifying additional mineral reserves and mineral resources. Since acquiring the Toqui mine in 1997, the Company has systematically explored the region and has identified several areas which have expanded the mineral reserves and mineral resources in the area of the mine. Despite this, the Toqui region generally remains under-explored.

During 2009, 11,330 metres were drilled from underground in 128 holes and no surface drilling was carried out.

The underground drill campaign included infill drilling and definition drilling. The bulk of the campaign was targeted on further defining the Mina Profunda deposit as well as on areas below the Aserredero and Dona Rosa deposits in search of similar gold deposits. Sectors drilled were Sector 9, Falla 4, Aserradero lower calcarious sandstone ("LCS") and Mallin Sur LCS. These sectors are indicating mineralization but will require further drilling. In Aserredero Norte, the drilling of the LCS has been successful and additional tonnage has been added to Toqui's gold resources.

Underground drilling was also carried out in Estatuas and Concordia Sur adding tonnage to the reserve.

(iv) Toqui Outlook

The 2010 mine plan at Toqui is focused on mining the gold bearing deposits together with the zinc bearing deposits and assumes the thickened tailings facility and the wind power plant are installed and operational in the second half of 2010. Toqui's current labour agreement expires October 1, 2010. Meeting the 2010 production guidance for Toqui assumes a successful conclusion to labour negotiations.

Myra Falls

(i) Myra Falls Financial Results


                                          Fourth Quarter          Year
($000's)                                   2009     2008     2009     2008
----------------------------------------------------------------------------
Gross sales revenue                      23,534   33,915   78,377  109,404
Treatment and marketing costs            (6,553) (10,392) (20,351) (32,886)
                                       -------------------------------------
Net revenue                              16,981   23,523   58,026   76,518
Direct operating costs                   (8,612) (31,934) (46,990) (88,247)
Depreciation and depletion                 (233)  (2,562)  (1,398)  (7,031)
Reclamation and closure costs              (305)    (178)  (3,004)  (1,466)
                                       -------------------------------------
Contribution (loss) from mining
 activities                               7,831  (11,151)   6,634  (20,226)
Exploration                                   -       (7)       -   (1,033)
Write-down of mineral properties and
 fixed assets                                 -  (25,300)       -  (25,300)
                                       -------------------------------------
                                          7,831  (36,458)   6,634  (46,559)
Income and mining tax (provision)
 recovery                                  (162)     291     (162)  (7,873)
                                       -------------------------------------
Net earnings (loss)                       7,669  (36,167)   6,472  (54,432)
                                       -------------------------------------
                                       -------------------------------------

Capital expenditures                        541      420    1,645    3,670
                                       -------------------------------------
                                       -------------------------------------

Revenue:

The following tables and discussion provide details of Myra Falls' gross sales revenue for the periods indicated:


                                               Fourth Quarter
----------------------------------------------------------------------------
                                                    2009
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(1)  revenue
                                     (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  15,133     6,869      2,273    15,613
Copper                                 1,943       488      6,249     3,050
Gold                                      85     2,457      1,052     2,585
Silver                                  n.a.    61,669      17.27     1,065
                                 ------------            -------------------
                                      17,161
                                 ------------            -------------------
                                 ------------            -------------------
Gross sales revenue in US$                                           22,313
Exchange rate                                                        1.0547
                                                                    --------
Gross sales revenue in C$                                            23,534
                                                                    --------
                                                                    --------

                                               Fourth Quarter
----------------------------------------------------------------------------
                                                    2008
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(1)  revenue
                                     (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  21,197     9,869      1,441    14,221
Copper                                 9,436     2,360      4,108     9,694
Gold                                       1     3,729        816     3,041
Silver                                   n.a.  125,065      13.38     1,674
                                 ------------                       --------
                                      30,634
                                 ------------
                                 ------------
Gross sales revenue in US$                                           28,630
Exchange rate                                                        1.1846
                                                                    --------
Gross sales revenue in C$                                            33,915
                                                                    --------
                                                                    --------

(1) Payable metal and realized prices for zinc and copper are per tonne and
    for gold and silver are per ounce.

Concentrate sold in the fourth quarter of 2009 was 44% lower than in the fourth quarter of 2008. Lower concentrate sales were partially offset by significant higher realized zinc, copper and gold prices and resulted in 22% lower revenue for the quarter in US$ terms. An 11% lower exchange rate resulted in gross sales revenue decreasing 31% in C$ terms to $23.5 million.


                                                  Year 2009
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(1)  revenue
                                     (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  54,721    24,996      1,631    40,762
Copper                                16,318     3,596      4,495    16,164
Gold                                      94     8,563        943     8,075
Silver                                   n.a.  299,461      13.45     4,028
Other(2)                                 n.a.                          (335)
                                 ------------                       --------
                                      71,133
                                 ------------
                                 ------------
Gross sales revenue in US$                                           68,694
Exchange rate                                                        1.1410
                                                                    --------
Gross sales revenue in C$                                            78,377
                                                                    --------
                                                                    --------

                                                 Year 2008
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(1)  revenue
                                     (tonnes)  metal(1)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  68,361    31,061      1,851    57,483
Copper                                23,500     5,401      5,873    31,718
Gold                                       1    10,144        867     8,791
Silver                                   n.a.  359,767      15.58     5,605
Other(2)                                 n.a.                        (1,341)
                                 ------------                       --------
                                      91,862
                                 ------------
                                 ------------
Gross sales revenue in US$                                          102,256
Exchange rate                                                        1.0699
                                                                    --------
Gross sales revenue in C$                                           109,404
                                                                    --------
                                                                    --------

(1) Payable metal and realized prices for zinc and copper are per tonne and
    for gold and silver are per ounce.

(2) Other gross sales revenue represents revaluations of prior period
    concentrate receivables.

Concentrate sold in 2009 was 23% lower than in 2008. Lower concentrate sales and lower realized zinc and copper prices resulted in revenues for the year decreasing by 33% in US$ terms. A 7% higher exchange rate resulted in gross sales revenue decreasing 28% in C$ terms to $78.4 million.

Expenses:

In the fourth quarter of 2009, treatment and marketing costs were 37% lower on an aggregate basis primarily due to 44% lower concentrate sales, lower freight rates, more favourable smelter terms, lower exchange rate. As a percentage of gross revenue, in the fourth quarter of 2009, treatment and marketing costs decreased to 28% from 31% in the same period in 2008 primarily due to higher realized metal prices and the factors noted above.

In 2009, treatment and marketing costs were 38% lower on an aggregate basis primarily due to 23% lower concentrate sales, lower freight rates and more favourable smelter terms partially offset by a higher exchange rate. As a percentage of gross revenue, in 2009 treatment and marketing costs decreased to 26% from 30% in the same period in 2008 primarily due to lower realized metal prices and the factors noted above.

Direct operating costs in the fourth quarter of 2009 were 73% lower than in the same period of 2008 primarily due to 44% lower concentrate sales, cost reductions achieved in 2009, reduced write-downs related to marking inventory to the lower of cost and net realizable value and reduced restructuring expenses partially offset by increased pension expenses.

Direct operating costs in 2009 were 47% lower than in 2008 primarily due to 23% lower concentrate sales, and cost reductions achieved in 2009, reduced write-downs related to marking inventory to the lower of cost and net realizable value and reduced restructuring expenses partially offset by increased pension expenses.

Income and mining tax provisions for the fourth quarter of 2009 were $0.2 million compared with a recovery of $0.3 million in 2008. The increase was due to an adjustment for mining taxes. For 2009, the income and mining tax provision decreased by $7.7 million primarily due to an $8.0 million write-down of a future tax asset in 2008 which did not recur in 2009.

Capital Expenditures:

Myra Falls' capital expenditures in 2009 of $1.6 million consisted primarily of $0.3 million for the tailings disposal area, $0.4 million in ramp development, $0.5 million for mobile equipment and $0.3 million related to mine infrastructure.

(ii) Myra Falls Production

The following table sets forth Myra Falls' production for the periods presented:


                                             Fourth Quarter        Year
                                               2009    2008    2009    2008
----------------------------------------------------------------------------
Tonnes Milled                               107,157 126,140 449,930 592,072
 Zinc (%)                                       9.6     6.9     7.8     6.9
 Copper (%)                                     1.3     1.0     1.1     1.1
 Gold (g/t)                                     2.3     1.2     1.6     1.2
 Silver (g/t)                                    81      43      52      45
Concentrate Production
 Zinc (tonnes)                               17,549  14,161  57,838  66,051
  Zinc Recovery (%)                            88.9    87.5    88.4    87.1
  Zinc Grade (%)                               51.9    54.1    53.4    54.1
  Gold Recovery (%)                            18.7    23.2    21.0    24.8
  Gold Grade (g/t)                              2.7     2.4     1.7     2.7
 Copper (tonnes)                              3,802   4,039  14,404  21,569
  Copper Recovery (%)                          65.9    72.7    67.9    74.1
  Copper Grade (%)                             23.5    22.2    23.3    23.3
  Gold Recovery (%)                            52.1    38.9    39.3    35.9
  Gold Grade (g/t)                             31.3    13.9    19.2    12.0
 Gold (tonnes)                                  0.1       -     2.0       -
  Recovery (%)                                  9.1       -     8.1       -
  Grade (g/t)                               395,151       -  28,999       -
Metal in Concentrates
 Zinc (tonnes)                                9,113   7,659  30,900  35,762
 Copper (tonnes)                                893     895   3,349   5,024
 Gold (ounces)                                5,873   2,870  15,526  13,994
 Silver (ounces)                            222,309 134,897 578,008 661,228

C$ operating costs, production basis
 ($000's)                                    12,674  14,176  50,905  75,724
C$ operating cost per tonne milled
 (production basis)                             118     112     113     128

Production of zinc in concentrate was 19% higher in the fourth quarter of 2009 compared with the same period in 2008 due to higher head grades and recoveries despite fewer tonnes milled. Production of copper in concentrate in the fourth quarter of 2009 was similar to the same period in 2008 due to higher head grades despite lower recoveries and fewer tonnes milled. Production of zinc in concentrate in 2009 was 14% lower than 2008 due to fewer tonnes milled despite higher recoveries and head grades. Production of copper in concentrate was 33% lower in 2009 compared with the same period in 2008 due to fewer tonnes milled and lower recoveries.

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.

Under the terms of the royalty agreements, the Company is required to make basic royalty payments at fixed amounts per tonne of payable zinc produced. In addition, the Company granted net profit interests for the three royalty agreements respectively in years 2015 through 2019 if the average price of zinc in a given calendar year exceeds US$4,250, US$4,500 or US$4,750 per tonne respectively. Of the cash received, $86.1 million was placed with a financial institution, for which the Company took back promissory notes. Interest earned from the promissory notes will be used to fund the expected basic royalty payments during the initial years of the royalty agreements. Over the remaining years of the royalty agreements, interest and principal from the promissory notes will be used to fund the basic royalty payments.

The balance of the funds received of $9.6 million will be used for general corporate purposes. Under certain circumstances the Company has the right, by way of a call option, to acquire the partnership units which own the royalty agreements for the lower of market value or for the outstanding amount of the promissory note.

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

(iii) Myra Falls Drilling

The 2009 diamond drilling program consisted of evaluating and delineating the perimeter of the Battle and HW deposits. In 2009, the total metres drilled were 14,416 with 8,275 metres drilled in the Battle deposit and 6,141 metres drilled in the HW deposit. The South Flank lens, located at the eastern end of the HW deposit was a principal target during the year and will continue to be a focus of exploration in 2010. The Battle drill program delineated a new lens (108) associated with an intrusive contact west of known mineralization. Exploration for additional mineralization along this contact is planned for 2010. The definition drill program, which is directed toward infill work for mining purposes, has led to the delineation of a Battle Upper lens area which was previously interpreted as non-mineralized.

A program of access development to establish diamond drill platforms is planned for 2010. This includes development on 24 level to provide drill access for the Marshall zone in the north west area of the mine. Planned development within the Price mine will gain access to drill positions from which the area between the west end of the Price mine down to the east end of the South Flank lens can be explored. A second major target is the Trumpeter lens which lies north and east of the HW lens. This target can be tested through an extension of an existing drift in the Price mine. In addition to these major development and drill projects, the peripheral diamond drill programs around the HW and Battle deposits are planned to be ongoing throughout 2010.

(iv) Myra Falls Outlook

The 2010 plan at Myra Falls is focused on mining in the Battle/Gap, the HW and the South Flank deposits and assumes that normal weather patterns prevail throughout 2010.

Langlois

On November 2, 2008, the Company temporarily suspended operations at Langlois due to unforeseen economic developments and the mine is being maintained on a care and maintenance basis. Langlois personnel have developed a re-opening plan which anticipates a minimum of six months of pre-production development in order to enable increased production rates. The Company will continue to closely monitor economic and market conditions as they relate to any decision to continue the temporary suspension or to restart the mine.

The following table provides details of Langlois' gross sales revenue for the periods indicated:


                                                 Year 2009(1)
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(3)  revenue
                                     (tonnes)  metal(3)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                   3,618     1,660      1,151     1,911
Copper                                   322        57      3,221       184
Silver                                   n.a.       26        818        21
Gold                                     n.a.    9,515      10.29        98
Other(4)                                 n.a.                           220
                                 ------------                       --------
                                       3,940
                                 ------------
                                 ------------
Gross sales revenue in US$                                            2,434
Exchange rate                                                        1.2293
                                                                    --------
Gross sales revenue in C$                                             2,992
                                                                    --------
                                                                    --------

                                                 Year 2008(2)
----------------------------------------------------------------------------
                                                                      Gross
                                 Concentrate             Realized     sales
                                        sold   Payable    price(3)  revenue
                                     (tonnes)  metal(3)      (US$)  ($000's)
----------------------------------------------------------------------------
Zinc                                  81,730    36,638      1,871    68,537
Copper                                11,818     2,039      6,489    13,232
Silver                                   n.a.  332,209      14.24     4,731
Gold                                     n.a.    1,285        860     1,104
Other(4)                                 n.a.                           404
                                 ------------                       --------
                                      93,548
                                 ------------
                                 ------------
Gross sales revenue in US$                                           88,008
Exchange rate                                                        1.0687
                                                                    --------
Gross sales revenue in C$                                            94,054
                                                                    --------
                                                                    --------

(1) Due to the Company's revenue recognition policy, certain concentrate
    produced prior to the temporary suspension on November 2, 2008 was not
    recognized in revenue until the first quarter of 2009.

(2) On November 2, 2008, Langlois operations were temporarily suspended.

(3) Payable metal and realized prices for zinc and copper are per tonne and
    for gold and silver are per ounce.

(4) Other gross sales revenue represents revaluations of prior period
    concentrate receivables.

For additional information on Langlois' 2008 results, please refer to the Company's 2008 financial report which can be found on SEDAR at www.sedar.com or available on the Company's website at www.breakwater.ca.

Langlois Outlook

While the unforeseen suspension of operations at Langlois is considered temporary, management is taking a cautionary approach. To this end, the Company has initiated a project to advance two ramps, one from surface to the top of zone 4 and one internal to zone 3. The capital to be spent will be $4.6 million which is expected to be provided in the form of loans and a training and employment grant from a consortium of local, regional and provincial government agencies. In the interim Langlois will remain on care and maintenance. The Company continues to closely monitor conditions to determine when production should recommence with a view to reopening the mine as economic circumstances permit.

NON-GAAP RECONCILIATIONS

Operating cost per tonne milled on a production basis is a performance indicator. It is a non-GAAP measure and because there is no standard method for calculating it, operating costs per tonne milled on a production basis is not a reliable way to compare the Company against other companies. It can however allow an understanding of how production costs have changed from year-to-year and the impact on cash flows.


Three Months Ended
 December 31, 2009                              Myra
($000's)                   Mochito    Toqui    Falls Langlois(1)    Total
----------------------------------------------------------------------------
Direct operating costs
 per financial statements    4,851    3,855    8,612         15    17,333
Adjustment to production
 basis                       6,392    3,386    4,070        n.a.   13,848
Less: stock-based
 compensation                   (4)      (2)      (8)       (15)      (29)
Less: royalty adjustment       n.a.    (540)     n.a.       n.a.     (540)
                         ---------------------------------------------------
Operating costs on
 production basis (C$)      11,239    6,699   12,674          -    30,612
                         ---------------------------------------------------
                         ---------------------------------------------------
Average exchange rate       1.1022   1.0775   1.0627        n.a.   1.0802
Operating costs on
 production basis (US$)     10,197    6,217   11,926        n.a.   28,340
                         ---------------------------------------------------
                         ---------------------------------------------------
Tonnes milled              187,806  130,857  107,157        n.a.  425,820
                         ---------------------------------------------------
                         ---------------------------------------------------
Operating cost per tonne
 milled - US$                   54       48      111        n.a.       67
Operating cost per tonne
 milled - C$                    60       51      118        n.a.       72

(1) On November 2, 2008, Langlois operations were temporarily suspended.



Three Months Ended
 December 31, 2008                              Myra
($000's)                   Mochito    Toqui    Falls Langlois(1)    Total
----------------------------------------------------------------------------
Direct operating costs
 per financial statements   15,309   10,985   31,934     17,897    76,125
Adjustment to production
 basis                      (4,094)  (3,941) (17,713)    (9,640)  (35,388)
Less: stock-based
 compensation                   (9)     (19)     (44)       (15)      (87)
Add: royalty adjustment        n.a.       8      n.a.       n.a.        8
                         ---------------------------------------------------
Operating costs on a
 production basis (C$)      11,206    7,033   14,177      8,242    40,658
                         ---------------------------------------------------
                         ---------------------------------------------------

Average exchange rate       1.2063   1.2244   1.3470     1.4419    1.3001
Operating costs on
 production basis (US$)      9,289    5,744   10,524      5,717    31,274
                         ---------------------------------------------------
                         ---------------------------------------------------

Tonnes milled              162,083  130,893  126,140     67,611   486,727
                         ---------------------------------------------------
                         ---------------------------------------------------
Operating cost per tonne
 milled - US$                   57       44       83         85        64
Operating cost per tonne
 milled - C$                    69       54      112        122        84

(1) On November 2, 2008, Langlois operations were temporarily suspended.



Year Ended December 31,                          Myra
 2009 ($000's)              Mochito    Toqui    Falls Langlois(1)     Total
----------------------------------------------------------------------------
Direct operating costs
 per financial statements    36,691   18,864   46,990      1,191    103,736
Adjustment to production
 basis                        7,130    7,272    3,986     (1,134)    17,254
Less: stock-based
 compensation                   (13)     (44)     (71)       (57)      (185)
Less: royalties                 n.a.  (1,388)     n.a.       n.a.    (1,388)
                         ---------------------------------------------------
Operating costs on a
 production basis (C$)       43,808   24,704   50,905          -    119,417
                         ---------------------------------------------------
                         ---------------------------------------------------

Average exchange rate        1.1394   1.1280   1.1409        n.a.    1.1377
Operating costs on
 production basis (US$)      38,449   21,900   44,619        n.a.   104,968
                         ---------------------------------------------------
                         ---------------------------------------------------
Tonnes milled               726,818  496,686  449,930        n.a. 1,673,434
                         ---------------------------------------------------
                         ---------------------------------------------------
Operating cost per tonne
 milled - US$                    53       44       99        n.a.        63
Operating cost per tonne
 milled - C$                     60       50      113        n.a.        71

(1) Due to the Company's revenue recognition policy, certain concentrate
    produced prior to the temporary suspension on November 2, 2008 was not
    recognized in revenue until the first quarter of 2009.



Year Ended December 31,                          Myra
 2008 ($000's)              Mochito    Toqui    Falls Langlois(1)     Total
----------------------------------------------------------------------------
Direct operating costs per
 financial statements        42,463   36,878   88,247     61,734    229,322
Adjustment to production
 basis                       (4,234)  (9,605) (12,230)    (8,672)   (34,741)
Less: stock-based
 compensation                   (54)    (138)    (293)       (61)      (546)
Less: royalties                 n.a.  (1,229)     n.a.       n.a.    (1,229)

                         ---------------------------------------------------
Operating costs on a
 production basis (C$)       38,175   25,906   75,724     53,001    192,806
                         ---------------------------------------------------
                         ---------------------------------------------------

Average exchange rate        1.0675   1.0675   1.0675     1.0675     1.0675
Operating costs on
 production basis (US$)      35,761   24,269   70,936     49,650    180,616
                         ---------------------------------------------------
                         ---------------------------------------------------

Tonnes milled               646,845  519,379  592,072    514,444  2,272,740
                         ---------------------------------------------------
                         ---------------------------------------------------

Operating cost per tonne
 milled - US$                    55       47      120         97         79
Operating cost per tonne
 milled - C$                     59       50      128        103         85

(1) On November 2, 2008, Langlois operations were temporarily suspended.


SUMMARY OF QUARTERLY RESULTS

                                                                       2008
                         ---------------------------------------------------
                         ---------------------------------------------------
                                           Q1        Q2       Q3         Q4
----------------------------------------------------------------------------
Gross sales revenue ($ millions)         81.9     115.1    101.0      100.1
Net earnings (loss) ($ millions)         (6.9)      8.1    (36.1)     (53.5)
Basic earnings (loss) per share      $  (0.02) $   0.02 $  (0.08) $   (0.12)
Weighted-average number of
 Common Shares outstanding
 (millions)                             425.8     446.4    446.5      446.8
Diluted earnings (loss) per share    $  (0.02) $   0.02 $  (0.08) $   (0.12)
C$/US$ realized exchange rate          1.0047    1.0100   1.0457     1.2050
Average realized zinc price (US$/t)     2,409     2,205    1,830      1,331
Average realized zinc price (C$/t)      2,420     2,227    1,914      1,604
Concentrate tonnes sold(1)             59,210    95,188   87,978    104,229
Concentrate tonnes produced(1)         73,481    86,856   89,514     65,986

                                                                       2009
                         ---------------------------------------------------
                         ---------------------------------------------------
                                           Q1        Q2       Q3         Q4
----------------------------------------------------------------------------
Gross sales revenue ($ millions)         64.1      40.9     71.6       49.7
Net earnings (loss) ($ millions)         (6.5)     (4.5)     6.5        5.4
Basic earnings (loss) per share         (0.01) $  (0.01) $  0.01  $    0.01
Weighted-average number of
 Common Shares outstanding
 (millions)                             447.7     678.4    678.9      683.6
Diluted earnings (loss) per share       (0.01) $  (0.01) $  0.01  $    0.01
C$/US$ realized exchange rate          1.2499    1.1599   1.0947     1.0567
Average realized zinc price (US$/t)     1,156     1,413    1,678      2,119
Average realized zinc price (C$/t)      1,445     1,639    1,837      2,239
Concentrate tonnes sold(1)             66,051    43,670   54,590     38,401
Concentrate tonnes produced(1)         49,803    48,512   54,588     61,757

(1) On November 2, 2008, Langlois operations were temporarily suspended. Due
    to the Company's revenue recognition policy, certain concentrate
    produced prior to the temporary suspension on November 2, 2008 was not
    recognized in revenue until the first quarter of 2009.

The quantity and mix of concentrates sold directly affects gross sales revenue. The recognition of revenue from the sale of concentrate can vary from quarter-to-quarter for the reasons discussed in the "Gross Sales Revenue" section of this news release. As all sales are based in US$, the US$'s movement against the C$ impacts the realized C$ gross sales revenue.


CONTRACTUAL OBLIGATIONS

Contractual Obligations
($ millions)                                         Payments Due by Period
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                        greater              greater
                           less than       than                 than
                              1 year  1-3 years  4-5 years   5 years  Total
----------------------------------------------------------------------------
Capital leases                   0.4        0.5        0.1         -    1.0
Operating leases                 1.0        1.0          -         -    2.0
Debt                             2.2        4.8        1.9       1.3   10.2
Accrued benefit
 obligations (1)                 2.6       10.4       11.9      17.0   41.9
Reclamation(1)                   5.4        2.8          -      26.6   34.8
Royalty obligations(1)             -          -       62.0     102.0  164.0
----------------------------------------------------------------------------
Total                           11.6       19.5       75.9     146.9  253.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Accrued benefit obligations, reclamation and royalty obligations have
    funding sources from pension plan assets ($35.3 million), restricted
    reclamation investments ($31.6 million) and restricted promissory notes
    ($168.4 million) respectively. See the Company's 2009 audited
    consolidated financial statements for additional details.

TRANSACTION WITH RELATED PARTIES

In the second quarter of 2009, Dundee Corporation, a significant shareholder of the Company, purchased 57,960,000 units under the Offering to maintain its approximate 25.2% equity interest in the Company.

In 2009, Dundee incurred $61,000 of legal fees on behalf of the Company relating to various financing alternatives. The Company has agreed to reimburse Dundee for these amounts which remained unpaid as at December 31, 2009.

OUTSTANDING SHARE DATA AND FULL DILUTION CALCULATION

The Company is authorized to issue an unlimited number of Common Shares and 200,000,000 preferred shares, issueable in series. There are no preferred shares outstanding. Each Common Share entitles the holder of record thereof to one vote at all meetings of shareholders of the Company, except at meetings at which only holders of another class or series of shares of the Company are entitled to vote. The table set forth below summarizes the Capital Stock.


Common Shares or Securities Convertible into Common
 Shares                                                   February 25, 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Issued and outstanding                                          687,922,628
Share options outstanding (weighted-average exercise
 price $0.74)                                                    12,530,740
Warrants issued at $0.12, expire on April 9, 2014 -
 traded on TSX                                                  106,511,000
----------------------------------------------------------------------------
Future fully diluted                                            806,964,368
----------------------------------------------------------------------------
----------------------------------------------------------------------------

CONCLUSION RELATING TO DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was performed under the supervision of and with the participation of management, including the President and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as defined in the Multilateral Instrument 52-109. Based on that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of the Company's disclosure controls and procedures were effective as at December 31, 2009.

CAUTION ON FORWARD-LOOKING INFORMATION

This news release contains certain statements which constitute forward-looking information. These forward-looking statements are not descriptive of historical matters and may refer to management's expectations or plans. These statements include but are not limited to statements concerning the Company's business objectives and plans; future trends in the Company's industry; future production costs and volumes; mineral grades, reserve and resource estimates and types; sales volumes and realized prices; capital spending plans; exploration plans; expansion plans; expected market fundamentals and prices; availability of equipment and supplies; expected plant availability; success of process changes; the Company's processing technologies; global economic growth and industrial demand; production of base metal concentrates by the Company's operations; future metal prices and treatment and freight charges; future royalties payable; changes in global metal and concentrate inventories; currency exchange rates; costs of energy, materials and supplies; the outcome of disputes and legal proceedings in which the Company is involved; future effective tax rates; and, future benefit costs.

Inherent in forward-looking statements are risks and uncertainties beyond the Company's ability to predict or control, including risks that may affect the Company's operating or capital plans, including risks generally encountered in the development and operation of mineral properties and processing facilities such as unusual or unexpected geological formations, unanticipated metallurgical difficulties, ground control problems, process upsets and equipment malfunctions; risks associated with labour disturbances and unavailability of skilled labour; fluctuations in the market prices of the Company's principal products, which are cyclical and subject to substantial price fluctuations; risks created through competition for mining properties; risks associated with lack of access to markets; risks associated with mineral reserve and resource estimates, including the risk of errors in assumptions or methodologies; risks posed by fluctuations in exchange rates and interest rates, as well as general economic conditions; risks associated with environmental compliance and permitting, including those created by changes in environmental legislation and regulation; risks associated with the Company's dependence on third parties in the provision of transportation and other critical services; risks associated with aboriginal title claims and other title risks; social and political risks; risks associated with government and non-government actions; and, risks associated with legal proceedings.

Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, the following assumptions: that there is no material deterioration in general business and economic conditions; that there is no fluctuation of interest rates and foreign exchange rates; that the supply and demand for, deliveries of, and the level and volatility of prices of zinc, copper, lead, gold and silver develop as expected; that the Company receives regulatory and governmental approvals for its development projects and other operations on a timely basis; that the Company is able to obtain financing for its development projects on reasonable terms; that there is no unforeseen deterioration in the Company's costs of production or production and productivity levels; that the Company is able to continue to secure adequate transportation for its products; that the Company is able to procure mining equipment and operating supplies in sufficient quantities and on a timely basis; that engineering and construction timetables and capital costs for the Company's development and expansion projects are not incorrectly estimated or affected by unforeseen circumstances; that costs of closure of various operations are accurately estimated; that there are no unanticipated changes to market competition; that the Company's reserve estimates are within reasonable bounds of accuracy (including with respect to size, grade and recoverability) and that the geological, operational and price assumptions on which these are based are reasonable; that environmental and other proceedings or disputes are satisfactorily resolved; and, that the Company maintains its ongoing relations with its employees and with its business partners and joint venturers and representatives of communities in which it operates.

Readers are cautioned that the foregoing list of important factors and assumptions is not exhaustive. Forward-looking statements are not guarantees of future performance. Events or circumstances could cause the Company's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Readers should also carefully consider the matters discussed under "Risk Factors" in the Company's most recent Annual Information Form. Given these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors, whether as a result of new information or future events or otherwise, except as may be required under applicable laws.

BREAKWATER RESOURCES LTD.
Consolidated Balance Sheets
(Expressed in thousands of Canadian dollars)
(Unaudited)
----------------------------------------------------------------------------
As at December 31                                             2009     2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets

Current
Cash and cash equivalents                                   41,080   20,328
Restricted cash                                                775      761
Short-term investments                                         150      142
Accounts receivable - concentrate                            2,717      614
Other receivables                                           10,558   12,451
Concentrate inventory                                       41,791   21,816
Materials and supplies inventory                            33,860   37,278
Prepaid expenses and other current assets                    2,156    5,748
Income and mining tax receivable                                31    1,550
Future income tax assets                                         -      621
----------------------------------------------------------------------------
Total current assets                                       133,118  101,309

Restricted reclamation investments                          31,615   35,026
Mineral properties and fixed assets                        262,153  277,990
Restricted promissory notes                                168,365   80,886
----------------------------------------------------------------------------
                                                           595,251  495,211
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities                    32,706   48,058
Provisional payments for concentrate inventory shipped
 and not priced                                             19,110   10,512
Short-term debt including current portion of long-term
 debt                                                        2,193    4,854
Income and mining taxes payable                              2,998      264
Current portion of reclamation, closure cost accruals and
 other environmental obligations                             5,387    5,622
----------------------------------------------------------------------------
Total current liabilities                                   62,394   69,310

Deferred income                                              9,656    5,924
Long-term lease obligations                                    586      125
Royalty obligations                                        164,493   78,449
Long-term debt                                               8,049    1,851
Reclamation, closure cost accruals and other
 environmental obligations                                  29,452   25,685
Employee future benefits                                     1,359      994
Future income tax liabilities                                5,973    3,211
----------------------------------------------------------------------------
Total liabilities                                          281,962  185,549
Shareholders' equity                                       313,289  309,662
----------------------------------------------------------------------------
                                                           595,251  495,211
----------------------------------------------------------------------------
----------------------------------------------------------------------------



BREAKWATER RESOURCES LTD.
Consolidated Statements of Operations and Retained Earnings
(Expressed in thousands of Canadian dollars except share and per share
 amounts)
(Unaudited)

                                      Three Months Ended Twelve Months Ended
                                             December 31         December 31

                                           2009     2008      2009     2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Gross sales revenue                      49,744  100,101   226,438  398,110
Treatment and marketing costs            12,980   39,664    64,656  135,796
----------------------------------------------------------------------------
Net revenue                              36,764   60,437   161,782  262,314
----------------------------------------------------------------------------

Direct operating costs                   17,333   76,125   103,736  229,323
Depreciation and depletion                4,684   16,726    23,257   47,677
Reclamation and closure costs               933      810     5,776    3,864
----------------------------------------------------------------------------
                                         22,950   93,661   132,769  280,864
----------------------------------------------------------------------------
Contribution (loss) from mining
 activities                              13,814  (33,224)   29,013  (18,550)
----------------------------------------------------------------------------

General and administrative                5,799      990    13,919   12,423
Interest and financing                      836     (272)    3,170    2,706
Investment and other income              (2,463) (10,669)   (9,755) (24,205)
Foreign exchange expense (income)         1,003   (3,703)    5,726   (5,191)
Exploration                                 650    3,382     1,789   17,212
Write-down of mineral properties and
 fixed assets                                 -   35,508         -   46,478
Other non-producing property costs        1,530      590     6,742    1,834
----------------------------------------------------------------------------
                                          7,355   25,826    21,591   51,257
----------------------------------------------------------------------------
Earnings (loss) before income and
 mining tax provision                     6,459  (59,050)    7,422  (69,807)
Income and mining tax provision
 (recovery)                               1,099   (5,564)    6,613   18,533
----------------------------------------------------------------------------
Net earnings (loss)                       5,360  (53,486)      809  (88,340)
Retained earnings, beginning of year     76,017  134,054    80,568  168,908
----------------------------------------------------------------------------
Retained earnings, end of year           81,377   80,568    81,377   80,568
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Basic earnings (loss) per Common Share  $  0.01   ($0.12)   ($0.00)  ($0.20)
Diluted earnings (loss) per Common
 Share                                  $  0.01   ($0.12)   ($0.00)  ($0.20)
Basic weighted-average number of
 Common Shares outstanding (000's)      683,632  446,843   622,183  441,378
----------------------------------------------------------------------------
----------------------------------------------------------------------------



BREAKWATER RESOURCES LTD.
Consolidated Statements of Accumulated Other Comprehensive
(Loss) Income
(Expressed in thousands of Canadian dollars)
(Unaudited)
----------------------------------------------------------------------------
Year ended December 31                                         2009    2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Accumulated other comprehensive income (loss), beginning of
 year                                                         3,257  (3,817)
Other comprehensive (loss) income                           (19,086)  7,074
----------------------------------------------------------------------------

Accumulated other comprehensive (loss) income, end of year  (15,829)  3,257
----------------------------------------------------------------------------
----------------------------------------------------------------------------



BREAKWATER RESOURCES LTD.
Consolidated Statements of Other Comprehensive (Loss) Income
(Expressed in thousands of Canadian dollars)
(Unaudited)
                                           Three Months       Twelve Months
                                                  Ended               Ended
                                            December 31         December 31
                                          2009     2008      2009      2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Net earnings (loss)                      5,360  (53,486)      809   (88,340)
----------------------------------------------------------------------------

Other comprehensive (loss) income, net
 of income taxes:
  Unrealized (losses) gains on
   translating financial statements of
   self sustaining foreign operations   (3,004)  13,622   (18,801)   19,789
  Unrealized loss on short-term
   available-for-sale securities,
   net of income tax provision of $Nil
   (2008 - $5)                               6       (3)        -       (26)
  Unrealized (loss) gain on restricted
   investments, net of income tax
   provision of $32 (2008 - $94)          (130)     407      (185)      533
  Reclassification of gains on sale of
   available-for-sale securities to
   income                                    1        -      (100)  (13,222)
----------------------------------------------------------------------------
Other comprehensive (loss) income, net
 of income taxes                        (3,127)  14,026   (19,086)    7,074
----------------------------------------------------------------------------

Comprehensive earnings (loss)            2,233  (39,460)  (18,277)  (81,266)
----------------------------------------------------------------------------
----------------------------------------------------------------------------



BREAKWATER RESOURCES LTD.
Consolidated Statements of Cash Flow
(Expressed in thousands of Canadian dollars)
                                           Three Months       Twelve Months
                                                  Ended               Ended
(Unaudited)                                 December 31         December 31
                                          2009     2008      2009      2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Activities
Net earnings (loss)                      5,360  (53,486)      809   (88,340)
Items not affecting cash:
  Depreciation and depletion             4,684   16,726    23,257    47,677
  Gain on sale of investment                 -       14      (118)   (9,021)
  Write-down of mineral properties and
   fixed assets                              -   35,508         -    46,478
  Gain on sale of Lapa royalties             -   (6,350)        -    (6,350)
  Unrealized loss (gain) on investments    182     (385)      259     1,337
  Other non-cash items                   2,106      (91)    2,885     2,271
  Stock-based compensation                 494      190       927     1,091
  Unrealized deferred income              (936)    (153)   (2,783)     (611)
  Future Income taxes                     (946)  (2,231)    2,507    13,454
  Reclamation, closure cost accruals
   and other environmental obligations     933      810     5,776     3,864
  Employee future benefits                 881      249     3,458     1,633
Payment of reclamation, closure cost
 accruals and other environmental
 obligations                            (1,062)  (2,537)   (2,936)   (5,420)
Payment for employee future benefits      (814)    (975)   (3,093)   (3,456)
Changes in non-cash working capital
 items                                  12,213   13,529   (19,261)  (10,452)
----------------------------------------------------------------------------
Net cash provided by (used in)
 operating activities                   23,095      818    11,687    (5,845)
----------------------------------------------------------------------------
Investing Activities
Increase in restricted cash              5,815     (250)      (14)     (132)
Restricted reclamation investments        (226)    (423)    3,076      (899)
Short-term investments                       -      (14)        -     7,003
Long-term investments                        -        -         -    13,350
Funds advanced on promissory note      (62,641) (15,970)  (86,069)  (15,970)
Issue of common shares to purchase
 Myra Falls Limited Partnership              -        -         -       (34)
Acquisition of Metco Resources Inc.,
 net of cash acquired                        -        -         -        23
Mineral properties and fixed assets    (12,112) (11,689)  (30,169)  (76,839)
Proceeds from sale of mineral
 properties and fixed assets                 -    7,018     1,906     7,210
----------------------------------------------------------------------------
Net cash used in investing activities  (69,164) (21,328) (111,270)  (66,288)
----------------------------------------------------------------------------
Financing Activities
Proceeds from sale of royalty interest  62,641   15,970    86,069    15,970
Proceeds from sale of Lapa royalty           -    6,350         -     6,350
Issue of common shares and warrants
 for cash                                  682       97    22,341       381
Deferred income relating to royalties    6,811      869     9,556       869
Increase (decrease) in long-term lease
 obligations                               546      (33)      497      (142)
(Decrease) increase in short-term debt    (329)   3,096      (886)    3,987
(Decrease) increase in long-term debt     (329)  (3,057)    5,139         -
----------------------------------------------------------------------------
Net cash provided by financing
 activities                             70,022   23,292   122,716    27,415
----------------------------------------------------------------------------
Effect of exchange rate changes on
 cash and cash equivalents held in
 U.S. dollars (loss) gain               (1,186)   1,659    (2,381)    2,112
----------------------------------------------------------------------------
Net increase (decrease) in cash during
 the period                             22,767    4,441    20,752   (42,606)
----------------------------------------------------------------------------
Cash and cash equivalents, beginning
 of period                              18,313   15,887    20,328    62,934
----------------------------------------------------------------------------
Cash and cash equivalents, end of
 period                                 41,080   20,328    41,080    20,328
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplemental Information
  Cash interest paid                       130      148       679       214
  Cash income and mining taxes paid         87      859     1,051    15,494
  Cash interest received                   412      412     1,054     1,396
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Segment Information

Segment Information
For the Three Months Ended December 31, 2009 (Unaudited)
---------------------------------------------------------------------------
($000's)
Operating Segment       Mochito   Toqui   Myra Falls   Langlois       Total
---------------------------------------------------------------------------

Gross sales revenue      17,666  10,111       23,534          -      51,311
Treatment and
 marketing costs          4,700   1,727        6,553          -      12,980
---------------------------------------------------------------------------
Net revenue              12,966   8,384       16,981          -      38,331
---------------------------------------------------------------------------
Direct operating
 Costs                    4,851   3,855        8,612         15      17,333
Depreciation and
 Depletion                2,195   1,014          233      1,219       4,661
Reclamation and
 closure costs              300     192          305         21         818
---------------------------------------------------------------------------
                          7,346   5,061        9,150      1,255      22,812
---------------------------------------------------------------------------
Contribution (loss)
 from mining activities   5,620   3,323        7,831     (1,255)     15,519
---------------------------------------------------------------------------
General and
 administrative               -       -            -          -           -
Interest and financing        -       -            -          -           -
Investment and other
 income                       -       -            -          -           -
Foreign exchange expense      -       -            -          -           -
Exploration                 900     182            -       (492)        590
Other non-producing
 property costs               -       -            -      1,432       1,432
---------------------------------------------------------------------------
                            900     182            -        940       2,022
---------------------------------------------------------------------------
Earnings (loss) before
 income and mining tax
 provision (recovery)     4,720   3,141        7,831     (2,195)     13,497
Income and mining tax
 provision (recovery)     1,683     913          162     (1,659)      1,099

---------------------------------------------------------------------------
Net earnings (loss)       3,037   2,228        7,669       (536)     12,398
---------------------------------------------------------------------------
Capital expenditures      3,553   7,269          541          -      11,363

Mineral properties
 and fixed assets        46,394  63,429       22,474    119,952     252,249
Identifiable assets      78,331  89,629      254,363    123,865     546,188
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Segment Information
For the Three Months Ended December 31, 2009 (Unaudited)
---------------------------------------------------------------------------
($000's)
Operating Segment    Non-operating mines  Corporate and Other  Consolidated
---------------------------------------------------------------------------
Gross sales revenue                    -               (1,567)       49,744
Treatment and marketing costs          -                    -        12,980
---------------------------------------------------------------------------
Net revenue                            -               (1,567)       36,764
---------------------------------------------------------------------------
Direct operating costs                 -                    -        17,333
Depreciation and depletion             -                   23         4,684
Reclamation and closure costs        115                    -           933
---------------------------------------------------------------------------
                                     115                   23        22,950
---------------------------------------------------------------------------
Contribution (loss) from
 mining activities                  (115)              (1,590)       13,814
---------------------------------------------------------------------------
General and administrative             -                5,799         5,799
Interest and financing                 -                  836           836
Investment and other income            -               (2,463)       (2,463)
Foreign exchange expense               -                1,003         1,003
Exploration                            -                   60           650
Other non-producing property costs   109                  (11)        1,530
---------------------------------------------------------------------------
                                     109                5,224         7,355
---------------------------------------------------------------------------
Earnings (loss) before income and
 mining tax provision (recovery)    (224)              (6,814)        6,459
Income and mining tax
 provision (recovery)                  -                    -         1,099
---------------------------------------------------------------------------
Net earnings (loss)                 (224)              (6,814)        5,360
---------------------------------------------------------------------------
Capital Expenditures                   -                  749        12,112
Mineral properties and
fixed assets                         977                8,927       262,153
Identifiable assets                1,190               47,873       595,251
---------------------------------------------------------------------------



Segment Information
For the Three Months Ended December 31, 2008 (Unaudited)
---------------------------------------------------------------------------
($000's)
Operating
 Segment            Mochito       Toqui   Myra Falls   Langlois      Total
---------------------------------------------------------------------------
Gross sales
 revenue             20,411      18,763       33,915     27,012    100,101
Treatment and
 marketing costs      6,933       9,265       10,392     13,074     39,664
---------------------------------------------------------------------------
Net revenue          13,478       9,498       23,523     13,938     60,437
---------------------------------------------------------------------------
Direct operating
 costs               15,309      10,985       31,934     17,897     76,125
Depreciation and
 depletion            3,750       3,117        2,562      7,257     16,686
Reclamation and
 closure costs          389         125          178         20        712
---------------------------------------------------------------------------
                     19,448      14,227       34,674     25,174     93,523
---------------------------------------------------------------------------
Contribution
 (loss) from
 mining activities   (5,970)     (4,729)     (11,151)   (11,236)   (33,086)
---------------------------------------------------------------------------
General and
 administrative           -           -            -          -          -
Interest and financing    -           -            -          -          -
Investment and
 other income             -           -            -          -          -
Foreign exchange
 (income)                 -           -            -          -          -
Exploration             821         128            7        306      1,262
Write-down of
 mineral properties
 and fixed assets     8,327           -       25,300          -     33,627
Other non-producing
 property costs           -           -            -          -          -
---------------------------------------------------------------------------
                      9,148         128       25,307        306     34,889
---------------------------------------------------------------------------
Earnings (loss)
 before income
 and mining tax
 provision
 (recovery)         (15,118)     (4,857)     (36,458)   (11,542)   (67,975)
Income and mining
 tax recovery        (1,928)       (626)        (291)    (2,701)    (5,546)
---------------------------------------------------------------------------
Net (loss)
 earnings           (13,190)     (4,231)     (36,167)    (8,841)   (62,429)
---------------------------------------------------------------------------
Capital
 expenditures
 (recovery)           8,315       3,135          420      1,706     13,576
Mineral
 properties
 and fixed
 assets              55,714      67,874       22,307    129,377    275,272
Identifiable
 assets              81,862      84,659      159,056    134,220    459,797
---------------------------------------------------------------------------



Segment Information
For the Three Months Ended December 31, 2008 (Unaudited)
---------------------------------------------------------------------------
($000's)
Operating
 Segment           Non-operating mines  Corporate and Other    Consolidated
---------------------------------------------------------------------------
Gross sales revenue                  -                    -         100,101
Treatment and marketing costs        -                    -          39,664
---------------------------------------------------------------------------
Net revenue                          -                    -          60,437
---------------------------------------------------------------------------
Direct operating costs               -                    -          76,125
Depreciation and depletion           -                   40          16,726
Reclamation and closure costs       98                    -             810
---------------------------------------------------------------------------
                                    98                   40          93,661
---------------------------------------------------------------------------
Contribution (loss) from
 mining activities                 (98)                 (40)        (33,224)
---------------------------------------------------------------------------
General and Administrative           -                  990             990
Interest and financing               -                 (272)           (272)
Investment and other income          -              (10,669)        (10,669)
Foreign exchange income              -               (3,703)         (3,703)
Exploration                         21                2,099           3,382
Write-down of mineral
 properties and fixed assets     1,282                  599          35,508
Other non-producing
 property costs                    599                   (9)            590
---------------------------------------------------------------------------
                                 1,902              (10,965)         25,826
---------------------------------------------------------------------------
Earnings (loss) before
 income and mining tax
 provision (recovery)          (2,000)               10,925         (59,050)
Income and mining tax recovery      -                   (18)         (5,564)
---------------------------------------------------------------------------
Net (loss) earnings            (2,000)               10,943         (53,486)
---------------------------------------------------------------------------

Capital expenditures
 (recovery)                         -                (1,887)         11,689
Mineral properties and
 fixed assets                   1,100                 1,618         277,990
Identifiable assets             1,785                33,629         495,211
---------------------------------------------------------------------------
---------------------------------------------------------------------------



Segment Information
For the Year Ended December 31, 2009 (Unaudited)
---------------------------------------------------------------------------
($000's)                                          Myra
Operating Segment          Mochito    Toqui      Falls  Langlois      Total
---------------------------------------------------------------------------
Gross sales revenue         89,273   60,179     78,377     2,992    230,821
Treatment and marketing
 costs                      25,417   17,704     20,351     1,184     64,656
---------------------------------------------------------------------------
Net revenue                 63,856   42,475     58,026     1,808    166,165
---------------------------------------------------------------------------
Direct operating costs      36,691   18,864     46,990     1,191    103,736
Depreciation and
 depletion                  14,150    6,331      1,398     1,287     23,166
Reclamation and closure
 costs                       1,307      718      3,004        86      5,115
---------------------------------------------------------------------------
                            52,148   25,913     51,392     2,564    132,017
---------------------------------------------------------------------------
Contribution (loss) from
 mining activities          11,708   16,562      6,634      (756)    34,148
---------------------------------------------------------------------------
General and administrative       -        -          -         -          -
Interest and financing           -        -          -         -          -
Investment and other income      -        -          -         -          -
Foreign exchange expense         -        -          -         -          -
Exploration                  1,219      642          -      (131)     1,730
Other non-producing
 property costs                  -        -          -     5,896      5,896
---------------------------------------------------------------------------
                             1,219      642          -     5,765      7,626
---------------------------------------------------------------------------
Earnings (loss) before
 income and mining tax
 provision (recovery)       10,489   15,920      6,634    (6,521)    26,522
Income and mining tax
 provision (recovery)        2,689    2,633        162     1,893      7,377

---------------------------------------------------------------------------
Net earnings (loss)          7,800   13,287      6,472    (8,414)    19,145
---------------------------------------------------------------------------
Capital expenditures        12,977   14,171      1,645        91     28,884
---------------------------------------------------------------------------



Segment Information
For the Year Ended December 31, 2009 (Unaudited)
-------------------------------------------------------------------------
 ($000's)
Operating                   Non-operating      Corporate and
   Segment                          mines              Other Consolidated
-------------------------------------------------------------------------
Gross sales revenue                     -             (4,383)     226,438
Treatment and marketing costs           -                  -       64,656
-------------------------------------------------------------------------
Net revenue                             -             (4,383)     161,782
-------------------------------------------------------------------------
Direct operating costs                  -                  -      103,736
Depreciation and depletion              -                 91       23,257
Reclamation and closure costs         661                  -        5,776
-------------------------------------------------------------------------
                                      661                 91      132,769
-------------------------------------------------------------------------
Contribution (loss) from
 mining activities                   (661)            (4,474)      29,013
-------------------------------------------------------------------------
General and administrative              -             13,919       13,919
Interest and financing                  -              3,170        3,170
Investment and other income             -             (9,755)      (9,755)
Foreign exchange expense                -              5,726        5,726
Exploration                             -                 59        1,789
Other non-producing property costs    794                 52        6,742
-------------------------------------------------------------------------
                                      794             13,171       21,591
-------------------------------------------------------------------------
Earnings (loss) before income
 and mining tax provision
 (recovery)                        (1,455)           (17,645)       7,422
Income and mining tax
provision (recovery)                    -               (764)       6,613
-------------------------------------------------------------------------
Net earnings (loss)                (1,455)           (16,881)         809
-------------------------------------------------------------------------
Capital expenditures                    -              1,285       30,169
-------------------------------------------------------------------------



Segment Information
For the Year Ended December 31, 2008 (Unaudited)
----------------------------------------------------------------------------
 ($000's)
Operating                                      Myra
   Segment             Mochito    Toqui       Falls     Langlois      Total
----------------------------------------------------------------------------
Gross sales revenue     98,596   96,056     109,404       94,054    398,110
Treatment and
 marketing costs        28,978   40,187      32,886       33,745    135,796
----------------------------------------------------------------------------
Net revenue             69,618   55,869      76,518       60,309    262,314
----------------------------------------------------------------------------
Direct operating
 costs                  42,463   36,879      88,247       61,734    229,323
Depreciation and
 depletion              10,033    9,372       7,031       21,075     47,511
Reclamation and
 closure costs
 (recovery)              1,314     (449)      1,466           80      2,411
----------------------------------------------------------------------------
                        53,810   45,802      96,744       82,889    279,245
----------------------------------------------------------------------------
Contribution (loss)
 from mining activities 15,808   10,067     (20,226)     (22,580)   (16,931)
----------------------------------------------------------------------------
General and administrative   -        -           -            -          -
Interest and financing       -        -           -            -          -
Investment and other income  -        -           -            -          -
Foreign exchange (income)    -        -           -            -          -
Exploration              2,609      943       1,033        3,905      8,490
Write-down of mineral
 properties and fixed
 assets                  8,327        -      25,300            -     33,627
Other non-producing
 property costs              -        -           -            -          -
----------------------------------------------------------------------------
                        10,936      943      26,333        3,905     42,117
----------------------------------------------------------------------------
Earnings (loss) before
income and mining
tax provision (recovery)  4,872    9,124     (46,559)     (26,485)  (59,048)

Income and mining
  tax provision
  (recovery)            3,270    2,051       7,873        6,302     19,496

----------------------------------------------------------------------------
Net earnings (loss)      1,602    7,073     (54,432)     (32,787)   (78,544)
----------------------------------------------------------------------------
Capital expenditures
 (recovery)             28,091   20,890       3,670       24,992     77,643
----------------------------------------------------------------------------



Segment Information
For the Year Ended December 31, 2008 (Unaudited)
-------------------------------------------------------------------------
 ($000's)
 Operating              Non-operating      Corporate and
   Segment                      mines              Other    Consolidated
-------------------------------------------------------------------------

Gross sales revenue                 -                  -         398,110
Treatment and marketing costs       -                  -         135,796

-------------------------------------------------------------------------
Net revenue                         -                  -         262,314
-------------------------------------------------------------------------
Direct operating costs              -                  -         229,323

Depreciation and depletion          -                166          47,677

Reclamation and closure
 costs (recovery)               1,453                  -           3,864
-------------------------------------------------------------------------
                                1,453                166         280,864
-------------------------------------------------------------------------
Contribution (loss) from
 mining activities             (1,453)              (166)        (18,550)

-------------------------------------------------------------------------
General and administrative          -             12,423          12,423

Interest and financing              -              2,706           2,706

Investment and other income         -            (24,205)        (24,205)

Foreign exchange income             -             (5,191)         (5,191)

Exploration                       444              8,278          17,212
Write-down of mineral
 properties and fixed assets    1,282             11,569          46,478

Other non-producing
 property costs                 1,668                166           1,834
-------------------------------------------------------------------------
                                3,394              5,746          51,257
-------------------------------------------------------------------------
 Earnings (loss) before
  income and mining tax
  provision  (recovery)        (4,847)            (5,912)        (69,807)

Income and mining tax
 provision (recovery)               -               (963)         18,533

-------------------------------------------------------------------------
Net earnings (loss)            (4,847)            (4,949)        (88,340)
-------------------------------------------------------------------------
Capital expenditures (recovery)     -               (804)         76,839
-------------------------------------------------------------------------

Contacts:
Breakwater Resources Ltd.Dave Langille
Vice President, Finance and Chief Financial Officer
(416) 363-4798 Ext. 236

Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
(416) 363-4798 Ext. 277

Breakwater Reports Mineral Reserve and Mineral Resource Estimates

Wed, 24 Feb 2010 08:01:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 02/24/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) announces an increase to its mineral reserves and an extension to the mine life at Mochito.

The mineral reserves at December 31, 2009 were estimated to total 18.5 million tonnes grading 6.7% zinc resulting in an 8% increase year-over-year. Specifically, mineral reserves at Mochito increased by 56% due to gains from diamond drilling and the discovery of new deposits. Measured and indicated mineral resource estimates totaled 22.0 million tonnes grading 7.8% zinc, a 5% increase over 2009 primarily due to an increase at Mochito. Inferred mineral resources have been estimated to total 11.6 million tonnes, representing a 4% increase year-over-year.


Proven Mineral Reserves
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    1,083  5.8 3.4   -   107     -     347  5.1  3.2    -   107     -
Toqui        807  6.5 0.3   -     8   4.4     661  7.3  0.2    -   5.0   3.6
Myra
 Falls     5,369  4.9 0.5 0.9    44   1.3   5,422  5.0  0.5  0.9    44   1.2
Langlois   1,469  8.7   - 0.5    38   0.1   1,469  8.7    -  0.5    38   0.1
----------------------------------------------------------------------------
Total      8,728  5.8   -   -     -     -   7,899  5.9    -    -     -     -
----------------------------------------------------------------------------

Probable Mineral Reserves
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    2,773  4.7 2.0   -    52     -   2,117  5.2  2.2    -    59     -
Toqui      2,517  7.2 0.3   -     9   2.3   2,682  7.1  0.5  0.1    13   2.4
Myra
 Falls       865  6.2 0.6 1.1    42   1.6     876  6.5  0.6  1.1    44   1.6
Langlois   3,626 10.1   - 0.7    48   0.1   3,626 10.1    -  0.7    48   0.1
----------------------------------------------------------------------------
Total      9,781  7.5   -   -     -     -   9,301  7.8    -    -     -     -
----------------------------------------------------------------------------

Proven and Probable Mineral Reserves
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    3,856  5.0 2.4   -    68     -   2,464  5.2  2.3    -    66     -
Toqui      3,324  7.0 0.3   -     9   2.8   3,343  7.1  0.4  0.1    11   2.6
Myra
 Falls     6,234  5.1 0.5 0.9    44   1.3   6,298  5.2  0.5  0.9    44   1.3
Langlois   5,095  9.7   - 0.6    45   0.1   5,095  9.7    -  0.6    45   0.1
----------------------------------------------------------------------------
Total     18,509  6.7   -   -     -     -  17,200  6.9    -    -     -     -
----------------------------------------------------------------------------

Measured Mineral Resources(1)
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    1,152  6.8 3.7   -   118     -     350  6.1  3.6    -   120     -
Toqui      1,004  7.6 0.2   -     7   3.8     942  8.3  0.2    -     4   2.7
Myra       5,610  6.6 0.6 1.2    57   1.6   5,838  6.7  0.6  1.2    57   1.6
 Falls
Langlois   2,398  9.4   - 0.6    41   0.1   2,398  9.4    -  0.6    41   0.1
----------------------------------------------------------------------------
Total     10,164  7.4   -   -     -     -   9,528  7.5    -    -     -     -
----------------------------------------------------------------------------

Indicated Mineral Resources(1)
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    3,050  5.5 2.3   -    60     -   2,185  6.2  2.7    -    69     -
Toqui      3,644  8.1 0.4   -    11   1.9   3,983  8.0  0.5  0.1    14   1.9
Myra         911  8.2 0.8 1.4    56   2.1     961  8.3  0.8  1.4    54   2.1
 Falls
Langlois   4,261 10.4   - 0.7    51   0.1   4,261 10.4    -  0.7    51   0.1
----------------------------------------------------------------------------
Total     11,866  8.3   -   -     -     -  11,390  8.6    -    -     -     -
----------------------------------------------------------------------------

Measured and Indicated Mineral Resources(1)
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    4,202  5.9 2.7   -    76     -   2,535  6.2  2.8    -    76     -
Toqui      4,648  8.0 0.4   -    10   2.3   4,925  8.1  0.4  0.1    12   2.1
Myra
 Falls     6,521  6.8 0.6 1.2    57   1.7   6,799  6.9  0.6  1.2    57   1.7
Langlois   6,659 10.0   - 0.7    47   0.1   6,659 10.0    -  0.7    47   0.1
----------------------------------------------------------------------------
Total     22,030  7.8   -   -     -     -  20,918  8.1    -    -     -     -
----------------------------------------------------------------------------
(1) Includes proven and probable reserves but excludes inferred resources

Inferred Mineral Resources
                 December 31, 2009                December 31, 2008
----------------------------------------------------------------------------
          Tonnes   Zn  Pb  Cu    Ag    Au  Tonnes   Zn   Pb   Cu    Ag    Au
         (000's)  (%) (%) (%) (g/t) (g/t) (000's)  (%)  (%)  (%) (g/t) (g/t)
----------------------------------------------------------------------------
Mochito    3,330  4.5 2.1   -    46     -   2,372  4.3  2.3    -    55     -
Toqui      3,545  7.7 0.4   -    15   1.0   3,994  7.3  0.5  0.1    16   1.0
Myra
 Falls     3,172  8.1 0.9 1.1   110   2.3   3,196  8.2  0.9  1.1   110   2.3
Langlois   1,543  8.0   - 0.5    44   0.1   1,543  8.0    -  0.5    44   0.1
----------------------------------------------------------------------------
Total     11,590  6.9   -   -     -     -  11,105  7.0    -    -     -     -
----------------------------------------------------------------------------

NOTES TO INVESTORS CONCERNING ESTIMATES

The mineral reserves and mineral resources set forth in this news release were prepared in accordance with National Instrument 43-101 ("NI 43-101").

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, 2009 mineral reserve and mineral resource estimates, metal prices, including premiums, used to determine economic viability were US$1.00/lb. zinc, C$/US$ exchange rate of 1.12, US$700/oz. gold, US$12.55/oz. silver, US$2.66/lb. copper and US$0.83/lb. lead. The metal prices used represent the approximate historical five year average for each metal from 2005 to 2009.

Scientific and Technical Data

The Company is reporting mineral resource and reserve estimates in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves (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 in accordance with the meanings ascribed to those terms in the CIM Guidelines, such definitions commence on page 4 under the heading "Glossary of Terms". 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 allowances for losses that may occur when the material is mined. A proven mineral reserve is the economically mineable part of a measured mineral 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 is justified. A probable mineral reserve is the economically mineable part of an indicated and, in some circumstances, a measured mineral 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 resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals 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, 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. 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.

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, 2009. The 2008 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 Vice President, 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 Daniel Goffaux, P.Eng., VP, Latin America.

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.

Block models have been created for the various zones using an inverse distance squared interpolation with block dimensions of three metres wide by three metres long by 3.7 metres high (except for the Palmar Dyke that has three metre high blocks). Ellipsoid sizes and shapes are determined by the style of mineralization (i.e. manto or chimney style mineralization).

The block model is constrained by geological solids of the various deposits that limit the reserve category (i.e. one rock code is used for areas interpreted to be predominantly measured and indicated whereas other rock codes are used to limit the resource category to inferred where the degree of confidence in the geological interpretation is lower). Geological solids identified as being predominantly measured and indicated are categorized according to the search ellipse parameters outlined in the table below. Geological solids defined as Inferred can only host inferred resources.


----------------------------------------------------------------------------
Mineralization Type   Category     East-West     North-South      Elevation
                                    (radius)       (radius)       (radius)
----------------------------------------------------------------------------
Manto                 Measured     7.6 metres     7.6 metres     4.5 metres
                      Indicated    22.9 metres    22.9 metres    9.1 metres
                      Inferred     45.7 metres    45.7 metres    18.2 metres
----------------------------------------------------------------------------
Chimney               Measured     7.6 metres     7.6 metres     7.6 metres
                      Indicated    22.9 metres    22.9 metres    22.9 metres
                      Inferred     45.7 metres    45.7 metres    45.7 metres
----------------------------------------------------------------------------

The block model is constructed on the basis of the original in-situ shape of the deposit. Other solids are created of the mined part of the deposit. Unrecoverable pillars are considered to have been mined and are included in the solid of the mined part of the deposit. Sill pillars beneath existing workings are taken as two metres thick since part of the sill pillar will be taken on retreat as a sawtooth back.

The geological solid is trimmed against the solid of the mined area to produce the final solid which represents the geological resource. All material within the resource solid is taken as part of the mineral resource regardless of the grade of individual blocks (blocks below cut-off grade are accepted as internal dilution).

All grade estimates are based upon diamond drill hole intersections. Geological solids are created by snapping to the exact point of the drill hole representing the contact interpreted by the geologist. Solids are assigned rock codes representing the mineralization type (chimney or manto) as well as the maximum resource category allowed by the geologist (measured and indicated or inferred). Rock codes from the solids are applied to the drill hole database and that part of the drill hole within the solid is composited into three metre lengths. Missing sample intervals are assigned a grade of zero except in the case of the Barbasco, Imperial, Port Royal, and McKenney Chimneys where unsampled intervals are not represented in the composites due to challenges associated with the geological interpretation of these highly complex and irregular deposits.

The composites are converted into three dimensional ("3D") points that are used for the grade estimate of individual blocks according to the interpolation parameters and search ellipses discussed above. Each 3D point has an associated rock code. The rock code of the block and the 3D point must be the same for the grade to be calculated (i.e. only chimney intersections can be used to calculate the grade of chimney deposits and only manto intersections are used to calculate the grade of manto deposits). Blocks identified as inferred resources are allowed to draw upon points defined as having a higher degree of confidence.

The geological solids of the measured and indicated resources are reviewed by the engineering group to determine which can be economically extracted. Those solids that are identified as profitable are converted to mineral reserves by diluting the block grades to account for sandfill and wall rock dilution. Sandfill dilution has been historically accepted as 15%. Wall rock dilution is assigned on the basis of the surface area to volume relationship as well as historical factors. Mining losses are applied to account for planned pillars. Geological losses are applied where there is concern that part of the resource will not be recovered. The diluted grade for the solid must be greater than 5% zinc equivalent based upon the long-term metal prices used for mineral resource and mineral reserve calculations. Blocks within the solid that are below the cut-off grade are considered to be internal dilution.

Toqui

The qualified person responsible for the Toqui mineral reserve and mineral resource estimates is Daniel Goffaux, P.Eng., VP, Latin America.

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 cut-off 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, certain assumptions are made. Depending on the deposit, dilution is added at a variable rate of between 6% and 19%. Calculations of dilution are based on geological and operational factors which vary depending on the mine.

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. In the case of drift and fill method, the recovery factor will be approximately 98%.

Myra Falls

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 HW, Battle-Gap, Extension, Lynx Level 6, Ridge, Price and Marshall Zones. A 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 Torben Jensen, P.Eng., Vice President, Engineering.

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. For each drill hole intersection and underground face sample, 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 sulphide zone and then a block model was constructed based on this interpretation. Block model dimensions are five metres high by five metres long by one metre wide which reflects the elongated narrow lenses.

Limits of each zone are 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 are 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 is determined for each metal unit. These metal units are then used to calculate the NSR value of each interpreted 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 at Grevet B is two metres. For Langlois, the minimum mining width used was three metres in Zones 3 and 4 and 2.2 metres in Zones 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 2,000 metres.

The mineral reserves are estimated by applying mining recovery and dilution to the measured and indicated resources. Minimum mining widths are applied including three metres for Zones 3 and 4, 2.2 metres for Zone 97 and two 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.

Forward-looking Statements

The information in this news release has been prepared as at February 24, 2010. 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.

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

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

Mon, 25 Jan 2010 11:46:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 01/25/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) will hold a conference call on Friday, February 26, 2010, commencing at 10:00 a.m. (ET) to discuss with analysts its financial and operating results for the year ended December 31, 2009. David Petroff, President and Chief Executive Officer will host the call which will also be accessible via a live webcast.

Phone: 1-800-319-4610 (Canada and USA) or +1-604-638-5340 (outside of Canada and USA)

Webcast: http://services.choruscall.com/links/breakwater100226.html

After the broadcast, an archive of the webcast will be available at the above URL.

The Company's news release covering its year-end financial and operating results will be released after regular trading hours on Thursday, February 25, 2010 and will be available on the Company's website at www.breakwater.ca.

The scheduled speakers on the conference call will be David Petroff, President and Chief Executive Officer; Dave Langille, Vice-President, Finance and Chief Financial Officer; and Steve Hayes, Chief Commercial Officer.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca

Breakwater Resources Ltd.'s Production Results for 2009 and 2010 Guidance

Mon, 25 Jan 2010 09:21:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 01/25/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) announces 2009 production results for the fourth quarter and the full year as well as guidance for 2010.

In 2009, the Company's objectives were to maximize cash flow in a challenging economic environment while maintaining safe, environmentally compliant and productive mines. Where necessary and appropriate the Company invested in capital projects to increase the productivity and efficiency of operations and advanced mine exploration and development. Until the completion of a strategic review later this year, management's business plan in 2010 is to develop a strong, stable base from which to grow. Accordingly, management will invest capital prudently while continuing to contain costs.

Production

The Company's projected metals production for 2010 is set forth in the following table:


Metal in Concentrate(1)
 (contained)                        Mochito     Toqui  Myra Falls      Total
                                --------------------------------------------
Zinc (tonnes)                        33,000    23,000      32,000     88,000
Copper (tonnes)                                             4,600      4,600
Lead (tonnes)                        13,000       600                 13,600
Gold (ounces)                                  35,000      17,000     52,000
Silver (ounces)                   1,563,000    83,000     651,000  2,297,000

(1)Metal contained in concentrate is before smelting deductions which, based
on industry-wide practices, are approximately 15% for zinc and 5% for each
of copper and lead. The actual smelting deductions negotiated by the Company
may vary from the industry standards depending on a number of factors.

Estimates of production are subject to change and actual production may vary materially from such estimates.

There are numerous uncertainties inherent in estimating anticipated production including many factors beyond the control of the Company. While production forecasts are soundly engineered and detailed, the accuracy of any such estimates is a function of the quality of available data, reliability of production history, variability of grade encountered, mechanical, environmental, social or other issues, engineering and geological interpretation and operator judgment. Rates of production may be more or less than anticipated. Results of drilling, metallurgical testing and production, and the evaluation of mine plans subsequent to the date of any estimate may cause actual production to vary materially from such estimates. For these reasons we will provide updated guidance only when production of contained metal varies from previous guidance by a significant margin.

Capital Expenditures

In 2010, the Company plans to spend $49.5 million on capital with the bulk of the funds related to Mochito, Toqui and Myra Falls. Of the $15.9 million capital budget at Mochito, $9.4 million is for mine and mine development, $2.4 million is for mine equipment and $1.2 million is for delineation drilling. It is expected that approximately $9.8 million of Mochito's total will be spent in the first six months of 2010. At Toqui, of the $18.8 million to be spent, $4.8 million is for mill equipment, $8.4 million is for a paste plant; $2.3 million is for mine equipment, infrastructure and development and approximately $1.9 million is for power generation initiatives. It is expected that approximately $16.5 million of Toqui's capital expenditures will occur in the first six months of the year. Of the $10.0 million to be spent at Myra Falls, approximately $1.4 million is for surface projects, $3.9 million is for various development projects with the balance for mobile equipment, electrical upgrades, the mill and underground equipment. At Langlois, the $4.6 million is for a project to advance two ramps, one from surface to the top of zone 4 and one internal to zone 3. The Company has other capital projects that it may bring forward if metal prices and cash flow allow.


Capital Expenditures($ millions)                             2010 Projection
----------------------------------------------------------------------------
Mochito                                                                 15.9
Toqui                                                                   18.8
Myra Falls                                                              10.0
Langlois                                                                 4.6
Other                                                                    0.2
----------------------------------------------------------------------------
Total Capital                                                           49.5
----------------------------------------------------------------------------

Costs

The operating costs, on a production basis, at each mine are estimated to fall in the ranges set forth below:


                                         Production Costs (per tonne milled)
----------------------------------------------------------------------------
Mochito                                                        US$49 - US$54
Toqui                                                          US$51 - US$56Myra FallsC$112 - C$123

Exploration

The Company expects to spend $3.9 million on exploration expenses in 2010 with the objective of increasing the mineral resources (both measured and indicated and inferred) at Mochito in Honduras and at Toqui in Chile as well as meeting the Company's obligations under various joint venture agreements in Quebec, Canada. If market conditions, and the Company's financial position allow, additional exploration may be undertaken. The current forecast of exploration expenses is set forth in the following table.


Exploration Expenses ($ millions)                            2010 Projection
----------------------------------------------------------------------------
Mochito                                                                  1.6
Toqui                                                                    0.6
Quebec                                                                   1.7
----------------------------------------------------------------------------
                                                                         3.9
----------------------------------------------------------------------------

Key Assumptions

Sales

The Company's Canadian dollar gross sales revenues are affected by the United States dollar ("US$") denominated metals prices received and the exchange rate between the US$ and C$. With the current volatility in the markets, including the effect of government stimuli and interest rate decisions, it is difficult to forecast metal prices or exchange rates.

Mochito

Certain ground control issues have affected the mine off and on over the last several years necessitating the mining of ore in unaffected areas. While these issues are thought to be largely resolved, a recurrence could adversely affect the 2010 production. The current labour agreement with Mochito employees expires October 1, 2010. Meeting the above-noted production guidance for Mochito assumes a successful conclusion to labour negotiations.

Toqui

The 2010 mine plan at Toqui is focused on mining the zinc bearing deposits together with the gold bearing deposits and assumes a paste plant is installed and operational by mid-2010, as planned. Toqui's current labour agreement expires October 1, 2010. Meeting the above-noted guidance for Toqui assumes a successful conclusion to labour negotiations.

Myra Falls

The 2010 plan at Myra Falls is focused on mining in the Battle/Gap, the HW and the South Flank. Additionally, it assumes that normal weather patterns prevail throughout the 2010 period.

Langlois

While the suspension of operations at Langlois is considered temporary, management is taking a cautionary approach. To this end, the Company has initiated a project to advance two ramps, one from surface to the top of zone 4 and one internal to zone 3. The capital to be spent will be $4.6 million that is expected to be provided in the form of loans and a training and employment grant from a consortium of local, regional and provincial government agencies. In the interim Langlois will remain on care and maintenance. The Company continues to closely monitor economic conditions to determine when production should recommence.

SENSITIVITY TO METAL PRICES AND EXCHANGE RATES

The Company's cash flow and net earnings are sensitive to movements in the price of zinc, lead, copper, silver and gold and to the US$/C$ exchange rate. The following table provides the Company's estimates of the sensitivity of C$ cash flow to changes in the various metal prices and C$/US$ exchange rate movements based on the projections for 2010. The table assumes that all other prices and/or the exchange rate are held constant.


Variable                                Change       Sensitivity ($millions)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Zinc                      US10 cents per pound                         $11.8
Lead                      US10 cents per pound                          $2.3
Copper                    US20 cents per pound                          $2.0
Silver                          US$1 per ounce                          $1.5
Gold                           US$25 per ounce                          $1.0
Exchange rate                   C$/US$ 5 cents                          $3.8

2009 PRODUCTION RESULTS

The table below contains the Company's production for the periods presented.


                                      Fourth Quarter             Year
---------------------------------------------------------------------------
                                      2009       2008       2009       2008
---------------------------------------------------------------------------
Tonnes Milled                      425,820    486,727  1,673,434  2,272,740
 Zinc (%)                              6.6        6.4        5.9        6.7

Concentrate Production (tonnes)
Zinc:
 Mochito                            20,339     12,198     68,552     53,757
 Toqui                               9,799     15,253     40,665     64,776
 Myra Falls                         17,549     14,161     57,838     66,051
 Langlois(1)                             -     11,175          -     71,868
---------------------------------------------------------------------------
                                    47,687     52,787    167,055    256,452
---------------------------------------------------------------------------
Copper:
 Myra Falls                          3,802      4,039     14,404     21,569
 Langlois(1)                             -      1,475          -     10,661
---------------------------------------------------------------------------
                                     3,802      5,514     14,404     32,230
---------------------------------------------------------------------------
Lead:
 Mochito                             7,230      4,943     22,110     18,865
 Toqui                                 345      1,193      1,927      5,395
---------------------------------------------------------------------------
                                     7,575      6,136     24,037     24,260
---------------------------------------------------------------------------

Gold:
 Toqui                               2,693      1,549      9,162      2,895
 Myra Falls                              -          -          2          -
---------------------------------------------------------------------------
                                     2,693      1,549      9,164      2,895
---------------------------------------------------------------------------
Total                               61,757     65,986    214,660    315,837
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) On November 2, 2008, Langlois operations were temporarily suspended.

The table below summarizes the Company's metal contained in concentrate, before smelting deductions, for the periods presented.


                          Fourth Quarter                   Year
                   ---------------------------------------------------------
Metal in
 Concentrate             2009      2008      %      2009      2008         %
                   ---------------------------------------------------------
Zinc (tonnes)
 Mochito               10,683     6,470    65%    36,370    28,462       28%
 Toqui                  4,815     7,518   -36%    19,635    31,992      -39%
 Myra Falls             9,113     7,659    19%    30,900    35,762      -14%
 Langlois(1)                -     6,046      -         -    38,620         -
                   ---------------------------------------------------------
                       24,611    27,693   -11%    86,905   134,836      -36%
                   ---------------------------------------------------------
Copper (tonnes)
 Myra Falls               893       895      -     3,349     5,024      -33%
 Langlois(1)                -       281      -         -     1,994         -
                   ---------------------------------------------------------
                          893     1,176   -24%     3,349     7,018      -52%
                   ---------------------------------------------------------
Lead (tonnes)
 Mochito                4,798     3,305    45%    14,471    12,545       15%
 Toqui                    172       670   -74%     1,025     2,796      -63%
                   ---------------------------------------------------------
                        4,970     3,975    25%    15,496    15,341        1%
                   ---------------------------------------------------------
Gold (ounces)
 Toqui                 13,102     9,758    34%    44,079    23,085       91%
 Myra Falls             5,873     2,870   105%    15,526    13,994       11%
                   ---------------------------------------------------------
                       18,975    12,628    50%    59,605    37,079       61%
                   ---------------------------------------------------------
Silver (ounces)
 Mochito              540,972   431,849    25% 1,855,018 1,894,835       -2%
 Toqui                 51,470    94,899   -46%   233,382   343,457      -32%
 Myra Falls           222,309   134,897    65%   578,008   661,228      -13%
 Langlois(1)                -    43,424      -         -   298,863         -
                   ---------------------------------------------------------
                      814,751   705,069    16% 2,667,408 3,198,383      -17%
                   ---------------------------------------------------------
(1)On November 2, 2008, Langlois operations were temporarily suspended.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca

Breakwater Resources Ltd. Initiates Development at Langlois Mine

Tue, 19 Jan 2010 16:29:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 01/19/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) has initiated a project at Langlois to advance two ramps, one from surface to the top of zone 4 and the second, internal to zone 3. The capital to be spent will be $4.6 million which is expected to be provided in the form of loans and a training and employment grant from a consortium of local, regional and provincial government agencies.

In making this announcement, David Petroff, President and Chief Executive Officer said, "The recent strength in the price of zinc has moved us closer to reopening Langlois. We intend to proceed cautiously while we rebuild our balance sheet."

Breakwater is a mining, exploration and development company which produces and sells zinc, copper, lead and gold concentrates to customers around the world. The Company's concentrate production is currently derived from three mines in Chile, Honduras and Canada. As noted above Breakwater's Langlois mine in Quebec, Canada remains on temporary care and maintenance.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca

Breakwater Enters Into Royalty Agreements

Wed, 30 Dec 2009 18:32:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 12/30/09 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) has entered into royalty agreements with Red Mile Resources No. 15 Limited Partnership ("Red Mile") and Ronpam Resources Limited Partnership ("Ronpam") whereby Breakwater sold basic royalties on a portion of the payable zinc production, over the life of the Myra Falls mine. Breakwater received cash of $69.4 million, which included royalty income of $62.6 million and fees and interest of $6.8 million.

Under the terms of the royalty agreements, the Company is required to make basic royalty payments at fixed amounts per pound of payable zinc produced, which escalates from $0.022 per pound to $0.193 per pound for the Red Mile royalty and from $0.015 per pound to $0.043 per pound for the Ronpam royalty over the first eleven years of the respective royalty agreements. In addition, in years 2015 through 2019 if the price of zinc in a given calendar year averages above US$4,250, US$4,500 or US$4,750 per tonne, the Company granted Red Mile a net profit interest of 4.50%, 4.70% or 4.90% respectively and granted Ronpam a net profit interest of 0.75%, 1.00% or 1.25% respectively. Of the cash received, $62.6 million was placed with a financial institution, for which the Company took back promissory notes. Interest earned from the promissory notes will be used to fund the expected basic royalty payments during the initial years of the royalty agreements. Over the remaining years of the royalty agreements, interest and principal from the promissory notes will be used to fund the basic royalty payments.

The balance of the funds received of $6.8 million will be used for general corporate purposes.

Under certain circumstances the Company has the right, by way of a call option, to acquire the partnership units of Red Mile and Ronpam for the lower of market value or for the outstanding amount of the promissory note.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice-President, Investor Relations
(416) 363-4798 Ext. 277

Breakwater Resources Ltd. Myra Falls Production Restarted

Wed, 18 Nov 2009 12:04:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 11/18/09 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) Production employees returned underground yesterday and the mill restarted this morning. The Myra Falls mine site is still experiencing high levels of precipitation, currently in the form of snow, requiring careful ongoing monitoring and management. As always the safety of our employees is our paramount concern and production decisions will be made on a day-to-day basis until the high levels of precipitation abate.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca

Breakwater Resources Ltd. Myra Falls Production Update

Mon, 16 Nov 2009 18:03:00 -0500

TORONTO, CANADA -- (MARKET WIRE) -- 11/16/09 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) -

Excessive rain and snow melt has created a considerable amount of water runoff at our Myra Falls mine site. In consideration for the safety of our employees the Company has evacuated the underground workings. Required personnel will remain on site to manage the situation. The Company will provide updates as appropriate.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca

Breakwater Resources Ltd.: Myra Falls Production Hoist Returned to Service

Mon, 16 Nov 2009 12:10:00 -0500

TORONTO, ONTARIO -- (MARKET WIRE) -- 11/16/09 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) - The damaged electrical switch gear controlling the production hoist at Myra Falls has been replaced and the production hoist was returned to service yesterday, Sunday, November 15, 2009 at approximately 1:00 pm (PT). Annual production is expected to be within about five percent of the Q3 production guidance for Myra Falls.

Contacts:
Breakwater Resources Ltd.Ann Wilkinson
Vice President, Investor Relations
416-363-4798 Ext. 277
AWilkinson@breakwater.ca