Breakwater Provides Initial Exploration Results on Mina Profunda Gold-Zinc Project, Toqui Mine, Chile

Breakwater Provides Initial Exploration Results on Mina Profunda Gold-Zinc Project, Toqui Mine, Chile

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TORONTO, ONTARIO--(Marketwire - March 3, 2008) - Breakwater Resources Ltd. (TSX:BWR) has received initial exploration results for the Mina Profunda gold project area located directly underneath Dona Rosa and Aserradero. This exploration program is part of a 3,600 metre underground drill program investigating several sectors of the Toqui mine including Estatuas, Dona Rosa and Aserradero.


The first seven holes drilled along a north-south trend immediately beneath Dona Rosa have confirmed the continuity of gold mineralization within a separate calcareous sandstone horizon at a depth of almost 60 metres below mine workings. Drilling, spaced at 25 metre intervals, returned high grade gold intersections with average core intercepts of 12 metres. Exploration drilling will continue to infill this area.


Preliminary assay results received to date from our 2008 program are shown in the table below. Refer to map for location of recent drilling.



Drill-Hole Dip Azimuth Total From To Core True Zn Au
Length (m) (m) Length Thickness (%) (g/t)
(m) (m) (m)
------------------------------

--------------------------------------------
DAS-03 -90 27 235.2 196.8 209.1 12.3 11.3 2.6 8.3
degrees degrees
--------------------------------------------------------------------------
LCS-01 -53 216 75.6 51.1 70.4 19.3 16.9 1.7 3.5
degrees degrees
--------------------------------------------------------------------------
LCS-02 -49 167 102.8 71.4 85.0 13.6 8.7 2.3 14.6
degrees degrees
--------------------------------------------------------------------------
LCS-03 -64 158 75.2 53.3 65.5 10.7 9.3 3.5 6.1
degrees degrees
--------------------------------------------------------------------------
LCS-04 -69 324 60.1 45.5 57.6 12.1 11.3 3.5 9.2
degrees degrees
--------------------------------------------------------------------------
LCS-05 -48 359 92.2 76.2 84.2 8.0 5.5 3.6 0.5
degrees degrees
--------------------------------------------------------------------------
LCS-06 -72 84 77.5 61.6 72.1 10.5 7.9 2.6 4.4
degrees degrees
--------------------------------------------------------------------------
LCS-12 -89 304 56.1 38.2 51.1 12.9 11.9 3.4 9.9
degrees degrees
--------------------------------------------------------------------------




Exploration drilling over the last two months has tested a 20 metre thick tuffaceous-calcareous sandstone horizon located 40 to 60 metres beneath the upper fossiliferous limestone that hosts the main mineralization at Toqui. A rhyolitic intrusive sill, 35 to 60 metres thick, separates the two units. This deeper horizon was first recognized in 2000 when several surface drill holes (including DAS-03 which graded 8.3 g/t gold and 2.6% zinc over a true thickness of 11.3 metres) intercepted significant gold anomalous values. The recent drill results demonstrate that gold mineralization is an important component at Toqui and greatly increases the potential for a large gold-zinc skarn system within an untested stratigraphic horizon. This gold-zinc mineralized zone remains open, and additional drilling will test the areas along strike in the immediate future.


Access to this new area is possible from the development headings currently being driven to access the Porvenir deposit.


Breakwater is a mineral resource company engaged in the acquisition, exploration, development and mining of base metal and precious metal deposits in the Americas and North Africa. Breakwater has four producing zinc mines: the Mochito mine in Honduras; the Toqui mine in Chile; the Myra Falls mine in British Columbia, Canada; and the Langlois mine in Quebec, Canada.


The exploration programs at El Toqui are under the supervision of Torben Jensen, P.Eng. who is a qualified person as defined by National Instrument 43-101. All core samples are split in half at the drill site, with one-half of the core sample sent to Andes Analytical Assay Ltda. in Santiago for sample preparation and analysis by atomic absorption and fire assay for the gold values and high silver values. The other half of the core sample is retained on site. The pulp samples are sent to Assayers Canada in Vancouver, British Columbia for further analysis by ICP methods.


Forward-looking Statements


The information in this news release has been prepared as at March 3, 2008. Certain information included in this news release constitutes "forward-looking statements". The words "expect", "will", "intend", "estimate" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to, risks associated with the mining industry such as government regulation, environmental and reclamation risks, title disputes or claims, success of mining activities, future commodity prices, costs of production, possible variation in mineral reserves, mineral resources, grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, the timing of estimated future production, capital expenditures, financial market fluctuations, requirements for additional capital, conclusions of economic evaluations, limitations on insurance coverage, risks associated with using third-party contractors, inflation as well as those factors discussed in the Company's most recent Annual Information Form on file with Canadian provincial securities regulatory authorities.


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


To view a map of the Mina Profunda Project, please click on the link below:


http://media3.marketwire.com/docs/bwr303.pdf



FOR FURTHER INFORMATION PLEASE CONTACT:

Breakwater Resources Ltd.
Torben Jensen, P.Eng.
Vice President, Engineering
(416) 363-4798 Ext. 232


or

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



© 2008 The Globe and Mail

Gold Bugs Predict Doom And Gloom-Lee Rogers

New tax-free account means there's planning ahead

PORTFOLIO STRATEGY

New tax-free account means there's planning ahead
Rob Carrick's ideas for managing your investments
Headshot of Rob Carrick

ROB CARRICK

March 1, 2008

In the financial world, people who use savings accounts, guaranteed investment certificates and bonds are second-class citizens.

The Tax-Free Savings Account introduced in the federal budget this week goes a long way toward eliminating this bias. For many people, this will be the new program's chief benefit when it kicks in starting in 2009.

From a tax point of view, there is no distinction between money earned through salary and the interest paid by GICs and the like. Dividends and capital gains both get special treatment that allows their after-tax returns to crush those from anything paying interest.

TFSAs are an investing equalizer. No matter what you put in it, and you can invest in all the same things as you can with an RRSP, you don't pay tax on your gains. Nor is there any tax to pay when you withdraw money from a plan.


The Globe and Mail

All of this highlights the fact that investors have some planning to do in the lead-up to the introduction of this new program next year (the usual proviso for minority governments applies, of course). To start with, TFSAs are ideal for interest-paying savings and investments.

If all your investments are tied up in your registered retirement savings and education plans, then a TFSA will be a perfect receptacle for your short-term savings and emergency funds. You'll want to use a high-interest savings account from the likes of President's Choice Financial, ING Direct, Manulife Financial, ICICI Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia, Citizens Bank of Canada, Canadian Tire Bank and more. Regular bank savings accounts are pointless in this or any other application because they pay only trace amounts of interest at best.

Critics of the TFSA point out that the tax benefits are small if you use even high-interest accounts for savings. An Alberta resident who earns $75,000 a year might pay all of $72 in tax on $5,000 invested a 4-per-cent high-rate savings account for a year. Still, it's a no-brainer to use a TFSA to protect that $72.

People with investments outside their registered plans need to think strategically about how they'll use TFSAs. Again, though, interest-paying investments look like a top candidate for inclusion in these plans.

On reading the budget this week, Kevin Dancey, president and CEO of the Canadian Institute of Chartered Accountants, immediately singled out strip bonds as being an ideal TFSA investment. Strips are bought at a discount to their value at maturity, and the differential is computed into an annualized yield. You don't actually get the usual interest payments each year with a strip, but you'll pay tax as if you did. Not in a TFSA, though.

David Shymko, a financial adviser in Vancouver with Macdonald, Shymko & Co., said he sees TFSAs primarily as a tool collecting interest income. "Dividends would be wasted in there, just as they're wasted in registered accounts."

A well-hidden budget provision will slightly raise personal income tax rates on dividends starting in 2010, but your marginal tax rate on dividends (that's the tax rate on your last dollar earned) can in some cases be much less than half of what it is for interest income.

TFSAs and investing for dividends and capital gains aren't necessarily incompatible, however. It all depends on how extensive your non-registered investments are. If you have a large, diversified portfolio, you'll want to keep interest-paying investments in the TFSA and your stocks outside. If you have small non-registered holdings, it can make sense to consolidate in a TFSA and let the portfolio ride for the long term. When you finally get around to withdrawing funds from your plan, the taxes you avoid could be significant. Quite likely, they'd outweigh the benefits of using a TFSA for interest-paying investments only.

The most notable feature of the TFSA may be its utility for virtually every demographic above the age of 18. For example, seniors are expected to be avid users. First, they'll be able to save or invest any surplus funds from their registered retirement income fund withdrawals in a tax-sheltered format. Second, any money they pull out of a TFSA won't affect their income in a way that negatively affects their eligibility to receive Old Age Security and other government benefits.

There are a couple of tax wrinkles with TFSAs that will lessen their appeal to aggressive stock traders.

In a conventional investment account, you can get some use out of your dud stocks by applying losses against taxable capital gains. Capital losses in a TFSA are wasted. There's also no point in using borrowed money to invest in a TFSA because you won't be able to deduct interest costs like you can in a regular investment account.

Investors with existing non-registered savings and investments may be wondering how they can get these assets into a TFSA. If you transfer stocks or mutual funds over, it's considered a sale and you'll be liable for taxes on any applicable capital gains. GICs will be tricky because they're not a liquid asset.

"We honestly haven't gone into those kinds of issues yet," said Linda Knight, president of BMO Mutual Funds. "The reality is, people who have non-registered savings and investments now are going to want to use this vehicle. So we'll look at how to make that transfer as advantageous and easy as possible."

Another issue that still needs to be resolved is whether financial institutions will charge annual administration fees on TFSAs, just as they do with RRSP and RESPs. "Even if they get $10 or $15 registration fees, this will be a nice program for the banks, or other financial institutions," Mr. Shymko said.

Regardless of how you plan to use a TFSA, don't open one before you check the fees. There are bound to be some no-fee TFSAs offered and they're the ones that will be most attractive.

Taxes and the TFSA

Starting in 2009, the new Tax-Free Savings Account will allow you to invest $5,000 a year without paying taxes on your gains or your withdrawals. What investments should go in a TFSA? One way to decide is to look at how much of a benefit you'll get from the tax sheltering provided by a TFSA.
Marginal tax rates on investment income ('07 tax year)
TFSA Non-Registered (%)
B.C. resident making $50,000 per year
Interest income 0 30.7
Dividend income* 0 4.4
Capital gains 0 15.3
Ontario resident making $100,000 per year
Interest income 0 43.4
Dividend income* 0 20.3
Capital gains 0 21.7
Nova Scotia resident making $150,000 per year
Interest income 0 48.3
Dividend income* 0 28.4
Capital gains 0 24.1

*applies to eligible dividends paid by corporations; also, taxes on dividends will rise slightly starting in 2010

SOURCE: ERNST & YOUNG TAX'S ONLINE 2007 PERSONAL TAX CALCULATOR

*****

TFSA ABCs

Basic concept: A vehicle for tax-free savings and investment available to anyone 18 and older.

Start date: 2009

limits: $5,000 per year to start.

Tax on gains: Nil

Tax on Withdrawals: Nil

Deductions: Nil

Unused Contribution: Available to carry forward.

Funds Taken Out: Withdrawals are added back to your total contribution room.

Allowable Investments: Same as RRSPs, which means stocks, bonds, funds and savings accounts.

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