February 1, 2002…..(TSE..BWR) Breakwater Resources Ltd. is pleased to announce certain changes to arrangements with its banking syndicate and its major shareholder, Dundee Bancorp Inc. ("Dundee"). As previously announced, the banking syndicate has agreed to increase Breakwater's existing term loan by US$6.5 million with a new maturity date of January 2, 2003. The full US$6.5 million has been guaranteed by Dundee. For providing its support for these arrangements, Breakwater had previously agreed to issue to Dundee a warrant to purchase up to 50,000,000 common shares of Breakwater. This payment to Dundee was subject to regulatory approval. Regulatory approval has been received for the issue of an initial warrant to Dundee to purchase up to 15,400,705 shares and a further warrant to be issued following the completion of the previously announced rights offering as described below. The exercise price of each of the warrants issued to Dundee will be $0.20 per common share and the warrants will expire five years from the date of issue. Prior to the rights offering, in the event that the initial warrant is exercised in full, the percentage ownership interest of Dundee in Breakwater would increase to approximately 38.5% on a partially diluted basis from its present 28.5%.

As part of its financial plan, Breakwater intends to offer its shareholders the right to acquire one share for each share held. On the completion of this rights offering, Breakwater will only issue the further warrant to Dundee to the extent required in order to ensure that Dundee holds warrants to purchase up to the number of common shares of Breakwater such that, in the event that the warrants were exercised in full, the percentage ownership interest of Dundee in Breakwater would remain at approximately 38.5% on a partially diluted basis. Based on 100% of the rights being exercised with Dundee exercising its allocated rights, Breakwater will issue the further warrant to Dundee to purchase up to 15,400,705 shares under the same terms and conditions as the previous warrant.

Breakwater’s business plan and its agreement with the banking syndicate include the capital expected to be raised by the proposed rights issue. Dundee has agreed to the significant reduction in the number of warrants in order to give Breakwater the necessary ability to proceed immediately with its announced rights offering. The receipt of regulatory approval for a reduced number of warrants eliminates the need and substantial expense of seeking further approvals at a special meeting of shareholders and allows Breakwater to proceed with its business plan. The Company intends to file a preliminary prospectus shortly.

This news release contained forward-looking statements. When used in this news release the words “anticipate”, “believe”, “intend”, “estimate”, “plans”, “projects”, “expect”, “will”, “budget”, “could”, “may”, and similar expressions are intended to identify forward-looking statements. To the extent that this news release contains forward-looking statements regarding operating results or business prospects please be advised that the actual operating results and business performance of the Company may differ materially from that anticipated, projected or estimated in such forward-looking statements.

Should you require further information please contact:

C. K. Benner

President and Chief Executive Officer

416-363-4798 Ext. 269

cbenner@breakwater.ca

René R. Galipeau

Executive Vice President and Chief Financial Officer

416-363-4798 Ext.260

rgalipeau@breakwater.ca