October 31, 2002

CanZinco Ltd., a wholly owned subsidiary of Breakwater Resources Ltd., announced

today that the Nunavut Water Board (“NWB”) approved the issuance of a water license

(the “License”), on certain conditions, in connection with the closure and reclamation of

the Nanisivik Mine in Nunavut.

Operations at the Nanisivik Mine ceased on September 30, 2002 but reclamation

activities continue. The License requires CanZinco to submit for approval certain studies

and plans including a final closure and reclamation plan, a Phase II Environmental Site

Assessment and Ecological Human Health Risk Assessment within six months. Work on

these studies and others has already been initiated and it is anticipated that these studies

will be completed before year end. The NWB has reserved the right to amend or vary the

License upon review of the additional studies and plans.

The Mine Site Reclamation Policy for Nunavut was issued by the Department of Indian

Affairs and Northern Development Canada while the hearings on this matter were being

conducted. The new policy asks the NWB to require licensees to furnish financial

security for closure and reclamation activities based on a calculation of reclamation costs.

The NWB in applying the new policy, issued the License on the condition that CanZinco

provide, on or before November 9, 2002, financial security in the amount of $17.6

million, $6.0 million of which has already been furnished pursuant to the expired water

license, and that Breakwater guarantee the security. Breakwater has guaranteed the

difference between the $6.0 million of security and CanZinco’s estimated reclamation

costs of $9.2 million.

In previous applications for renewal water licenses and other public documents,

CanZinco had estimated the cost of Nanisivik’s closure to be as high as $12.0 million,

with that amount including severance and other payments made to terminated employees.

The revised closure cost estimate of $9.2 million excludes severance payments and is

based on a more detailed analysis of costs, incorporating information provided by third

party contractors and outside consultants.

To date, CanZinco has expended approximately $1.1 million on actual reclamation work

at the site and has approximately $2.9 million of supplies and materials on site that are

specifically designated for the reclamation exercise. The cost of work already completed

as well as the purchase of materials earmarked for the reclamation are included in

CanZinco’s estimate of $9.2 million for closure costs.

CanZinco will apply to the NWB for a reduction in the amount of security required

pursuant to the License. In the Reasons for the Decision of the NWB, it recognizes that

CanZinco knows the site better than the government consultant and has studies from test

cells and cover designs, which the government consultant does not. CanZinco will make

further submissions to the NWB when it has completed the required studies and reports.

In the interim, CanZinco will request an extension of time to provide the financial

security.

CanZinco has also commissioned an independent “order of magnitude” valuation of the

infrastructure and other assets in place at Nanisivik and is confident that the value of the

site assets far exceeds the amount of security required by the NWB.

For further information contact:

Bill Heath

Vice President, CanZinco Ltd.

Tel: (416) 363-4798 ext. 267