TORONTO, December 29 2005… BREAKWATER RESOURCES LTD. (TSX - BWR) announces that it has entered into a Royalty Agreement ("Agreement") with Red Mile Resources No. 4 Limited Partnership ("Red Mile") whereby Breakwater sold a basic royalty on a portion of the payable zinc production, over the life of the Myra Falls Mine. The Company received cash of $56.5 million, which included royalty income of $50.5 million and fees and interest of $6.0 million.

Under the terms of the Agreement, the Company is required to make basic royalty payments at fixed amounts per pound of payable zinc produced, which escalates from $0.002 per pound to $0.079 per pound over the first twelve years of the Agreement. In addition, the Company granted Red Mile a Net Smelter Return of 1.5%, 2.25% or 3.0% in years 2011 through 2015 if the price of zinc in a given calendar year averages US$2,600, US$2,800 or US$3,000 per tonne respectively. $50.5 million of the cash received was placed with a financial institution, for which the Company took back a promissory note. Interest earned from the promissory note will be used to fund the expected basic royalty payments during the first five years of the Agreement. Over the remaining years of the Agreement, interest and principal from the promissory note will be used to fund the basic royalty payments.

The balance of the funds received of $6.0 million will be used for working capital and capital requirements at the Myra Falls Mine.

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

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 three producing zinc mines: the Myra Falls mine in British Columbia, Canada; the El Mochito mine in Honduras; and the El Toqui mine in Chile. The Company is also developing the Langlois mine in Canada. Cautionary Note on Forward-Looking Statements.

Certain statements included in this news release are forward-looking statements, which are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. They include estimates and statements that describe the Company's future plans, objectives and goals, including words to the effect that the Company or management expects a stated condition or result to occur. When used herein, phrases such as "will be", "is required" and "has the right" and other similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve inherent risks and uncertainties and are subject to other factors, many of which are beyond our control, that may cause the actual results or performance to differ materially from those expressed or implied by such forward-looking statements. Such factors include, among others, fluctuations in ore grade, geological and environmental risks, problems during the development, construction and start-up phases of an underground mine, and inadequacy of environmental insurance. For a more comprehensive review of risk factors, please refer to the Company's most recent annual report under "Management's Discussion and Analysis of Financial Results" and Form 40-F under "Risk Factors" on file with the Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission filed on SEDAR at www.sedar.com. The Company disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise. Readers are cautioned not to put undue reliance on these forward-looking statements.

Should you require further information please contact:

Richard Godfrey

Vice President, Finance and Chief Financial Officer

416-363-4798 Ext. 276

rgodfrey@breakwater.ca

Ann Wilkinson

Vice President, Investor Relations

416-363-4798 Ext. 277

awilkinson@breakwater.ca