3SOF

About BWLRF:

Breakwater Resources Ltd. (Breakwater), incorporated in 1979, is a base metals mining company that produces zinc, lead, copper and gold concentrates.

Primarily it looks like they mine ZINC though produced silver,copper, and gold as well throughout the year. All the resources i used placed them under the gold & silver industry though i compared them to the metal mining industry as well.

BWLRF growth in eps in 2006 has been quite amazing. In the years 04 and 05 bwlrf managed to squeeze out some profitability reporting .01 and .04 for 04' and 05'. In Feb they reported their full year 2006 results with .37eps which was a 825% increase in income from 2005 to 2006. BWLRF is managing to sustain this sudden rise income and are expected to grow to an annual .50 eps for 2007 and .60 eps for 2008 with increased revenues. It appears that things are leveling off into 2008 estimates but i think BWLRF looks way undervalued here especially when we compare it to the industry averages and to a similar company RNO. Comparison of the Industry averages are on the chart below.

2006 highlights:
HIGHLIGHTS
• The Company realized net earnings of $156.5 million or $0.41 per share in 2006 compared with $14.0 million or $0.04 per share in 2005, a $142.5 million increase
• The contribution from mining activities was $168.5 million in 2006 compared with $29.6 million in 2005
• Net cash provided by operating activities increased by $139.8 million to $158.5 million in 2006 and was primarily used for $75.7 million of capital expenditures and $16.6 million of debt repayment
• At December 31, 2006, cash and cash equivalents were $81.4 million and total debt was $2.7 million
• Gross sales revenue increased by 44.5% to $452.2 million in 2006 from $313.0 million in 2005
• Development of the Langlois mine is on track to commence commercial production by mid-2007
• Mineral reserves at Langlois increased by 10% and mineral resources increased by 14% through the addition of the Grevet B deposit
• Exploration success at Langlois prompted the Company to stake an additional 4,000 hectares surrounding the Company's land package
• Development of El Toqui's Concordia deposit is on track and production is anticipated by mid-2007
• On the Coulon joint venture with Virginia Mines Inc., exploration carried out during 2006 led to the discovery of two new significant polymetallic lenses, bringing the total known lenses to five, and confirmed the vertical continuity of lens 9-25 to a depth of 365 metres

Explaining the comparison to RNO, which is primarily a gold stock, but there both mining companies and very similar in fundamentals. There both around the same size company with BWLRF= 746m cap and RNO=731.2m cap though BWLRF seems way undervalued compared to RNO. BWLRF is only trading at 4.86x earnings while RNO is trading more than double BWLRF's P/E at 10.19x. The gold and silver industry average is trading at 26.6x so we could say they both look undervalued from a P/E perspective. P/S ratio for BWLRF is currently trading at 2.3x while RNO is trading at 3.18x making BWLRF more attractive from this perspective as well. Essentially RNO is trading at prices more than double that of BWLRF's share price when the companies fundamentals and future earnings estimates are almost identical making BWLRF look a lot cheaper given the financial information and a lot better value buy, as well as a much better chart for entry at the moment

Though the thing that discourages me from BWLRF is that they have more than double the outstanding shares of RNO. Current Outstanding shares are 385m and fully diluted including warrents expiring in 2009 there are 459m outstanding shares which doesn't appeal to me at all. So if BWLRF doubled from here to trade at 4 to catch up to RNO's P/E ratio then is BWLRF really worth $1.5b? more than double that of RNO's value? I guess that is a possibility with revenues and income nearly double that of RNO's

I don't like the O/S shares situation with BWLRF but the chart is extremely bullish and fundamentals look good so i think its worth speculating on with a smaller position as resource stocks have been bullish lately.

This months analysts recommendations: 5 issued a buy, 2 issued strong buy for BWLRF

Buying 1/3 position in BWLRF.OB for todays session.
strategic pull-back entry could be near yesterdays midpoint candle, or a retest near support around 1.8

Man ive been looking over this same damn stock for the last 5 hours debating with it and my instincts. This sucker better make me some money be cautious with your decision to enter a position here and do some of your own DD, i usually don't debate my positions with my instincts and the information given for 5 hours before i make a decision to buy................... which is why im only betting 1/3 position here, as well as  why i didn't have time to update any of the other stocks for todays session............ Sorry 

-fous

Hi,
thanks for your tip! I am going in tomorrow, but I am afraid of Nasdaq is going down again and can take along with BWLRF (like at the end of February).

And what about NTO - that one is not comparable IYO? Would you mind to discuss with that stock another 5 hours???
P.S. Sorry for my English

Good Luck!
nexta