WesternZagros Resources Ltd.

WesternZagros Resources Ltd.

March 10, 2011 17:12 ET

WesternZagros Resources Closes Cdn$43 Million Private Placement Financing

CALGARY, ALBERTA--(Marketwire - March 10, 2011) -


WesternZagros Resources Ltd. (TSX VENTURE:WZR) ("WesternZagros" or the "Company") is pleased to announce that it has closed its previously announced private placement offering (the "Offering") of common shares of the Company (the "Shares"). The Company sold, through a syndicate of agents, 89,665,352 Shares at a price of Cdn$0.48 per share for gross proceeds of Cdn$43 million. The Shares issued under the Offering are subject to resale restrictions until July 11, 2011 in accordance with applicable Canadian securities laws.

Paulson & Co. Inc. ("Paulson"), through funds which it controls, purchased 21,561,000 Shares in the Offering. Soros Fund Management LLC ("Soros"), through funds which it controls, purchased 20,833,000 Shares in the Offering. To the Company's knowledge, this results in Paulson increasing their direction or control over the Company's outstanding Shares from 17.5% to 19.5%, and Soros increasing their direction or control over the Company's outstanding Shares from 11.1% to 14.8%. In addition, certain directors and officers of the Company purchased an aggregate of 4,061,494 Shares pursuant to the Offering, resulting in these directors and officers holding 4.1% of the outstanding Shares. Due to the fact that neither the fair market value of the Shares purchased by such insiders, nor the consideration paid therefore, exceeded 25% of the Company's market capitalization, as calculated in accordance with Multilateral Instrument 61-101, an exemption was available under such instrument from the requirement to obtain shareholder approval of such insiders participation in the Offering. In addition, since the Shares of the Company are listed only on the TSX Venture Exchange, the Company was also exempt from any formal valuation requirements under such instrument.

The syndicate of agents was led by TD Securities Inc. and Scotia Capital Inc. and included Macquarie Capital Markets Canada Ltd., RBC Capital Markets and Stifel Nicolaus Canada Inc. (collectively the "Agents"). In connection with the Offering, the Agents received a fee of approximately Cdn$1.8 million of the gross proceeds of the Offering, resulting in net proceeds to the Company of Cdn$41.2 million.

The net proceeds from the Offering will be used by the Company for: the drilling of the Company's Sarqala-1 re-entry well and the Mil Qasim-1 exploration well; future exploration on the Company's oil & gas properties; and for working capital and general corporate purposes.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The common shares being offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of the U.S. Securities Act.

About WesternZagros Resources Ltd.

WesternZagros is an international natural resources company engaged in acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. WesternZagros, through its wholly-owned subsidiaries, holds a Production Sharing Contract with the Kurdistan Regional Government in the Kurdistan Region of Iraq. WesternZagros' shares trade in Canada on the TSX Venture Exchange under the symbol "WZR".

This news release contains certain forward-looking information relating, but not limited, to future drilling plans and testing programs and the proposed use of proceeds from the Offering. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", or similar words suggesting future outcomes. The Company cautions readers not to place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by WesternZagros. Readers are also cautioned that disclosed test rates and potential production rates may not be indicative of ultimate production levels. In addition, the forward-looking information is made as of the date hereof, and the Company assumes no obligation to update or revise such to reflect new events or circumstances, except as required by law.

Forward-looking information is not based on historical facts but rather on management's current expectations and assumptions regarding, among other things, plans for and results of drilling activity, future capital and other expenditures (including the amount, nature and sources of funding thereof), continued political stability, timely receipt of any necessary government or regulatory approvals, the continued participation of the Company's co-venturers in exploration activities and the timely receipt of any insurance proceeds due to the Company. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by WesternZagros including, but not limited to, risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; interruptions in operations together with any associated insurance proceedings; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), risks associated with resource estimates, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. For further information on WesternZagros and the risks associated with its business, please see the Company's Annual Information Form dated March 24, 2010, which is available on SEDAR at www.sedar.com.


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