Delay in Publication of 1999 Zarara Financials and Developments Concerning Parent Company, Mawenzi Resources Limited.

Business Editors

DUBAI, United Arab Emirates--(BUSINESS WIRE)--June 29, 2000

As a result of factors arising from the developments reported by Mawenzi, Zarara's (OTC:ZARAF.OB)(Ofex:ZOG) 83% shareholder, in a press release dated 23 June, 2000 (as reproduced below) and issues relating to loans made by that company to Zarara in 1999, the audit of the 1999 report and accounts could not commence until 5 June, 2000.

It is anticipated that Zarara will be able to report its 1999 results in mid-July. On 23 June, 2000 Mawenzi Resources Ltd, issued the following statement:

MAWENZI RESOURCES LIMITED REGISTRATION NO: 1901/01078/06) ("MAWENZI" OR "THE COMPANY")

RESTRUCTURING, PROFIT WARNING AND FURTHER CAUTIONARY ANNOUNCEMENT

1. RESTRUCTURING

The directors of Mawenzi wish to inform shareholders of the following recent developments:

1.1 The offer for Zarara

The offer made by Mawenzi in October 1999 to acquire Zarara Oil and Gas Limited ("Zarara") closed on 9 June 2000 after a number of extensions to the closing date of the offer. Mawenzi has acquired 40 662 249 Zarara shares in terms of the offer and now owns 83.33% of the issued share capital of Zarara. Zarara will continue to be listed on [the OTC Bulletin Board] NASDAQ. Mawenzi has issued 81 324 498 ordinary shares to the Zarara shareholders in settlement of the purchase consideration. This has had the effect of increasing Mawenzi's issued share capital from 174 252 898 shares to 255 577 396 shares.

1.2 Reconstitution of the board of directors

The following directors resigned on 2 June 2000: Executive directors: Dr KJ Atkins, Messrs G Brummer and SM Xayiya. Non-executive directors: Mrs Tam Mokhobo, Messrs S Ndukwana and SP Ngwenya.

The board of directors has been reconstituted as follows: Messrs MG Khumalo (non-executive chairman), SS Yahya (chief executive), LM Carroll (chief operating officer), DM Zondi and DC Shreve.

1.3 Restructuring

The directors have embarked on a restructuring of Mawenzi with a view to focusing the company on investments in the energy resources sector. Shareholders will be informed shortly in this regard.

1.4 Disposal of the commercial property portfolio

The restructuring of the Company has resulted in a delay in the mailing of the circular to shareholders of Mawenzi in which details of the disposal of the commercial property portfolio will be set out. This transaction was announced in the press on 5 may 2000. It is expected that the circular will be mailed on or about 30 June 2000.

2. PROFIT WARNING

2.1 Developments in Mozambique

During February 2000, Zarara and the Sasol Limited Group entered into an agreement whereby Sasol acquired Zarara's 4,76% interests in the Temane and M-10 permit areas in Mozambique for a [cash consideration] Furthermore, Zarara has increased its interest in the Sofala permit area from 4,76% to 10%.

Zarara has also finalized a previous in-principle agreement to increase its interest in the Buzi permit area from 25% to 98% by acquiring the additional shareholding from Scimitar Production International Limited in exchange for a royalty arrangement based on production.

2.2 Developments in Thailand

In May 1999, Zarara entered into an agreement whereby it would earn a 50% interest in the SW1 concession area of the Thailand oil fields in exchange for paying 100% of the drilling and completion costs for four wells. To date, Zarara has spent US$1,663 million on the drilling of two wells. These two wells have not produced oil. Zarara has decided not to continue its participation in this project. Zarara will accordingly incur a loss in the financial year ended 30 September 2000.

The financial effects of this transaction will be quantified in the interim results to be released shortly.

2.3 Effects on profit forecast

In the circular to shareholders dated 11 October 1999 relating to the Zarara acquisition, Mawenzi included a profit forecast of 10,7 cents per share for the financial year ended 30 September 2000. The forecast was based on a number of assumptions including the income to be earned from the oil wells in Thailand. The loss incurred by Zarara, along with the intended sale of Mawenzi's commercial property portfolio to Iprop as announced on 5 May 2000, will result in Mawenzi not achieving the profit forecast.

3. FURTHER CAUTIONARY ANNOUNCEMENT

In view of the developments set out above, shareholders are advised to continue to exercise caution in their dealings in Mawenzi shares until further information is made available in the interim results announcement and the circular to shareholders.

Sandton 26 June 2000

For further information, in the UK please call 0171 608 3883, or call Denis Strauch toll-free in North America at [phone], or visit our web site at www.zararaoil-gas.com.

Symbol: OTC: ZARAF.OB Ofex: ZOG

ZARARA OIL & GAS LIMITED Suite 505, Bin Ham Building, Trade Center Road Dubai, United Arab Emirates 

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This press release contains statements that constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that express or involve discussions with respect to predictions, business strategy, budgets, exploration and development opportunities or projects, the expected timing of commencement of production or other expectations, beliefs, plans, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements". Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those anticipated by the Corporation. These include, but are not limited to, the risks of the oil and gas industry (for example, operating risks of exploring for, developing and producing crude oil and natural gas and the uncertainty of reserve estimates), risks in conducting foreign operations fluctuations in oil and gas prices and exchange rates, and the uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects. Additional information concerning certain of these and other factors which could affect the Corporation's operations or financial results is included under the heading "Risk Factors" in the Annual Report on Form 20-F filed by the Corporation with the Securities and Exchange Commission.