Diaz Resources Ltd.
TSX : DZR

Diaz Resources Ltd.

February 03, 2011 09:00 ET

Diaz Announces Planned $3.0 Million Financing and Ratification of Previously Announced Amendments to Convertible Debentures by Debenture Holders

CALGARY, ALBERTA--(Marketwire - Feb. 3, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Diaz Resources Ltd. (TSX:DZR) ("Diaz" or the "Company") announced today that it has entered into an agreement with First Canadian Securities®, a division of Limited Market Dealer Inc., to act as finder and lead manager in respect of the issue of up to 21.4 million common shares on a commercially reasonable efforts basis at a price of $0.14 per common share.

The finder and other registered representatives will receive a commission of 6% on the common shares sold other than shares sold to Humboldt Capital Corporation ("Humboldt").

Humboldt has agreed to subscribe for $1,000,000 of the offering or 7,142,857 common shares. Humboldt and Robert W. Lamond, Diaz's Chairman and the Chairman, President, CEO and controlling shareholder of Humboldt, together own approximately 30.5 million common shares of Diaz, representing approximately 34% of the outstanding common shares of Diaz. Assuming the offering is fully subscribed, Humboldt and Lamond will own approximately 37.6 million common shares, representing approximately 34% of Diaz's outstanding common shares. 

The net proceeds from this offering will be added to working capital and used for the Company's 2011 drilling program which is expected to include additional horizontal wells on the Company's Lloydminster property in Alberta.

Upon completion of the financing, assuming the offering is fully subscribed, the Company will have approximately 112.3 million shares outstanding, 6.3 million employee options outstanding and 5.4 million warrants and brokers' warrants outstanding.

The closing is subject to the receipt of the necessary regulatory approvals, including that of the Toronto Stock Exchange, and is anticipated to occur on or about February 23, 2011.

In addition, the Company has received the approval of debentureholders holding not less than 66 2/3% of the aggregate principal amount of convertible debentures outstanding to amend the terms of the debentures as follows:

  1. increase the interest payable on the debentures from 8.75% per annum to 10.5% per annum effective January 17, 2011;
  2. reduce the conversion price of the debentures from $0.90 per share to $0.33333 per share, such that 3,000 common shares of the Corporation shall be issuable for each $1,000 principal amount of debentures converted;
  3. extend the maturity date of the debentures from March 27, 2012 to March 26, 2014; and
  4. prohibit the redemption of the debentures prior to December 3, 2012.

The foregoing amendments are subject to the completion of final documentation.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy the securities in any jurisdiction. The securities offered will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.

Diaz is an oil and gas exploration and production company based in Calgary, Alberta. Diaz's current focus is on oil development and exploration in Alberta and Saskatchewan.

ADVISORY: This press release contains forward looking statements. More particularly, this press release contains statements concerning the anticipated closing date of the Private Placement and the anticipated use of the proceeds of the offering. Although Diaz believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Diaz can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The closing of the Private Placement could be delayed if Diaz is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Private Placement will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the Private Placement will not be completed within the anticipated time or at all. The intended use of the proceeds of the Private Placement by Diaz, including Diaz's 2011 drilling program, might change if the board of directors of Diaz determines that it would be in the best interests of Diaz to deploy the proceeds for some other purpose.

The forward looking statements contained in this press release are made as of the date hereof and Diaz undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

NEITHER THE TORONTO STOCK EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TORONTO STOCK EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Diaz Resources Ltd.
    Robert W. Lamond
    Chairman
    (403) 269-9889
    (403) 269-9890 (FAX)
    or
    Diaz Resources Ltd.
    Donald K. Clark
    Chief Operating Officer
    (403) 269-9889
    (403) 269-9890 (FAX)
    info@diazresources.com
    www.diazresources.com