Diaz Resources Ltd. (Toronto Venture: DZR) announced a proposal to reorganize the company's capital structure and convert an aggregate of $15 million of debt into equity, eliminating approximately $1.58 million in annual interest payments.

If completed, management believes the share and debt reorganization will strengthen the company's balance sheet and better position Diaz to pursue financing or strategic alternatives that would facilitate the development of its asset base. In addition, as a consequence of continued challenging commodity prices and lower than expected production results, if the share and debt reorganization is not completed Diaz may be unable to make the interest payments due on its debentures on Dec. 31, 2012, which would result in Diaz being in breach of certain of its covenants under both the debentures and its bank facility and could result in the amounts owing under each being called for immediate repayment.

In light of the foregoing and other factors, the board of directors of Diaz approved proceeding with the share and debt reorganization. The board has engaged Sayer Securities Ltd. to advise the board in respect to the fairness of the transaction.