Sitting Tight with a Wry SmileSo sell at a loss, buy or hold? Buy if you can and hold if you are maxed out imo and here is why.
This stock was 75c on good market sentiment just a few months ago. The mkt cap was around $100m, we had not even started operations on TSB-1. Fast foward a few months and we have successfully re-entered the well and confirmed an oil discovery over a considerably larger gross/net pay than expected. We are actually already flowing light sweet crude at the moment from only one of mutiple stacked reservoirs, with another test to come on U4. This is fact, not open to conjecture.
We await flow rates. I have managed my expectations here, as we are only testing 2 zones, of 6 total zones. The mkt cap today is $24m, so apparently we are only worth a 1/4 of what we were before we confirmed any oil. Yes, the $100m was toppy for what we had then, but $24m now is just downright crazy imo.
We need to drill TSB-3 and we will need to finance it. Looking at the cash position. We had $3.6m on 30/09 (from interims), since then we have the convertible debt of $5m. $8.6m in total.
If we subtract Oct/Nov overheads at
.6m per month and assume another $5m to be spent/to be spent on TSB-1 (since 30/09), we will likely have around $2-3m when we are done testing.
From the Oct presentation Mira stated they needed $34.5m for dilling TSB1 & TSB3, where TSB1 was expected to cost $12.6m, leaving $21.9m needed for TSB3. Add in say another 4 months of overhead cost whilst drilling at
.6m and ignoring any requirements for a pipeline ($12.5m, but i assume we hook up post TSB3) we are looking at raising $25m or so to complete drilling ops.
$25m at current prices is 93% dilution, at 40c it is 47% dilution and at 60c is 31% dilution. I have not tried to factor in dilution from the 5m convertible as the conversion price is not known and it is optional.
We need the SP up to 60c and i cannot see why this will not happen. This all smacks of some serious manipulation imo. Hold and buy regardless, when we are pumping 10,000 a day there will be no avoiding a more accurate valuation. If i have to hold to production 2012/13 i will. No one is getting their grubby little mits on my stock without a serious dent in the fundametals here, that imo i do not see coming from the co issued data so far.
GLTA - the only way would be to prise them out of my cold dead hands.