https://www.jenningscapital.com/reports/MRP20111206LoweringTarget.pdf
Excerpt:
December 6, 2011
Recommendation: SPECULATIVE BUY
Revised 12-Month Target: C
.35
Previous 12-Month Target: C$1.25
Risk Rating: ABOVE AVERAGE
MIRA RESOURCES CORP.
(TSXV-MRP C
.12)
FINAL TEST RESULTS ON TSB-1 –
FORMATION DAMAGE INHIBITS TEST RATES
LOWERING TARGET
? TSB-1 tested at rates ranging from 77 – 512 Bb/d.
The various test rates were mainly a function of
different choke sizes. These rates are significantly
below the market’s expectations, most likely due to
formation damage caused during the original drilling in
1980. A longer test program would be required to
definitively calculate the native formation permeability
and the skin damage.
? Reservoir modelling still suggests that the well
could produce up to 2,500 Bbl/d. These rates would
require either a downhole pump or completing the gas
leg in the U4 to provide a “gas lift” effect. Neither of
these operations can be implemented at this time due
to equipment and financial limitations.
? The potential in Tom Shot Bank may actually have
increased. The new logs suggest that total net pay in
all five zones could be 280 ft or more, clearly much
higher than the 86 ft used in last the resource
assessment. If the resources are proportionate to the
net pay, Mira’s share might be 13.5 MMBbl or more,
vs. the 4.2 MMBbl previously assigned.
? Financing becomes the key issue. Mira would like
to drill the new well (TSB-3) in 2012, and pending
success on that and on the remediation of TSB-1,
build the facilities required to commence production.
We estimate that this will cost about $55 million in
total. The Company will face the difficult choice
between raising new equity in the context of the
current market price, vs. farming out its interest to a
third party capable of making those expenditures.
We are lowering our 12-month target price to C
.35
per share and maintaining our SPECULATIVE BUY
recommendation.