This blogger has pretty much summed up the thesis for this stock.
It looks really scary right now because of the debt, but I think the situation will change significantly over the next year. Fully diluted market cap is about $730 million (all CAD$ unless indicated otherwise). They will get about $50 million from the exercise of those warrants over the next few years. Latest net debt was about $249 million. Average prices for Vanadium were about US$8 during Q4.
They produced about 2600 tonnes in Q4 and plan to produce a little over 10k annually over the next decade or so.
So they produced about 5.73 million pounds in Q4. Multiply that by US$8, and multiply again by 1.25 and you get $57 million in revenue. Costs are about $44 million. So that is $13 million in free cash flow. Their debt has a really high yield though. They could save $10 million per quarter here if they pay it off.
If they produce 2600 tons in Q1 at US$12 (the current price), then that is $42 million just in Q1, or $160 million in 2018. So they will likely pay off most or all of their debt within the next 2-3 years at US$8-12/lb prices. I can imagine a refinance at some point this year to let's say 6-8%.
If they are debt free and produce at US$8 per lb, that is almost $100 million per year in EBT. They got quite a bit of NOLS. So unless prices crater back to $5-6 with no spikes in the meantime, this stock is not nearly as scary as the debt makes it look like. A spike to US$20/lb for Vanadium would make this stock very cheap.. That looks at least somewhat likely given the supply/demand situation.
So got a 1.5% position at $1.12.