This stock closed up significantly Friday, as its first quarter earnings report showed considerable transition progress, but MoneyShow's Jim Jubak doesn't think the mining company is totally out of the woods quite yet.

Shares of Thompson Creek Metals (TC) closed up 9.4% Friday, April 11, as the company’s first quarter earnings report showed that the miner made essential progress in its transition from a molybdenum producer to a molybdenum/copper/gold producer with an emphasis on copper and gold. (Thompson Creek is a member of my Jubak Picks 50 portfolio.)

The company still isn’t out of the woods—there is simply not very much room for error in Thompson Creek’s cash flow and debt load. A drop of another 10% in metals prices would put the company in the position of needing to raise more capital, perhaps as early as 2015. And Thompson Creek has an earthmover’s worth of debt to refinance in 2017.

But the company has moved away from the brink of a liquidity crisis that looked very likely in 2013. I certainly wouldn’t bet the farm on this very risky member of my long-term Jubak Picks 50 portfolio. But I think there’s a good chance that another good quarter could take the shares back to the $3.50 level that they hit in November 2013, before falling to $1.84 in December. From the April 11 closing price that represents a potential 22% gain over the next three months or so.

In the first quarter, the company reported strong copper and gold production from its Mt. Milligan mine. Ore grades at mine were in line with projections and the still ramping mine is on track to achieve throughput of 75% to 85% of capacity by the end of 2014.

It’s good that the story from the Mt. Milligan mine was so strong, because Thompson Creek’s older mines were disappointing. The Endako Mine showed an 8% drop in production from the prior quarter, on lower ore grades and operational problems at the mine. Production at the Thompson Creek Mine was up 19% from the prior quarter but water from spring runoff looked likely to cut production levels this spring.

The big disappointments at the company’s older molybdenum mines, though, were long-term. The company reduced the projected life of the Endako molybdenum mine to three to five years based on a revised projection of molybdenum at $10 a pound. (Previous projections of reserves at higher molybdenum prices had estimated that the mine would last until 2028. That reduction in reserves does create the possibility for big upside if molybdenum prices climb and the company can increase its reserve projections for Endako.) Thompson Creek also announced that it would suspend molybdenum production at its Thompson Creek Mine in late 2014 in response to lower molybdenum prices. Molybdenum prices have fluctuated recently from $9 a pound in mid-2013 to a recent $11.50 a pound. Forward contracts for 2015 have been bid recently at $12 a pound.

An increase in molybdenum prices to $12.50 a pound, along with an increase of 10% in the price of copper (to $3.30 a pound) and a 10% increase in the price of gold to $1441 an ounce, would increase free cash flow to $105 million in 2015. At current prices, free cash flow in 2015 comes to about $50 million.

The company finished the first quarter with a cash balance of $234 million. If everything works out as now projected, the company should finish the year with about that level of cash on hand. If metal prices fall by 10% and the production at Mt. Milligan doesn’t reach projected capacity by the end of 2014, the cash balance will be closer to $160 million. That’s probably not low enough to revive fears of a liquidity crisis—which, in itself, is a measure of how far Thompson Creek has come in the last year. But that kind of drop in cash on hand, if combined with fears of a further drop in the price of molybdenum, copper, and gold, would certainly mean that shares of Thompson Creek wouldn’t finish 2014 higher than they are now.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares of Thompson Creek as of the end of December. In preparation for closing the fund at the end of May, as of the end of March I had moved the fund’s holdings almost totally to cash.