I agree that Sprott's investment in Virginia Energy (v.vui on stockhouse) could end up as a total loss, but I still think of vui as a speculative investment with a very good risk/reward ratio.

The DOWNSIDE:  VUI could go to $ZERO!!  But even if it does, SCP has only invested 1% of it's market cap. Logically (although logic is not something the market is very good at) even a total loss on this investment should not cause a loss in SCP share price of more than 1% (especially with it'sestimated internal rate of return of 28%).

The UPSIDE:  There won't be a total loss in this investment/speculation. 

-VUI has $7billion worth of uranium in the ground!!!  I don't know the economics of uranium mining, but IF the project ever goes ahead the profit conservatively should be at least one or two billion dollars.

-VUI's current market cap IS $32million.  Again, IF this mine ever goes into production the profit, as guessed at above, should be at least 30-60 times the current market cap.  Even with no immediate prospects for mining, the share price will not go to zero because there will always be investors willing to speculate on that kind of risk/reward.  (There are mining companies with gold deposits in Africa worth far less than $7billion.  They are in countries that are politically unstable and they have no current prospects for financing, yet they still have market caps higher than $32milllion.)  

-If Sprott holds on to VUI for let's say five years I think that there is some chance that someone will be able to convince the state of Virginia to share in the profits.  Even if this never happens, over the course of 5years speculation will periodically drive the share price up enough so that they can be sold at a fair profit.