mexico mike discusses silver, and prefers companies that are self-financing to explorers.

TGR: When you say junior mining stocks, are you looking at producers or explorers? And how do you differentiate between the two in terms of investment strategies?

MK: A lot of companies are having a difficult time accessing funding. There's been a lending freeze worldwide, and that's really hit the mining industry hard. Right now there are very few junior mining companies that actually have production, recurring cash flow or earnings. These companies are probably the better performers because they don't have to rely on outside sources of funding in order to advance their business model.

So if I were to rank the most desirable companies today, I would say right now you need to look at companies that are self-financing. That would be my primary target because there's less risk with those companies—they'll be able to continue their operations because they can still find the money they need to keep moving forward.

As far as the explorers, they're less attractive right now. Unless they've done a good job raising money, they are going to find themselves unable to go to the market for an equity offering without severely diluting the float. Their share prices are lower, so, as an investor, you've got an opportunity to buy these stocks very cheaply, but you have to be patient. You also have to very aware of the risks—if these companies cannot eventually get financing, they could default on the terms of their projects, and may even face the risk of getting delisted or go out of business. And mining is a risky game, that's something people should always be aware of.

From my point of view in today's market, it's very important to seek companies that are cash-flow positive, have growth in the pipeline, strong balance sheets and strong management that's demonstrated they can continue to operate under difficult market circumstances. And we don't know how long this will go on for; we could be seeing a trend reversal going on right now. Or it could go on for another couple of years before things improve and the financing becomes easier to attain. Investors have to be aware of these things.

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