“It’s the worst we have ever seen,” he said. “Economic survival mode is what these companies are facing.”

He was commenting on a report by consultants Ernst & Young that found only 24 per cent of global mining companies are going to be focusing on mergers and acquisitions — the industry’s lifeblood — over the next six months.

The Ernst & Young report Capital Confidence Barometer, says that although confidence in the sector is improving — 57 per cent of companies believe the world economy is strengthening — the appetite for mergers and takeovers has vanished. Weaker commodity prices, cost inflation and labour unrest have taken their toll, said Bruce Sprague, Ernst & Young’s Canadian mining and metals leader.

However, the depressed value of mining stocks and the fact companies are divesting assets is creating opportunities for what Sprague described as nontraditional investors.

“More and more private equity and sovereign wealth funds are entering the market, securing supply and seeking financial return on undervalued assets,” Sprague said.

It’s a trend Dirom has seen unfolding in British Columbia.

“These companies are undervalued and their stock prices are reflecting that. So it’s a buyer’s opportunity and who is starting to buy? What I have seen of late is private equity placements.”

The most recent was a $ 6- million investment by Chinese private equity investors in a junior B. C. company that is exploring outside the province.

“Maybe it’s in dribs and drabs, but there are private equity placements occurring, and that is what Ernst & Young now sees happening more and more.”

Ned Goodman, chief executive officer at Dundee Corp., told B. C. miners last week at a daylong seminar that the desperate economic conditions they face represent a huge opportunity for investors because of the depressed valuations of their companies.

In the meantime, Dirom said, he expects that this summer there will be less drilling activity.

“What we are seeing in the exploration community is staff reductions. If you are going to do an exploration program this year; if you are lucky enough to have obtained some venture capital, or are drawing on some resources that you previously had, you might do a reduced scope of work. Or, you might do no work at all.”