Mining acquisitions have slumped to an eight-year low as the industry’s largest players rein in spending after a drop in commodities prices.

The slump threatens hundreds of exploration and development companies that do not have revenue, more than half of which are based in Canada. Being bought by a larger miner is proving increasingly elusive, as companies such as Toronto-based Barrick Gold, the biggest gold producer, avoid acquisitions and new projects in favour of improving existing operations.

“Buyers are being very cautious on where they deploy capital,” says Matthew Hind, the Toronto-based head of Canadian metals and mining investment banking for Credit Suisse Group. “Players are in the process of re-evaluating their balance sheets and pipelines.”

There were 76 takeovers of companies in the third quarter, with a combined valuation of $1.73-billion, according to data compiled by Bloomberg. That is the lowest volume since the fourth quarter of 2004, the data show.

Copper and zinc have dropped this year, amid concerns of a Chinese economic slowdown, and gold has declined 24%, heading for its first yearly decline in 13 years. BHP Billiton and Rio Tinto Group, the two biggest mining companies, have cut billions of dollars of spending, while Barrick sold three mines in October and says it may sell others to cut costs.

“There are a lot of sellers and very few buyers,” says Clive Johnson, CEO of B2Gold, a Vancouver-based gold producer that is considering acquisitions.

“The general mood is anti-mergers and acquisitions (M&As) in the gold space for the most part, particularly at the senior level,” says Barrick CEO Jamie Sokalsky. “While potential targets have low valuations, often “they’re projects that you might have to spend a billion or two-billion to build”.

There are about 972 mining companies based in Canada that reported no revenue in the last 12 months, according to data compiled by Bloomberg. The largest, Detour Gold, started pro-duction at its Detour Lake gold mine, in Ontario, in August and has a market value of C$1.03-billion ($988.8-million).

While Toronto-based Detour and some others have been able to raise funds and start production, for many more the capital and operational expertise required to develop a mine means selling is the best strategy.

Lumina Copper is one junior looking for a suitor. The Vancouver-based company put itself up for sale last year. It would probably have announced a deal already if it were not for the change in industry sentiment and an increase in political risk associated with Argentina, where Lumina operates, says CEO David Strang.

Bigger miners are “making sure that they move back to greater profitability on their operating mines, and are less inclined to look at greenfield project acquisitions”, says Strang.

He adds that his team’s objectives are clear – they do not build mines; instead, they prepare projects for sale. He was previously CEO of Global Copper, which was acquired in 2008 by Teck Resources for C$406-million. Strang has also held executive roles at Northern Peru Copper and Regalito Copper, both juniors that were acquired.

Lumina is prepared to “sit and wait” for the right deal, he said.

“Our job is to remain patient and focused and to be ready so that, when the market does return – and it will return – we are ready and the project’s ready to be shown for sale,” Strang says.

Lumina’s Taca Taca copper project, in Argentina, is large, with relatively high ore grades, and has access to infrastructure, all of which mean the junior is more likely than most to find a buyer, says Adam Low, a Toronto-based analyst at Raymond James Financial.

“In all likelihood, it’s only going to be the cream of the crop that will get considered seriously in the current environment,” Low adds. “The other juniors might have to wait until the next cycle.”

A sale can bring riches to founders and early shareholders. Billionaire mining investor Robert Friedland established his fortune when he was cochairperson of Diamond Field Resources, a Canadian junior that discovered the Voisey’s Bay nickel deposit, in Labrador. Inco paid C$4.3-billion for the project in 1996.

Without revenue, it may be difficult for some juniors to survive for long. Mining industry stock sales, one of the few funding options available as companies try to cover operating costs, are poised for a fourth consecutive annual decline, according to data compiled by Bloomberg.

Mining mergers and acquisitions may get a boost from cash-starved companies looking to combine to survive. The decline in the gold price may drive some companies that produce and explore for the metal to consolidate, says J Paul Rollinson, CEO of Toronto-based Kinross Gold.

Most juniors will probably just keep moving their projects forward, while keeping their options open, says NGEx Resources CEO Wojtek Wodzicki.

NGEx, which has projects in Chile, Argentina and Canada, is another junior that may attract interest despite the tough environment, Raymond James’s Low says. While Vancouver-based NGEx is not actively looking for a buyer, it will not rule anything out, says Wodzicki.

“We’re adding value to the projects and just sort of pushing ahead with them,” he says.

Credit Suisse’s Hind says that, while there will always be interest in high-quality projects, there are also marginal ones that can-not be restructured to fit the current price environment.

“Many projects won’t be able to reinvent themselves and will ultimately disappear,” he says.