On the one hand, we have companies which have moved to diversify under one corporate umbrella.

Consolidated Minerals is the obvious example to spring to mind, and now Michael Kiernan is attempting to replicate that with his Territory Resources.

David Archer has declared a similar strategy at Hillgrove Resources. He wants to build Hillgrove as he did Savage Resources, a company that produced copper-gold and coal, and owned zinc mining and smelting operations in the US. Now Hillgrove is moving toward copper production, is drilling for zinc, has a stake in coal bed methane and has diversified into exploration on Madagascar.

The ultimate consolidation stories are, of course, BHP Billiton, Rio Tinto, and Xstrata. The diversity of businesses in those companies is one of their prime strengths.

Even at the junior end, some companies prefer to keep everything together and have decided to manage their finances by farming out their projects. Cullen Resources has taken a bit of stick for ending up with minority interests in everything, but at least the company is exposed to several commodities rather than just one.

On the other hand, every man and his dog at the junior end has been spinning off companies. Flicking the uranium “assets” into a new vehicle has been one of the more popular ways of raising a bit of extra cash, but this craze has afflicted all sectors of the mining business.

Got a small iron ore-gold-nickel-zinc deposit you haven’t got time or energy to do anything about? No worries, whip it into a new initial public offering. That’s another $3 million, or however much, in the bank.

At the end of July, in a column called “Too many minnows, not enough sharks”, I argued that Australia’s mining sector needed greater critical mass. Events of the past week have added urgency to that call.

The present wobbles in the share market should be concentrating some minds out there in exploration world. It started in the sub-prime, spread to equities; now it looks like the contagion has spread to currencies with 90-day US Treasury bills seeing huge inflows of cash.

Could economic ramifications be next? We have all taken comfort in the thought that the Chinese economy would keep on surging and see us through.

But a few comments this week provided some unsettling thoughts. First, historian Geoffrey Blainey wrote that, in fact, China had little experience in handling financial crises and there was no knowing how adept they would be.

Then Bloomberg columnist William Pesek this week made a plausible case for just how fragile the Chinese economy really is. He foresaw three possible shocks. The most obvious was the danger of a sudden fall in the Shanghai stock exchange; after all, millions of Chinese punters have opened trading accounts there.

But there were also dangers in terms of the scares over food safety and product quality (think: Mattel toys) confidence in buying Chinese products of any sort. Commentators on US business shows are already lamenting the demise of American manufacturing, and radio in New Zealand has been reporting growing consumer concern about buying anything Chinese.

Then there was air pollution. China may, at some time, have to pay a heavy price to clean up the environment and so slow economic growth.

So what does this have to do with spin-offs in the exploration sector?

Quite a lot, actually.

Money is already drying up for mortgage lenders. US non-banks simply cannot roll over their financing.

If the panic and worry continues, money is going to dry up for anything speculative. Junior explorers without runs on the board are going to be one of the hardest hit as investors flee to quality and safe havens, just as they were in 1987.

And if - like so many of these spin-offs - a company is a one-trick pony, then its appeal could wane all that much faster.

Neither MiningNews.net nor the author imply any recommendation regarding stocks mentioned. Investors should seek the advice of a qualified financial adviser.