Tightening capital markets and strong commodity prices are combining to create the “ideal” conditions for consolidation of the ASX-listed exploration sector, which shrank for the first time in almost three years in the June quarter.

Advisory firm BDO said seven of the 787 pre-revenue explorers on the ASX at March 31 were acquired in the subsequent three months, helping to shrink the bourse’s most populous sector to 779 companies by June 30.