Patersons has picked an interesting time to lob its meaty market overview, which includes its current top investment picks: Ampella Mining, Blackthorn Resources, Coalspur Mines, Grange Resources and Tiger Resources.

Rock stocks are “down but not out” is one theme of the report, published just as the latest downturn smashed many household names in the local market, including Fortescue, Atlas Iron and Paladin.

Notwithstanding the market bounce yesterday, resources now look cheaper than they have for some time.

This may provide an opportunity for predators, some of whom may have been put off bidding up to now by unrealistic asset prices.

“There comes a time when it is cheaper to buy assets rather than build them,” Patersons head of research Alex Passmore told MD.

“Asset values are back to levels that may be appealing to corporates.”

The inherent risk in building new projects in a high-cost environment could be one tipping point for new M&A.

“Why risk a three-year build program, and the possibility of capex blowouts, if you can buy an asset for a reasonable price?” Passmore said.

The Patersons guru declined to specify which stocks might figure prominently on the radar of predators, though there is no shortage of candidates because of this month’s share market carnage.

In particular, those with hefty capex requirements may struggle to raise capital in this market, making them vulnerable to opportunistic approaches.

Atlas Iron, whose share price hit 21-month lows last week before rebounding 8% yesterday, admitted as much over the weekend, when managing director Ken Brinsden told the Australian newspaper the company was "ripe for the picking".

The most likely suitors are BHP Billiton and Fortescue Metals, who have long coveted Atlas's 46.5Mtpa export allocation at Port Hedland.

Outside of these familiar favourites, Japan Inc. has ramped up activity down under, including Marubeni’s recent purchase of a minority stake in Gina Rinehart’s Roy Hill venture.

Another outfit that must be feeling a bit vulnerable is Tony Poli’s Aquila Resources.

Having traded at $9 in early 2011, the stock has been repeatedly bashed since those golden days. It hit a nadir of $2.86 last week before yesterday’s recovery to $2.97.

If someone came in and offered $4 a share – valuing the group at $1.6 billion – Aquila’s downtrodden shareholders would probably jump at it.

Of course, Tony Poli would have a big say in the outcome, with the chairman retaining 24% of the stock.

Fortescue, which keeps popping up in takeover speculation these days as both predator and target, has been touted as a possible suitor for Aquila.

This is probably not much more than mischievous gossip from investment bankers. After all, Fortescue is currently shovelling out nearly $US10 billion to build its Solomon expansion and probably doesn’t need the distraction of a takeover.

Fortescue obviously has an interest in the proposed Anketell port development as one solution for its next cab off the rank, the 2 billion-tonne Nyidinghu deposit.

But Anketell is now competing with Fortescue’s mooted outer harbour development at Port Hedland as a possible shipping route for Nidi’s tonnes.

Aquila also comes with several east-coast coal projects, some of which are either in the process of being sold or on the market.

If you add up Aquila’s announced coal divestment deals – and what it might hope to get for Belvedere – the total is just shy of Aquila’s market cap.

So, in that light, the group’s West Pilbara iron ore project, which includes Anketell as the port solution, does look relatively cheap at the moment.

Sandfire Resources, worth around $1 billion, is the other perennial takeover favourite, given OZ Minerals’ long-held 20% stake.

Some brokers have pointed out that Sandfire’s DeGrussa copper-gold mine won’t be the panacea for OZ’s short mine life at its Prominent Hill venture in South Australia.

OZ instead may choose to distribute the Sandfire stake as a special distribution to its shareholders, the speculation goes.

Or OZ could, of course, flog the stake to a third-party predator.

Mind you, any offer would have to be a fair premium to current levels.

Earlier this month Sandfire shares were trading at $8.20.

So a bid pitched near the current share price of around $7.00 is unlikely to cut the mustard.

MD suspects that predators would need to wait for a further downturn, so that Sandfire shareholders can become accustomed to lower valuations.

And that is probably a broader issue for predators: was last week the low point?

Or will patience prove to be a virtue if share prices resume their down-trend for the next few months?

This article first appeared in ILN's sister publication MiningNews.net.