TORONTO, July 2 (Reuters) - Tight credit conditions are keeping exploration-stage Canadian mining companies from raising capital, a development that could lead to more takeovers from larger players, according to a study released on Wednesday.

While Canadian initial public offering activity continues to be dominated by mining, the value of equity raised in the IPOs has fallen, particularly among smaller exploration companies, a report by Ernst & Young said.

"The credit crunch has really hit the grassroots exploration phase of the IPO market hard," said Tom Whelan, Ernst & Young's Canadian mining leader."

With senior mining companies doing little exploration these days, cash-strapped juniors that have found appealing resources will become increasingly prone to takeovers, he said.

"We're anticipating many more mining mergers and acquisitions in the second half of this year," Whelan said.

Most stock sectors have been hurt over the past year by the credit crunch and worries of a U.S. recession, but producing miners have continued to rise due to high prices, particularly for gold and copper.

Companies such as gold producers Barrick Gold (ABX.TO: Quote, Profile, Research) and Kinross Gold (K.TO: Quote, Profile, Research), as well as uranium producer Cameco Corp (CCO.TO: Quote, Profile, Research), have said recently they may be looking at acquiring smaller players.

A recent Ernst & Young global survey found that 40 percent of mining companies expect they will have to make acquisitions to meet the market's growth expectations.

"Booming economies like China and India have infrastructure demands that far exceed resource supplies, and the mining sector will need to work hard to meet those demands," Whelan said. (Reporting by Cameron French; Editing by Frank McGurty)