After a replay, I cannot seem to pass the slime boss fight without the spear breaking. I would assume then that if you borrow the spear at all from the guy, you inevitably end up down this path. Im not sure if you are supposed to return it after you go mining, or if there is a way to avoid getting the spear in the first place, but those seem to be the only two options to avoid that bad end.
*EDIT* Or Im just plain stupid. The spear is SUPPOSED to break at some point. The goal here is to make sure you have 50k by the time you clear the ghost house (thats when his bad end went off for me). Easily attainable by selling all the pink items you find up until that point. Though I reccomend skipping the "lose to slime" boss event, as you will lose money and possibly not clear this route.