Almost $4bn: minerals testing gets to the core

PROVING that there are some spinoff benefits from mining, Queensland's Campbell Brothers came within a whisker of being worth $4 billion yesterday.

Campbell, once famed for melting bits of animals to produce tallow for its soaps, is these days all about minerals testing laboratories - and that is what is driving its price up.

Even though Campbell made no announcements to the ASX yesterday, its shares surfed the rally in other mining services providers that did produce results - like drilling services provider Boart Longyear, mining contractor Macmahon Holdings and engineers Monadelphous.

Two out of three of those companies, Macmahon and Monadelphous, cracked 12-month peaks for their share prices after posting results. Macmahon hit 82?, before settling for a 5.5? gain to 80.5?, while Monadelphous topped out at $23.89, but still managed a 71? gain to $23.86.

For Macmahon, which not so many years ago teetered on the brink of non-existence, that must be some consolation, while Monadelphous is now valued by the market at more than $2 billion.

Insider hears that what kicked Campbell along, though, was not just the collective performance of its fellow resource industry services peers, but the mention in Boart Longyear's briefing to analysts of the expected increase in global exploration budgets for 2012.

The estimates of a $US4 billion increase in spending to $US22 billion came from respected Canada-based Mineral Economics Group, whose annual exploration compendium has been something of a bible for the industry.

Campbell's ALS Minerals, especially after its $220 million purchase of Britain's Stewart Holdings Group a year ago, now has a major global presence in minerals testing - from Antofagasta to Kyrgyzstan, and parts in between.

It does not have a monopoly - there are the likes of London's Intertek and the Belgian-controlled Bureau Veritas - but it is a dominant figure.

Like most of those in the industry at the moment, Campbell/ALS has virtual queues of geologists clutching their cores, rock chips and buckets of oil waiting for testing and affirmation.

While explorers still have to get their physical samples to the labs, they can track results and progress through web portals - somewhat like tracking your online purchases via FedEx, DHL or Australia Post.

In the dark days of mid-2009, Campbell's market worth was less than $500 million. Yesterday, its shares closed $1.80 higher at $58.80, giving it a market valuation of $3.97 billion - which puts it not far behind property developer Lend Lease, and well ahead of winged kangaroo Qantas.

Whoops, who's counting?SVC Group directors have found out what happens when you turn over stones - sometimes you find unidentifiable beasties.

In SVC's case, it last night submitted one of the more embarrassing notices to the ASX - a confession that somehow it seemed to have many millions more shares on issue than it had told the market.

Not that that represents a great problem for the ASX because for most of the period over which the discrepancies occurred, SVC Group's shares have been suspended - in fact, they have not traded since September 2008.

Once known as Shell Villages and Resorts, the company, by Insider's estimate, is now (like the Communist Party in Beijing) in its fifth year of a restructuring plan designed to eliminate debt and get its shares back on the market.

Last year, for example, it filed three years' worth of annual reports to bring the ASX and its investors up to date, and pointed out that the company's main activity is its heroic struggle to have the shares requoted - which to Insider does not sound a great investment proposition.

Late yesterday, it told the ASX that it wanted quotation for an additional 10.7 million shares to eliminate the difference between its records, and the market's. That would, it said, fix up errors that occurred because the company forgot to notify the issues of 1.5 million shares in 2007 and another 26.25 million last February.

It is not SVC's first struggle with documentary disappearance. A few years back it explained the failure to lodge a notice detailing a director's shareholding changes as the result of mislaying the papers during office renovations.

Only last month it had to pull the prospectus for a $2 million capital raising that had been out in the market since October, blaming the cancellation on not being able to achieve certain dates in the long march to re-listing. Rifling around in SVC's binned prospectus reveals that beyond wanting the money to reduce debt, it did still have an aim to continue in property development and retirement villages - although those seemed to rank fairly low on the priority list.

SVC investors might take some comfort from the appointment two weeks ago of Perth's Alto Capital as advisers to help the board finally bring home a capital raising, although they have lowered the sights to a range between $1.3 million and $1.7 million.

Legal action resolvedPHOTON Group seems to have wasted little time in beating off the legal action launched by the vendor of one of its businesses, iMega, which claimed that he was owed millions more under earn-out agreements.

Barely a fortnight on from the action being filed in the Federal Court, complainant Ari Klinger and Photon's representatives agreed to have it dismissed, with each party bearing their own costs.

Photon has undergone a Herculean transformation in the past two years, removing its massive debt burden, and the threatened claim was yet another niggle that it did not need.

Interestingly, when Insider wrote about the case earlier this month, Klinger's lawyer was Shaye Chapman, who acted for another former iMega director, Janina Fabig, in a $4 million-plus claim a few years back.

The court file suggests that Klinger changed his legal representation just a few days later.

insider@fairfaxmedia.com.au