It was only a two-block walk away from my hotel at the historic Hotel Vancouver situated in the heart of downtown Vancouver. After a long morning filled with meetings with a few resource and mining companies, I walked into the HSBC building, where I had a meeting with one of the most successful men in the mining world: Lukas Lundin.

In the lobby of the HSBC building swung a massive pendulum. The swinging block of silver must have weighed 30 tons and measured more than six stories high. It simply swung back and forth, yet stood as an appropriate symbol of the power and wealth that roamed the building on a daily basis.

After admiring the pendulum like your average tourist, I headed over to the elevators and was on my way to the Vancouver offices of the Lundins on the 21st floor. The receptionist just said, “Lukas will be with you in a few minutes. You can have a seat in the boardroom.”

I walked into the boardroom and just took a look outside the window that stood between me and the city. It was one of the few places in the downtown area where you could look down on most of the other buildings while admiring the waterways and the sailing enthusiast knocking off work early to trying to catch a couple of extra hours on the water on the exceptionally warm Friday afternoon.

Then he came in and introduced himself with what remained of a Swedish accent, “Hello, I’m Lukas.”

After a quick handshake we sat down and got to business. Aside from trying to find some new prospective investments for Small-Cap Commodity Prospector and a day trip to Saskatchewan to research for my next issue of BreakAway Investor, I came up north to find out what made the most successful investors are looking for when they start forming companies.

And there’s no better place to get this kind of information and perspective than directly from one of the most successful mining men in the past half century. You see, Lukas and his brother Ian, who together head up the Lundin Group, have a stunning track record of success.

One of their ventures, Lundin Petroleum (LUPE:OMX), has blown away the competition. Through aggressive acquisition strategies and by expanding exploration and production, Lundin Petroleum has been a stunning success story as the stock has climbed more than 2,800% in five years.

But the Lundins aren’t just a one-trick pony. Just take a look at what they did with their other top oil company, Tanganyika Oil. Tanganyika has successfully leveraged its oil-producing properties in Syria and Egypt on the way to a 4,100% return in five years.

Again, it doesn’t stop there. The Lundins’ Valkyries Petroleum increased 2,565% before being acquired by Lundin Petroleum. And Pearl Exploration and Production, the family’s heavy oil company with properties in western Canada, Texas and California, has kept pace with the others. Pearl’s share price has climbed from a low of 25 cents in 2002, to more than $5 today. That’s a solid gain of 1,900% in only five years.

As you can see, this is someone worth taking a few minutes sit down and talk with. After we exchanged a few pleasantries, it was time to get straight to business. Lukas’ overall take on the mining industry is that we’re truly in the midst of commodities supercycle.

He cited numerous references to the years of neglect and underinvestment in the mining industry have created a massive supply-demand imbalance that is going to take years to turn around. And he is looking toward a few opportunities in the oil and gas sector.

When asked which is the best investment of all the Lundin companies (which now total about $16 billion in market value), Lukas said the Lundin Mining (LMC:AMEX or LUN:TSX) offers the best value.

Honestly, I have to agree that Lundin Mining does offer plenty of upside potential. Aside from the Lundins’ exceptional track record, Lundin Mining is a pretty good opportunity.

The company currently has four operational mines, one in Ireland, one in Portugal, and two in Sweden. On top of that, Lundin Mining has two prospective mines that are expected to come on line within the next two years and another high-potential area in the Russian Federation.

Even with all the expenses of developing the new prospective mines, Lundin Mining achieved a 27.8% net profit margin in 2006. And that’s after taxes. Add all that up and it’s no wonder why Lundin Mining shareholders have reaped about a 2,800% total return in just the past four years.

However, I think there is a lot more upside with one of the smaller companies in the Lundin stable. Thanks to the elimination of a 95-year ban on exploration, one of the potentially most lucrative areas in the Gulf of Mexico has been opened up for exploration. The opportunity was so enticing, one of Louisiana’s most successful oilmen has come out of retirement to head up the entire operation.

But there’s a lot more to the story than that, and if the Lundins are involved, you can bet there’s a very good chance at this being another big winner.

 

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