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There is a story Lukas Lundin tells about how he and his brother Ian ended up running the family business, the Lundin Group of Companies, which includes the Vancouver-based Lundin Mining Corp. His father, Adolf, the Swedish oil and mining entrepreneur who passed away late last year, had taken the family to the French Riviera for a holiday. He took his boys­-Lukas was 12 at the time, Ian 10-to a café for lunch. Over dessert, Adolf, who had only just begun his own entrepreneurial career in investments, looked across the table at his boys and announced that the time for a decision had come. "Which of you will be my mining engineer, and which of you will take care of the oil? You have 10 minutes."

Lukas Lundin laughs, remembering the afternoon. An intense, athletic 48-year-old, he tosses a white Nerf football up and down while he speaks from behind his desk in the 21st-floor offices of Lundin Mining's headquarters in downtown Vancouver. Then he grows a degree more serious, the football dropping into an open hand, which squeezes slowly closed around it. "My father left the table," Lukas remembers.

"So my brother and I thought about it for a bit. Then I said, 'Okay, I'll do mining. You do petroleum.'"

It might not seem that significant. They were just boys, after all. Lukas would have other ideas later, at one point becoming so committed to a career in professional motocross racing that he almost failed high school. Yet, incredibly enough, his decision over lunch that day in 1970 turned out to be exactly what happened. His brother did in fact go on to head up Lundin Petroleum, while Lukas ended up as the chairman of Lundin Mining.

But on the mining side, the fulfilment of his father's vision has come about in a style that perhaps even the ambitious Adolf Lundin could not have imagined. Lundin Mining is arguably the hottest mid-tier mining outfit in the world today. In a sector that has seen price surges across base metals over the past two years, Lukas has been on an acquisitions tear. In October, 2006, he closed a $1.8-billion deal to purchase EuroZinc Mining Corp., securing its zinc assets in Portugal. This April, he made an offer for Toronto-based Rio Narcea Gold Mines Ltd. for just under $1 billion, gaining the Aguablanca nickel and copper mines in Spain. A week later, Lundin Mining was again in the news, this time announcing the $1.5-billion stock swap purchase of Tenke Mining Corp., which gave the group a 25% interest in Tenke Fungurume in the Democratic Republic of Congo, the largest copper/cobalt deposit in the world.

And don't touch that dial. Because industry watchers believe there will be more to come.

"Who knows what his next target will be," says Eric Coffin, long-time industry analyst and publisher of the online newsletter "But I guarantee you there is one."

"I'm extremely bullish on the sector, " Lukas says, football back in motion. And then, in reference to the hot market for base metals compared to historic levels over the past 20 years or so, he adds with emphasis: "I think this is a supercycle and we have five or 10 years left."

Then he stops again to crack a grin. "But hopefully a lot of people think differently so I can continue to buy things."

That comment nicely captures the Lundin spirit. Confidence, even brash risk-taking, runs in the family. Lukas once took a group of brokers bungee jumping after successfully floating a stock issue. And while carrying on the increasingly busy leadership role in a company climbing the rankings, he still manages to take time off every year to get more immediate thrills on his motorcycle. Extreme Swedish/Canadian modesty

on this topic doesn't prevent his love of a calculated risk from coming through.

Is it true that he's raced in the legendary 10,000-kilometre Paris to Dakar Rally? "Yes. I think…four times." Well? What was it like? "It was…gruelling." Did he finish? "Sure. Twice." And what happened the other times? "I crashed." Long pause. "Once I broke my wrist."

Adolf Lundin didn't race bikes, but it's pretty clear from his history that Lukas's risk tolerance is inherited. Adolf embarked on an entrepreneurial career after working for Royal Dutch Shell and the Swedish company Nynas Petroleum. In 1968, having taken the position of deputy director at the Centre d'études industrielles management training school in Geneva, Adolf began investing in mining through the Vancouver Stock Exchange. He bought into a company called AEX that made a significant zinc and lead find in the Yukon, cashing out in 1969 with a cool half-million profit, his first big hit.

But as his son has learned in the Dakar Rally, you don't always finish in a blaze of glory. Adolf used his AEX profits, plus funds from friends and associates, to start up Austro International Investment Corp., which focused on high-risk oil and mining properties. Two years later-having had that fateful lunch with his sons on the French Riviera-Adolf took Austro deep into an Australian nickel play called Tasminex. He had an insider at the company who was supposed to send him a Telex reading "Buy the filly" if a particular nickel find was confirmed, Adolf told a biographer years later. The message duly arrived, and Adolf hit the phones hard, buying up Tasminex as fast as he could. A week later, 90% of Austro's value vaporized on the news that the full text of the Telex hadn't been received. The actual wording was reportedly two words longer: "Do not buy the filly."

That wasn't even the low point. Adolf invested personally in Poseidon, another Australian nickel company, which also happened to be one of the most infamous speculative bubbles of the past century. He bought at $1.85 (Australian). The share price hit $280 just four months later. But in early 1972, the nickel market crashed. Adolf was travelling in Moscow at the time and couldn't get a phone line out. Unable to put in sell orders, he watched his entire accumulated fortune go up in smoke.

"He really went belly up," Lukas says, with a shake of the head. But with a small chuckle, too, as if he is now able to really empathize with his father's position, understanding that in a business renowned for radical ups and downs, you must take the long view. "We had a fancy house on the lake in Geneva," he continues. "So we sold that. We moved into some farmhouse in France. My mother was a good sport, but it must have been very hard on him."

No guts, no glory, Adolf Lundin would have said, citing his personal motto. Still, he might also have acknowledged that a little old-fashioned luck never hurt, either. That same year, returning to Geneva from Canada, Adolf had one of those life-changing encounters of which Hollywood screenwriters are so fond. Ahmed El Dib was the man's name.

They met at Paris's Orly airport and got to talking, the way two travellers do. It turned out Ahmed had just been let go by an oil exploration company called Basic Resources, and had the foresight to take an option on a Qatari oil concession as severance payment. Ahmed, Adolf learned,

listening raptly in the departure lounge that day, was in the market for partners with the appetite for risk and some negotiating savvy.

And he had found one. Later that same year, Adolf nailed down the deal. Not easily, of course. The Emir of Qatar needed $1 million (U.S.) for his trouble, but the money couldn't merely be handed over directly. That would have been bribery, and beneath the royal dignity.

"So my father bet the Emir that it would rain the next day," Lukas says. "Of course, it never rains in Qatar, so…the Emir got his million and Dad got the concession."

The project became Gulfstream Resources, which became the North Dome gas discovery in the Persian Gulf, which by 1979 represented $15 million worth of share value in Adolf Lundin's pocket.

Still, it wasn't all clear sailing from there. Adolf's snakes-and-ladders career path became even more complicated as the number of his ventures multiplied. From his base in Geneva, he was now spreading his interests around the world. The 1980s were tumultuous, and by the end of the decade, things were going poorly. Lundin's Musto Explorations, which owned a gallium mine in St. George, Utah, was in trouble. (Gallium is a soft metal used primarily in the electronics industry.) So, too, was a gold extraction project at Kirkland Lake, Ontario, owned by another Lundin company, Eastmaque Mining. Both were running into technical problems with the extraction process, which, crucially, was causing turmoil in the markets-Musto, in particular, had soared from pennies to over $12, only to crash again.

It was a bad situation, but it ended up becoming young Lukas's first chance to really prove himself. He'd started with the company in 1977, going to Saskatchewan to stake uranium claims during his summer breaks from high school. "I was a terrible student," Lukas remembers. "My poor father." During his last year at school, he visited his brother in New Mexico-where Ian was working for another Lundin company-and had an epiphany. He wanted to quit school and enroll in the New Mexico Institute of Mining and Technology. He bluffed his way in without a diploma, then, a year later, went back to his high school in Geneva and negotiated for the certificate retroactively on the strength of his good marks from first-year university. Like father, like son.

His first job out of university had been oil exploration work in Egypt, where he'd made his mark by firing two former Shell employees his father had hired to run the project-and then he proceeded to drill nothing but dry holes. "I was sure we were going to be J. Paul Getty," he says. "Amoco had just made a huge discovery two kilometres away."

The Lundins eventually abandoned the concession in 1989, but the timing proved advantageous to Lukas. Musto stock had tanked. Eastmaque was in trouble. So Adolf decided to send Lukas to Canada to salvage what he could of the situation. Which he did, managing to bring in a white knight in the form of Morrison-Knudsen Co., which bought half the Eastmaque project and saved Lundin shareholders from losing everything.

It was a successful outing for the then 31-year-old.

But his next one would eclipse it and perhaps be more telling-after Eastmaque, Lukas went on to spearhead the Lundins' decision to invest in Argentinian gold concessions.

That project highlighted what has come to be a particular feature of the Lundin appetite for risk: a willingness to put money into emerging regions with unstable political environments. Argentina, on their arrival in the early 1990s, was in the initial years of Carlos Menem's presidency, when inflation rates of 5,000% were a recent memory. To get their first big gold project rolling, they had to persuade the new government to write a mining code from scratch.

Efforts were rewarded, eventually. The project-owned by a revitalized International Musto Explorations, no less, a new company formed out of the ashes of Musto Exploration-ended up making a significant gold strike at Bajo de la Alumbrera. Shareholders who'd had the patience to hang on to Musto shares after the Utah gallium disaster, as the Lundin family did, would have cashed out at 60 times their original investment when the Lundins sold International Musto for $325 million (U.S.) in 1995.

Which is right around the time that Tenke Mining began its negotiations for a copper/cobalt concession in the Democratic Republic of Congo (then Zaire), a process that has only just been resolved. Adolf signed the original deal in 1997, having hammered out the details with Gecamines, the national mining company, only to see the whole thing trashed by President Mobutu Sese Seko's officials in Kinshasa. A new deal was negotiated; $120 million in financing was arranged. Then Mobuto was kicked out and a new leader, Laurent-Désiré Kabila, took over. Civil strife ensued, and the project was put into force majeure in 1999.

"Of course I'd blown through my 120 million bucks," Lukas says. "I had no money. I couldn't raise any in the market. Congo had gone to rat shit. Everything was shit." Luckily, BHP Billiton Ltd. agreed to partner at that point, he says. When BHP's interest was subsequently taken over, a new deal was negotiated, and only finalized last year. That left Tenke holding 25% of the Fungurume asset, a year away from production. Lukas then merged the company into Lundin Mining.

It's a typical story for a family that has, at various points over the years, had investments in South Africa, the Sudan, Malaysia and post-Communist Russia. "Those guys have stones, what can I say?" Eric Coffin says. "Adolf was always the first guy in and he got great projects. There was risk, of course. But he's done it over and over again, and I can't think of too many cases where it didn't work out." A thick political skin certainly helps. Investments in embargoed South Africa in 1982 and the war-torn Sudan in the late '90s earned the group scathing press. Talisman famously withdrew from the Sudan. Lundin Oil didn't. "We are bringing Sudan out of misery," Adolf told a Swedish paper, explaining why Lundin Petroleum continues exploration in the area.

More important to Lundin shareholders, perhaps, is the group's almost otherworldly patience in the face of corrupt regimes and confused regulatory and ownership environments. Lukas may have honed his endurance skills riding 10,000 kilometres through the African desert (or from Cairo to the Cape, as he and his brother did last summer), but he may also have a genetic predisposition for stamina, courtesy of his father.

LUndin Mining now has assets spread throughout the world in zinc, copper, cobalt, lead, gold and silver, generating $540 million in revenues in the year ending Dec. 31, 2006. About 1,500 people work for the company worldwide (reporting to either Vancouver or the operations office in Stockholm), although when related mining companies in the Lundin Group are included, as well as the new employees that will be added when Tenke ramps up operations, that number will rise to close to 3,000. From a market capitalization standpoint, meanwhile, Lundin Mining has vaulted itself up in the sector-from about $1 billion in 2003 to approximately $7 billion (assuming Rio Narcea and Tenke close as planned). That would put Lundin Mining about eighth in the TSX's ranking of listed mining companies by market value.

And if the company's most recent acquisitions seem somehow unremarkable against this history of barnburning expansion and high-risk investment-what goes up in the industry tends to come down, right?-Lukas Lundin's confidence remains unwavering. He believes strongly that the metals boom is still unfolding. And importantly, leading industry analysts now agree with him. For them, increasingly, the word "supercycle" is hanging in the air.

Donald Coxe, global portfolio strategist for BMO Financial Group (of whom the Lundin Group is a significant client), wrote a paper as long ago as August, 2003, arguing that while base metal prices had been highly cyclical since the late '60s, when the baby boom ended, a new trend was at work that would smooth out that cyclicality for at least the next decade. That supercycle is a product of the emergence of a middle class in China and India-people moving into houses with plumbing, using household appliances and driving cars. In other words, people needing a significant investment in base metals to make that transition.

The two countries are currently adding 40 million people each year to the middle class, Coxe points out, noting that in two years they create the same demand as the baby boom did over 12. "There's no precedent for the scale of this."

Eric Coffin agrees, pointing out that Chinese copper consumption tripled from 1990 to 2000, and has roughly doubled since then. But he also hastens to add that the supply side of this equation is just as important as the demand. "Part of what makes this a supercycle is not just that there are the strong demand drivers but that years of under-investment have led to a situation where the mining industry will have to play catch-up for a while yet."

In which environment you might assume that mining share prices would have rocketed up the charts already, perhaps even to the point of making acquisitions undesirable. The mining sector has had its share of speculative runs and rushes, after all. Add to that the fact that recent forecasts out of Wall Street, citing the historic cyclicality of base metals, have called for long-term corrections to $5 (U.S.) nickel (trading at $23 in early May) and $0.90 (U.S.) copper ($3.60). Those kinds of numbers would certainly bring Lundin's aggressive expansion into question.

But Coxe dismisses the bearish forecasts out of hand. He points out that the in-house mining expertise at big American investment houses is low, and that many money managers have stopped following mining altogether, since only a single mining company (Freeport McMoRan Copper & Gold Inc.) remains in the S&P 500 Index.

But he also cites the wisdom of Chicago real estate billionaire Sam Zell, whom Coxe recalls counselling that in the cyclical real estate market, you have to wait to buy assets until the point when existing properties are selling below what they would cost to build. "Apply that logic to mining companies," Coxe says, "then stocks like Inco, Falconbridge, Teck Cominco, these companies are selling far below what it would cost to replace those assets. If you could."

Mining companies are only just starting to get higher valuations, Coffin says. "And they're still not being priced as if the market believes they're going to be making scads of money over the course of the next five years, which I think they will. I'm not saying we're going to have $4 or $5 copper for 20 years. But elevated prices, above the top of the last cycle, I think those are here for awhile."

When asked about his plans for the future, Lukas Lundin talks about balancing the company's investments between cash flow and longer-term considerations. Producing assets, which the market rewards, are expensive. But the market will also punish those who buy only assets in development: "To me, the best deals are assets that are in production a year and half from today," he says.

This approach is one that Coffin sees Lukas as having brought to the company. "I have a huge amount of respect for Lukas Lundin," he says. "Adolf's thing was going out and finding new stuff. Lukas seems more interested in building an operating mining company."

Back in his office, contemplating the question of whether his approach is different from, or similar to, his father's, Lukas-who is divorced and the father of four boys-begins tossing the Nerf football again. "I think we have the same entrepreneurial spirit," he says, then pauses a long time to consider the contrasts. Up and down. Up and down.

"He was probably…wilder in his decision-making," he says finally, with a grin. "I'm a bit more calculating."

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