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"The First Family of Resource Investing
By Matt Badiali, editor, S&A Resource Report
Monday, November 5, 2007
Natural-resource explorer Adolf Lundin was like the great white hunters of Colonial Africa. He didn't care what the resource was: oil, gas, copper, iodine, lead, zinc, silver, or gold. He just wanted to go big.
In the 1960s and 1970s, if you weren't Exxon or Chevron, it was hard to get into mineral exploration in the "civilized" countries. Adolf Lundin adapted. He traveled the world. He was completely fearless.
Adolf had a penchant for Argentina, and the country was good to him, too. He and his son Lukas discovered Valedero there. Valedero is a giant gold and silver deposit that contains 11.4 million ounces of gold reserves. The discovery led to a $300 million takeover of the Lundin's company, Argentina Gold, by Homestake in 1999. Barrick bought Homestake in 2001 for $2.3 billion and is currently building the mine at Veladero.
During Mobutu Sese Seko's rule of the Democratic Republic of Congo, Lundin negotiated control of Tenke Fungurume, at the time one of the world's largest undeveloped copper and cobalt deposits. Tenke's contains more than 500 million tons of resource, which includes 14 million tons of copper and 1.2 million tons of cobalt.
Lundin Mining still controls 25% of Tenke.
In 1996, Lundin noticed a Russian company with nearly as much oil and gas as Exxon, yet the stock market valued this company at 1% of Exxon's market price. Lundin pooled $25 million of family money and started an investment firm. That money became Vostok Nafta, a Sweden-based investment company focused on Russian natural-resource companies.
Vostok Nafta is now the fourth-largest shareholder of Gazprom, Russia's largest oil company. Today, the company has a net asset value of $580 million... not a bad return on $25 million.
Adolf Lundin's other contribution to natural-resource exploration was his two sons, Ian and Lukas. The brothers also share their father's love of adventure and competition. They've ridden motorcycles from Cairo to Cape Town, and they've competed in the Paris to Dakar Road Rally, the ultimate off-road endurance race.
Adolf Lundin's offspring are board members of several natural-resource companies. Here's an excerpt from Lukas Lundin's biography:
Lukas Lundin is the first child of Adolf Lundin. He currently serves as Chairman of Tanganyika Oil Co. Ltd., Vostok Nafta Investment Ltd., Canadian Gold Hunter Ltd, Denison Mine Corp., Tenke Mining Corp., Pearl Exploration & Production Ltd., Red Back Mining Inc., Lundin Mining Corp. and is a Board member of Atacama Minerals Corp.
The Lundin brothers found success in their own right. Lukas took over a struggling Australian company that traded for 80¢ a share. The company now trades for more than $8 per share. Ian is currently CEO of Lundin Petroleum, which spun out of Talisman Energy's takeover of Lundin Oil in 2001.
The Lundin family built its empire while oil prices were in the $14 to $35 range and gold traded for less than $300. In this period of runaway commodity prices, one can only imagine their success.
If you want to grab a share of the Lundins' success, you have several options. You can buy shares of Vostok Nafta (VNIL on the Stockholm Exchange). You can also buy shares in Lundin Petroleum (LYV on the Berlin, Frankfurt, and XETRA exchanges, or LUPE on the Stockholm Exchange). Lundin Mining trades on the New York Stock Exchange (LMC).
One of the tenets of my service, The S&A Prospector, is investing in people. The Lundins are the kind of people that we want to invest with.
Good investing,
Matt Badiali
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JMO
Red
AI
