I first had this at John Franzky's house and man was it good!!! The recipe is from Bon Appetit, and is pretty easy to make but it does take a little bit of time for the sauce to reduce fully. The sauce can also be used on other meats such as roast beef, one of my favorite uses besides rack of lamb.
2 cups beef stock or canned beef broth
2 cups chicken stock or canned low sodium chicken broth
2/3 cup ruby Port
1/3 cup minced shallots
2 tsp minced fresh thyme
2 tbsp unsalted butter, room tempature
1 tbsp all purpose flour
1/2 cup chopped pitted Kalamata olives
Rack of Lamb:
2 1 1/4 to 1 1/2 lb racks of lamb, trimmed
1/4 cup Dijon mustard
3/4 cup (packed) fresh breadcrumbs from crustless French bread
3/4 cup freshly grated Parmesan cheese
6 tbsp chopped fresh parsley
3 tbsp unsalted butter, melted
1 1/2 tbsp minced garlic
Boil first 5 ingredients in a heavy large sauce pan over medium-high heat until mixture is reduced to 1 1/2 cups, about 35 min. Mix 2 tbsp butter and flour in a small bowl to form paste. Whisk paste into sauce; simmer until slightly thickened, about 3 minutes. Strain into heavy small saucepan.
Preheat oven to 450 F. Place lamb on baking sheet. Spread mustard over lamb. Mix breadcrumbs, cheese, parsley, butter and garlic in small bowl; press onto lamb. Bake lamb to desired doneness, about 25 minutes for medium-rare. Bring sauce to simmer. Mix in olives. Cut lamb between ribs into chops. Serve with sauce.
Now if you are like me and not the biggest fan of olives, I just let the olives steep in the sauce for a few min before straining it.