The $100 Million Run

Houston's Gulf Sulphur Corp. until a year ago was a $10.7 million-a-year operation that depended entirely on sulphur production in Mexico. Then President Robert H. Allen, 40, a lanky (6 ft. 4 in.) onetime Texas A. & M. distance runner, long-strided his way into the merger derby. Today, renamed Gulf Resources & Chemical Corp., Allen's company is a broadly based natural-resources producer with an annual sales rate of over $100 million. Explains Allen: "We did not want to be a com pany with a single mineral."

Gulf Resources' unusual growth is the result of two mergers. First, Allen paid out $18.5 million in stock to acquire Lithium Corp. of America, a New York-based mineral and chemical concern. He next made a tender offer for shares in far bigger Bunker Hill Co., an $83.2 million-a-year Idaho mining and smelting company. Bunker Hill spurned Allen's overtures, began dickering with two other prospective part ners. Undeterred, Allen coolly bought up its stock on the open market, by last February had a commanding 36% interest. The battle of Bunker Hill over, shareholders of the two companies last week approved a $60 million stock swap that made the Idaho company a subsidiary of Gulf Resources.

Its acquisition of Lithium Corp. of America made Gulf Resources, in a single stroke, one of the world's largest producers of lithium, a superlight metal that, in various forms, is used in such disparate products as laundry bleach, synthetic rubber and swimming-pool disinfectant. Lithium Corp. also has a stake in a venture to extract potash and other minerals from Utah's Great Salt Lake. Bunker Hill, meanwhile, is one of the U.S.'s biggest producers of zinc, lead and silver. By acquiring it, Gulf Resources also strengthened its profit position, since Bunker Hill had earnings last year of $4.19 million compared with $3.81 million for its new parent company.

Price of Popularity. For Gulf Resources, profits of any amount are a relatively recent phenomenon. Founded in 1956 and armed with a concession for mining sulphur in the Mexican state of Veracruz, the company produced too little and borrowed too much, found itself deep in debt. When Allen, a former certified public accountant who had joined the company soon after its founding, became its president in 1960, he paid off the debts with company stock, brought in a new production man to raise sulphur output above the breakeven point. Within a year, the company showed its first profit.

Allen's impatience with a single product does not mean that sulphur is unprofitable. On the contrary, a phenomenal growth in demand--with nearly half of total U.S. production going into fertilizers--has sent sulphur prices soaring. But sulphur's very popularity threatens to deplete low-cost minable deposits. By diversifying into other minerals, Gulf Resources has also been minimizing its dependence on foreign-based facilities. As a result of its mergers, 80% of the company's assets are now located in the U.S.

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