Gulf Chairman to Consider Privatization Option

Published Feb 28th, 2012

SHANDONG, China, Feb. 21, 2012 /PRNewswire-Asia-FirstCall/ -- Gulf Resources, Inc. (Nasdaq: GURE - News) ("Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, is issuing this press release regarding recent market speculation as to the Company's plans with respect to a potential third-party investment in the Company, or a privatization transaction.

There have been recent market rumors about the implications for the Company of an investment letter of intent ("LOI") between Shandong Ocean Bright Stone Industry Fund Management Co., Ltd., a PRC-based investment fund ("Ocean Bright"), and Shandong Haoyuan Industrial Group Co., Ltd. ("SHIG"). SHIG is an entity controlled by our Chairman and is a record owner of approximately 11.9% of our common stock. SHIG, together with the Chairman and his family, owns in the aggregate approximately 38.5% of our common stock.

We have been informed by Chairman Yang that, on February 20, 2012, SHIG did execute an LOI with Ocean Bright regarding a potential investment program in China's bromine exploitation industry, with the objective of consolidating those investments under SHIG and ultimately seeking a stock exchange listing for SHIG in China. We have been told that the LOI is highly preliminary and conditional, being subject to, among other things, due diligence and the commitment of definitive funding for potential PRC bromine investments. The Company is not a party to the LOI, but the Chairman has informed us that SHIG and Ocean Bright are considering the Company as a potential principal component to their strategy of consolidating the bromine industry in China, and, accordingly, as a potential candidate for a privatization in order to satisfy the listing requirements for SHIG in China.

As of this time, the Company has not received from either SHIG or Ocean Bright any formal or informal offer as to any type of investment or acquisition transaction, or any other inquiry seeking negotiations or due diligence. The Company's Board of Directors will take appropriate steps in the best interests of the Company's shareholders to evaluate fully and independently any such offer or inquiry that may be received from SHIG or Ocean Bright in the future.

"We will continue to focus on our daily operations, exploring strategic alternatives where appropriate, and creating value for our shareholders," said Xiaobin Liu, Chief Executive Officer of Gulf Resources. "If negotiations between the Company and SHIG and Ocean Bright begin and progress to a definitive point meriting shareholder disclosure or consideration, then we will of course update the market at that time. We however cannot give any assurance as to the timing of any of these negotiations, and, if they do begin, whether they will progress to any definitive agreement."

The Company follows a policy of not commenting on market rumors and takeover speculation, but has made an exception in this limited situation. We do not expect to have further comment on this matter at this time.

The reports that, to our knowledge, appeared in the Chinese language press referencing the LOI are set forth below. The Company makes no representation as to the accuracy of these reports or the statements or quotations included therein.

http://news.chemnet.com/item/2012-02-09/1620648.html

http://news.dsqq.cn/ROLLNEWS/2012/02/082232387527.html

About Gulf Resources, Inc.

Gulf Resources, Inc. operates through two wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil & gas field explorations and as papermaking chemical agents. For more information about the Company, please visit http:// www.gulfresourcesinc.com.

Forward-Looking Statements

Certain statements in this news release contain forward-looking information about Gulf Resources and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, future product development and production capabilities, shipments to end customers, market acceptance of new and existing products, additional competition from existing and new competitors for bromine and other oilfield and power production chemicals, changes in technology, the ability to make future bromine asset purchases, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. Gulf Resources undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.