Gulf Resources Provides Expected Net Income Contribution of Acquired Manufacturing Assets

Published Sep 25th, 2009

NEW YORK and SHANDONG, China, Sept. 25 -- Gulf Resources, Inc. (OTC Bulletin Board: GFRE; "Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in the People's Republic of China, today announced that it expects the bromine and crude salt manufacturing assets, for which it entered into an asset purchase agreement on September 7, 2009, to contribute approximately $3.3 million in net income for 2010. This reflects a projected net profit margin of 29% given $11.3 million in expected revenue contribution of the assets for 2010. The company expects the acquired assets to become operational at the end of November 2009.
 

Consideration being paid by the Company for the manufacturing assets and the value of the rights to the leased property includes RMB 78.4 million (approximately $11.5) million in cash and the issuance of 4,229,366 shares of common stock equal to RMB33.6 million (approximately $4.9 million). The Company has so far paid approximately 30% of the total cash amount and expects to pay the remaining 70% of the cash consideration and the share consideration upon the closing of the transaction on September 30, 2009.

Gulf Resources has completed the audit and transition of the manufacturing assets. The technology preparations, staff employment and equipment maintenance are scheduled as planned and the Company expects to start production utilizing the newly purchased assets by the end of November 2009. In line with the earlier announcement, the Company estimates the manufacturing assets will add 4,000 metric tons to its annual bromine production capacity and 150,000 metric tons to its annual crude salt production capacity.

"Our latest acquisition is proceeding on schedule and will close by the end of the quarter," stated Xiaobin Liu, CEO of Gulf Resources. "The additional production capacity will further expand our domestic market share and help satisfy domestic demand for bromine and crude salt, while the increased access to limited bromine reserves should further enhance our pricing power in the industry."

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.cn .

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.