Gulf Resources Signs a Non-Binding Letter of Intent with the People's Government of Daying County in Sichuan Province

SHANDONG, China, June 27, 2011 /PRNewswire-Asia-FirstCall/ -- Gulf Resources, Inc. (Nasdaq: GFRE) ("Gulf Resources" or the "Company"), a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced that the Company's subsidiary Shouguang City Haoyuan Chemical Ltd. Co. has signed a non-binding Letter of Intent with the People's Government of Daying County in Sichuan Province to explore and develop potential underground brine water resources. Daying County is called the "China Dead Sea" and contains potential abundant underground brine resources.

Brine is used for bromine and crude salt extraction. The Company expects the cooperation to promote its long-term growth strategy of the Company through access to more bromine and crude salt resources. According to the Letter of Intent, the People's Government of Daying County will help the Company obtain exclusive mining and exploration rights to access brine resources.

After the prospect of brine water have been confirmed, the Company will consider to invest approximately RMB1.5 billion (approximately $220 million) over the next three to five year for development of resources.

The Company expects to use cash on hand and cash generated from operations, in combination with debt, to fund the project and does not intend to conduct an equity offering to raise the required capital.

"We are pleased to announce this cooperation agreement with the Daying County government," said Mr. Xiaobin Liu, the Company's Chief Executive Officer. "While the project is still in its early stages of development, we are very excited about the potential to grow our access to bromine and crude salt in the PRC, thereby further strengthening our market position."

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.

SOURCE Gulf Resources, Inc.

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