Gulf Resources, Inc. (OTCBB: GFRE)

Dear Reader,

Today’s featured company isn’t high-technology nor does it have a cure for anything.  What it does have is a highly sought-after component of a massive growth industry in perhaps the largest growth market in history.  The company, Gulf Resources Inc. (OTCBB: GFRE), is the largest producer of bromine in China with a domestic market share greater than 15%.  With a market cap exceeding $198 million, all indications are that growth is likely to continue and expansion inevitable. Please take a moment to review our profile below.
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About Gulf Resources, Inc.

Gulf Resources, Inc. (OTCBB: GFRE) based in Shandong China, is a US publicly traded company and is a leading provider of chemical products in China. By the end of fiscal year 2006, Gulf Resources had net assets of $8.88 million with total assets valued at over $13.98 million. The company’s market capitalization, as of October 2007, was $198 million USD. 

Gulf Resources conducts its operations through its two wholly-owned subsidiaries: Shouguang City Hao Yuan Chemical Industry Co., Ltd. (SCHC) and Shouguang Yu Xin Chemical Industry Co., Ltd. (SYCI).

SCHC

SCHC is one of the top producers and distributors of bromine and crude salt in China, which are utilized to manufacture a wide variety of industrial compounds and products. The company employs a total of 103 people, including 6 managers, 8 technicians and 5 sales associates.

SYCI

SYCI produces and distributes chemical products and agents used in oil and gas field explorations, oil and gas distribution, oil field drilling, wastewater processing, and in the papermaking industry. The company services large customers such as SINOPEC and PetroChina. Currently, there are 98 employees at the company, including 5 managers, 10 technicians and 8 sales associates. 

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Chemical Market in China

Bromine, crude salt and other chemical products are highly desired in many industries in China. These products are essential for the oil and papermaking industries. China is the fourth largest bromine producer worldwide behind the US, Israel and Jordan. The production of bromine is estimated to reach over 130,000 tons/year in China. Demand for bromine in China continues to outpace supply. Currently, bromine sales worldwide are $1.24 billion with $290 million originating from China. GFRE has an annual production capacity estimated at 26,700 tons and possesses rights on over 18,775 acres of property with proven and probable reserves of over 1.7 million tons of Bromine.

Currently, GFRE is the largest producer of bromine in China with a domestic market share greater than 15%. Through targeted complementary acquisitions and further organic growth, the company’s goal is to continue increasing its bromine production each year, while growing its proven reserves. While the international market is large and growing, China currently consumes all the bromine produced domestically, and currently this annual consumption represents only 20% of total worldwide use.

The rising international demand for bromine, coupled with the fact that China will soon become the largest papermaking country in the world is anticipated to have a significant impact on the bromine demand. In addition, based on the predication of Freedonia consulting, the market size of oil chemicals will be $8.1 billion in 2007 growing to $9.2 billion in 2010. This translates to excellent opportunities for us as we continue to aggressively market our specialty chemical products, while introducing new proprietary compounds for customers in the power generation industry.

The crude salt yield of Shandong Province was 16 million tons in 2005, which amounts to approximately 30% of the entire Chinese market. Shouguang City, the location of the company’s headquarters, is the major salt production area in Shandong Province.

Developing profitable products:
Bromine is also used in the manufacture of fumigants, flame-retardants, water purification compounds, dyes, medicines, sanitizers, inorganic bromides for photography and other items. Some products have higher profit margins. The company has developed flame-retardant agents and is developing new products which utilize bromine. Doing so will increase profits and help us towards our goal of becoming a chemical industry leader.

Continuous increase in R&D:
Based on market demand, we will continue to pursue the development of environmentally friendly products. Our company’s R&D team will focus on introducing new products while making improvement to its current product portfolio, with a focus on papermaking chemicals, power generation and pesticides.

High bromine reserve concentration:
Bromine is a non-renewable resource. Bromine is only found in large quantities in four countries: the United States, Israel, Jordan and China. The bromine exploitation and extraction costs are very high in the US; whereas the costs are relatively low in China because of high bromine concentration and geographically easy exploitation of bromine wells.

Legitimate licensed company:
Gulf Resources is one of only six companies in China that possesses an exploitation license for bromine. Strictly enforced government regulations prohibit any non-licensed company or person from producing or distributing bromine.

Superior technical know-how:
30% of the current GFRE team are senior technical workers who have a wealth of experience in the industry and have developed 30 kinds of chemical products to date. 
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Products and Manufacturing

Manufacturing bromine and specialty chemical products

Gulf Resources is a leading provider of bromine, crude salt and a portfolio of various specialty chemicals throughout China. Our products are necessary components for China's flourishing oil and paper-making industries.

Gulf Resources is one of only six companies with a highly coveted Chinese license for bromine exploration, production and distribution. Bromine is a chemical element that is used in the refrigeration, medical, agrochemical, and oil field industries. While the international market is large and growing, China currently consumes all the bromine produced domestically. Gulf Resource will capitalize on the growing demand for bromine with its large proven reserves in Shouguang, China.

In addition to bromine, our company manufactures and supplies crude salt, which is found in large quantities near the bromine brine wells. Gulf Resources also develops numerous specialty chemicals for China’s papermaking and oil & gas industries. In 2006, Gulf Resources delivered 10,000 tons of oil & gas related chemical products, along with 7,000 tons of papermaking related chemical products.

Gulf Resources is aggressively pursuing complementary acquisitions, which coupled with sustained organic growth, will help us become a dominant worldwide player in the bromine and specialty chemical industries.

Besides the bromine and crude salt manufactured and produced by Shouguang City Hao Yuan Chemical Industry Co., Ltd. (SCHC), there are a variety of specialty chemicals produced by Shouguang Yu Xin Chemical Industry Co., Ltd. (SYCI). SYCI produces and distributes oil & gas products, papermaking chemicals and anticorrosive reagents. These products comprise the essential raw materials in the papermaking and oil & gas industries.
 

1.  Hydroxyl guar gum is an economical thickener and stabilizer agent. Its primary uses are: dispersion, controlled viscosity, gelling, and it also acts as a preservative.

2.  Demulsifier agent is a chemical used in the preparation and maintenance of an oil- or synthetic-based drilling fluid.

3.  Corrosion inhibitor is an agent used extensively in the oil & gas industry. It is designed to control pipeline corrosion and aid in the production of a variety of other chemicals.

4.  Bactericide is used to control bacteria populations in drilling, production, processing and transportation operations. As a result of bactericide, pipeline and storage tank corrosion and general product deterioration can be significantly reduced which leads to increased production capacity, lower piping and equipment maintenance costs, as well as increased safety for workers.

5.  Chelant agent dramatically increases papermaking strengths the fibers which are utilized to make paper.

6.  Iron ion stabilizer is utilized in many industries and forms strong complexes with the metal ions present in the target solution.

7.  Clay stabilizing agent is a chemical additive used to prevent the migration or swelling of clay particles in reaction to water-based fluids. Clay stabilizers act to retain the clay platelets in position by controlling the charge and electrolytic characteristics of the treatment fluid.

8.  Flocculant agent is fed into an untreated water supply for water treatment and sediment processing.

9.  Retention agent is used in production process of papermaking when a retention system is used. The agent substantially improves the draining (i.e. the speed with which water flows from the fiber suspension). It’s also used for water treatment and sediment processing.

10.  Miscellaneous papermaking agents include: expanding agents, strength enhancing agents, and softener agents. These agents can change the characteristics of paper’s formations and textures depending on which agent is used.

Recent News from Gulf Resources, Inc.

NEW YORK and SHANDONG, China, Dec. 4 /Xinhua-PRNewswire-FirstCall/ -- Gulf Resources, Inc. (OTC Bulletin Board: GFRE - News), which is a leading Bromine producer in the People's Republic of China (the "PRC"), today announced that it will present at the ICR XChange Asia Conference, which will be held on Wednesday, December 5, 2007 at the REUTERS Conference Center and the Nasdaq MarketSite in New York City. MORE

Press Release Source: EQUITIES Magazine
Tuesday December 4, 12:01 am ET

NEW YORK, Dec. 4, 2007 (PRIME NEWSWIRE) -- EQUITIES Magazine proudly announces its Winter Discovery Day Conference, to be held at the Princeton Club of New York on Friday, December 7, 2007. At this exciting event, emerging companies from a wide range of sectors will present to an audience of brokers, hedge fund managers, portfolio managers and sophisticated private investors.

The keynote speaker will be Timothy Sykes, a young man who truly personifies the American entrepreneurial spirit. While still in college, Sykes invested $12,415 of Bar Mitzvah gift money and turned it into $1.65 million. With the proceeds, he started his own hedge fund, Cilantro Fund Management, which was Barclays' No. 1 short-bias hedge fund from 2003 to 2006. Sykes is a regular CNBC commentator and has been featured on CNN, FOX News, MSN Money, and CBS Marketwatch, and in Businessweek, Institutional Investor, The New York Times, and the LA Times. MORE
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Management at Gulf Resources, Inc.

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Ming Yang, CEO & Director  Mr. Yang was born in 1966. He was nominated as director of Qinghe Oil Field Office in 1993, where he managed operations. In 1997 he was appointed to chairman and general manager of Shouguang Qinghe Shiye LLC and during the next three years its profits doubled. He took the position of general manager of Shouguang City Yu Xin Chemical Industry Co., Ltd. in 2000. During his stay, he focused on quality management and technology progress, which led to a 100 percent success rate on all products. He also helped the company successfully pass the ISO certification and become a private high-tech enterprise. In 2005 he was appointed to the position of chairman, where he has helped the company to become a leading producer of bromine and crude salt in China. In 2006 he became the chairman of Gulf Resources, Inc. Mr. Yang has been the representative of Shandong Shouguang congress since 1995 and in 1998 he was awarded as Honorary Entrepreneur in Weifang City. In 2002 he was honored as one of the ten outstanding youth in Shouguang.

Min Li, CFO & Director
From 1998 to 1999, he worked at China Construction Bank Shandong branch and in 2000 he worked at the Yangkou Office as the accounting manager. He became the manager of the accounting department in Shouguang Yu Xin Chemical Industry Co., Ltd. in 2004 and in 2006 he was appointed to the role of CFO of Gulf Resources, Inc. He has helped implement effective cost controls while efficiently increasing the use of capital.

Naihui Miao, Vice President & Director Scretary
He was born in 1968. He was the director of Shouguang Business Trade Center since 1986. From 1991 to 2005, Mr. Miao served as Vice President of Shouguang City Commercial Trading Center Company Limited. From 2005 to 2006, Mr. Miao served as Vice President of Shouguang City Yuxin Chemical Company Limited and as the deputy general manager. In 2005, he successfully developed the sales market of Talimu oil Field. Since January 2006, Mr. Miao has served as Director Secretary and Vice President of Gulf Resources, Inc. he is in charge of sales, human resource and business management.

Shixiang Huang, Vice President
Mr. Huang joined the Qinhe Industrial Co., Ltd. in 1994. By 2000 Mr. Huang became the deputy general manager of Yu Xin Chemical Industry Co., Ltd and in 2003 he was promoted to the President of Yu Xin Chemical Industry Co., Ltd. During this period he obtained Weifang City’s “Private Business Certificate of Safe Operation.” Mr. Huang has obtained his Senior Management Qualification Certificate and his Standardization Management Certificate in Shandong Province. Under Mr. Huang, the company passed the ISO and was honored “The National Service and Product Quality Guarantee Business” by the Federal Government. In 2004, the company was honored “The Most Creditable Company” in Shandong Province. Under Mr. Huang’s guidance the company is anxious to seek-out new projects and become the leading suppliers of CNPC and SINOPEC.

Ganzuo Li, Senior Technical Adviser & General Engineer
Mr. Li graduated from Shandong University in July of 1960 and was employed by the university upon graduating. Between 1980 and 1982, he was the visiting scholar of Missouri University in the US. Between 1986 and 1994 he served at Shandong University and his highest position was the Associate Dean of Chemistry College. From 1990 through 2005 he was a visiting professor at several universities in Asia and the US. He joined Gulf Resources in March, 2005 as the general engineer. He is the editor of J.Disp.Tech.Sci and director of the Shandong Chemical committee. 
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Financial Highlights For Gulf Resources, Inc.

2007 Financial Guidance

Management is currently revising its guidance to incorporate the recent asset purchases and further integration of previously completed transactions. Management currently anticipates revenues of approximately $54 million, representing an increase of over 200 percent from the $17.8 million reported during calendar 2006. Specifically, management expects that its core bromine business "SCHC" and specialty chemical business "SYCI" will contribute approximately $38 million and $16 million in revenues respectively. Net income is expected to increase approximately 980 percent to at least $13 million from the $1.2 million reported in 2006, which included a $5.3 million non-cash equity compensation charge. Previously issued guidance for revenue and net income was $48 million and $11.6 million respectively.

These estimates do not include any potential future acquisitions or non- cash charges related to the amortization of goodwill from previously completed acquisitions.

TO CONTACT GULF RESOURCES

Company Contact:
Ethan Chuang
Phone: 646.200.6316
E-mail:  Ethan@gulfresourcesco.com
Web Site:  www.gulfresourcesco.com

Investor Relations Contact:
Hayden Communications, Inc.
Matthew Hayden, President
Phone: 760.994.0034
E-mail: matt@haydenir.com

Visit the GFRE Web site, please Click Here

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