Gulf Resources Inc. (OTCBB: GFRE)

Written by John Pentony on July 10, 2009

OVERVIEW

Gulf Resources is a leading provider of bromine, crude salt and a portfolio of various specialty chemicals throughout China. The Company’s products are necessary components for China’s flourishing oil and papermaking industries.

The Company operates through its two wholly-owned subsidiaries: Shouguang City Haoyuan Chemical Co. Ltd (SCHC), which primarily produces and distributes bromine and crude salt; and Shouguang Yuxin Chemical Industry Co. Ltd (SYCI), which focuses on manufacturing and selling chemical products.

SCHC produces and distributes bromine and crude salt in China. SCHC is one of few licensed bromine producers and is the largest in China and fourth largest in the world. Elemental Bromine is a chemical element that is used in the refrigeration, pharmaceutical, agrochemical, and oil field industries. China’s domestic market is large and growing and the country currently produces roughly 80% of all the bromine consumed domestically. Gulf Resources will capitalize on the growing demand for bromine with its access to non-reserve mineralized materials in Shouguang, China

SYCI produces and distributes chemical products and agents used in oil and gas field exploration and distribution, oil field drilling, and in the papermaking industry. The company services large customers such as SINOPEC and China National Petroleum Corporation. A strong customer base, material growth drivers and proprietary product introductions provide a diversified platform for growth.

Gulf Resources became a U.S. publicly traded company in December 2006. In November 2007, the Company completed a two for one forward stock split, and started trading under the new ticker symbol GFRE on the OTC Bulletin Board.

BROMINE

Bromine is never naturally found in its elemental form, but rather in compounds with other substances, called bromides. Bromides are present in halogen water, that exists in salt lakes, seawater and underground brine wells. Elemental bromine is produced by extracting the bromine ion from halogen water.

We use chlorine for the extraction process and sulfur or soda to absorb the elemental bromine. This production method is simple, with bromine extraction rates reaching 70-80%. The process can also be completed in a closed system, imposing minimal strain on the environment.

Elemental bromine is mainly used to manufacture flame retardants, pharmaceuticals, paper, dyes, insect repellents, drilling fluids, perfumes, photographic chemicals, water-treatment chemicals, and sanitizers. Bromine is also a key component of other chemicals.

GFRE uses chlorine for the extraction process and sulfur or soda to absorb the elemental bromine. This production method is simple, with bromine extraction rates reaching 70-80%. The process can also be completed in a closed system, imposing minimal strain on the environment.

THE MANAGEMENT

Xiaobin LiuChief Executive Officer

Effective March 10, 2009, Mr. Xiaobin Liu was appointed the Chief Executive Officer of Gulf Resources. Mr. Liu has been closely involved with the Company since January 2007. Serving as Vice President, he was responsible for all the Company’s operations. From June 2005 to December 2006, he was the Vice President of Shenzhen SEG. Dasheng Co., Ltd., a Shenzhen-listed company engaged in the real estate and hotel industries. From May 2000 to June 2005 he managed the securities department of Saige International Trust and Investment Corporation in Hainan province and was in charge of asset management. From May 1995 to May 2000, Mr. Liu served as the Vice President of Hainan Wanquanhe Development, where he was in charge of corporate operations and financial control. Prior to that, he worked in the finance departments of Chinese Black Metal, Ltd. and Shanxi Aircraft Manufacturing Company. He has a Master’s degree in international accounting from the City University of Hong Kong. Mr. Liu was born 1968.

Min LiChief Financial Officer

From 1998 to 1999, Mr. Li worked at China Construction Bank Shandong branch and in 2000 he worked at the Yangkou Office as the accounting manager. He became Manager of the accounting departmen t 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 MiaoVice President

Mr. Miao was born in 1968. He was Director of Shouguang Business Trade Center since 1986. From 1991 to 2005, Mr. Miao served as Vice President of Shouguang City Commercia l 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 resources and business management.

Ganzuo LiSenior 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 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 General Engineer. He is also Director of the Shandong Chemical committee.