CASSIUS MINING LIMITED — Interim / Quarterly Report 2007

Oct 28, 2007

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ASX ANNOUNCEMENT

29 October 2007

FIRST QUARTER ACTIVITIES REVIEW

for the period ending 30 September 2007

KEY POINTS

• Copper/lead/zinc mineralisation confirmed in diamond drill holes at Crystalbrook Project, located in Far North Queensland

• Extension zones of alteration and mineralisation are consistent with the gold/copper intrusive related target model

• Follow-up drilling planned for December quarter 2007 and March quarter 2008

SUMMARY

Drilling intersects extensive mineralised system at Queensland gold base metal project.

Intersections of significant gold, silver, lead and zinc mineralisation previously announced by Gulf Resources Ltd (ASX: GLF) at its wholly-owned Crystalbrook project in far north Queensland were confirmed following receipt of encouraging assay results. Drilling intersected zones of anomalous copper (to 0.4 %) and zinc (to 0.3 %) mineralisation within an extensive intrusive related silica–pyrite–pyrhhotite alteration zone.

Gulf chairman, Scott Reid, commenting on the results said “Interpretation of the results suggest that the chargeable anomalies represent the top of a much larger system at depth and that the main source of the IP targets have not been intersected. Follow-up diamond drilling is scheduled in the December and March Quarters at the project.”

…continued on page 2

Further information

Scott Reid, Chairman t 02 8247 5333 Wayne Kernaghan, Finance Director t 02 8247 5333 Greg Duncan, Technical Director t 0427 376 426

Attribution

The information in this report which relates to exploration results at the Crystalbrook Project has been approved for release by Mr Greg Duncan (B.Sc., MAusIMM), who is an exploration geologist and has sufficient experience in relation to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined by the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (The JORC Code 2004 Edition). Mr Duncan has consented to inclusion of this information in the form and context in which it appears.

About Gulf Resources

The company holds highly prospective exploration projects in the North Queensland and Tanami gold provinces. These provinces host several world class gold deposits with recognised exploration potential for further discoveries.

The company also holds an advanced exploration resource delineation project in Northern New South Wales which contains a JORC inferred resource of 309,000 tonnes at 3.12 grams per tonne gold for 31,000 ounces.

The company’s key aim is focused on low cost - high return exploration and corporate strategies to capture significant value for investors during this current resource cycle by offering investors a balanced exposure to Brownfield resource expansion, advanced Greenfield exploration and development potential through a project acquisition strategy.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

Crystalbrook Project, Far North Queensland (EPM 13841 - GLF 100%)

The primary focus this period was on reviewing the results of the diamond drilling program to appraise the high tenor geophysical Induced Polarisation (“IP”) anomaly at the company’s wholly owned Crystalbrook gold-base metal project in Far North Queensland. The project is located some 25km south west of Chillagoe and 150km west of Cairns.

Regional Geology & Location Map - Crystalbrook Project

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Diamond Drilling

Encouraging assay results have been received from the initial diamond drilling program at the Crystalbrook Project in Far North Queensland. Drilling intersected zones of anomalous copper (to 0.4 %) and zinc (to 0.3 %) mineralisation within an extensive intrusive related silica–pyrite–pyrhhotite alteration zone.

The initial two holes into a previously untested blind target confirm the presence of a large intrusive system with associated copper, zinc, lead and silver mineralisation. The result of 21m @ 248 ppm copper and 436 ppm zinc from 272m in CBDD-2 demonstrates the potential of the system to host economic mineralisation.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

The drill holes, drilled 380m apart, targeted a large (2 km diameter) geophysical anomaly 1400m to the north of the mineralised Silver Dollar Fault Zone. This zone was detected utilising an Induced Polarisation Survey which indicated a chargeable anomaly at depth to the north of the regional fault and resistive anomaly to the south. The anomaly is co-incident with the regional northwest Silver Dollar Fault intersection with a radial fracture system.

The results are of a lower tenor than previous drilling along the Silver Dollar Fault Zone and are interpreted as having intersected the peripheral zone of mineralisation within the system. Surface rock chip and soil sampling results indicate a broad area of elevated gold and base metal over a 12 km[2] area centred on the Silver Dollar Fault Zone intersection with the radial fracture zone (see diagram 1 below).

The extensive widths of alteration present in both holes, CBDD-1 was drilled to 380.6m and CBDD-2 to 452m and progression to a higher temperature alteration assemblage in CBDD-2 from 170m depth are considered indicative of an extensive system with zoned metal distribution. Mineralisation increased in CBDD-2 with the broadest zone of anomalous + 300 ppm zinc from 272m.

The results are considered very encouraging with confirmation of a large intrusive related mineralised system warranting continued exploration. Petrology and further assays will be undertaken on the drill core with results to be combined with previous drill results and the IP model to target further drilling which is scheduled to commence within the December quarter.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

Results include:

• 0.5m @ 10 ppm Ag, 4420 ppm (0.4%) Cu and 2100ppm Zn from 32.5m in CBDD-2

• 21m @ 248 ppm (Cu) and 436 ppm (Zn) from 272m in CBDD-2

• 2m @ 1114 ppm Zn from 141.5m in CBDD-2

• 4.5m @ 453ppm Cu and 273 ppm Zn from 107m in CBDD-1

• • 1.0m @ 3090ppm Pb and 2023 ppm Zn from 127.5m in CBDD-1

• 1.5m @ 288 ppm Cu and 891 ppm Zn from 83.5m in CBDD-1

• 1m @ 1146ppm Cu, 3.8 ppm Ag and 208 ppm Zn in CBDD-1

CBDD - 1

CBDD - 1
From	To	Interval m.	Cuppm.
84	85	1	496
107	108	1	1146
111	111.5	0.5	1140

Copper intersections > 400 ppm.

From	To	Interval m.	Znppm.
83.5	85	1.5	890.5
110.5	111.5	1	547
127.5	128.5	1	2023
216	216.5	0.5	540

Zinc intersections > 300 ppm.

CBDD - 2

CBDD - 2
From	To	Interval m.	Cuppm.
32.5	33	0.5	4420
34	34.5	0.5	409
49	49.5	0.5	470
77.4	77.9	0.5	427
277.5	278.5	1	598
286	289.5	3.5	459
298.5	299	0.5	871
342	342.5	0.5	547
381	381.5	0.5	953
397	397.5	0.5	418
409	409.5	0.5	559

Copper intersections > 400 ppm.

From	To	Interval m.	Cuppm.
32.5	33	0.5	4420
34	34.5	0.5	409
49	49.5	0.5	470
77.4	77.9	0.5	427
277.5	278.5	1	598
286	289.5	3.5	459
298.5	299	0.5	871
342	342.5	0.5	547
381	381.5	0.5	953
397	397.5	0.5	418
409	409.5	0.5	559
423	425.5	2.5	327

Zinc intersections > 300 ppm.

Collar Location

	Easting	Northing	Azimuth	Dip	Depth
CBDD – 1	224910	8081861	310	-90	380.6
CBDD - 2	224603	8082089	360	-60	452.
AGD 66 Zn. 55.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

Assay Details

Drill core was half sawn in 0.5m intervals and assayed by ALS-Chemex. Gold assay was by fire assay AA-Au 25 and base metals by ME-ICP61.

Drilling was conducted by Tom Browne Drilling using an LF70 drill rig. Holes were collared as HQ and continued as NQ core.

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The company is in the final stages of securing extra tenement coverage in this important region and will report on the finalisation of this process to the market in due course.

Swan Creek Project Northern Territory (EL24764,EL25083 and EL10097 and EL10096 - GLF 100%)

Exploration for gold and base metal mineralisation has commenced at the Swan Creek Project in the Northern Territory. The project is located to the north of the gold rich Tanami Province with exploration targeting copper and gold mineralisation in coeval basement metasediments. Equivalent rock types host the majority of the Northern Territory’s gold mineralisation in the Tanami, Pine Creek and Tennant Creek districts.

The area has been subject to previous drill testing for Mt Isa style lead – zinc mineralisation in the Limbunya Group. Drilling intersected low grade lead and zinc. Follow up of copper intersections in drilling and gold stream sediment anomalies to 31 ppb was not conducted.

Drilling by GeoPeko intersected graphitic shales with chalcopyrite in hole LMDH8 and haematitic sericitic shale and “chert” + haematite with quartz, carbonate and haematite veining, rare pyrite and chalcopyrite in LMDH12.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

These mineralised basement intersections indicate the prospectivity of this area which has seen minimal exploration.

The area has shallow soil cover which limited historic exploration. Airborne magnetics indicates folded magnetic basement rocks interpreted to be iron rich sediments which are being targeted for the gold mineralisation shedding into local streams.

The current campaign will follow up on gold stream sediment anomalies and the initial soil sampling undertaken last year. Exploration will entail stream and soil sampling, geological mapping and associated rock chip sampling. A review of the Isa style base metal mineralisation previously drilled by GeoPeko will also be undertaken.

This work will be used target drill testing early in the 2008 field season.

Note: Drillhole information reported in Exploration Licences 7140 & 7141 Combined Final Report on Exploration. Peko Wallsend Operations Ltd. Geopeko Division. By A Hurrell December 1993. Open File Report DME Library, Darwin.

Ewingar Northern New South Wales (EL 6490 - GLF 100%)

Following a number of positive consultations with representatives of the Malera Bandjalan Tribe during the quarter, the company is now proceeding towards formalising a framework for co-operation in identifying cultural heritages sites and places within the tenement. Company management and the representatives of the tribe are planning to meet on site to review the project area in the near future.

COMPANY CORPORATE

Director Appointment

During the quarter the company announced the appointment of Philip Treisman as Director of Strategy and Counsel.

Philip Treisman has over 10 years experience in the international finance and mining and resource industries. As CEO and founder of a bespoke multi-jurisdictional strategic business management consultancy, and as head of the Strategic Finance Division at one of South Africa’s first tier law firms, Philip Treisman has been the principal advisor for strategic business development in international finance, mining and resource projects and various government sponsored infrastructure development projects throughout Africa, the Caribbean, Asia, Oceania and Australia. During his career he has served as independent counsel to Fleming Family & Partners and the Highland Star Group.

His close relationship with London’s finance community and role in the valorisation of projects in emerging economies through public listings of securities on the Johannesburg Stock Exchange, Botswana Stock Exchange and London’s Alternative Investment Market has provided him with extensive experience in corporate activities relating to junior mining companies expanding their activities and increasing their shareholder value as they move into the multinational arena .

Investment Activities

As part of our investment strategy, the company became a substantial shareholder in a “corporate shell” called GoldLink GrowthPlus Ltd, listed on the ASX, with approx. $4.5 million cash. Gulf decided to exercise its rights as a shareholder of GoldLink in order to effect a positive change to the direction of GoldLink by: (i) removing most of the current board members and (ii) seeking our fellow shareholders’ mandate for taking GoldLink forward.

During the past two years under the direction of the GoldLink Board and with the specialized assistance of the investment Manager, over 80% of shareholder value has been lost and by June 2007, the Company had a net loss of approximately $30 million.

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Gulf Resources Ltd (ASX: GLF) First Quarter (September 2007) Activities Review

Our intentions were clear, simple and logical:

• Remove the architects and promoters of the failed strategy in order for the Company to properly consider all its alternatives;

• Trim down the board to a more appropriate size (and cost) yet retain linkage to the historical activities of the board by keeping on one of the non-executive members;

• Simultaneously, investigate the activities of the historical board and the investment Manager for potential recovery of value and review the supposed investigations of the investment subcommittee with regard to the alternatives noted in May 2007.

• Suggest, seek out and / or devise a new way forward for GoldLink, which will be fully and properly discussed with shareholders and will be undertaken with the mandate of shareholders.

The Goldlink board unilateral conduct in the lead up to the shareholders meeting appeared to be an expropriation of shareholders rights and to unfairly favour one shareholder above all other shareholders.

Gulf was of the view that in the circumstances, an application to the Takeovers Panel was not only necessary: it was appropriate. The Takeovers Panel has decided that it was not able to deal with the matter and accordingly the application was rejected. Gulf has been advised that there are grounds to review the Takeovers Panel decision in the Federal Court. Gulf is now considering its position and we will keep you informed of our decision in this regard.

At the shareholders meeting on the 18 October 2007, Gulf was pleased that a significant number of us, the shareholders, decided to participate. More than 50% of the GoldLink participated in the voting. Overall, of the shares that were voted (including all the proxies held by the chairman of the meeting) approximately 45% voted in favour of the resolutions and 55% voted against. This equates to a total voting of approximately 27% of the company for the resolutions and 33% of the company against.

We note that the new board has now undertaken to implement many of the proposals put forward by Gulf in the communications leading up to the meeting of 18 October. Nonetheless, Gulf remains concerned about the composition of the Goldlink board and we will continue to monitor situation closely.

Project Acquisition Strategy

The board, together with external consultants, has continued confidential discussions with a number of potential partners in relation to the company’s ongoing project acquisition strategy.

The board is currently reviewing advanced status projects that potentially provide the company opportunity for participation in development stage projects across the following commodity spread: gold, uranium, copper, iron ore and nickel.

Currently our project acquisition geographical focus remains on Eastern and Southern Africa and Madagascar.

www.gulfresources.com.au

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APPENDIX 5B

MINING EXPLORATION ENTITY QUARTERLY REPORT

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

	Name of entity
	Gulf Resources Limited
	ABN 13 115 027 033 Consolidated statement of cash flows		Quarter ended (“current quarter”)
			30 September 2007
	Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for: (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest & other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows		Current quarter $A’000	Year to date (3 months) $A’000
			(522) (259) 20	(522) (259) 20
			(761)	(761)
	Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		(20) (221) (28) (300)	(20) (221) (28) (300)
			(569)	(569)
			(1,330)	(1,330)

Appendix 5B Mining Exploration Entity Quarterly Report

1.13 Total operating and investing cash flows (brought forward)	(1,330)	(1,330)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) – expense of issue Net financing cash flows	-	-
	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(1,330) 2,339	(1,330) 2,339
	1,009	1,009

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities	Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		165
		-
1.25 Explanation necessaryforanunderstanding ofthe transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets andliabilities but didnotinvolve cash flows - 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entityhas an interest -	Explanation necessaryforanunderstanding ofthe transactions
	-
	-
	Details of outlays made by other entities to establish or increase their share in projects in which the reporting entityhas an interest
	-

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Appendix 5B Mining Exploration Entity Quarterly Report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount available $A’000	Amount used $A’000
	-		-
	-		-
Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development			$A’000
			265
			-
Total			265
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to therelateditemsinthe accountsis asfollows.	Current quarter $A’000		Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	1,009		2,339
	-		-
	-		-
	-		-
Total: cash at end of quarter(item 1.22)	1,009		2,339

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

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Appendix 5B Mining Exploration Entity Quarterly Report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs	46,559,271	32,859,266	-	-
	-	-	-	-
7.5 +Performance Rights 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	3,000,000	-	-	-
	-	-	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	23,327,402	16,577,402	$0.20	30 June 2011
	-	-	-	-
	-	-	-	-
	-	-	-
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

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Appendix 5B Mining Exploration Entity Quarterly Report

Compliance Statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 24 October 2007 (Company Secretary) Print name: Wayne Kernaghan

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NOTES

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities: The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards: ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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