CASSIUS MINING LIMITED — Interim / Quarterly Report 2008

Jan 28, 2009

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ASX ANNOUNCEMENT

29 January 2008

SECOND QUARTER ACTIVITIES REVIEW

for the period ending 31 December 2008

OVERVIEW

Gulf Resources is a resource development company that creates value for shareholders through the identification, acquisition and valorisation of resource focused projects, with a particular emphasis on regions where Gulf maintains relationships that provide a strategic advantage.

With a team of experienced engineering, project management, legal, financial and resource specialists, Gulf fosters and seeks to develop projects of major significance to both the company and the countries in which Gulf operates.

Gulf currently operates in Eastern Africa, Vietnam, and Northern and Eastern Australia.

ACTIVITES & PROJECT REVIEW

Summary

Activities in this period have continued the work established over the past year in shifting the corporate focus from a domestic exploration portfolio to a strategic developer and acquirer of projects providing exposure to large scale energy project and integrated resource/infrastructure development opportunities in Asia and Africa.

Operations Reviewed, Streamlined and Strategy Endorsed

Given the turmoil in the financial markets and its ramification for successful, near term funding options for exploration and early stage development projects, Gulf has reviewed its operations across the board and sought significant cuts in expenditures where possible, whilst retaining Gulf’s primary assets and our experienced management team.

A core part of our strategy for sustainable success is to develop relationships, diversify our assets and to foster and secure intellectual capital. This approach forms part of a coherent and logical strategy, designed to capture value at both a corporate and project level.

Separation of Resource Development and Investments from Financial Services Completed

In keeping with this strategy, Gulf has completed its initial development of a stand alone investment and financial services group by establishing Thornhills NWT Investment Corporation (“Thornhills”).

This new group will act initially as a corporate advisor and business consultant, enabling it to capitalise on the broader corporate opportunities as they arise in the global mining and financial markets. In this regard, certain initial mandates of the new financial services group will be to specifically assist the funding requirements associated with the large scale mining and infrastructure opportunities Gulf is seeking in Africa and Asia.

Gulf shareholders will have an initial 70% interest in Thornhills, which will be held and administered through the Gulf Shareholder Trust, in preparation for a potential listing of this business. Philip Treisman, Deputy Chairman of Gulf Resources Ltd, as been appointed Chairman of ThornhillsNWT Investment Corporation and trustee of the Gulf Shareholders Trust. Scott Reid, Chairman of Gulf, as been appointed Deputy Chairman of ThornhillsNWT Investment Corporation and trustee of the Gulf Shareholders Trust.

Thornhills is also in the process of launching an investment company focussed on taking advantage of the significant opportunities created by the unprecedented global economic downturn. Thornhills Resources Investment Company Ltd has been established as the vehicle to seek these opportunities and plans to list on the ASX, at an appropriate time, as a specialist resource listed investment company.

Restructuring of Company Project Holdings

As part of the company’s review of operations, Gulf Groups' key projects have been streamlined into a company structure designed to create efficiencies, protect project value and simplify valorisation transactions as follows:

1. Gulf Future Fuels Corporation (previously GLFR508 Holdings Ltd)

This company holds Gulf’s interest in the Coal to Liquid (“CTL”) Project in Vietnam, a partnership with a major Vietnamese industrial conglomerate, Geleximco, to establish the feasibility of, and the development and implementation of an up to 60,000 barrel per day (bpd), Coal to Liquid fuel plant in northern Vietnam ("Vietnam CTL Project").

Gulf has been advised that application has been made to the Vietnamese Government for substantial coal concessions spanning two provinces in the Red River Delta coal basin near Hanoi. We were expecting an update on the application progress late last year but to date no further progress reports have been received from our Vietnamese partners.

In light of the continuing economic crisis, the company reviewed the terms of the Joint Development Agreement (JDA) with our partners and as a result has suspended operations under the JDA for the time being. Gulf’s management and technical team continues to assist our partner in procuring the coal license under the framework of the strategic alliance agreement with Geleximco.

On behalf of the Geleximco/Gulf partnership, Gulf’s technical representatives in conjunction with representatives from Hatch Engineering will be presenting at the 4[th] Annual Coal-to-Liquids and Gas-toLiquids Conference on 17 & 18 February 2009 at the Stamford Plaza Hotel in Brisbane.

2. East African Development Corporation (previously GLFR308 Holdings Ltd)

Previously referred to as the Mtwara Infrastructure Corporation, the company is primarily seeking iron ore, copper and other metal opportunities in eastern Africa.

Company management has reviewed an advanced copper mineralisation project and a small scale iron ore production opportunity. Both projects have the potential to generate modest cash income to sustain local operations for minimal capital expenditure.

The company will also hold our interests in the Southern Sudan Copper Gold Project and related logistics and supply project. Both of these projects are in joint venture with locally based partners.

3. Revuma Energy Corporation (previously GR Projects Ltd)

The company holds a 70% interest in a Tanzanian coal prospect, license PL4510/2007. The company is seeking further coal related opportunities in East Africa and discussions are at an advanced level with government representatives in East African countries with respect to a power generation strategy for the region.

4. Industrial Minerals International Corporation (previously GR Services Ltd)

The company technical team has reviewed a significant Kaolin project in Tanzania and investigated a world class sized vermiculite project in eastern Africa. Discussion with project owners and stake holders are continuing.

Company management is reviewing potential joint ventures that offer low cost exposure to promising mineral development projects. A significant mineral sand opportunity is being reviewed and other projects are also being sought. Minimal expenditure in Madagascar is expected for the next three months.

5. Asia Pacific Gold Corporation Pty Ltd (Previously Dingo Resources Pty Ltd)

The company holds the Ewingar Project in Northern New South Wales (EL 6490 - GLF 100%). The tenement includes a small inferred resource of 31,000 ounces of gold at the Horton’s Prospect, which remains open at the northern end, with possible extension to the south. The tenement has been renewed with exploration to commence following finalisation of the Native Title Right to Negotiate process by the New South Wales Department of Natural Resources.

In keeping with the Group's shift of corporate focus from a domestic exploration portfolio, company management is reviewing a potential gold-related joint venture in Saudi Arabia.

6. Chillagoe Resources Pty Ltd

The company will conduct further reviews of advanced projects in the base metals sector over the next few months both in Australia and in Eastern Turkey.

The company currently holds the advanced Crystalbrook base metal project in Far North Queensland (EPM 13841 and EPM 15707 – GLF 100%) where access has been established with the view to conducting ground geophysical surveys to extend the existing grid and provide coverage over EPM 15707. Further work programs over EPM 15707 will be reviewed internally in the March quarter.

CORPORATE

As reported in the attached Appendix 5B, cash on hand at end of December 2008 was A$1.4m.

Further Information

Scott Reid, Chairman
Philip Treisman, Deputy Chairman	t 02 8247 5333
Wayne Kernaghan, Finance Director and Company Secretary
Andrew Johnstone, Chief Operating Officer

Competent Person Statement

The information in this report that relates to exploration results is based on information compiled by Andrew Johnstone who is a Fellow of the Financial Services Institute of Australasia, a member of both the Australian and American Societies of Exploration Geophysicists, and member of the Australasian Institute of Geoscientists (AIG). Mr Johnstone provides exploration management services to Gulf Resources Ltd. Mr Johnstone has sufficient experience in 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 Johnstone consents to the inclusion of this information in the form and context in which it appears.

www.gulfresources.com.au

A P P E N D I X 5 B

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

Name of entity
Gulf Resources Limited
ABN 13 115 027 033 Consolidated statement of cash flows		Quarter ended (“current quarter”)
		31 December 2008
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 (realised exchange gain) Net OperatingCash Flows		Current quarter $A’000	Year to date (6 months) $A’000
		(746) (141) 17 432	(1,555) (295) 45 432
		(438)	(1,373)
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)		- 41 (12)	(32) 47 (184)
		29	(169)
		(409)	(1,542)

Appendix 5B Mining Exploration Entity Quarterly Report

1.13 Total operating and investing cash flows (brought forward)	(409)	(1,542)
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 financingcash flows	-	160
	-	160
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	(409) 1,852	(1,382) 2,825
	1,443	1,443

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 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
		152
		-
1.25 Explanation necessaryfor an understandingof the transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows - 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest -	Explanation necessaryfor an understandingof the transactions
	-
		n consolidated assets
	-
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
	-

Appendix 5B – Page 2

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 used $A’000
	-	-
	-	-
Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development		$A’000
		400
		-
Total		400
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	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)	1,443	1,852
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	1,443	1,852

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

Appendix 5B – Page 3

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	69,758,055	69,758,055	-	-
7.5 +Performance Rights 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured,converted	4,000,000	-	-	Expiring 31 May 2010
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	25,449,072 42,629,028	25,449,072 42,629,028	$0.20 $0.25	30 June 2011 31 December 2009
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

Appendix 5B – Page 4

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: 29 January 2009 (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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Appendix 5B – Page 5