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Last updated on April 17, 2014 at 15:08 EDT

New Gold Announces Blackwater Feasibility Study Results

December 12, 2013

(All figures are in US dollars unless otherwise indicated)

VANCOUVER, Dec. 12, 2013 /PRNewswire/ – New Gold Inc. (“New Gold”) (TSX:NGD)
and (NYSE MKT:NGD) today announces the results of the Feasibility Study
for its Blackwater Gold project (“Blackwater” or the “Project”) in
British Columbia, Canada.

Feasibility Study Highlights

        --  Conventional truck and shovel open pit mine with 60,000 tonne
            per day ("tpd") whole ore leach processing plant
        --  17-year mine life with direct processing for first 14 years and
            processing of stockpile thereafter
        --  Life-of-mine operational strip ratio of 1.88 to 1.00
        --  Life-of-mine gold and silver recoveries of 87% and 49%
        --  Life-of-mine gold and silver production of 7 million ounces and
            30 million ounces
        --  Development capital costs of $1,865 million inclusive of a $190
            million contingency
        --  First nine years - average annual gold production of 485,000
            ounces at total cash costs(1) of $555 per ounce and all-in
            sustaining costs(2) of $685 per ounce
        --  Base case economics - at $1,300 per ounce gold, $22.00 per
            ounce silver and a 0.95 US$/C$ foreign exchange rate,
            Blackwater has a pre-tax 5% net present value ("NPV") of $991
            million, an internal rate of return ("IRR") of 11.3% and a
            payback period of 6.2 years
        --  Alternative case economics - at $1,600 per ounce gold, $26.00
            per ounce silver and a parity US$/C$ foreign exchange rate,
            Blackwater has a pre-tax 5% NPV of $2,120 million, an IRR of
            16.8% and a payback period of 4.5 years

“The completion of the Blackwater Feasibility Study is an important
milestone for our company,” stated Randall Oliphant, Executive Chairman
of New Gold. “The Project has many great attributes including: its
secure jurisdiction, long life, robust production potential, all-in
sustaining costs well below industry average, and continued exploration
potential. However, the combination of gold being down by over $500 per
ounce since we completed the Preliminary Economic Assessment for
Blackwater in September of 2012 and our Rainy River project having a
more modest capital requirement, results in our primary objective being
the advancement of Rainy River.”

“Importantly, Rainy River shares all of Blackwater’s strong project
characteristics,” Oliphant continued. “An updated feasibility study for
Rainy River remains on schedule for completion in early 2014.”

New Gold will continue to move Blackwater through the permitting phase
in 2014. The company views the potential of having a fully permitted
project as an important and valuable asset. In the current environment,
where there has been significant commodity price volatility, New Gold
wants to maximize its flexibility in respect of any future development
decisions. The company plans to stage the development of its projects
with the near-term focus being on the advancement of the lower capital
cost Rainy River project. Thereafter, the timing of Blackwater’s
development will be driven by the prevailing market conditions over the
coming years.

Mineral Reserve Estimate

The Blackwater mineral resource, effective March 31, 2013, is reported
within a conceptual pit shell at gold-equivalent cut-off values ranging
from 0.3 to 0.4 grams per tonne. The deposit contains Measured and
Indicated mineral resources suitable for direct processing of 306
million tonnes at 0.88 grams per tonne gold and 5.8 grams per tonne
silver, representing 8.6 million ounces of gold and 57.5 million ounces
of silver. In addition, the Measured and Indicated mineral resources
suitable for stockpiling and future processing includes 91 million
tonnes at 0.30 grams per tonne gold and 4.3 grams per tonne silver,
representing 0.9 million ounces of gold and 12.6 million ounces of
silver.

This mineral resource estimate is compliant with CIM (as defined at the
conclusion of the release) Definition Standards prescribed under
National Instrument 43-101 and is based upon a geologic block model
that incorporates 286,966 individual assays from 309,516 metres of core
from 1,003 drill holes at a nominal drill hole spacing ranging from 25
metres to 50 metres. Assay data density is sufficient to classify the
mineral resource at the Measured and Indicated confidence levels as
necessary to support the estimation of a mineral reserve. The drill
hole database was supported by approximately 80,000 quality
assurance/quality control (QA/QC) check assays.

A proposed mining production schedule was developed through the design
of an ultimate open pit within the mineral resource model. The
Blackwater mineral reserve, which represents the proportion of the
Measured and Indicated mineral resources included in the production
schedule, has been diluted using an average of 4.7% additional tonnes
containing 0.15 grams per tonne gold and 3.1 grams per tonne silver.
The Blackwater mineral reserve is summarized below.

     _________________________________________________________________
    |Blackwater Mineral Reserve Estimate - Effective December 2, 2013 |
    |_________________________________________________________________|
    |                                |Tonnes|Gold |Silver|Gold |Silver|
    |                                | (Mt) |(g/t)|(g/t) |(Moz)|(Moz) |
    |________________________________|______|_____|______|_____|______|
    |Direct processing material      |      |     |      |     |      |
    |Proven                          |124.5 |0.95 |  5.5 |3.79 | 22.1 |
    |Probable                        |169.7 |0.68 |  4.1 |3.73 | 22.3 |
    |Total direct processing material|294.3 |0.79 |  4.7 |7.51 | 44.4 |
    |________________________________|______|_____|______|_____|______|
    |Stockpile material              |      |     |      |     |      |
    |Proven                          | 20.1 |0.50 | 3.6  |0.33 | 2.3  |
    |Probable                        | 30.1 |0.34 | 14.6 |0.33 | 14.1 |
    |Total stockpile material        | 50.2 |0.40 | 10.2 |0.65 | 16.4 |
    |________________________________|______|_____|______|_____|______|
    |Direct processing and stockpile |      |     |      |     |      |
    |material                        |144.6 |0.88 |  5.3 |4.11 | 24.4 |
    |Proven                          |199.8 |0.63 |  5.7 |4.05 | 36.4 |
    |Probable                        |344.4 |0.74 |  5.5 |8.17 | 60.8 |
    |Total                           |      |     |      |     |      |
    |________________________________|______|_____|______|_____|______|

    Notes:
    1.Reported within an open pit design based on metal prices of
    $1,300/oz gold, $22.00/oz
    silver, with variable recoveries by grade and ore type averaging
    86.6% for gold and 49.1%
    for silver.
    2. Contained metal calculated on the basis of Tonnes * Grade /
    31.10348 grams per
    troy ounce.
    3. Direct processing reserves are defined as mineralization above
    a lower cut-off grade
    that varies by year between 0.26 g/t and 0.38 g/t AuEq and is to
    be mined and
    processed directly.
    4. Reserves noted as stockpiled material consist of ore tonnage
    above a 0.32g/t AuEq
    cut-off grade that is mined and stockpiled before being sent to
    the mill.  This stockpiled
    tonnage includes ore mined before mill startup, lower grade ore
    mined during
    preproduction and commercial production, and ore tonnage
    misclassified or
    misallocated during the mining process. All of the ore tonnage
    classified as
    reserves and listed here is processed and the total reserves
    quoted are equal to
    the total mill feed as shown in the life of mine plan.  No
    stockpiles currently exist
    at site.
    5. Gold-equivalent grade estimate based on $1,400/oz gold,
    $28.00/oz silver, and
    average metallurgical recoveries of 88.0% gold and 64.0% silver
    for oxide
    mineralization, 85.0% gold and 58.0% silver for transitional oxide
    / sulphide
    mineralization, and 85.0% gold and 44.0% silver for sulphide
    mineralization.
    6. All costs are based on estimates and vendor quotes effective
    third quarter
    2013. No escalation has been applied to bring costs forward to
    December 2, 2013.

Mining Operations and Metallurgy

The mining production schedule was developed using four phases. The
schedule incorporates an elevated cut-off grade strategy during the
first 10 years of mining to raise the mill feed grade. Material below
the higher cut-off grade is stockpiled for processing at the end of the
Project’s life.

Mining operations would be carried out with an initial equipment fleet
comprising four 200 to 250 millimetre diesel blast hole drills, two 40
cubic metre hydraulic shovels, one 28 cubic metre front-end loader, and
fourteen 290 tonne trucks. The mining fleet increases during
operations with the addition of four blast hole drills, one electric
cable shovel, and thirteen haul trucks. A 12 metre bench height has
been selected for mining. This large-scale open pit mining would
provide process plant feed at a nominal rate of 60,000 tpd or 21.9
million tonnes per year. Annual mine production of ore and waste would
peak at 92 million tonnes. The operational stripping ratio, excluding
waste stripping during the development phase, is 1.88:1.00.

The metallurgical evaluation was supported by an extensive metallurgical
and grinding test program. The tests were conducted on samples
composited to represent process plant feed in the mine plan. Composites
derived from 324 exploration drill holes as well as 27 dedicated large
bore HQ/PQ core drill holes were used for testing. Mineralogical and
diagnostic leach testing indicated that the primary areas of
investigation required to optimize the whole ore leach processing were:
primary grind size, reagent addition, and leach retention time.
Estimated process plant feed grade, recoveries and metal production
from commercial production forward are summarized below.

     _______________________________________________________________
    |           Blackwater Feasibility Study Production Schedule    |
    |_______________________________________________________________|
    |             |         |            |           |Average Annual|
    |  Production |Mill Feed| Head Grade |  Recovery |  Production  |
    |     Years   |  (Mt)   |____________|___________|______________|
    |             |         |Gold |Silver|Gold|Silver|Gold | Silver |
    |             |         |(g/t)|(g/t) |(%) | (%)  |(Koz)| (Koz)  |
    |_____________|_________|_____|______|____|______|_____|________|
    |1 through 9  |   183.4 |0.85 |  5.6 |87.1| 50.1 | 485 |  1,842 |
    |_____________|_________|_____|______|____|______|_____|________|
    |1 through 14 |   292.9 |0.79 |  4.7 |86.8| 48.5 | 463 |  1,531 |
    |_____________|_________|_____|______|____|______|_____|________|
    |15 through 17|   48.9  |0.40 | 10.2 |84.4| 50.6 | 177 |  2,726 |
    |_____________|_________|_____|______|____|______|_____|________|
    |Life-of-mine |   341.8 |0.74 |  5.5 |86.6| 49.0 | 413 |  1,742 |
    |_____________|_________|_____|______|____|______|_____|________|

    Note: Table excludes 2.65 Mt of material mined and milled in the
    preproduction period.

Mineral Processing

The 60,000 tpd process plant would use conventional crushing, grinding,
leaching, and carbon-in-pulp technology to produce gold-silver doré.
The overall design utilizes a simple and conventional flowsheet.

Run-of-mine ore would be crushed and ground to 80% passing 150 µm in a
conventional dual-train semi-autogenous grinding-ball milling-pebble
crushing circuit. Ground ore would be directed to a leach feed
thickener, then to a leaching and carbon-in-pulp extraction circuit.
Extracted gold and silver would be released from carbon in stripping
columns and recovered by electrowinning before being smelted into
gold-silver doré.

Key process equipment would consist of:

        --  A 1,520 x 2,870 millimetre (60" x 113") gyratory crusher
        --  A SAG/ball mill/crusher grinding circuit:
      o Two 11.0 x 6.7 metre diameter (36' x 21.5') 17-Megawatt SAG mills
      o Two 8.2 x 12.8 metre diameter (27' x 42') 17-Megawatt Ball mills
      o Two 1,000-Kilowatt pebble crushers
        --  Whole ore leaching and carbon-in-pulp circuit:
      o 24 leach tanks of 18 metre diameter
      o Two trains of seven 400 cubic metre capacity carbon-in-pulp tanks
      o Two 80 metre diameter thickeners
        --  Three cyanide destruction vessels

Project Capital Costs

The Project is located 112 kilometres southwest of Vanderhoof, a town
with a population of approximately 4,000 people, in central British
Columbia. The Project is close to existing infrastructure with access
to low cost hydroelectric power available, which requires the
construction of a 140 kilometre transmission line from an existing B.C.
Hydro substation to the Blackwater site. B.C. Hydro completed a System
Impact Study, which concluded that the Glenannan substation was the
optimal point of connection to the grid and that supply of up to 120
Megawatts was feasible. Stakeholders along the transmission line route
have been consulted.

The Blackwater site is currently accessible via the Kluskus forest
service road, which connects to Provincial Highway 16 near Vanderhoof.
As part of the development plan, a 16 kilometre section of new access
road would be constructed to provide a more direct route from the
forest service road to the Project site.

During the development stage, an 880-person construction camp would be
established on site which, together with the expansion of the existing
camp from 250 to 426 persons, would provide accommodations for
contractors and construction management staff. This construction camp
would be removed once development is complete. An airstrip is planned
to be built for use during the construction phase of the Project in
order to increase accessibility and reduce travel time to the site. The
presence of an airstrip supports New Gold’s strategy of being best
positioned to attract top-quality, skilled labour for construction. For
operations, a high-quality modular camp with a capacity of 420 persons
would be used.

The total estimated development capital cost for the Project is $1,865
million inclusive of a $190 million contingency. The estimated
development capital cost is based on the third quarter 2013 capital
environment. The development capital cost equates to $266 per
recoverable gold ounce over the current reserve life of the Project.
Total sustaining capital over the life of the Project is estimated to
be $647 million, which is equivalent to an average of $92 per
recoverable gold ounce.

A detailed breakdown of the key components of the Project’s development
capital are shown below.

     _____________________________________________________________________
    |   Breakdown of Feasibility Study Project Development Capital Costs  |
    |_____________________________________________________________________|
    |                                 Description            |($ millions)|
    |________________________________________________________|____________|
    |Direct Costs                                            |            |
    |________________________________________________________|____________|
    |Mining equipment and pre-production development         |         272|
    |________________________________________________________|____________|
    |On-site infrastructure (Truck shop, Warehousing,        |         158|
    |Earthworks, etc.)                                       |            |
    |________________________________________________________|____________|
    |Process plant                                           |         600|
    |________________________________________________________|____________|
    |Tailings facilities and water reclaim                   |          86|
    |________________________________________________________|____________|
    |Off-site infrastructure (Transmission line, Water supply|         121|
    |system, Airstrip, etc.)                                 |            |
    |________________________________________________________|____________|
    |Access corridor                                         |          11|
    |________________________________________________________|____________|
    |Total Direct Costs                                      |       1,248|
    |________________________________________________________|____________|
    |Owner's Costs and EPCM                                  |            |
    |________________________________________________________|____________|
    |Owner's costs                                           |          74|
    |________________________________________________________|____________|
    |Engineering, Procurement and Construction Management    |         108|
    |________________________________________________________|____________|
    |Indirect Costs                                          |            |
    |________________________________________________________|____________|
    |Construction services, support and utilities            |          97|
    |________________________________________________________|____________|
    |Construction camp and facilities                        |          78|
    |________________________________________________________|____________|
    |Freight and logistics                                   |          42|
    |________________________________________________________|____________|
    |Other indirect costs                                    |          28|
    |________________________________________________________|____________|
    |Total Indirect Costs                                    |         245|
    |________________________________________________________|____________|
    |Total Owner's Costs, EPCM and Indirect Costs            |         427|
    |________________________________________________________|____________|
    |Subtotal                                                |       1,675|
    |________________________________________________________|____________|
    |Contingency                                             |         190|
    |________________________________________________________|____________|
    |Total Project Development Costs                         |       1,865|
    |________________________________________________________|____________|

Project Operating Costs

The unique combination of Blackwater’s proximity to infrastructure,
stripping ratio of 1.88 to 1.00, access to low cost hydroelectric power
and silver by-product revenue, result in the Project’s estimated total
cash costs((1)) and all-in sustaining costs((2)) being well below today’s industry average.

After the start of commercial production, the Project’s mining costs are
projected to be C$1.88 per tonne of material and the costs per tonne
milled are summarized below.

     _____________________________________________________________________
    |         Breakdown of Base Case Feasibility Study Operating Costs    |
    |_____________________________________________________________________|
    |                   Description       |(C$ per tonne|($ per gold ounce|
    |                                     |   milled)   |    produced)    |
    |_____________________________________|_____________|_________________|
    |Mining                               |         5.33|              247|
    |_____________________________________|_____________|_________________|
    |Processing                           |         7.20|              333|
    |_____________________________________|_____________|_________________|
    |General and administrative           |         1.43|               67|
    |_____________________________________|_____________|_________________|
    |Royalties                            |         0.27|               12|
    |_____________________________________|_____________|_________________|
    |Refining                             |         0.21|               10|
    |_____________________________________|_____________|_________________|
    |Transport and insurance              |         0.05|                2|
    |_____________________________________|_____________|_________________|
    |Cash costs                           |        14.49|              671|
    |_____________________________________|_____________|_________________|
    |Silver by-product sales at $22.00 per|       (2.01)|             (93)|
    |ounce silver                         |             |                 |
    |_____________________________________|_____________|_________________|
    |Total cash costs(1)                  |        12.48|              578|
    |_____________________________________|_____________|_________________|
    |Sustaining capital                   |         1.99|               92|
    |_____________________________________|_____________|_________________|
    |All-in sustaining costs(2)           |        14.47|              670|
    |_____________________________________|_____________|_________________|

A key driver of the Project’s low all-in sustaining costs((2)) is that, at an assumed silver price of $22.00 per ounce, Blackwater’s
average annual silver revenue is expected to offset the Project’s
annual sustaining capital requirement.

Economic Sensitivity Analysis

The summary below, showing a variety of commodity price and foreign
exchange scenarios, holds the following assumptions constant: an
electricity rate of C$0.051 per kilowatt hour and a diesel cost of
C$1.04 per litre. As previously indicated, the company’s primary
development focus is on its Rainy River project, however, for purposes
of comparability, the NPV calculations below are calculated to the
beginning of 2015.

     _________________________________________________________________
    |              Summary of Feasibility Study Project Economics     |
    |_________________________________________________________________|
    |             |             |        |   5% NPV   |   IRR |Payback|
    | Gold Price  |Silver Price | US$/C$ |($ millions)|   (%) |Period |
    |($ per ounce)|($ per ounce)|foreign |            |       |(Years)|
    |             |             |exchange|____________|_______|_______|
    |             |             |        |   Pre-tax  |Pre-tax|Pre-tax|
    |_____________|_____________|________|____________|_______|_______|
    |      1,150  |      20.00  |   0.93 |         402|    7.8|    7.5|
    |_____________|_____________|________|____________|_______|_______|
    |      1,300  |      22.00  |   0.95 |         991|   11.3|    6.2|
    |_____________|_____________|________|____________|_______|_______|
    |      1,450  |      24.00  |   0.97 |       1,582|   14.4|    5.1|
    |_____________|_____________|________|____________|_______|_______|
    |      1,600  |      26.00  |   1.00 |       2,120|   16.8|    4.5|
    |_____________|_____________|________|____________|_______|_______|

Using the base case assumptions as the foundation, other important
sensitivities include:

        --  Every $100 per ounce change in the life-of-mine gold price,
            where all other assumptions are held constant, results in an
            approximate $442 million change in pre-tax NPV and 2.4% change
            in pre-tax IRR
        --  Every $0.05 change in the US$/C$ foreign exchange rate, where
            all other assumptions are held constant, results in an
            approximate $270 million change in pre-tax NPV and 1.9% change
            in pre-tax IRR
        --  Every $100 million change in development capital costs, where
            all other assumptions are held constant, results in a $98
            million change in pre-tax NPV and 0.9% change in pre-tax IRR

Tax Considerations

A part of New Gold’s growth strategy has been to build upon its business
in jurisdictions where it already has an established presence. One of
the benefits of this approach is that it enables the company to manage
its business in a tax-efficient manner. New Gold is able to realize tax
synergies between different assets by utilizing tax attributes
interchangeably amongst its portfolio of assets, all with the goal of
maximizing New Gold’s overall profitability rather than that of any one
operation or project. New Gold has shown pre-tax NPV’s for the Project
as the timing of a future development decision would have a meaningful
impact on the tax attributes of Blackwater. Future Canadian corporate
administrative costs, interest costs as well as expenditures at the New
Afton Mine in British Columbia and, potentially, the Rainy River
project in Ontario could all impact the after-tax economics of
Blackwater. Key provincial and federal tax considerations for
Blackwater would include:

        --  British Columbia mining tax - 2% provincial tax payable
            immediately upon the start of production, increasing to 13%
            after applicable capital cost deductions are used
        --  British Columbia provincial income tax - 11.0%, payable after
            applicable deductions are used
        --  Canadian federal income tax - 15.0%, payable after applicable
            deductions are used
        --  As the mining tax is deductible for income tax purposes, once
            Blackwater becomes fully taxable later in its mine life, the
            effective tax rate would be approximately 35% based on today's
            statutory rates

2012 PEA versus Feasibility Study

As Blackwater has progressed from the 2012 PEA to the Feasibility Study,
the majority of the project parameters have remained consistent. A
comparison of key metrics, including those that have changed, between
the 2012 PEA and the Feasibility Study is provided below:

        --  Project's 60,000 tonne per day scale and whole ore leach
            processing circuit remain unchanged
        --  Weighted average gold grade processed in first nine years of
            production unchanged at 0.85 grams per tonne
        --  Weighted average silver grade processed in first nine years of
            production increased to 5.6 grams per tonne from 4.8 grams per
            tonne
        --  Life-of-mine average gold recoveries unchanged
        --  Life-of-mine average silver recoveries decreased by 4%
        --  Cumulative gold production in first nine years decreased by
            187,000 ounces, or an average of 21,000 ounces per year,
            primarily attributable to a more conservative production
            ramp-up assumption
        --  Cumulative silver production in first 9 years increased by
            395,000 ounces, or an average of 44,000 ounces per year
        --  Overall smaller pit design with 149 million tonnes less waste
            mined, including pre-production waste, resulting in lower
            stripping ratio
        --  Decrease in total cost per tonne milled, net of silver
            by-product credit, to C$12.48 per tonne from C$13.01 per tonne,
            despite using lower silver price assumption
        --  0.9 million ounce decrease in life-of-mine gold production,
            primarily driven by years 10 and beyond, resulting from the
            incorporation of infill drilling, related updates to the
            geologic and geostatistical model, inclusion of a 5% mining
            dilution factor and resulting revisions to the mine plan
        --  2.3 million ounce decrease in life-of-mine silver production,
            driven by years 10 and beyond
        --  In Canadian dollar terms, the estimated development capital has
            increased by 8%, which has been offset by a 9% depreciation in
            the Canadian dollar from US$/C$1.03 at the time of the 2012 PEA
            to US$/C$0.94 today
      o The 2012 PEA applied a parity exchange rate to the development
        cost, whereas the Feasibility Study applies a US$/C$ 0.95 exchange
        rate
        --  $110 million increase in life-of-mine sustaining capital costs
            of which the majority is related to ongoing tailings dam
            expansion in first five years of mine life

Environment, Permitting and Corporate Social Responsibility

New Gold has conducted extensive environmental baseline studies and is
preparing comprehensive environmental management plans for the Project.
The environmental management plans have been integrated into the
mining, processing, water, and waste management designs for Blackwater.
There would be no surface water discharge during operations.

The mine design includes a robust closure plan with simplified water
management requirements resulting from the compact project layout and
integrated waste management strategy. The closure plan employs proven
practices and is not dependent on long-term active treatment and
monitoring. All Project components would be decommissioned and
reclaimed according to best industry practices and provincial and
federal regulations. Proposed end land use objectives for mine closure
are wildlife habitat and return of the land for traditional use by
First Nations.

New Gold has designed and would operate the Project in accordance with
the International Cyanide Management Code.

Approval to develop and operate major mines in British Columbia is
granted after the completion of environmental reviews by both the
Government of British Columbia and the Government of Canada under the
B.C. Environmental Assessment Act and Canadian Environmental Assessment
Act, respectively. These reviews involve approval of the mine concept
and lead to project certification under the B.C. process and approval
from the federal Minister of Environment under the federal process. A
subsequent process leads to project permitting by provincial and
federal regulatory agencies, and involves specific design and technical
approvals related to mine construction activities and operations.

The provincial review is administered by the B.C. Environmental
Assessment Office and the federal review by the Canadian Environmental
Assessment Agency. Both the federal and provincial governments have
legislated timelines for completion of their respective reviews. While
the processes and timelines are not legally linked, they are
coordinated through the Canada-B.C. Environmental Cooperation
Agreement.

New Gold has initiated the federal and provincial review processes and
remains on track to submit the Project’s Environmental Assessment
report in early 2014.

The company is consulting with First Nations, government, and other
stakeholders regarding the Project. The intent of the consultations is
to increase the mutual awareness and understanding of the Project.

Forestry, agriculture, and, to a lesser extent, tourism, are the primary
industries driving the economy of the region, with mining targeted as
an emerging sector. The area’s economy has historically been driven by
forestry, but the Mountain Pine Beetle epidemic, the downturn in the
forest industry, and the closures of certain sawmills in the area, have
led to economic decline in the region.

Blackwater would create approximately 595 permanent jobs. The
construction work force would be roughly 1,200 on average, peaking at
1,500. New Gold is committed to maximizing local employment and
contracting opportunities. The company plans to work collaboratively
with community partners to prepare local workers, and establish
programs for specific training where necessary.

About New Gold Inc.

New Gold is an intermediate gold mining company. The company has a
portfolio of four producing assets and three significant development
projects. The New Afton Mine in Canada, the Cerro San Pedro Mine in
Mexico, the Mesquite Mine in the United States and the Peak Mines in
Australia provide the company with its current production base. In
addition, New Gold owns 100% of the Blackwater and Rainy River
projects, both in Canada, as well as 30% of the El Morro project
located in Chile. New Gold’s objective is to continue to establish
itself as a leading intermediate gold producer, focused on the
environment and sustainability. For further information on the company,
please visit www.newgold.com.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this news release, including any
information relating to New Gold’s future financial or operating
performance as well as information respecting the Blackwater project or
the Rainy River project may be deemed “forward looking”. All statements
in this news release, other than statements of historical fact, that
address events or developments that New Gold expects to occur are
“forward-looking statements”. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the use of forward-looking terminology such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates”, “projects”, “potential”,
“believes” or variations of such words and phrases or statements that
certain actions, events or results “may”, “could”, “would”, “should”,
“might” or “will be taken”, “occur” or “be achieved” or the negative
connotation. Forward-looking statements in this news release primarily
relate to the results of the Blackwater Feasibility Study, and include,
among others, statements with respect to: expected capital costs,
sustaining capital costs, production, cash costs and all-in sustaining
costs; the expected mine life, scale, mining methods and plan,
processing methods and rate, grades, recovery rates, stripping ratio,
production and other attributes of the Blackwater project; the expected
NPV, IRR, and payback period associated with the Blackwater project;
the estimation of mineral reserves and resources; the timing for
submission of the Blackwater Environmental Assessment report and
receipt of permits; the potential development of Blackwater in the
future; New Gold’s plans to advance Rainy River and its project
characteristics and capital cost; and the timing to complete the Rainy
River updated feasibility study.

All forward-looking statements in this news release are based on the
opinions and estimates of management as of the date such statements are
made and are subject to important risk factors and uncertainties, many
of which are beyond New Gold’s ability to control or predict. Material
assumptions regarding our forward looking statements, including without
limitation, the key assumptions underlying the Blackwater Feasibility
Study, are discussed in this news release, the annual MD&A, the AIF and
our Technical Report which will be filed on SEDAR within 45 days of the
release of this news release. Forward-looking statements are
necessarily based on estimates and assumptions that are inherently
subject to known and unknown risks, uncertainties and other factors
that may cause actual results, level of activity, performance or
achievements to be materially different from those expressed or implied
by such forward-looking statements. Such factors include, without
limitation: significant capital requirements; price volatility in the
spot and forward markets for commodities; fluctuations in the
international currency markets and in the rates of exchange of the
currencies of Canada and the United States; discrepancies between
actual and estimated production, between actual and estimated reserves
and resources and between actual and estimated metallurgical
recoveries; changes in national and local government legislation in
Canada; taxation; controls, regulations and political or economic
developments in Canada; the speculative nature of mineral exploration
and development, including the risks of obtaining and maintaining the
validity and enforceability of the necessary licenses and permits and
complying with the permitting requirements, including, but not limited
to: obtaining the necessary permits for the Blackwater and the Rainy
River projects; the uncertainties inherent to current and future legal
challenges New Gold is or may become a party to; diminishing quantities
or grades of reserves and resources; competition; loss of key
employees; additional funding requirements; rising costs of labour,
supplies, fuel and equipment; actual results of current exploration
activities; uncertainties inherent to mining economic studies including
the Feasibility Study for Blackwater and the Feasibility Study for
Rainy River; changes in project parameters as plans continue to be
refined; accidents; labour disputes; defective title to mineral claims
or property or contests over claims to mineral properties; unexpected
delays and costs inherent to consulting and accommodating rights of
First Nations; and uncertainties with respect to obtaining all
necessary surface rights for the Rainy River project. In addition,
there are risks and hazards associated with the business of mineral
exploration, development and mining, including environmental events and
hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins, flooding and gold bullion losses (and the risk of
inadequate insurance or inability to obtain insurance to cover these
risks) as well as “Risk Factors” included in New Gold’s (and, in
respect to information related to the Rainy River project, in Rainy
River’s) disclosure documents filed on and available at www.sedar.com. Forward-looking statements are not guarantees of future performance,
and actual results and future events could materially differ from those
anticipated in such statements. All of the forward-looking statements
contained in this news release are qualified by these cautionary
statements. New Gold expressly disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of
new information, events or otherwise, except in accordance with
applicable securities laws.

Cautionary Note to U.S. Readers Concerning Estimates of Measured,
Indicated and Inferred Mineral Resources

Information concerning the properties and operations of New Gold has
been prepared in accordance with Canadian standards under applicable
Canadian securities laws, and may not be comparable to similar
information for United States companies. The terms “Mineral Resource”,
“Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred
Mineral Resource” used in this news release are Canadian mining terms
as defined in accordance with National Instrument 43-101 (“NI 43-101″)
under guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum (“CIM”) Definition Standards for Mineral
Resources and Mineral Reserves adopted by the CIM Council on November
27, 2010. While the terms “Mineral Resource”, “Measured Mineral
Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource”
are recognized and required by Canadian securities regulations, they
are not defined terms under standards of the United States Securities
and Exchange Commission. Under United States standards, mineralization
may not be classified as a “Reserve” unless the determination has been
made that the mineralization could be economically and legally produced
or extracted at the time the Reserve calculation is made. As such,
certain information contained in this news release concerning
descriptions of mineralization and resources under Canadian standards
is not comparable to similar information made public by United States
companies subject to the reporting and disclosure requirements of the
United States Securities and Exchange Commission. An “Inferred Mineral
Resource” has a great amount of uncertainty as to its existence and as
to its economic and legal feasibility. It cannot be assumed that all or
any part of an “Inferred Mineral Resource” will ever be upgraded to a
higher category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or pre-feasibility
studies. Readers are cautioned not to assume that all or any part of
Measured or Indicated Resources will ever be converted into Mineral
Reserves. Readers are also cautioned not to assume that all or any part
of an “Inferred Mineral Resource” exists, or is economically or legally
mineable. In addition, the definitions of “Proven Mineral Reserves” and
“Probable Mineral Reserves” under CIM Definition Standards differ in
certain respects from the standards of the United States Securities and
Exchange Commission.

Technical Information

The scientific and technical information in this news release has been
reviewed and approved by Mark Petersen, an AIPG Certified Professional
Geologist under National Instrument 43-101 and officer of New Gold. A
Technical Report to be prepared in accordance with Form 43-101F1 will
be filed on SEDAR within 45 days of this news release. For further
information with respect to the key assumptions, parameters and risks
associated with the results of the Feasibility Study, the mineral
reserve estimate and other technical information with respect to the
Blackwater project, please refer to the Technical Report to be made
available at www.sedar.com. The following qualified persons, as that term is defined in NI 43-101,
have prepared or supervised the preparation of their relevant portions
of the technical information in this news release and the related
Technical Report to be filed:

        --  Mark Petersen, AIPG Certified Professional Geologist (New Gold
            Inc.)
        --  Ronald G. Simpson, P Geo (GeoSim Services Inc.)
        --  Jay Horton, P. Eng (Norwest Corporation)
        --  Bruno Borntraeger, P. Eng (Knight Piesold Ltd.)
        --  Gary Christie, P. Eng (AMEC)
        --  Ignacy (Tony) Lipiec, P. Eng (AMEC)

Mineral Resources

     ___________________________________________________________________
    |   Blackwater Mineral Resource Estimate - Effective March 31, 2013 |
    |___________________________________________________________________|
    |                       |Tonnes |Au (g/t)|Ag (g/t)|Au (Moz)|Ag (Moz)|
    |                       |(000s) |        |        |        |        |
    |_______________________|_______|________|________|________|________|
    |Measured & Indicated   |       |        |        |        |        |
    |Resources              |       |        |        |        |        |
    |Direct processing      |       |        |        |        |        |
    |material               |       |        |        |        |        |
    |Measured               |116,955|   1.04 |   5.6  |   3.90 |  21.06 |
    |Indicated              |189,044|   0.78 |   6.0  |   4.73 |  36.47 |
    |M&I (direct processing)|305,999|   0.88 |   5.8  |   8.62 |  57.52 |
    |Stockpile material     |       |        |        |        |        |
    |Measured               |26,521 |   0.30 |   4.1  |   0.26 |   3.50 |
    |Indicated              |64,382 |   0.30 |   4.4  |   0.62 |   9.11 |
    |M&I (stockpile)        |90,904 |   0.30 |   4.3  |   0.87 |  12.60 |
    |Total M&I              |396,903|   0.74 |   5.5  |   9.50 |  70.13 |
    |_______________________|_______|________|________|________|________|
    |Inferred Resources     |       |        |        |        |        |
    |Inferred (direct       |       |        |        |        |        |
    |processing)            |13,815 |   0.76 |   4.1  |   0.34 |   1.82 |
    |Inferred (stockpile)   | 3,785 |   0.31 |   3.6  |   0.04 |   0.44 |
    |Total Inferred         |17,600 |   0.66 |   4.0  |   0.38 |   2.26 |
    |_______________________|_______|________|________|________|________|

Notes:

1. Reported within a conceptual open pit shell based on metal prices of
$1,400/oz gold, $28.00/oz silver, and average metallurgical recoveries
of 88.0% gold and 64.0% silver for oxide mineralization, 85.0% gold and
58.0% silver for transitional oxide / sulphide mineralization, and
85.0% gold and 44.0% silver for sulphide mineralization.


2. Total contained metal calculated on the basis of Tonnes * Grade /
31.10348 grams per troy ounce.


3. Gold-equivalent grade estimate based on $1,400/oz gold, $28.00/oz
silver, and differential metallurgical recoveries described in Note 1
above.


4. Direct processing material defined as mineralization above a 0.4 g/t
AuEq cutoff and likely to be mined and processed directly.


5. Stockpile material defined as mineralization above a 0.3 g/t AuEq and
below a 0.4 g/t AuEq cutoff that is suitable for stockpiling and future
processing based on average metallurgical recoveries of 79.0% gold and
37.0% silver. The 0.3 g/t AuEq lower cutoff grade is considered
adequate to cover mining, processing, and additional handling costs.

Mineral Reserve

1. Reported within an open pit design based on metal prices of $1,300/oz
gold, $22.00/oz silver, with variable recoveries by grade and ore type
averaging 86.6% for gold and 49.1% for silver.

2. Contained metal calculated on the basis of Tonnes * Grade / 31.10348
grams per troy ounce.

3. Direct processing reserves are defined as mineralization above a
lower cut-off grade that varies by year between 0.26 g/t and 0.38 g/t
AuEq and is to be mined and processed directly.

4. Reserves noted as stockpiled material consist of ore tonnage above a
0.32g/t AuEq cut-off grade that is mined and stockpiled before being
sent to the mill. This stockpiled tonnage includes ore mined before
mill startup, lower grade ore mined during preproduction and commercial
production, and ore tonnage misclassified or misallocated during the
mining process. All of the ore tonnage classified as reserves and
listed here is processed and the total reserves quoted are equal to the
total mill feed as shown in the life of mine plan. No stockpiles
currently exist at site.

5. Gold-equivalent grade estimate based on $1,400/oz gold, $28.00/oz
silver, and average metallurgical recoveries of 88.0% gold and 64.0%
silver for oxide mineralization, 85.0% gold and 58.0% silver for
transitional oxide / sulphide mineralization, and 85.0% gold and 44.0%
silver for sulphide mineralization.

6. All costs are based on estimates and vendor quotes effective third
quarter 2013. No escalation has been applied to bring costs forward to
December 2, 2013.

7. Cutoff grade values are based on a gold price of $1,300/oz. The plant
direct feed cut-off grade is AuEq 0.26 g/t, and the ore stockpile
cut-off grade is AuEq 0.32 g/t. The cut-off grade calculation includes
the following costs:


        a.     minimum profit

        b.     operating cost (ore mining, hauling cost, processing, G&A)

        c.     sustaining capital cost for mining, tailings storage
               facility and the mill

        d.     royalty and refining cost

        e.     reduced recovery for stockpiled ore (79%)

The costs for determining cut-off grade are based on the 2012 PEA
updated by New Gold. Cut-off grades as determined using the feasibility
study costs and recoveries update the cut-off grade from 0.26 g/t to
0.28 g/t for direct feed and 0.32 g/t to 0.33 g/t for stockpiled ore.
This difference is within the accuracy expected of a feasibility level
study. An elevated cut-off grade strategy has been selected to minimize
the Project payback period and maximize the NPV. During the first 10
years of the Project, where a surplus of ore will be mined, the
highest-grade ore will be sent to the mill and the rest stockpiled for
processing at the end of the mine life.

8. There are two primary dilution and loss scenarios. The first scenario
sees a surplus of ore being mined and being sent to both the mill and
the low-grade stockpile. In the second scenario, all ore mined is sent
to the mill with no surplus sent to the low-grade stockpile. Dilution
and losses vary for these two scenarios due to the different cut-off
grades used, resulting in different ore / waste contact block
configurations. As such, the resulting average dilution for periods
where both the mill and the stockpile are fed is 5% at a grade of 0.16
g/t Au and 3.19 g/t Ag. For periods where all ore is sent to the mill
directly, dilution is 4% at a grade of 0.12 g/t Au and 2.90 g/t Ag. In
addition, all isolated ore blocks–ore blocks with waste on all four
adjacent sides–will be mined as waste and all isolated waste
blocks–waste blocks with ore on all four adjacent sides–will be mined
as ore.

Beyond the dilution factor noted above, a misallocation factor is also
applied when calculating the ore tonnes. This factor accounts for ore
that is intended for the plant, based on grade, but is sent to the
stockpile, or vice versa. A factor of 15% of the total material sent to
the stockpile was applied to determine the misallocated quantities. The
misallocated stockpile ore is made up with the average mill feed ore
for the period. This misallocated material would average about 700kt
per year, or just under 4% of the total mill feed.

Non-GAAP Measures

(1) TOTAL CASH COSTS

“Total cash costs” per ounce figures are non-GAAP measures which are
calculated in accordance with a standard developed by The Gold
Institute, which was a worldwide association of suppliers of gold and
gold products and included leading North American gold producers. The
Gold Institute ceased operations in 2002, but the standard is widely
accepted as the standard of reporting cash costs of production in North
America. Adoption of the standard is voluntary and the cost measures
presented may not be comparable to other similarly titled measures of
other companies. New Gold reports total cash costs on a sales basis.
Total cash costs include mine site operating costs such as mining,
processing, administration, royalties and production taxes, but are
exclusive of amortization, reclamation, capital and exploration costs.
Total cash costs are reduced by any by-product revenue and is then
divided by ounces sold to arrive at the total by-product cash cost of
sales. The measure, along with sales, is considered to be a key
indicator of a company’s ability to generate operating earnings and
cash flow from its mining operations. This data is furnished to provide
additional information and is a non-IFRS measure. Total cash costs
presented do not have a standardized meaning under IFRS and may not be
comparable to similar measures presented by other mining companies. It
should not be considered in isolation as a substitute for measures of
performance prepared in accordance with IFRS and is not necessarily
indicative of operating costs presented under IFRS.

(2) ALL-IN SUSTAINING COSTS

Consistent with the guidance announced earlier in 2013 from the World
Gold Council, an association of various gold mining companies from
around the world of which New Gold is a member, New Gold defines
“all-in sustaining costs” as the sum of total cash costs, sustaining
capital expenditures, corporate general & administrative costs,
capitalized and expensed exploration that is sustaining in nature and
environmental reclamation costs. New Gold believes this non-GAAP
measure provides further transparency into costs associated with
producing gold and will assist analysts, investors and other
stakeholders of the company in assessing its operating performance, its
ability to generate free cash flow from current operations and its
overall value. All-in sustaining costs constitute a non-GAAP measure
and are intended to provide additional information only and do not have
any standardized meaning under IFRS. They should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with IFRS. Other companies may calculate these measures
differently.

SOURCE New Gold Inc.


Source: PR Newswire