Quantcast

New Gold Finishes 2013 with Lowest Costs in its History, Increases Gold Reserves by 127 Percent per Share and Provides 2014 Guidance with Even Lower Costs

February 6, 2014

(All figures are in US dollars unless otherwise indicated)

VANCOUVER, Feb. 6, 2014 /PRNewswire/ – New Gold Inc. (“New Gold”) (TSX:NGD) and
(NYSE MKT:NGD) today announces fourth quarter and full-year 2013
operational results, updated year-end mineral reserves and resources
and 2014 guidance.

Fourth Quarter and Full-Year 2013 Highlights

        --  Fourth quarter provided a strong finish to 2013
      o Highest production quarter of 2013 - 106,520 ounces of gold and
        24.0 million pounds of copper
      o Low total cash costs(1) of $316 per ounce and all-in sustaining
        costs(2) of $883 per ounce
        --  Met 2013 full-year outlook and achieved lowest total cash costs
            (1) in company's history
      o Production - 397,688 ounces of gold, 85.4 million pounds of copper
        and 1.6 million ounces of silver
      o Costs - total cash costs(1) of $377 per ounce, the lowest in New
        Gold's history, and all-in sustaining costs(2) of $899 per ounce
        --  2013 year-end mineral reserves of 18.5 million ounces of gold,
            an increase of 127% per share when compared to the end of 2012
        --  Year-end cash balance of $414 million

2014 Guidance

        --  Focus will be on further cost reductions in 2014 with targeted
            total cash costs(1) of $320 to $340 per ounce and all-in
            sustaining costs(2) of $815 to $835 per ounce
        --  Gold production expected to remain consistent with that
            achieved in 2013, ranging from 380,000 to 420,000 ounces
      o 23% targeted increase in gold production at low-cost New Afton Mine
        offset by lower production at Cerro San Pedro
        --  Copper production expected to increase by 12% to a range of
            92.0 to 100.0 million pounds
        --  New Afton expected to average throughput of 12,500 tonnes per
            day in 2014 and proceeding with mill expansion to 14,000 tonnes
            per day, driving further targeted gold and copper production
            growth in 2015
        --  Exploration to focus on further increasing gold and copper
            resources at New Afton C-zone, which grew by over 10 times in
            2013, and follow-up drilling on prospective regional targets at
            the Rainy River and Blackwater projects

“We are pleased to have finished the year with a strong quarter which
enabled us to deliver the lowest cash costs in our history,” stated
Randall Oliphant, Executive Chairman. “We are particularly proud to
have increased the company’s reserves per share so significantly, and
to have the highest reserves we have ever had, which positions New Gold
well for the future. In 2014, we anticipate another solid year with
even lower costs driven by the strong performance of New Afton, our
biggest cash flow generator.”

The preliminary information provided for production, sales, total cash
costs((1)) and all-in sustaining costs((2)) are approximate figures and may differ from the final results in the
2013 annual audited financial statements and management’s discussion
and analysis.


                           Preliminary Production and Cost Results

    New Gold 2013 Fourth Quarter and Full-Year Summary Operational Results 

                                  Three months ended   Twelve months ended

                                        December 31,          December 31,

                                      2013      2012       2013       2012

    Gold Production
    (thousand ounces)

    New Afton                         25.2      22.8       87.2       36.8

    Mesquite                          34.9      29.2      107.0      142.0

    Peak Mines                        24.2      28.8      100.7       95.5

    Cerro San Pedro                   22.2      32.1      102.8      137.6

    Total Gold Production            106.5     112.9      397.7      411.9

    Total Gold Sales                 104.5     109.8      391.8      395.5

    Average realized gold           $1,233    $1,578     $1,337     $1,551
    price ($ per ounce)

    Silver Production
    (thousand ounces)

    New Afton                         54.8      43.1      192.5       82.5

    Peak Mines                        31.2      31.9      112.2      136.8

    Cerro San Pedro                  297.5     401.3    1,300.6    1,938.5

    Total Silver Production          383.5     476.3    1,605.3    2,157.8

    Total Silver Sales               378.9     489.3    1,572.3    2,082.0

    Average realized silver         $20.10    $32.36     $23.16     $30.87
    price ($ per ounce)

    Copper Production
    (million pounds)

    New Afton                         20.5      17.3       72.0       28.5

    Peak Mines                         3.5       3.6       13.4       14.4

    Total Copper Production           24.0      20.9       85.4       42.8

    Total Copper Sales                23.8      19.8       82.6       35.6

    Average realized copper          $3.24     $3.52      $3.24      $3.56
    price ($ per pound)

    Total Cash Costs(1) ($
    per ounce)

    New Afton                     ($1,428)  ($1,067)   ($1,196)   ($1,043)

    Mesquite                           841       787        907        690

    Peak Mines                         778       743        850        764

    Cerro San Pedro                    911       320        676        232

    Total Cash Costs(1)               $316      $254       $377       $421

    All-in Sustaining Costs
    (2) ($ per ounce)

    New Afton                          $12      $168     ($133)       $358

    Mesquite                           988       920      1,108        768

    Peak Mines                       1,106     1,309      1,331      1,360

    Cerro San Pedro                  1,076       458        766        358

    All-in Sustaining Costs           $883      $823       $899       $827
    (2) 

Gold Production

As anticipated, the fourth quarter was the company’s strongest of the
year and New Gold delivered on the high end of its updated 2013
full-year outlook of 390,000 to 400,000 ounces of gold production.

Fourth quarter production increased by 13% when compared to the third
quarter of 2013, however, it was slightly below that of the prior year
quarter. The quarter-over-quarter increase was driven by higher
production at Mesquite and the Peak Mines and continued strong
performance at New Afton. When compared to the fourth quarter of 2012,
production at New Afton and Mesquite increased due to higher ore tonnes
processed and higher grades, while Cerro San Pedro and the Peak Mines
were impacted by a combination of lower ore tonnes processed and lower
grades.

As disclosed in the second half of 2013, New Gold’s consolidated 2013
production was impacted by the combination of a pit wall movement and
lower recoveries at Cerro San Pedro and lower grades at Mesquite. In
October of 2013, New Gold updated its production outlook, maintaining
its original guidance for New Afton and the Peak Mines and lowering its
expectations for Cerro San Pedro and Mesquite as a result of the
above-noted items. Ultimately, 2013 production at New Afton exceeded
the original guidance range of 75,000 to 85,000 ounces and the Peak
Mines met the original guidance range of 95,000 to 105,000 ounces. At
Cerro San Pedro, full-year production was above the updated expectation
of 95,000 to 100,000 ounces, while Mesquite’s production was slightly
below its updated target range of 110,000 to 115,000 ounces. Together,
New Gold’s portfolio of four operations produced 397,688 ounces of gold
and delivered on the high end of the company’s updated consolidated
outlook of 390,000 to 400,000 ounces.

Copper Production

New Gold’s consolidated copper production during the fourth quarter
increased by 15% when compared to the same period of the prior year.
The increase was attributable to a combination of New Afton
successfully achieving its higher mill throughput rates ahead of
schedule and grades moving in line with reserve grade, as well as
continued strong performance at the Peak Mines.

Full-year production was double that of the prior year and met the high
end of the copper guidance range, set at the beginning of 2013, of 78
to 88 million pounds. The significant increase in copper production in
2013 when compared to 2012 was attributable to a full year of
production at New Afton.

Silver Production

Silver production in both the fourth quarter and full year was below
that of the same periods of the prior year as a result of the
above-noted challenges at Cerro San Pedro during the year.

Total Cash Costs((1)) and All-in Sustaining Costs((2))

In both the fourth quarter and full-year period, New Gold continued to
deliver its production at among the lowest costs in the industry. New
Gold’s 2013 total cash costs((1)) of $377 per ounce were in line with the company’s outlook and
represented the lowest cash costs in its history. Also, in the first
year of adoption of the new all-in sustaining costs((2)) measure, New Gold is proud to have delivered all-in sustaining costs((2)) below $900 per ounce, which should position the company as one of the
industry leaders.

Total cash costs((1)) in the fourth quarter of $316 per ounce were above the particularly
outstanding $254 per ounce in the fourth quarter of 2012 due to a
combination of lower gold sales volumes, lower silver by-product
revenue and lower realized copper prices. These factors were partially
offset by increased copper sales volumes, driven by New Afton’s strong
performance, and the depreciation of the Canadian and Australian
dollars. Total cash costs((1)) in 2013 decreased by $44 per ounce when compared to 2012, benefitting
from a full year of operation from the low-cost New Afton Mine.

Fourth quarter all-in sustaining costs((2)) were above the prior year quarter with lower costs at New Afton and the
Peak Mines being offset by increased costs at Cerro San Pedro and
Mesquite. Importantly, all-in sustaining costs((2)) at the Peak Mines decreased by approximately $200 per ounce when
compared to both the prior year quarter and the third quarter of 2013.
For the full year, all-in sustaining costs((2)) at New Afton and the Peak Mines were below those of the prior year. In
2013, New Afton’s copper revenue more than paid for all of the mine’s
operating and sustaining capital costs despite the decrease in the
copper price when compared to 2012. At the Peak Mines, through a focus
on sustaining capital reductions, all-in sustaining costs((2)) decreased when compared to the prior year. At Cerro San Pedro and
Mesquite, all-in sustaining costs((2)) were impacted by the above-noted operational challenges, which resulted
in lower production levels and, in the case of Cerro San Pedro, lower
silver by-product revenue. All-in sustaining costs((2)) for the full year delivered on the company’s outlook of $900 per ounce.


New Gold’s 2013 year-end gold reserves increased by 10.7 million ounces,
or 127% per share, when compared to the end of 2012. At the same time,
the company’s silver reserves increased by 58.8 million ounces, or 173%
per share, and copper reserves remained significant at 3.0 billion
pounds. New Gold’s Measured and Indicated gold and copper resources,
inclusive of reserves, also increased, both in absolute and per share
terms.

New Afton’s Measured and Indicated gold and copper resources, inclusive
of reserves, increased due to a significant expansion of the C-zone
resource and despite 4.1 million tonnes of ore reserves being mined
during 2013. The C-zone is a continuation of the main New Afton deposit
that lies down and along strike of the reserve that is currently being
mined. The 2013 year-end C-zone Measured and Indicated resources of
693,000 ounces of contained gold and 516 million pounds of contained
copper each increased by over 10 times when compared to the end of
2012. New Gold looks forward to continuing to grow the C-zone resource
during 2014 as detailed later in this news release in the section
entitled Exploration Update.

The change in reserves and resources at Cerro San Pedro and Mesquite is
a result of a combination of mine depletion and revised mine design,
estimated metallurgical recoveries and resource estimation parameters.
Additionally, in the case of Cerro San Pedro, the sulphide resources
below the open pit have been removed from the resource estimate.

At the Peak Mines, the decrease in Measured and Indicated resources from
mine depletion was partially offset by the company’s ongoing
underground exploration initiatives that have a long history of
demonstrating an ability to steadily convert Inferred resources to
Measured and Indicated resources and, ultimately, into reserves.

New Gold’s successful acquisition of Rainy River Resources Ltd. (“Rainy
River Resources”) in 2013 was significantly accretive to the company’s
mineral reserve and resource base. When compared to the year-end 2012
gold reserves, the acquisition increased New Gold’s gold reserves by
48.7% while only increasing the company’s shares outstanding by 5.5%.

Another important milestone for the company in 2013 was the completion
of the Blackwater Feasibility Study in December which led to 8.2
million ounces of Measured and Indicated resources being converted to
reserves. Beyond this upgrade, the company’s 2013 exploration efforts
at Blackwater also led to a 1.4 million ounce increase in the overall
Measured and Indicated gold resource base when compared to the end of
2012. At the Capoose property, located 25 kilometres west of the
Blackwater project, the Measured and Indicated gold and silver resource
base also increased as 2013 drilling successfully converted a portion
of the Inferred resources.

Reserves and resources at El Morro remained largely unchanged from the
prior year.


                                 2014 Guidance and Sensitivities

                                        New Gold 2014 Guidance

                                                 2014 Guidance            

                       Gold      Copper     Silver    Total     All-in    

                   Production Production Production   Cash    Sustaining
                                                    Costs(1)   Costs(2)

                   (thousand   (million  (thousand    ($ per     ($ per
                    ounces)    pounds)    ounces)     ounce)     ounce)

    New                 102 -                 200 - ($1,260)  ($620)  -
    Afton                112    78 - 84        300        -       ($600)
                                                     ($1,240)

    Mesquite       113 - 123         --         --    930  -   1,310  -
                                                         950      1,330 

    Peak            95 - 105    14 - 16   50 - 150    630  -   1,065  -
    Mines                                                650      1,085 

    Cerro                                   1,100 -    1,030   1,125  -
    San              70 - 80         --      1,300  -  1,050      1,145
    Pedro

    New Gold        380 - 420   92 - 100    1,350 -    $320 -     $815 -
    Consolidated                              1,750      $340       $835

New Gold’s 2014 consolidated gold and silver production is expected to
be similar to that achieved in 2013. With its continued strong
performance, New Afton is targeting a 23% increase in gold production.
Gold production at Mesquite and the Peak Mines is expected to remain
steady, while production at Cerro San Pedro is scheduled to decrease.
At the same time, consolidated copper production is expected to
increase by approximately 12% when compared to 2013 with both New Afton
and the Peak Mines targeting higher copper production.

After New Gold delivered the lowest total cash costs((1)) in its history in 2013, these costs are expected to decrease by a
further $35 to $55 per ounce in 2014. The lower anticipated cash costs
are driven by a combination of the significant contribution from the
low-cost New Afton Mine and the benefit of the lower Canadian and
Australian dollars relative to the U.S. dollar. New Afton’s 2014
co-product cash costs((1)) are forecast to be $440 to $460 per ounce of gold and $1.10 to $1.20
per pound of copper.

Consistent with the expected decrease in cash costs, New Gold is also
targeting a $65 to $85 per ounce decrease in all-in sustaining costs((2)). The anticipated decrease in all-in sustaining costs((2)) is driven by a combination of the lower total cash costs((1)) as well as decreases in sustaining capital at New Afton and the Peak
Mines.

In line with the company’s plans, the second half of 2014 is scheduled
to have higher gold and copper production, coupled with lower costs. As
2014 progresses, New Afton anticipates continued quarterly increases in
throughput, Cerro San Pedro is scheduled to move out of its elevated
waste stripping program into mining of ore from the upper levels of the
ore body, and Mesquite is expected to benefit from the placement of
more ore tonnes on the leach pad in the second half of 2014.

Key assumptions used in the 2014 guidance include gold, silver and
copper prices of $1,300 per ounce, $20.00 per ounce and $3.25 per pound
and Canadian dollar, Australian dollar and Mexican peso exchange rates
of $1.11, $1.14 and $13.00 to the U.S. dollar. The diesel price assumed
for 2014 is $3.25 per gallon, which is representative of recent prices
being paid at Mesquite. The following table provides an overview of the
impact on total cash costs((1)), both by asset and on a consolidated basis, of movements in the
above-noted key assumptions.


                               Total Cash Costs(1) - Sensitivities

    Category      Copper  Silver Price AUD/USD  CDN/USD  MXN/USD   Diesel
                  Price

    Base           $3.25      $20.00     $1.14    $1.11   $13.00    $3.25
    Assumption 

    Sensitivity  +/-$0.25     +/-$1.00 +/-$0.05 +/-$0.05 +/-$1.00 +/-$0.25

                                      Total cash costs(1) - Impact

    New Afton     +/-$200           --       --   +/-$65       --       --

    Mesquite           --           --       --       --       --   +/-$15

    Peak Mines     +/-$40           --   +/-$50       --       --       --

    Cerro San          --       +/-$15       --       --   +/-$50       --
    Pedro

    New Gold       +/-$60        +/-$5   +/-$15   +/-$15   +/-$10    +/-$5
    Total

Operations Overview

New Afton

After successfully commencing production ahead of schedule in mid-2012,
New Afton’s ramp up during 2013 continued apace. One of New Afton’s
goals during the year was to increase its throughput, from the design
rate of 11,000 tonnes per day, to 12,000 tonnes per day by the end of
2013. With steady increases in throughput in each of the first three
quarters of 2013, New Afton, once again, reached its goal ahead of
schedule, averaging a throughput of 12,396 tonnes per day in September.
During the fourth quarter, the throughput increased further, averaging
12,460 tonnes per day. The combination of increased throughput as well
as higher gold and copper grades and recoveries, led to steady
quarterly increases in gold and copper production through the year. For
2013, the average gold grade was 0.78 grams per tonne and the average
copper grade was 0.93%. Recoveries for gold and copper in 2013 were 85%
and 86%, respectively. New Afton’s fourth quarter gold production of
25,211 ounces and copper production of 20.5 million pounds enabled the
mine to exceed its annual gold production guidance and meet the high
end of its targeted copper production range. At the average realized
copper price and Canadian dollar exchange rate for 2013, New Afton’s
total cash costs((1)) also met guidance. New Afton’s 2013 co-product cash costs were $486 per
ounce of gold and $1.19 per pound of copper, both lower than the cost
guidance range for the year.

New Afton’s performance is expected to strengthen further in 2014. Both
gold and copper production should benefit from average throughput
remaining consistent with that achieved during the fourth quarter of
2013. Grades and recoveries of gold and copper are expected to remain
in line with 2013 levels. The combination of increased copper
production at copper prices assumed to remain consistent with those
realized in 2013, and a weaker Canadian dollar, results in New Afton’s
2014 guidance for total cash costs((1)) being even lower than those achieved in 2013.

During 2013, in support of the successful throughput increase, New Afton
focused on maximizing its flexibility through the development of
additional ore access points, or drawbells. Total sustaining capital
during the year, comprised of a combination of drawbell development as
well as ongoing capital purchases and initiatives, was $90 million. An
additional $32 million of growth-related capital was spent on the
development of the eastern portion of the New Afton block cave. This
area is scheduled to provide additional ore sources to support the mill
expansion project discussed in greater detail below. Looking forward,
the rate of total underground and drawbell development should decline
through 2014 as anticipated. Drawbell development is scheduled to
decline from the current level of three per month to reach a run-rate
level averaging one drawbell per month in the fourth quarter of 2014.
Estimated sustaining capital in 2014 should decrease by approximately
$30 million to $60 million due to a combination of less underground
development and certain 2013 capital expenditures, including
commissioning of the gyratory crusher and tailings projects, not
recurring in 2014. The reduction in sustaining capital, coupled with
lower anticipated total cash costs((1)), leads to an even greater expected decrease in all-in sustaining costs((2)) when comparing 2013 realized costs to the 2014 guidance.

An additional $55 million of growth-related capital is budgeted for
2014, of which $35 million is related to the mill expansion project
detailed below. The remaining $20 million is for the continued
evaluation of the C-zone resource, of which 60% is for capitalized
exploration to target additional resource growth in the C-zone as
further discussed in the section entitled Exploration Update.

Mill Expansion Project

Further to New Afton’s successful increase in daily throughput in 2013
to an average of 12,460 tonnes in the fourth quarter, the team has also
successfully completed its evaluation of the economic benefits of a
further expansion of the operation towards 14,000 tonnes per day. In
August and December of 2013, over multi-day periods, New Afton was run
at rates between 14,000 and 15,500 tonnes per day to better assess
which elements of the mining and milling processes could be further
optimized at the higher throughput levels.

Based on the operating performance, it was concluded that the
combination of the number of available drawbells as well as the excess
capacity of the gyratory crusher and conveyor enabled the mine to
deliver the higher ore tonnage to the mill. The mill also handled the
higher throughput levels, however, as anticipated, grind size increased
and a decrease in recovery was seen as the mill moved to progressively
higher throughput rates. With the benefit of this data, the focus of
the expansion study was on optimizing the project economics when taking
into account the economic trade-off between capital costs, daily
processing rates and recoveries.

After the completion of the expansion, the mill should operate at a
sustainably higher throughput rate averaging 14,000 tonnes per day
while, at the same time, increasing total gold and copper recoveries by
approximately 2% to 3% over those realized in 2013. The total capital
cost estimate of the expansion project is $45 million, of which $35
million is scheduled to be spent in 2014 The capital estimate includes
the purchase and installation of a vertimill for tertiary grinding as
well as the construction of an addition to the mill building to house
the vertimill, additional flotation capacity in the form of cleaner
cells and all related engineering, equipment and construction costs.
Relative to the modest capital outlay, the increase in annual gold and
copper production, driven by higher throughput and recoveries, and
resulting increase in cash flow is significant and leads to compelling
returns. Assuming commodity prices of $1,300 per ounce gold and $3.25
per pound copper, the internal rate of return on the expansion project
is over 50% and the payback period is less than two years. New Gold has
ordered the vertimill with delivery expected in early 2015. The mill
installation, commissioning and ramp-up to 14,000 tonnes per day is
targeted for mid-2015.

C-zone Resource

The company’s 2013 exploration efforts at New Afton increased the
contained gold and copper resources in the C-zone area by over 10 times
when compared to the end of 2012. The C-zone is a continuation of the
main New Afton deposit that lies down and along strike of the reserve
that is currently being mined. The 2013 year-end C-zone Measured and
Indicated resources included 693,000 ounces of contained gold and 516
million pounds of contained copper. From this already sizeable base,
the focus of the 2014 exploration program will remain on further
delineating the C-zone and continuing to explore its potential
extensions. In total, the company is targeting the completion of 30,000
to 35,000 metres of underground drilling on the C-zone in 2014. Through
2014, in addition to the ongoing exploration efforts, the company plans
to continue to advance its assessment of the potential to incorporate
the C-zone into New Afton’s longer-term mine plan.

Mesquite

As previously noted, Mesquite’s 2013 operational results were impacted
by lower than anticipated grades being mined and processed. Consistent
with the company’s expectations, the fourth quarter was the strongest
of the year as the gold grades processed were more in line with what
had been expected for the full year. Mesquite produced 34,893 ounces of
gold in the fourth quarter of 2013 at total cash costs((1)) of $841 per ounce. Full-year production was below expectations due to
the average grade processed being 0.06 grams per tonne below the
mid-point of the targeted range. Mesquite’s 2013 operating costs were
in line with expectations, however, the lower production base
negatively impacted the total cash costs((1)) for the year.

Gold production is expected to increase by approximately 10% in 2014 to
113,000 to 123,000 ounces. Mesquite’s 2014 guidance has taken into
account the grade-related challenges encountered in 2013 as well as
additional data from a late-2013 infill drilling program that was
conducted in the areas scheduled for mining through 2014. Average gold
grades in 2014 are scheduled to increase compared to 2013, with this
benefit being partially offset by lower ore tonnes placed on the pad as
the 2014 mine plan provides for opening a new area of the pit in 2014,
resulting in a higher stripping ratio for this year.

Mesquite’s 2014 total cash costs((1)) are expected to be slightly higher than those incurred in 2013 due to
an increase in total tonnes moved and the above-noted increase in the
stripping ratio. Sustaining capital expenditures in 2014 are estimated
to be $40 million, which includes $15 million for four new haul trucks,
$13 million related to a leach pad expansion, required as a result of
the increase in Mesquite’s mineral reserve base since the mine began
production, and $10 million for replacement of major equipment
components. The new trucks provide additional haulage capacity and
enhance the team’s flexibility in accessing Mesquite’s multiple ore
zones which should result in increased production in future periods.
Mesquite’s all-in sustaining costs((2)) are expected to peak in 2014.

Peak Mines

The Peak Mines had a solid year, achieving the mid-point of guidance for
both gold and copper production. All of the key variables that drive
production, including tonnes processed, grades and recoveries, were in
line with expectations. 2013 total cash costs((1)) were negatively impacted by a combination of the lower than forecasted
realized copper price and $7 million of underground development costs
being expensed rather than capitalized, which was partially offset by
the depreciation of the Australian dollar. As evidenced by the $78 per
ounce quarter-over-quarter decrease in total cash costs((1)) to $778 per ounce in the fourth quarter, the depreciation of the
Australian dollar continues to benefit the Peak Mines.

After achieving 5% gold production growth from 2012 to 2013, the Peak
Mines’ targeted 2014 production should remain at this higher level. At
the same time, copper production in 2014 is expected to increase by
approximately one million pounds compared to 2013 due to higher copper
grades.

Total cash costs((1)) are expected to decrease in 2014 due to the combination of a weaker
Australian dollar, increased productivity resulting from lower turnover
and the by-product benefit of increased copper production. In addition
to the lower total cash costs((1)), 2014 sustaining capital expenditures at the Peak Mines are also
estimated to decrease by approximately 8% to $40 million. As a result,
all-in sustaining costs((2)) are anticipated to decrease by over $245 per ounce to $1,065 to $1,085
per ounce in 2014. With the expectation of another year of solid gold
production as well as increased copper production and lower costs, 2014
should be a strong year for the Peak Mines.

Cerro San Pedro

After multiple years of outstanding performance at Cerro San Pedro, 2013
saw the mine face operational challenges. The August 2013 pit wall
movement, which required an adjustment to the mine plan, combined with
the lower recoveries of the porphyry ore to impact the mine’s gold and
silver production. Cerro San Pedro’s full-year gold production of
102,795 ounces of gold exceeded the company’s outlook range and silver
production of 1.3 million ounces was in line with the outlook.

Cerro San Pedro’s 2013 total cash costs((1)) remained below the industry average, however, they were impacted by a
combination of the lower gold production base as well as lower silver
by-product revenue.

In 2014, Cerro San Pedro will continue through the top section of its
final pit phase which requires increased waste stripping activity in
the first half of the year, after which ore from the upper levels of
the ore body is scheduled to be mined and placed on the leach pad.
Cerro San Pedro’s 2014 targeted gold production is impacted by a
combination of the mining and processing of lower grade ore from the
upper levels of the ore body as well as the continued effect of the
residual leaching of lower recovery porphyry ore placed on the pad in
2013. Silver production in 2014 is anticipated to remain similar to
2013.

Cerro San Pedro’s 2014 estimated total cash costs((1)) are higher than those realized in 2013 due to a combination of the
lower gold production base, increased volumes of processing reagents,
increased waste stripping costs and a lower silver by-product price
assumption. 2014 sustaining capital costs are estimated to be $8
million and relate to the final leach pad expansion at Cerro San Pedro
to allow for the effective processing of ore from the final mining
phase. Consistent with 2013, an additional $20 million of waste
stripping costs are classified as non-sustaining capital as the final
phase currently being mined was not included in Cerro San Pedro’s
original mine plan and thus has extended the mine’s life. The
significant 2014 waste stripping campaign positions Cerro San Pedro to
benefit from reduced stripping requirements in 2015.

Projects Overview

Rainy River

One of New Gold’s key 2013 achievements was the successful acquisition
of Rainy River Resources, which added the Rainy River project to the
company’s pipeline of exciting development projects. Rainy River is
located 50 kilometres northwest of Fort Frances, a town with a
population of approximately 8,000 people in northwestern Ontario, and
benefits from its proximity to infrastructure. Hydroelectric power for
the project will be sourced through the construction of a new
17-kilometre transmission line that will connect Rainy River to a
pre-existing 230 kV line that currently links Fort Frances and Kenora,
Ontario, a small city with a population of approximately 15,000 people
located to the north of the project. The site is easily accessible by a
network of serviced all-weather roads that branch off Trans-Canada
Highways 11 and 71 allowing year-round access. The Canadian National
Railway is located 21 kilometres to the south of the project.

On January 16, 2014, New Gold announced the results of its Feasibility
Study for the Rainy River project.

Rainy River Feasibility Study Highlights

        --  First nine years - average annual gold production of 325,000
            ounces at total cash costs(1) of $613 per ounce and all-in
            sustaining costs(2) of $736 per ounce
      o Average mill head grade of 1.44 grams per tonne gold
        --  Life-of-mine gold and silver production of 3.4 million ounces
            and 6.0 million ounces at total cash costs(1) of $663 per ounce
            and all-in sustaining costs(2) of $765 per ounce
        --  Base case economics - at $1,300 per ounce gold, $22.00 per
            ounce silver and a 0.95 US$/C$ exchange rate, Rainy River has a
            pre-tax 5% net present value ("NPV") of $438 million, an
            internal rate of return ("IRR") of 13.1% and a payback period
            of 5.4 years
        --  Alternative case economics - at $1,600 per ounce gold, $26.00
            per ounce silver and a parity US$/C$ exchange rate, Rainy River
            has a pre-tax 5% NPV of $1.0 billion, an IRR of 21.1% and a
            payback period of 3.6 years
        --  Development capital costs of $885 million inclusive of a $70
            million contingency
        --  Targeted commissioning in late 2016 with first year of full
            production in 2017
        --  14-year mine life with direct processing of open pit and
            underground ore, at a rate of 21,000 tonnes per day, for first
            nine years and processing of a combination of stockpile and
            underground ore thereafter

Importantly, Rainy River’s estimated project economics benefit
significantly from the recent depreciation of the Canadian dollar
relative to the U.S. dollar. When compared to the base case economics
summarized above, a $0.05 movement in the US$/C$ exchange, with all
other assumptions held constant, results in approximately $45 million
of development capital cost savings leading to a $141 million increase
in pre-tax NPV and a 2.8% increase in pre-tax IRR.

One of New Gold’s key areas of focus during 2014 will be on advancing
the permitting of the Rainy River project. The project is being
reviewed through a coordinated Federal Environmental Assessment (“EA”)
– Provincial Individual EA process. As part of the EA review process,
on December 12, 2013, the company was informed that the final EA report
had successfully passed the Federal conformity review step. Achieving
this milestone on schedule enabled the company to issue the final EA
report to the Federal and Provincial agencies, the local First Nations
and Métis groups and other stakeholders on January 17, 2014 to complete
the second consultation engagement.

The estimated capital expenditure for Rainy River in 2014 is $105
million which includes $60 million for property, plant and equipment,
including down payments on long lead time items, $35 million for
detailed engineering, studies, environmental monitoring and permitting
and $10 million for capitalized exploration. Additional detail
regarding the ongoing exploration initiatives at Rainy River is
provided below in the section entitled Exploration Update.

The Rainy River project enhances New Gold’s growth pipeline through its
manageable capital costs, significant production scale at below current
industry average costs and good regional exploration potential in a
great mining jurisdiction. The company looks forward to providing
further updates on the advancement of Rainy River throughout 2014.

Blackwater

The company’s Blackwater project, located approximately 160 kilometres
southwest of the city of Prince George in south-central British
Columbia, was significantly advanced during 2013. Consistent with the
timeline, the team’s efforts culminated in the completion of the
Feasibility Study for Blackwater in December 2013.

Blackwater Feasibility Study Highlights

        --  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
        --  Life-of-mine gold and silver production of 7 million ounces and
            30 million ounces at total cash costs(1) of $578 per ounce and
            all-in sustaining costs(2) of $670 per ounce
        --  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
        --  Base case economics - at $1,300 per ounce gold, $22.00 per
            ounce silver and a 0.95 US$/C$ exchange rate, Blackwater has a
            pre-tax 5% NPV of $991 million, an 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$ 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
        --  Development capital costs of $1,865 million inclusive of a $190
            million contingency
        --  Conventional truck and shovel open pit mine with 60,000 tonne
            per day whole ore leach processing plant

Similar to Rainy River, Blackwater benefits from the depreciating
Canadian dollar. At Blackwater, a $0.05 movement in the US$/C$
exchange, with all other assumptions held constant, results in
approximately $100 million of development capital cost savings leading
to a $270 million increase in pre-tax NPV and a 1.9% increase in
pre-tax IRR.

As noted in the December 12, 2013 news release announcing the results of
the Blackwater Feasibility Study, New Gold plans to advance the project
through the permitting phase in 2014. The company views the potential
of having Blackwater fully permitted as further enhancing the value of
the project.

In the current commodity price environment, New Gold 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 prevailing
market conditions over the coming years. With the benefit of the
requisite permits for both projects, New Gold believes it will be best
positioned to maximize its flexibility with respect to any future
development decisions.

During 2014, the company’s capital expenditures at Blackwater are
anticipated to be $15 million, including $10 million related to the
ongoing permitting initiatives and $5 million for engineering studies.
The company plans to continue its regional exploration program at
Blackwater with additional detail provided in the section entitled Exploration Update below.

El Morro

New Gold’s share of the El Morro project provides the company with a 30%
fully-carried interest in an advanced stage, world-class gold-copper
project in north-central Chile. Under the terms of New Gold’s agreement
with Goldcorp Inc. (“Goldcorp”), Goldcorp is responsible for funding
New Gold’s full 30% share of capital costs. The carried funding accrues
interest at a fixed rate of 4.58%. New Gold will repay its share of
capital plus accumulated interest out of 80% of its share of the
project’s cash flow with New Gold retaining 20% of its share of cash
flow from the time production commences.

On October 22, 2013, the Environmental Assessment Commission of Atacama
analyzed a final report prepared by the Chilean environmental
permitting authority (“SEA”) and unanimously decided on the
reinstatement of the environmental permit for the El Morro project that
had been suspended since April 2012. Subsequently, on November 22, 2013
the Copiapo Court of Appeals granted an injunction suspending
development of the El Morro project. The injunction was requested in
constitutional actions filed by the Huascoaltino and Diaguita
communities, which contended that the various consultations by SEA were
inconsistent with Convention ILO 169 standards. The injunction
effectively suspends construction activity or development works until
the Court has completed its review. Activities during 2014 will
continue to focus on gathering information to support permit
applications for submission following the reinstatement of the
environmental permit and optimization of the project economics
including securing a long-term power supply.

Exploration Update

New Gold looks forward to building on its 2013 exploration success in
2014 and beyond. The company’s estimated total exploration budget for
2014 remains consistent with 2013 at $50 million, of which $30 million
is expected to be capitalized.

At New Afton, the focus will remain on further delineating the C-zone
where the company’s 2013 exploration efforts led to a 10-fold increase
in contained gold and copper resources in the Measured and Indicated
categories. In total, the company is targeting the completion of 30,000
to 35,000 metres of underground drilling with the objective of further
expanding the C-zone Measured and Indicated resource and continuing to
explore its potential extensions.

The 2014 exploration program at Rainy River will continue to test the
potential of the company’s prospective 169 square kilometre land
package. The program is scheduled to include 35,000 to 40,000 metres of
exploration drilling, approximately 70% of which is dedicated to
testing a series of new drill targets around the known ore bodies and
along newly recognized district trends. The remaining 30% of the
drilling is for the completion of condemnation drilling within the
immediate project development area.

In 2013 the exploration team at Blackwater continued to systematically
explore the company’s broader land package which is now over 1,000
square kilometres. As Blackwater represents a newly emerging gold
district in a region characterized by extensive cover and limited
bedrock exposure, the company’s strategy has involved an integrated
approach of geologic, geochemical and geophysical field methods to
identify specific areas of prospective mineralization for follow-up
drilling. To date, New Gold has identified 14 new target areas despite
only 50% of the property having been evaluated in detail. Seven of the
14 targets were drill tested in 2013, with three intercepting gold and
silver mineralization. The 2014 exploration program is targeting the
completion of 10,000 to 15,000 metres of follow-up drilling at the
above-noted targets as well as the continued early-stage work to
identify additional targets on the property.

At the Peak Mines, the team is targeting the completion of 45,000 metres
of drilling in 2014, approximately 80% of which is for continued
underground resource delineation and mineral reserve conversion. The
balance is comprised of surface drilling focused on drill testing the
nine-kilometre mine corridor as well as broader regional targets.

Financial Update

At December 31, 2013, the key components of New Gold’s balance sheet
included $414 million in cash and cash equivalents and $878 million of
face value long-term debt. The components of the long-term debt are:
$300 million of 7.00% face value senior unsecured notes due in April
2020; $500 million of 6.25% face value senior unsecured notes due in
November 2022; and $78 million in El Morro funding loans, repayable out
of a portion of New Gold’s share of El Morro cash flow upon the start
of production. The company had 503 million common shares outstanding at
December 31, 2013.

As part of its annual year-end financial review, New Gold assesses the
carrying value of its assets. This assessment takes into account, among
other things, the impact of lower commodity prices as well as current
mineral reserves and resources and updated mine plans. This process
will be completed in connection with the release of the company’s
fourth quarter and full year 2013 financial results scheduled for the
end of February 2014.

Webcast and Conference Call

A webcast presentation to discuss these results will be held on February
6, 2014, at 10:00 a.m. Eastern Time. Participants may access the
webcast by registering here or from our website at www.newgold.com. You may also listen to the conference by calling 647-427-7450 or
toll-free 1-888-231-8191 in North America. To listen to a recorded
playback after the event, please call 1-416-849-0833 or toll-free
1-855-859-2056 in North America – Passcode 34704055. An archived
webcast will also be available at www.newgold.com following the event.

Detailed Reserve and Resource Tables


                   Mineral Reserves statement as at December 31, 2013

                                   Metal grade            Contained metal

                         Tonnes  Gold Silver Copper  Gold    Silver  Copper
                         000's   g/t   g/t     %     Koz       Koz    Mlbs

    New Afton                                                              

    Proven                     -    -      -      -      -         -      -

    Probable              48,821 0.56    2.2   0.84    879     3,500    904

    Total New Afton       48,821 0.56    2.2   0.84    879     3,500    904
    P&P

    Mesquite                                                               

    Proven                 3,809 0.70      -      -     86         -      -

    Probable             112,094 0.60      -      -  2,152         -      -

    Total Mesquite       115,903 0.60      -      -  2,237         -      -
    P&P

    Peak Mines                                                             

    Proven                 1,820 4.35    6.7   1.16    255       390     47

    Probable               1,820 2.69    7.4   1.27    157       430     51

    Total Peak Mines       3,640 3.52    7.1   1.22    412       820     98
    P&P

    Cerro San Pedro                                                        

    Proven                12,982 0.47   17.5      -    197     7,311      -

    Probable              13,714 0.44   18.7      -    195     8,239      -

    Total CSP P&P         26,696 0.46   18.1      -    392    15,550      -

    Rainy River                                                            

    Direct processing
    material

    Open Pit                                                               

    Proven                15,839 1.47    2.0      -    746     1,038      -

    Probable              46,866 1.26    3.1      -  1,896     4,594      -

    Open Pit P&P
    (direct               62,705 1.31    2.8      -  2,642     5,632      -
    processing)

    Underground                                                            

    Proven                     -    -      -      -      -         -      -

    Probable               4,187 4.96   10.3      -    668     1,388      -

    Underground P&P
    (direct                4,187 4.96   10.3      -    668     1,388      -
    processing)

    Stockpile
    material

    Open Pit                                                               

    Proven                 6,843 0.38    1.5      -     84       332      -

    Probable              30,541 0.39    2.1      -    378     2,058      -

    Open Pit P&P          37,384 0.38    2.0      -    462     2,390      -
    (stockpile)

    Total P&P                                                              

    Proven                22,681 1.14    1.9      -    830     1,370      -

    Probable              81,594 1.12    3.1      -  2,943     8,040      -

    Total Rainy River    104,275 1.13    2.8      -  3,773     9,410      -
    P&P

    Blackwater                                                             

    Direct processing
    material

    Proven               124,500 0.95    5.5      -  3,790    22,100      -

    Probable             169,700 0.68    4.1      -  3,730    22,300      -

    P&P (direct          294,300 0.79    4.7      -  7,510    44,400      -
    processing)

    Stockpile
    material

    Proven                20,100 0.50    3.6      -    330     2,300      -

    Probable              30,100 0.34   14.6      -    330    14,100      -

    P&P (stockpile)       50,200 0.40   10.2      -    650    16,400      -

    Total Blackwater     344,400 0.74    5.5      -  8,170    60,800      -
    P&P

    El Morro          100% Basis                           30% Basis       

    Proven               321,814 0.56      -   0.55  1,746         -  1,163

    Probable             277,240 0.35      -   0.43    929         -    788

    Total El Morro       599,054 0.46      -   0.49  2,675         -  1,951
    P&P

    Total P&P                                       18,538    90,080  2,953


         Measured and Indicated mineral Resource statement (inclusive of
                        Reserves) as at December 31, 2013

                                     Metal grade         Contained metal

                          Tonnes  Gold Silver Copper  Gold  Silver  Copper
                           000's  g/t   g/t     %     Koz     Koz    Mlbs

    New Afton                                                             

    A&B Zones                                                             

    Measured               41,059 0.79    2.7   1.09  1,041   3,624    984

    Indicated              26,966 0.44    2.1   0.65    384   1,777    384

    A&B Zone M&I           68,025 0.65    2.5   0.91  1,425   5,401  1,368

    C-Zone                                                                

    Measured                  618 0.75    1.5   0.91     15      30     12

    Indicated              25,223 0.84    2.0   0.91    678   1,589    504

    C-Zone M&I             25,842 0.83    2.0   0.91    693   1,620    516

    HW Lens                                                               

    Measured                    -    -      -      -      -       -      -

    Indicated              11,035 0.50    2.2   0.43    179     763    104

    HW Lens M&I            11,035 0.50    2.2   0.43    179     763    104

    Total New Afton M&I   104,901 0.68    2.3   0.86  2,297   7,786  1,988

    Mesquite                                                              

    Measured                9,070 0.66      -      -    191       -      -

    Indicated             304,081 0.48      -      -  4,713       -      -

    Total Mesquite M&I    313,151 0.49      -      -  4,904       -      -

    Peak Mines                                                            

    Measured                3,000 4.69    6.7   1.06    450     650     70

    Indicated               3,400 3.29    6.7   1.18    360     730     88

    Total Peak Mines M&I    6,400 3.95    6.7   1.12    810   1,380    158

    Cerro San Pedro                                                       

    Measured               13,387 0.46   17.3      -    199   7,459      -

    Indicated              14,311 0.43   18.4      -    198   8,489      -

    Total CSP  M&I         27,698 0.45   17.9      -    397  15,948      -

    Rainy River                                                           

    Direct processing
    material

    Open Pit                                                              

    Measured               20,282 1.45    1.9      -    947   1,261      -

    Indicated              80,411 1.35    2.6      -  3,486   6,584      -

    Open Pit M&I (direct  100,693 1.37    2.4      -  4,433   7,846      -
    processing)

    Underground                                                           

    Measured                   89 4.95    2.8      -     14       8      -

    Indicated               5,469 4.53   11.3      -    796   1,994      -

    Underground M&I         5,558 4.53   11.2      -    810   2,002      -
    (direct processing)

    Stockpile material                                                    

    Open Pit                                                              

    Measured                6,294 0.37    1.3      -     74     262      -

    Indicated              64,816 0.44    2.2      -    919   4,526      -

    Open Pit M&I           71,110 0.43    2.1      -    993   4,788      -
    (stockpile)

    Total M&I                                                             

    Measured               26,665 1.21    1.8      -  1,035   1,531      -

    Indicated             150,696 1.07    2.7      -  5,202  13,104      -

    Total Rainy River M&I 177,361 1.09    2.6      -  6,236  14,635      -

    Blackwater                                                            

    Direct processing
    material

    Measured              116,955 1.04    5.6      -  3,900  21,060      -

    Indicated             189,044 0.78    6.0      -  4,730  36,470      -

    M&I (direct           305,999 0.88    5.8      -  8,620  57,520      -
    processing)

    Stockpile material                                                    

    Measured               26,521 0.30    4.1      -    260   3,500      -

    Indicated              64,382 0.30    4.4      -    620   9,110      -

    M&I (stockpile)        90,904 0.30    4.3      -    870  12,600      -

    Total Blackwater M&I  396,903 0.74    5.5      -  9,500  70,130      -

    Capoose                                                               

    Indicated              20,280 0.50   22.4      -    320  14,620      -

    El Morro                          100% Basis              30% Basis

    Measured              341,604 0.56      -   0.54  1,848       -  1,230

    Indicated             349,803 0.35      -   0.42  1,193       -    977

    Total El Morro M&I    691,407 0.46      -   0.48  3,041       -  2,207

    Total M&I                                        27,505 124,499  4,353


                   Inferred Resource statement as at December 31, 2013

                                   Metal grade            Contained metal

                         Tonnes  Gold Silver Copper    Gold   Silver Copper
                         000's   g/t   g/t     %        Koz    Koz    Mlbs

    New Afton                                                              

    A&B-Zone               5,607 0.32    1.5   0.38        59    272     46

    C-Zone                11,288 0.63    1.7   0.64       227    602    159

    HW Lens                  818 0.56    1.3   0.42        15     33      7

    New Afton             17,713 0.53    1.6   0.54       301    907    212
    Inferred

    Mesquite              17,550 0.42      -      -       238      -      -

    Peak Mines             2,000 2.34    4.7   1.17       150    300     51

    CSP                    1,174 0.34   11.6      -        13    436      -

    Rainy River                                                            

    Direct processing                                                      

    Open Pit               9,388 0.97    2.3      -       292    687      -

    Underground            2,641 4.46    8.3      -       379    707      -

    Total Direct          12,029 1.74    3.6      -       671  1,394      -
    Processing

    Stockpile                                                              

    Open Pit               8,626 0.37    1.2      -       102    323      -

    Rainy River           20,655 1.16    2.6      -       773  1,717      -
    Inferred

    Blackwater                                                             

    Direct processing     13,815 0.76    4.1      -       340  1,820      -

    Stockpile              3,785 0.31    3.6      -        40    440      -

    Blackwater            17,600 0.66    4.0      -       380  2,260      -
    Inferred

    Capoose               29,263 0.39   26.3      -       370 24,740      -

                      100% Basis                    30% Basis              

    El Morro - Open      564,217 0.16      -   0.26       871      -    970
    Pit

    El Morro -           113,840 0.97      -   0.78     1,065      -    587
    Underground

    Total Inferred                                      4,161 30,360  1,821

Notes to Mineral Reserve and Mineral Resource Statements

New Gold reports its Measured and Indicated mineral resources inclusive
of its mineral reserves. Measured and Indicated mineral resources that
are not mineral reserves do not have demonstrated economic viability.
Inferred mineral resources have a greater amount of uncertainty as to
their existence and economic and legal feasibility, do not have
demonstrated economic viability, and are exclusive of mineral reserves.
Mineral reserves have been estimated in accordance with the Canadian
Institute of Mining, Metallurgy and Petroleum (“CIM”) definition
standards and National Instrument 43-101 (“NI 43-101″).

1) Mineral Reserves for the company’s mineral properties have been
estimated based on the following metal prices and lower cut-off
criteria:

     ___________________________________________________________________
    |Mineral Property| Gold  |Silver |Copper |         Lower cut-off    |
    |                |$/ounce|$/ounce|$/pound|                          |
    |________________|_______|_______|_______|__________________________|
    |New Afton       |$1,300 |$22.00 | $3.00 |$21.00/t NSR              |
    |________________|_______|_______|_______|__________________________|
    |                |       |       |       |0.21 g/t  Au - Oxide and  |
    |                |       |       |       |transition reserves       |
    |                |       |       |       |0.41 g/t Au - Non-oxide   |
    |Mesquite        |$1,300 |   --  |   --  |reserves                  |
    |________________|_______|_______|_______|__________________________|
    |Peak Mines      |$1,300 |$22.00 | $3.00 |AUD$88 to 134/t NSR       |
    |________________|_______|_______|_______|__________________________|
    |Cerro San Pedro |$1,300 |$22.00 |   --  |$3.00/t NSR               |
    |________________|_______|_______|_______|__________________________|
    |                |       |       |       |0.30 - 0.70 g/t  Au - Open|
    |                | $800  |$25.00 |       |pit                       |
    |Rainy River     |$1,300 |$22.00 |   --  |3.50 g/t Au - Underground |
    |________________|_______|_______|_______|__________________________|
    |                |       |       |       |0.26 - 0.38 g/t  AuEq -   |
    |                |       |       |       |Direct processing         |
    |Blackwater      |$1,300 |$22.00 |   --  |0.32 g/t AuEq - Stockpile |
    |________________|_______|_______|_______|__________________________|
    |El Morro        |$1,300 |   --  | $3.00 |0.20% Cu                  |
    |________________|_______|_______|_______|__________________________|

2) Mineral Resources for the company’s mineral properties have been
estimated based on the following metal prices and lower cut-off
criteria:

     ___________________________________________________________________
    |Mineral Property| Gold  |Silver |Copper |         Lower cut-off    |
    |                |$/ounce|$/ounce|$/pound|                          |
    |________________|_______|_______|_______|__________________________|
    |New Afton       |$1,400 |$24.00 | $3.25 |0.40% CuEq                |
    |________________|_______|_______|_______|__________________________|
    |                |$1,400 |   --  |   --  |0.11 g/t  Au - Oxide and  |
    |                |       |       |       |transition resources      |
    |                |       |       |       |0.22 g/t Au - Non-oxide   |
    |Mesquite        |       |       |       |resources                 |
    |________________|_______|_______|_______|__________________________|
    |Peak Mines      |$1,400 |$24.00 | $3.25 |AUD$92 to 125/t NSR       |
    |________________|_______|_______|_______|__________________________|
    |                |$1,400 |$24.00 |   --  |0.10 g/t  AuEq - Open pit |
    |                |       |       |       |oxide resources           |
    |                |       |       |       |0.30 g/t AuEq - Open pit  |
    |Cerro San Pedro |       |       |       |sulphide resources        |
    |________________|_______|_______|_______|__________________________|
    |                |$1,400 |$24.00 |   --  |0.30 - 0.45 g/t  Au - Open|
    |                |       |       |       |pit                       |
    |Rainy River     |       |       |       |2.50 g/t Au - Underground |
    |________________|_______|_______|_______|__________________________|
    |                |$1,400 |$24.00 |   --  |0.40 g/t  AuEq - Direct   |
    |                |       |       |       |processing                |
    |                |       |       |       |0.30 - 0.40 g/t AuEq -    |
    |Blackwater      |       |       |       |Stockpile                 |
    |________________|_______|_______|_______|__________________________|
    |Capoose         |$1,400 |   --  |   --  |0.40 g/t AuEq             |
    |________________|_______|_______|_______|__________________________|
    |El Morro        |$1,300 |   --  | $3.00 |0.20% Cu                  |
    |________________|_______|_______|_______|__________________________|

3) Mineral resources are classified as Measured, Indicated and Inferred
resources and are reported based on technical and economic parameters
consistent with the methods most suitable for their potential
commercial exploitation. Where different mining and/or processing
methods might be applied to different portions of a mineral resource,
the designators ‘open pit’ and ‘underground’ have been applied to
indicate envisioned mining method. Likewise the designators ‘oxide’,
‘non-oxide’ and ‘sulphide’ have been applied to indicate the type
of mineralization as it relates to appropriate mineral processing
method and expected payable metal recoveries. Additional details
regarding mineral resource estimation, classification, reporting
parameters, key assumptions and associated risks for each of New Gold’s
mineral properties, other than Rainy River, are provided in the
respective NI 43-101 Technical Reports which are available at www.sedar.com. Refer to the supplementary information below regarding the mineral
reserve and mineral resource estimates for Rainy River.

Rainy River Mineral Reserves:

      1. Open pit mineral reserves have been estimated using an optimized
         pit shell based on metal prices of $800 per ounce gold and $25 per
         ounce silver, a foreign exchange rate of C$1.05 to US$1.00, gold
         recovery of 89.9% (non-CAP Zone) and 74.3% (CAP Zone) and a silver
         recovery of 67.1% (non-CAP Zone) and 69.5% (CAP Zone). The cut-off
         grade is based on a gold price of $1,200. Underground reserves
         have been estimated from mining shapes generated using a cut-off
         grade of 3.5 g/t gold-equivalent. Development material from stope
         access drives above a cut-off grade of 1.5 g/t gold-equivalent is
         also assumed to be sent to the mill for processing. Underground
         breakeven cut-off grade is calculated at 2.75 g/t gold-equivalent
         based on metal prices of $1,300 per ounce gold and $22 per ounce
         silver, a foreign exchange rate of CAD $1.05 to USD $1.00, gold
         recovery of 95% and a silver recovery of 75%.
      2. Open pit reserves have been estimated using a dilution of 4% at
         0.21 g/t Au and 1.19 g/t Ag, and underground reserves have been
         estimated using an overall dilution of 8.3%, inclusive of both
         rock and backfill dilution. Open pit and underground reserves have
         been estimated using a mining recovery of 95% and 96.5%,
         respectively.
      3. Open pit direct processing material is defined as mineralization
         likely to be mined and processed directly and above a variable
         cut-off grade ranging from 0.3-0.7 Au g/t.
      4. Stockpile material includes all material within designed open pit
         between variable cut-offs described above in Note 3, as well as
         material within the CAP Zone (code 500) that is suitable for
         stockpiling and future processing.
      5. Mineral Reserves for the open pit are derived from the resource
         model effective November 2, 2013. Models for the underground
         reserves were derived from the August 2013 and September 2013
         models for the main ODM zone and Intrepid Zone, respectively.
         Models were prepared by Dorota El-Rassi, P.Eng. (APEO #100012348)
         and Glen Cole, P.Geo. (APGO #1416), of SRK, both independent
         "Qualified Persons" as that term is defined in National Instrument
         43-101. Rainy River's exploration program in Richardson Township
         is being supervised by Mark A. Petersen, (AIPG Certified
         Professional Geologist #10563), Vice President, Exploration for
         New Gold and a "Qualified Person" as defined in National
         Instrument 43-101. New Gold continues to implement a rigorous
         QA/QC program to ensure best practices in drill core sampling,
         analysis and data management.
      6. Qualified persons - The open pit portion of the mineral reserve
         statement was prepared under the supervision of Patrice Live (OIQ
         #38991) of BBA, and the underground portion of the mineral reserve
         statement was prepared by Colm Keogh, P.Eng. (APEGBC #37433) of
         AMC Mining Consultants (Canada) Ltd., both independent "Qualified
         Persons" as that term is defined in National Instrument 43-101.
      7. The mineral reserve estimate may be materially affected by
         environmental, permitting, legal, title, taxation, sociopolitical,
         marketing, and other relevant issues.

Rainy River Mineral Resources:

      1. Mineral resources are reported in relation to conceptual pit
         shells and are inclusive of the Intrepid zone. Vertical limit of
         -150m msl.
      2. Open pit mineral resources are reported at a cut-off grade of 0.30
         gpt gold, underground mineral resources are reported at a cut-off
         grade of 2.5 gpt gold based on a gold price of $1,400 per ounce, a
         silver price of $24.00 per ounce, a foreign exchange rate of
         C$1.10 to US$1.00, gold recovery of 88% for open pit resources and
         90% for underground resources with silver recovery at 75%.
      3. Direct processing material is defined as mineralization above a
         cut-off of 0.45 g/t gold and likely to be mined and processed
         directly.
      4. Stockpile material includes all material within conceptual pit
         shells in the gold grade range 0.30 - 0.45 gpt as well as all
         material within the CAP zone that is suitable for stockpiling and
         future processing based on average metallurgical recoveries of 88%
         gold and 75% silver.
      5. Qualified Persons - The mineral resource statement was prepared by
         Dorota El-Rassi, P. Eng. (APEO #100012348) and Glen Cole (APGO
         #1416) from SRK, both independent "Qualified Persons" as that term
         is defined in National Instrument 43-101.
      6. Mineral resources are inclusive of mineral reserves. Mineral
         resources that are not mineral reserves do not have demonstrated
         economic viability.
      7. The mineral resource estimate may be materially affected by
         environmental, permitting, legal, title, taxation, sociopolitical,
         marketing and other relevant issues.

4) Qualified Person: The preparation of New Gold’s mineral reserve and
mineral resource statements has been done by Qualified Persons as
defined under National Instrument 43-101 under the supervision of Mark
A. Petersen, a Qualified Person under National Instrument 43-101 and an
officer of New Gold.

     ____________________________________________________________________
    |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 are “forward looking”. All statements in this news release,
other than statements of historical fact, which 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 of such terms.
Forward-looking statements in this news release include, among others,
statements with respect to: guidance for production, cash costs and
all-in sustaining costs (and its components) and for growth capital
expenditures, including the expected drivers of those figures; the
expected throughput and recovery rates at New Afton; planned
modifications to the New Afton Mine and mill, the expected timeline,
outcomes, cost and payback period of any such modifications; planed
modifications to other operations; expected future mining activities;
planned exploration expenditures (and their accounting treatment) and
drilling activities and costs; exploration potential and the goals and
expected results of future exploration activities; the estimation of
mineral reserves and resources and the realization of such estimates;
the results of the Rainy River and Blackwater feasibility studies,
including the expected production, costs, stripping ratio, mining and
processing method and rate, stockpiling plan, recovery rates, mine
life, infrastructure, NPV, IRR and payback period (and related
sensitivities) associated with each project; the timing of permitting
activities and environmental assessment processes; targeted timing for
commissioning and full production at Rainy River; and potential for
impairment adjustments.

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. Certain
material assumptions regarding our forward-looking statements are
discussed in this news release, New Gold’s MD&A’s, its Annual
Information Form and its Technical Reports filed at www.sedar.com. In
addition to, and subject to, such assumptions discussed in more detail
elsewhere, the forward-looking statements in this news release are also
subject to the following assumptions: (1) there being no signification
disruptions affecting New Gold’s operations; (2) political and legal
developments in jurisdictions where New Gold operates, or may in the
future operate, being consistent with New Gold’s current expectations;
(3) the accuracy of New Gold’s current mineral reserve and resource
estimates; (4) the exchange rate between the Canadian dollar,
Australian dollar, Mexican Peso and U.S. dollar being approximately
consistent with current levels; (5) prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately
consistent with current levels; (6) labour and material costs
increasing on a basis consistent with New Gold’s current expectations;
(7) permitting and arrangements with First Nations and other Aboriginal
groups in respect of Rainy River and Blackwater being consistent with
New Gold’s current expectations; (8) all environmental approvals
(including the environmental assessment process for the Blackwater and
Rainy River projects), required permits, licenses and authorizations
being obtained from the relevant governments and other relevant
stakeholders within the expected timelines; and (9) the results of the
feasibility studies for the Rainy River and Blackwater projects being
realized.

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, the United States, Australia,
Mexico and Chile; 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, the United States,
Australia, Mexico and Chile or any other country in which New Gold
currently or may in the future carry on business; taxation; controls,
regulations and political or economic developments in the countries in
which New Gold does or may carry on business; 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 of
each jurisdiction in which New Gold operates, including, but not
limited to: in Canada, obtaining the necessary permits for the
Blackwater and Rainy River projects; in Mexico, where Cerro San Pedro
has a history of ongoing legal challenges related to our environmental
authorization (EIS); and in Chile, where the courts have temporarily
suspended the approval of the environmental permit for El Morro; the
lack of certainty with respect to foreign legal systems, which may not
be immune from the influence of political pressure, corruption or other
factors that are inconsistent with the rule of law; 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 or reclamation activities;
uncertainties inherent to mining economic studies including the
feasibility studies for Rainy River and Blackwater; 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 other
Aboriginal groups; uncertainties with respect to obtaining all
necessary surface and other land use rights or tenure for Rainy River;
risks, uncertainties and unanticipated delays associated with obtaining
and maintaining necessary licenses, permits and authorizations and
complying with permitting requirements, including those associated with
the environmental assessment processes for Blackwater and Rainy River.
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
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 Mineral Reserves
and 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 Report are Canadian mining terms as
defined in the Canadian Institute of Mining, Metallurgy and Petroleum
(“CIM”) Definition Standards for Mineral Resources and Mineral Reserves
adopted by CIM Council on November 27, 2010 and incorporated by
reference in National Instrument 43-101 (“NI 43-101″). 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. As
such, certain information contained in this Report 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 greater amount of uncertainty as to
its existence and as to its economic and legal feasibility. Under
Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility of pre-feasibility studies. It cannot be
assumed that all or any part of an “Inferred Mineral Resource” will
ever be upgraded to a higher confidence category. Readers are cautioned
not to assume that all or any part of an “Inferred Mineral Resource”
exists or is economically or legally mineable.

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 estimation is made. Readers are cautioned not
to assume that all or any part of the Measured or Indicated Mineral
Resources that are not Mineral Reserves will ever be converted into
Mineral Reserves. In addition, the definitions of “Proven Mineral
Reserves” and “Probable Mineral Reserves” under CIM 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 A. Petersen, Vice President, Exploration
of New Gold. Mr. Petersen is an AIPG Certified Professional Geologist
and a “qualified person” under National Instrument 43-101.

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, a worldwide association of suppliers of gold and gold
products that ceased operations in 2002. 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 then divided by ounces of gold sold to arrive at
a per ounce figure. Co-product cash costs are calculated based on total
cash costs, prior to any reduction for by-product revenue, being
apportioned to each metal produced on a percentage of revenue basis and
subsequently divided by ounces of gold or silver sold or pounds of
copper sold to arrive at per ounce or per pound figures. These
measures, along with sales, are 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-GAAP measure. Total cash costs and co-product
cash costs presented do not have a standardized meaning under GAAP and
may not be comparable to similar measures presented by other mining
companies. It should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP and is not
necessarily indicative of operating costs presented under GAAP. Further
details regarding our non-GAAP measures and a reconciliation to the
nearest GAAP measures are provided in our MD&A’s accompanying our
financial statements filed from time to time on www.sedar.com.

(2) ALL-IN SUSTAINING COSTS

Consistent with guidance announced in 2013 by 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”
per ounce as the sum of total cash costs, sustaining capital
expenditures, corporate general and administrative costs, capitalized
and expensed exploration that is sustaining in nature and environmental
reclamation costs, all divided by the ounces of gold sold to arrive at
a per ounce figure. 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 the company’s expected operating performance, ability to
generate free cash flow and its overall value. This data is furnished
to provide additional information and is a non-GAAP measure. All-in
sustaining costs presented do not have a standardized meaning under
GAAP and may not be comparable to similar measures presented by other
mining companies. It should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP
and is not necessarily indicative of operating costs presented under
GAAP. Further details regarding our non-GAAP measures and a
reconciliation to the nearest GAAP measures are provided in our MD&A’s
accompanying our financial statements filed from time to time on www.sedar.com.

SOURCE New Gold Inc.


Source: PR Newswire



comments powered by Disqus