Chilean Court Decision On El Morro Permit

VANCOUVER - New Gold Inc. reported that the Chilean Supreme Court has temporarily suspended the approval of the environmental permit for the El Morro Project. The El Morro Project is a joint venture between New Gold and Goldcorp Inc. The environmental permit was originally approved on March 14, 2011.

The Supreme Court's April 27, 2012 decision relates to a constitutional action that was filed by the Comunidad AgrÆcola Los Huasco Altinos ("CAHA") in May 2011 requesting the invalidation of the March 2011 resolution by the Chilean Environmental Permitting Authority (the "Servicio de Evaluaciùn Ambiental" or "SEA") that approved the project's environmental permit. While the action was filed against the SEA, Sociedad Contractual Minera El Morro, the Chilean company, jointly held by New Gold and Goldcorp, which owns and operates the El Morro Project, participated in the legal proceedings as an interested party and beneficiary of the environmental permit. In February 2012, the Court of Appeals of Antofagasta ruled against the approval of the project's environmental permit. The main grounds for the court ruling is that the SEA had not adequately consulted nor compensated the indigenous people (Diaguita nation) that integrate CAHA. Under the law of Chile, the ruling of the Court of Appeals was not to be effective unless and until confirmed by an order issued by the Supreme Court of Chile. As such, the El Morro Company continued with the development of the El Morro Project while the SEA and the El Morro Company appealed the Court of Appeals of Antofagasta's decision before the Chilean Supreme Court. It was anticipated that the Chilean Supreme Court would work through the appeal filed by the SEA and the El Morro Company over the course of the coming months allowing for hearings to be conducted with the impacted parties, however, the court's decision confirming the ruling by the Court of Appeals of Antofagasta was announced on April 27, 2012. Based on the Supreme Court's announcement, the El Morro Company immediately suspended all project field work being executed under the terms of the environmental permit. Safety and security staff will continue to work to protect the public, the equipment, and the facilities under construction. Activities not related to site construction, including detailed engineering, design work and architectural planning will continue. Throughout this process, Goldcorp, the project developer and operator, has worked closely with the SEA, the party who has been the focus of the legal challenges, and together the parties intend to immediately address any perceived deficiencies regarding the consultation or compensation of indigenous people in the area of the El Morro Project.