New Gold Mine Operations Generated $184 Million In Revenue

VANCOUVER - Randall Oliphant, Executive Chairman of New Gold Inc., said the second quarter delivered on planned increases in gold production at lower costs. In the second half of the year, we expect a 30 percent increase in gold production relative to the first half of 2013 at lower costs, which should result in increased earnings and cash flow. Beyond this near-term momentum, we continue to feel well positioned for the future with our strong cash balance and robust organic project pipeline.

During the second quarter, the company produced 102,435 ounces of gold at all-in sustaining costs of $931 per ounce and total cash costs of $430 per ounce. The company generated revenue of $184 million, earnings from mine operations of $34 million and net earnings of $15 million. Adjusted net cash generated from continuing operations was $43 million, which was adjusted for a one-time charge of $66 million related to the unwinding of the company's legacy gold hedge position. Including the non-recurring cost to settle the hedge, net cash used by continuing operations was $23 million.

Consolidated gold production was higher than the prior year for both the three and six-month periods ended June 30, 2013 as a result of New Afton's significant production contribution during the 2013 periods. The benefit of New Afton's production as well as increased production at the Peak Mines was partially offset by lower production at Cerro San Pedro and Mesquite, due to continued mining of lower grade ore in accordance with their mine plans. Looking forward, all of New Gold's four operations are anticipated to increase production in the second half of 2013.

As New Afton successfully achieved commercial production, ahead of schedule, in July of 2012, there are no production comparisons to the prior year periods. Comparing New Afton's 2013 first and second quarter gold production demonstrates the marked operational improvement resulting from completion of the underground infrastructure. Average daily tones of ore mined and milled increased by 19% to over 11,000 tones per day, average gold grades increased 16%, reconciling favorably to the company's plans, and average gold recoveries increased by 4% to 87%. Collectively, this resulted in a 46% increase in quarter-over-quarter gold production at New Afton. New Afton steadily produced more gold and copper in each month of the second quarter, culminating in the mine's strongest production month of the first half of the year in June. New Afton's strong performance has continued into July with further increases in average daily throughput and recoveries.

Production at Cerro San Pedro increased by 14% when compared to the first quarter of 2013, however, production in both the three and six month periods ended June 30, 2013 was below that of the prior year periods as a result of a combination of planned mining of lower grade ore and lower average recoveries, due to the processing of additional sulphide material, early in 2013. This was partially offset by increased ore tones being placed on the leach pads. During the second quarter, the average grade placed was more comparable to the prior year quarter and approximately 10% above reserve grade, which should positively impact production for the balance of the year.

Mesquite's production in both the three and six month periods ended June 30, 2013 was below that of the prior year periods due to mining of ore below both reserve grade and grades mined in the first half of 2012. Two additional haul trucks have been added to the fleet resulting in increased total ore tones moved when compared to the first six months of the prior year. This is expected to allow Mesquite to access higher grade ore in the second half of the year which should result in increased production.

Gold production at the Peak Mines increased by 12% and 23% when compared to the three and six-month periods ended June 30, 2013 of the prior year. The increase in production was attributable to a combination of increased ore tones processed and higher recoveries, while gold grades remained consistent.

Silver production in both the three and six-month periods ended June 30, 2013 was in line with the company's plans, however, below that of the same periods of the prior year. Silver production during the 2012 periods benefitted from a period of particularly high silver grade ore being placed on the leach pads at Cerro San Pedro.

Copper production increased by over 400% when compared to the second quarter of 2012, driven by New Afton's contribution. New Afton's copper production exhibited similar quarter-over-quarter improvements to those highlighted above with regard to its gold production. When compared to the first quarter of 2013, in addition to the increase in mill throughput, New Afton realized a 21% increase in average copper grade, to a level consistent with reserve grade, as well as a 7% increase in recoveries to 88%. In total, this led to a 58% increase in copper production from the first to second quarter of 2013. At the Peak Mines, copper production was consistent with the prior year periods as increased tones processed and recoveries largely offset the planned mining of lower copper grades.