Mesquite Mine Looks Ahead To Stronger Fourth Quarter 

VANCOUVER, BC -  New Gold reported that gold sales in the third quarter at the Mesquite Mine, in Mineral County, California, increased by 12% to 30,890 ounces from 27,594 ounces sold in the third quarter of 2009. As a result of increased gold sales and higher realized gold prices, Mesquite generated $6.3 million in earnings from mine operations in the third quarter of 2010 compared to $1.4 million in the same period of the prior year, despite an increase in total cash cost to $708 per ounce from $662 per ounce in the prior year. The average realized gold price in the third quarter of 2010 was $1,079 per ounce compared to $947 per ounce in the same period of the prior year.

The increased gold sales and production at Mesquite during the third quarter were primarily driven by mining of higher grade ore, though still below reserve grade, as well as continued improvement in gold recoveries. The total cash cost increase is attributable to lower truck operating efficiencies during the quarter as the sequencing of the mine plan led to mining in a smaller working area of the pit. This resulted in lower tonnes mined which, when combined with increased fuel costs, as both the volume and price of diesel consumed have increased over the prior year period and additional explosive costs, led to higher operating costs per tonne and, in turn, higher total cash cost during the quarter. For the nine months ended September 30, 2010, gold sales increased by 36% to 119,178 ounces from 87,647 ounces sold in the same period in 2009, while, over the same periods, total cash cost per ounce of gold sold decreased to $619 from $624. As a result of the increased production, declining costs and higher realized gold prices, Mesquite generated $35.0 million in earnings from mine operations in the first nine months of 2010 compared to $9.6 million in the same period of the prior year. The average realized gold price for the first nine months of 2010 was $1,067 per ounce compared to $888 per ounce in the same period of the prior year. The increased gold sales and production in the first nine months of 2010 were attributable to increased recoveries and higher average grades mined and were partially offset by lower ore tonnes mined. The drivers of the total cash cost decrease during the first nine months of 2010 included a lower stripping ratio requiring fewer waste tonnes to be moved as well as the fixed portion of operating costs being distributed over increased gold ounces. These positive impacts were partially offset by the above noted cost increases. The company's address is 3110-666 Burrard St., Vancouver, BC V6C 2X8, (604) 696-4100, fax: (604) 696-4110.