New Gold Inc.: New Afton Feasibility Study Indicates Potential to Develop One of Canada's Largest Underground Metals Mine and One of its Lowest Cost Gold Producers

Market Wire, April, 2007

(All dollar amounts in US$ unless otherwise indicated)

New Gold Inc. (TSX: NGD)(AMEX: NGD) is pleased to announce the results of the Feasibility Study ("FS") conducted on its 100%-owned New Afton Copper-Gold (Cu-Au) Project, located 10 kilometers west of Kamloops, British Columbia, Canada.

The key results of the FS are:

- Potential to develop an underground block cave, Cu-Au mine, with maximum mining rate of 4 million tonnes per year (11,000 tonnes per day), which would be one of Canada's largest underground metals mine (on a production basis).

- Reserves containing almost 1 billion pounds of Cu, more than 1 million ounces of Au, and more than 3 million ounces of Silver (Ag).

- Initial 12 year mine life.

- Maximum annual Au production of more than 100,000 ounces, and averaging 82,000 ounces.(1)

- Maximum annual Cu production of more than 87 million pounds, and averaging 78 million pounds.(1)

- Potentially one of Canada's lowest cost Au producers, with cash costs of negative $852 per ounce (net of Cu and Ag credits).(1,2)

- Cu cash costs of production of $0.58 per pound (net of Au and Ag credits). (1,2)

- Maximum pre-tax cash flow of more than $120 million per year, and averaging approximately $110 million.(1,2)

- Initial Capital Expenditures of $268 million, and additional Life of Mine expenditures of $215 million.

- Potential to start production in 2009.

- Pre-tax net present value, at discount rates of 0% and 5%, estimated at $614 million and $266 million, respectively.

(1) Average of complete years (2012-2020) at full production rate (4 million tonnes per year)

(2) 3 Year (2 Jan 2004 - 1 Jan 2007) Trailing average LME spot prices - Cu $2.01; Au $487; Ag $8.54

In releasing the results of the FS, President and CEO, Chris Bradbrook, stated, "The completion of the FS is a major milestone for New Gold. It is the culmination of more than 2 years of work, which included the completion of the underground exploration decline, infill drilling, and the technical studies which formed the basis of the FS. It marks the beginning of the next phase of development of the New Afton Project, as we endeavour to finance it, and bring into production one of Canada's largest underground metals mine, and move New Gold towards a market revaluation from explorer to producer. New Gold is continuing an active exploration program at the New Afton Project, and strongly believes there are opportunities to increase the resource base prior to the start of production, which could potentially provide additional flexibility, mine life and the opportunity to further optimize overall economics.

Many people have dedicated their time and effort towards the successful completion of this study, including everyone in the FS team (described below), our employees, directors, contractors, suppliers and the local and First Nations communities of Kamloops. I would like to sincerely thank all of them for their work and assistance in this significant undertaking. We look forward to seeing this mine develop for the mutual benefit of the town and all the communities of Kamloops, the Province of British Columbia and our shareholders."

FEASIBILITY STUDY BACKGROUND

The FS was carried out by a team which included, and was coordinated by, Hatch Ltd. ("Hatch") which completed the processing and surface infrastructure engineering components of the study. Mine planning and reserves were completed by AMC Consultants Pty. Ltd. ("AMC"), and Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA") completed the geology and resource sections. Environmental services and permitting were completed by Rescan Environmental Services Ltd. ("Rescan"). The Tailings disposal analysis was completed by Vector Engineering Inc. ("Vector"). The groundwater modeling was carried out by Piteau Associates Engineering Ltd. ("Piteau"). The purpose of the FS was to determine the potential for, and the technical and economic parameters of, developing the New Afton Project into a new bulk underground mining operation.

The New Afton FS was co-ordinated by Mr. John Shillabeer., P.Eng., of Hatch (who is a Qualified Person under National Instrument 43-101), and the technical content of this news release has been reviewed and approved by him. A NI 43-101 compliant Technical Report ("The Technical Report"), summarizing the FS, will be filed on SEDAR as soon as possible. It should be noted that the capital cost estimate, operating cost estimate, and economic analysis described in this press release are subject to important qualifications, assumptions and exclusions, all of which will be set out in the Technical Report. To fully understand the cost estimates and economic analysis the Technical Report should be read in its entirety.

PROJECT SUMMARY

The New Afton Project is host to a Cu-Au porphyry, which is among the highest grade in the world of this deposit type. It is the site of a former open pit Cu-Au operation (the Afton Mine) which operated from 1978 to 1987, producing approximately 500 million pounds of Cu, 500,000 ounces of Au, and 3 million ounces of Ag. In 1999 New Gold acquired the mineral rights through staking. An exploration program from 2000-2003 outlined an extensive body of high grade Cu-Au porphyry style mineralization, which a 2004 Scoping Study indicated had the potential to become a new underground mine. A 2005 underground exploration program completed more than 2 kilometers of tunneling, which provided access to complete infill drilling and conduct geotechnical analysis. The data gained from this work was used to undertake the FS, which commenced at the end of 2005.