2007 Financial Results, Project Cost Update and Project Update

New Gold Inc. (the "Company" or "New Gold") (TSX: NGD)(AMEX: NGD) is pleased to provide 2007 financial year end results and an update on its New Afton Copper Gold Project situated 10 kilometres west of Kamloops, British Columbia.

2007 Year End Results

Related Results

The Company incurred a loss of $61.4 million or $2.00 per share in 2007 compared with a loss of $3.5 million or $0.15 per share in 2006. The increased loss is primarily attributable to the $50.1 million impairment charge which the Company took in 2007 in respect of its investments in non-bank sponsored Asset Backed Commercial Paper ("ABCP"). In addition, the Company expensed $22.1 million related to interest and accretion charges in respect of the debt issuances which were completed in June and July 2007, which do not qualify for capitalizing to the New Afton Copper Gold Project (the "Project") costs. Partially offsetting these two items is an increase in interest income of $3.8 million as well as the recognition of a future tax recovery of $9.9 million in 2007 relating to available loss carry forward amounts and share and debt issue costs.

In 2007, the Company expended $39.3 million, including capitalized financing costs, on the Project and Ajax property as compared to $20.2 million in 2006. In 2007, the Company's primary expenditures were $25.7 million on the underground development related to the expansion of the existing 2 kilometre decline and commencement of new development faces, $5.0 million on interest capitalized and paid in 2007, $3.0 million in payments to complete the feasibility study on the Project, $4.5 million on surface exploration in and around the New Afton deposit and $0.8 million on exploration of the Company's Ajax property and optioned properties. In 2006, the Company spent $6.3 million on the feasibility study on the Project, $6.1 million on underground exploration, including support services for the underground exploration, and $2.3 million for tunneling costs (expended in 2005 but paid in 2006).

In addition, the Company spent $30.0 million on property, plant and equipment in 2007 as compared to only $0.4 million in 2006. The significant increase relates to the receipt of the initial portion of the mine development fleet ($11.2 million) and installment payments made on long lead mill equipment orders ($1.6 million). Additionally, the Company completed the acquisition of the surface rights for the Project in the fourth quarter of 2007 for consideration of $16.3 million.

On June 28, 2007 and July 27, 2007, the Company completed an offering (the "Offering") through a syndicate of underwriters, pursuant to which the following securities were issued:

- 237,000 Series D units at a price of $1,000 per unit, each unit consisting of a $1,000 principal amount unsecured note (the "Note") and 100 share purchase warrants;

- 55,000 5% subordinated convertible debentures at a price of $1,000 per debenture;

- 2,055,000 flow-through shares at $9.75 per share; and

- 10,700,000 shares at $7.50 per share.

The total Offering generated gross cash proceeds of $392.3 million (net proceeds $374.5 million).

Cash Resources

As at December 31, 2007, the Company had cash and cash equivalents totalling $190.2 million and negative working capital of $29.6 million. The negative working capital position is due to the classification of the Company's Notes as a current liability, because of a provision in the Note Indenture governing such Notes, which requires the Company to obtain permits related to the Project on or before June 27, 2008. The Mine Permit, which is the principal approval required for the development of the mine, was received on October 31, 2007. The additional material permits relate to the use of water and waste management respecting effluent, sewage and air emissions. The Company is in the process of applying for all of these permits; however if the permits are not obtained by June 28, 2008 the Company may be obligated under the Note Indenture to offer to redeem the Notes at par value ($237 million) from the holders. The Company is presently reviewing alternatives, including seeking an extension to the June 28, 2008 date. The negative working capital position is also due to the classification of the Company's investments in ABCP as non-current assets and will continue to be classified as such until no sooner than the restructuring of the ABCP is completed. The Company has $120 million of estimated recoverable value ($170 million face value) in investments subject to the ABCP restructuring in Canada.

The Company will be required to raise additional capital either from the issuance of flow-through shares which qualify for the vast majority of the underground development costs, additional debt, although this market is currently limited due to the restrictive credit markets world-wide, or equity financings. The timing and amount of these will be impacted by the timing and ultimate resolution of the Company's ABCP investments.

Project Update