2013 Annual Review

In 2013, New Gold achieved the lowest cash costs in its history in the face of operating challenges and a falling gold price. All-in sustaining costs were $899 per ounce, among the lowest in the industry, and are expected to decline further in 2014. With low costs, strong cash flows from operations and an ample cash balance, New Gold has a financially secure outlook at lower gold prices as well as the opportunity to benefit from higher gold prices. The Company is fortunate to have one of the most robust organic growth pipelines in the business, which positions us well to continue our track record of value creation per share.

Letter to shareholders Scorecard Operations

Fellow Shareholders,

As you know, 2013 was a challenging year for the gold industry, with a declining bullion price reflected in the shares of gold companies, including New Gold’s. As significant shareholders ourselves, your Company’s Board of Directors and management team shared in the pain of last year’s share price decline.

There were also other headwinds. We faced the first real operational challenges in the Company’s history during the year. We are proud of the way our team responded to these challenges, finishing the year with record-low cash costs.

Read More on Our Letter to Shareholders

2013 Scorecard

397,688oz

Produced 397,688 ounces of gold at the lowest cash costs in the Company’s history

$899per oz

All-in sustaining costs were $899 per ounce, among the lowest in the industry; total cash costs declined $44 per ounce to $377 per ounce

$414million

$414 million in cash at year-end and continuing strong cash flows provide financial flexibility to internally fund development projects at the timing of our choice

New Afton

New Afton Mine became the Company’s biggest cash flow generator in its first full year of operation and achieved targeted increase in mill throughput ahead of schedule

325,000oz

Acquired the Rainy River project at an attractive price, bolstering our robust growth pipeline with a project that has annual production potential of 325,000 ounces of gold at low cost

+127%

Gold reserves increased 127 percent per share to 18.5 million ounces – the largest gold reserves in New Gold’s history

2014 Targets

380,000–
420,000oz

Gold production expected to remain consistent with 2013 levels, ranging from 380,000 to 420,000 ounces

$815–835per oz

Focus on further cost reductions with all-in sustaining costs of $815 to $835 per ounce and targeted total cash costs of $320 to $340 per ounce

New Afton

23 percent targeted increase in gold production at low-cost New Afton Mine, offset by lower production at Cerro San Pedro Mine

14,000tonnes

New Afton Mine expected to average throughput of 12,500 tonnes per day in 2014 and proceed with mill expansion to 14,000 tonnes per day, driving further targeted gold and copper production growth in 2015

Rainy River

Prioritizing development of the low-cost Rainy River project

x10

Exploration to focus on further increasing gold and copper resources at New Afton C-zone, which grew over 10 times in 2013, and on follow-up drilling on prospective targets at the Rainy River and Blackwater projects

Operations

During 2013, New Gold achieved the lowest cash costs in the Company's history, producing 397,688 ounces of gold, 85.4 million pounds of copper and 1.6 million ounces of silver.

New Afton

New Afton

2013 PRODUCTION:

Gold:
87,177 ounces
Copper: 72 million pounds
All-in sustaining costs ($ per ounce): ($133)
Total cash costs per ounce (net of by-product sales): ($1,196)

Rainy River

Rainy River

MEASURED AND INDICATED RESOURCES (INCLUSIVE OF RESERVES):

Gold:
6.2 million ounces
Silver: 14.6 million ounces

Blackwater

Blackwater

ESTIMATED PRODUCTION AND COSTS:

For first nine years, 485,000 ounces of gold per year
All-in sustaining costs ($ per ounce): $685
Estimated total cash costs per ounce (net of by-product sales): $555

El Morro

El Morro

PROVEN AND PROBABLE RESERVES (NEW GOLD’S 30 PERCENT SHARE):

Gold:
2.7 million ounces
Copper: 2.0 billion pounds

Mesquite

Mesquite

2013 PRODUCTION:

Gold: 107,016 ounces
All-in sustaining costs ($ per ounce): $1,108
Total cash costs per ounce: $907

Peak

Peak

2013 PRODUCTION:

Gold:
102,795 ounces
Copper: 13.4 million pounds
All-in-sustaining costs ($ per ounce): $1,331
Total cash costs per ounce (net of by-product sales): $850

Cerro San Pedro

Cerro San Pedro

2013 PRODUCTION:

Gold:
102,800 ounces
Silver: 1,301,000 ounces
All-in sustaining costs ($ per ounce): $766
Total cash costs per ounce (net of by-product sales): $676

Financial
Highlights

New Gold is an intermediate gold mining company. The Company has a portfolio of four producing assets and three significant development projects. The New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in Australia and the Cerro San Pedro Mine in Mexico provide the Company with its current production base and solid foundation. In addition, New Gold owns 100% of the Rainy River and Blackwater projects, both in Canada, as well as 30% of the El Morro project located in Chile. New Gold’s objective is to be the leading intermediate gold producer, focused on the environment and social responsibility.

Read More on Our Financial Highlights

M&I Gold Resources, Inclusive of Reserves1

(millions of ounces)

M&I Gold Resources, Inclusive of Reserves Chart

Total Cash Costs per Gold Ounce Sold2,3

(U.S. dollars per ounce)

Net Cash Generated from Operations Chart

Adjusted Net Cash Generated from Operations2

(millions of U.S. dollars)

Earnings from Mine Operations Chart