(All figures are in US dollars unless otherwise stated)



    VANCOUVER, July 24 /EMWNews/ - New Gold Inc. ("New Gold")

(TSX and AMEX - NGD) is pleased to announce the second quarter production

and cash cost, an update on the New Afton project, and a revised forecast

for 2008. The production and cash cost information provided below are

approximate figures and might differ slightly from the second quarter

earnings and includes results for the period prior to the close of the

business combination between New Gold, Peak Gold Ltd. and Metallica

Resources Inc. on June 30, 2008. It should be noted that because the

business combination closed on June 30, the consolidated interim statements

of New Gold for the period ended June 30, 2008 that will be released on

August 14, 2008 will not include the results presented below for the Cerro

San Pedro mine and the New Afton project.






    Second Quarter Highlights



    Second quarter highlights reflect the operating results for the three

months ended June 30th, 2008 for Cerro San Pedro, Amapari and Peak Mines.



    -  Gold production was 62,705 ounces

    -  Gold sales were 62,730 ounces

    -  Total cash cost was $612 (net of by-product sales)

    -  Copper production was 1.237 million pounds

    -  Silver production was 284 thousand ounces



    First Half 2008 Highlights



    For the six month period ending June 30, 2008, the operational results for

Cerro San Pedro, Amapari and Peak Mines are as follows:



    -  Gold production was 124,295 ounces

    -  Gold sales were 130,351 ounces

    -  Total cash cost was $532 per ounce (net of by-product sales)

    -  Copper production was 3.4 million pounds

    -  Silver production was 512 thousand ounces

    The Cerro San Pedro mine in Mexico achieved excellent results in the

second quarter with gold sales increasing 39% at 22,190 ounces compared to

15,922 ounces in the first quarter of 2008. Silver sales increased 47% at

300,728 ounces in comparison to 203,973 ounces in the first quarter of

2008. Gold and silver production for the second quarter was 20,653 ounces

and 283,749 ounces respectively and for the six month period ending June

30, 2008, gold and silver production was 38,943 ounces and 512,372 ounces

respectively. Total cash cost net of by product sales for the second

quarter was $375 per ounce and for the six month period ending June 30,

2008, was $426 per ounce. Cash cost showed a 24% improvement in the second

quarter in comparison to the first quarter reflecting the production ramp

up from the heaps.



    Operations at the Amapari mine in Brazil continued to be challenged by

low equipment availabilities and extreme rain falls. Second quarter gold

production was 20,938 ounces and for the six month period ending June 30,

2008, the gold production was 39,139 ounces. Total cash costs for the

quarter were $968 per ounce bringing the figure for the six month period

ending June 30, 2008 to $829 per ounce. During the quarter, access to

higher grade materials was restricted due to unfavourable weather

conditions, while mobile and plant equipment availabilities adversely

impacted the amount of ore processed. Unit costs were also impacted by $165

per ounce due to reconciliation of leach pad inventory. A comprehensive

review of operations at Amapari is underway and is expected to return the

project to normal operating levels by year end.



    Second quarter results at Peak Mines in Australia included production

of 21,114 ounces of gold and 1.2 million pounds of copper and for the six

month period ending June 30, 2008, gold production was 46,213 ounces and

copper production was 3.4 million pounds. Total cash cost net of by product

sales for the second quarter was $472 per ounce and for the six month

period ending June 30, 2008, was $360 per ounce. Production was adversely

affected by delayed development of two high grade stopes due to difficult

ground conditions deferring production to later in the year. While

expenditures in Australian dollar terms were at expected levels, lower

production and exchange rate movement impacted the cash costs.



    Commenting on operating results, Robert Gallagher, President and Chief

Executive Officer said, "The results at Cerro San Pedro are excellent and

in-line with expectations. Great work has also been done at the community

level in the environs of the mine. Operations at the Amapari mine continued

to face challenges during the quarter and we have recently embarked on an

in depth program to get to the heart of the issues. A team of experts has

been assembled and have begun their analysis. They will work with site

staff to implement and maintain the systems required to turn the operation

around. Engineering continues on processing plant modifications while, with

a view to the longer term at Amapari, New Gold is conducting a study of

alternatives to optimize production from the existing oxide and sulphide

resources. Resource conversion drilling continues with a total of five

rigs. The Peak Mines were adversely impacted by lower than expected gold

and copper grades due to unfavourable but temporary ground conditions and

overestimation of grade in two stopes. Grades will return to planned levels

from the third quarter onwards" concluded Mr. Gallagher.



    New Afton Project



    The New Afton project in Kamloops, Canada, gained momentum in the

second quarter. Underground development continued to ramp-up with three

Cementation development crews producing 1,267 metres of finished drift in

the conveyor, access decline and associated ventilation access drifts and

crosscuts. Excavation of the first 3.5m diameter ventilation borehole was

completed providing ventilation connections from the surface down to the

exhaust ventilation drift 307 metres below surface. Dewatering of the Afton

pit commenced and is ahead of schedule. The mining contractor has now

expanded to working four development faces and there are presently three

mining crews working seven days a week, 20 hours a day.



    Construction of the process plant commenced early in 2008 with the goal

of completing the earthworks and associated foundation and mill building

work by the end of 2008. The first concrete was poured for the New Afton

processing facilities in June 2008, three weeks ahead of schedule. The

concentrator and related facilities will be completed during the first

three quarters of 2009. The first ore is scheduled to be trucked to surface

and along with stockpiled development ore will enable commencement of

milling operations during the fourth quarter of 2009. Ramp up to four

million tonnes per year capacity will continue throughout 2010 and into

early 2011.



    "The New Afton project is proceeding as scheduled and offers

significant internal growth opportunities for New Gold in the near future.

At today's gold and copper prices, the New Afton mine will be an enormous

cash generator for the Company," said Robert Gallagher



    2008 Forecast Update



    Metal production for 2008 is now forecast to be approximately 250,000

ounces of gold, 1.1 million ounces of silver and 9.4 million pounds of

copper. Total cash cost, net of by product credits is forecast to be

between $500 and $520 per ounce.



    New Gold will hold a conference call on Thursday, August 14, 2008 at

10:00 a.m. Pacific time to discuss these results. You may join the call by

dialing toll free 1-888-789-9572 or 1-416-695-7806 to access the call from

outside Canada or the U.S. You can listen to a recorded playback of the

call after the event until September 11, 2008 by dialing 1-800-408-3053 or

1-416-695-5800 for calls outside Canada and the U.S. Passcode: 3266725

followed by the number sign.



    New Gold also wishes to announce that Jim Simpson who was previously

the Executive Vice President and Chief Operating Officer for Peak Gold Ltd.

will be leaving New Gold at the end of August 2008. "On behalf of the Board

and Management, I would like to thank Jim for his prior contribution and

wish him all the success in the future," said Robert Gallagher, President

and Chief Executive Officer.



    New Gold is a new intermediate gold mining company with three operating

assets in Mexico, Brazil and Australia and two development projects in each

of Canada and Chile. For further information on New Gold, please visit our

website at http://www.newgold.com.



    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS



    Certain information contained in the press release, including any

information as to New Gold's future financial or operating performance, may

be deemed "forward looking". All statements in this press release, other

than statements of historical fact, that address events or developments

that New Gold expects to occur, are "forward-looking statements".

Forward-looking statements are statements that are not historical facts and

are generally, but not always, identified by the words "express", "plans",

"anticipates", "believes", "intends", "estimates", "projects", "potential"

"budget" and similar expressions, or that events or conditions "will",

"would", "may", "could", or "should" occur. All such forward-looking

statements are subject to important risk factors and uncertainties, many of

which are beyond New Gold's ability to control or predict. Forward-looking

statements are necessarily based on estimates and assumptions that are

inherently subject to known and unknown risks, uncertainties and other

factors that may cause New Gold's actual results, level of activity,

performance or achievements to be materially different from those expressed

or implied by such forward-looking statements. Such factors include,

without limitation: anticipated synergies from the business combination may

not be realized, there may be difficulties in integrating the operations

and personnel of New Gold, Peak Gold and Metallica, New Gold is subject to

significant capital requirements associated with its expanded operations

and portfolio of development projects since completion of the business

combination, fluctuations in the international currency markets and in the

rates of exchange of the currencies of Canada, the United States of

America, Australia, Mexico and Chile; price volatility in the spot and

forward markets for commodities; impact of any hedging activities,

including margin limits and margin calls; discrepancies between actual and

estimated production, between actual and estimated reserves and resources

and between actual and estimated metallurgical recoveries; changes in

national and local government legislation in Canada, the United States,

Mexico, Chile and Australia or any other country in which New Gold

currently or may in the future carry on business taxation, controls,

regulations and political or economic developments in the countries in

which New Gold does or may carry on business; the speculative nature of

mineral exploration and development, including the risks of obtaining

necessary licenses and permits; diminishing quantities or grades of

reserves; competition; loss of key employees; additional funding

requirements; actual results of current exploration or reclamation

activities; changes in project parameters as plans continue to be refined

accidents; labour disputes; defective title to mineral claims or property

or contests over claims to mineral properties. In addition, there are risks

and hazards associated with the business of mineral exploration,

development and mining, including environmental hazards, industrial

accidents, unusual or unexpected formations, pressures, cave-ins, flooding

and gold bullion losses (and the risk of inadequate insurance or inability

to obtain insurance, to cover these risks). Forward-looking statements are

not guarantees of future performance, and actual results and future events

could materially differ from those anticipated in such statements. All of

the forward-looking statements contained in this press release are

qualified by these cautionary statements. New Gold expressly disclaims any

intention or obligation to update or revise any forward-looking statements,

whether as a result of new information, events or otherwise, except in

accordance with applicable securities laws.



    CASH COST



    "Total cash cost" figures for gold production are calculated in

accordance with a standard developed by The Gold Institute, which was a

worldwide association of suppliers of gold and gold products and included

leading North American gold producers. The Gold Institute ceased operations

in 2002, but the standard is the accepted standard of reporting cash costs

of production in North America. Adoption of the standard is voluntary and

the cost measures presented may not be comparable to other similarly titled

measures of other companies. Total cash costs include mine site operating

costs such as mining, processing, administration, royalties and production

taxes, but are exclusive of amortization, reclamation, capital and

exploration costs. Total cash costs are then divided by ounces produced to

arrive at the total cash costs of production. The measure, along with

production, is considered to be a key indicator of a company's ability to

generate operating earnings and cash flow from its mining operations. This

data is furnished to provide additional information and is a non-GAAP

measure. It should not be considered in isolation as a substitute for

measures of performance prepared in accordance with GAAP and is not

necessarily indicative of operating costs presented under GAAP.