New Gold Had Highest Gold Production 

VANCOUVER - "2010 was a great year for New Gold as we achieved multiple goals; most notably our operations continued to deliver strong results, we were able to meaningfully increase the underlying value of our asset base and our significant year-end cash balance provides us enhanced financial flexibility," stated Randall Oliphant, Executive Chairman. "We now look forward to 2011 with excitement as we embark on a significant capital year to position both our operations and development projects for future production growth and free cash flow generation."

All three of the company's operating mines, Mesquite in California, Cerro San Pedro in Mexico, and Peak Mines in Australia, achieved excellent results in the fourth quarter leading to a strong finish to the year. Collectively, the gold production from the three operations during the quarter was 124,445 ounces at total cash cost(1) per ounce sold, net of by-product sales, of $354 per ounce compared to 111,672 ounces at $472 per ounce in the same period of the prior year. The record fourth quarter further drove the company to the best operating results in its history beating both production and cost guidance for the year. 2010 gold production increased 27% to 382,911 ounces from 301,773 ounces in 2009 and total cash cost(1) per ounce sold, net of by-product sales, decreased by $37 per ounce to $428 per ounce from $465 per ounce in 2009. In addition to the strong operating results, New Afton in Canada, the company's most near-term development project, continues to move forward on budget and on schedule with the scheduled production start anticipated for mid-2012.

"During both the fourth quarter and full year, our diversified asset base continued to demonstrate its potential with increases in production coupled with decreases in costs," stated Robert Gallagher, President and Chief Executive Officer. "We are proud to have, once again, bettered our guidance and look forward to our operational teams continuing their strong performance in 2011."

The fourth quarter gold production of 55,990 ounces at the Mesquite mine in Imperial County, California represented the mine's highest quarterly production of 2010 which compared to 61,245 ounces produced in the same period in 2009. Gold sales during the quarter were 50,393 ounces compared to 55,861 ounces in the same period in 2009. Gold production and sales during the fourth quarter of 2010 were lower than the prior year quarter due to lower tonnes being placed on the leach pad which was partially offset by higher gold grades and recoveries.

Total cash cost per ounce sold during the fourth quarter of 2010 decreased to $544 per ounce from $551 per ounce in the same period in 2009. The total cash cost decrease was primarily attributable to the use of a mining contractor and certain non-recurring maintenance costs during the fourth quarter of 2009 which were not incurred during the fourth quarter of 2010. These cost decreases were partially offset by higher diesel consumption and price during the fourth quarter when compared to the same period in 2009.

Full year 2010 gold production increased by 13% to 169,023 ounces from 150,002 ounces in 2009. Gold sales increased to 169,571 ounces from 143,509 ounces in 2009. The increase in 2010 gold production and sales was primarily attributable to increases in gold grade and leach pad recoveries reaching their steady state when compared to 2009 and was partially offset by lower tonnes placed on the leach pad during the year.

Total cash cost per ounce sold during 2010 remained consistent with 2009 at $596 per ounce. The total cash cost benefitted during the year from lower mine fleet maintenance costs. In addition, one-time 2009 costs related to the use of a mining contractor were not incurred in 2010. These cost benefits were offset by higher diesel consumption and price during 2010 when compared to 2009.

The Mesquite mine is forecast to produce 145,000 to 155,000 ounces of gold in 2011 at total cash cost per ounce sold of $620 to $640 per ounce. Ore tonnes processed and recoveries are anticipated to remain consistent with 2010 levels, however, the gold grade is expected to decline resulting in gold production reverting to an average life-of-mine level. The increase in forecasted total cash cost(1) in 2011 when compared to 2010 is driven by higher total tonnes mined as well as the assumption of a higher diesel price than that realized during 2010. 2011 capital expenditures at Mesquite are forecast to be approximately $9 million, including $6 million of maintenance and spare parts which are expected to be capitalized under International Financial Reporting Standards ("IFRS") which were historically expensed.

The company's address is 3110-666 Burrard St., Vancouver, BCV6C 2X8, (604)696-4100, fax: (604)696-4110.