Rainy River Achieves Revised Annual Guidance New Afton Exceeds Annual Guidance

New Gold Inc. ("New Gold" or the "Company") (TSX and NYSE American: NGD) reports strong fourth quarter operating results from the Rainy River and New Afton Mines, with Rainy River achieving annual revised gold production guidance and New Afton exceeding annual gold production guidance as well as achieving the high end of annual copper production guidance. (All amounts are in US dollars unless otherwise indicated.)

Fourth Quarter and Recent Operational Highlights

-- Total gold production for the quarter was 110,559 ounces and 455,448 ounces for the year, including 97,428 ounces and 315,483 ounces, respectively, from continuing operations1.

-- The Rainy River Mine reported best ever quarterly gold production of 77,202 ounces, a 39% increase over the prior quarter. The stronger operational performance achieved in September continued into the fourth quarter with the last four months of the year contributing 45% of the 227,284 ounces produced for the year, achieving revised annual guidance.

-- The New Afton Mine delivered another solid quarter with gold production of 18,778 ounces, contributing to annual production of 77,329 ounces, which exceeded the high end of annual guidance. New Afton produced 20.8 million pounds of copper for the quarter and 85.1 million pounds for the year, achieving the high end of annual guidance.

-- During the quarter, mine closure activities continued at the Cerro San Pedro Mine and 1,448 gold ounces were recovered from residual leaching of the heap leach pads.

-- Consistent with the renewed vision of repositioning the Rainy River Mine for long-term success, the Company has adopted a disciplined approach to capital allocation as well as mine life optimization. Accordingly, management has deferred the 2019 underground mine development plan to 2020. During 2019, the Company will launch a comprehensive review that includes alternative underground mining scenarios with the overall objective of reducing capital and improving the return on investment for the underground portion of the life of mine. Further details will be provided in the 2019 guidance press release, scheduled for release in the second half of January.

-- An internally funded development strategy for the New Afton C-zone has been launched, which will extend mine life to 2030 with robust economics. Further details will be provided in the 2019 guidance press release, scheduled for release in the second half of January.

"We are pleased to report a strong fourth quarter at both Rainy River and New Afton. It is encouraging to see the improvement in overall performance achieved at Rainy River in the final four months of the year. This marks a pivotal turning point for Rainy River as we reposition the asset for long-term success. The stronger production delivered during these months allowed the operation to comfortably meet revised annual production guidance. The New Afton Mine reported solid quarter-over-quarter results throughout the year and exceeded annual gold production guidance while meeting the high end of annual copper production guidance," stated Renaud Adams, CEO. "We begin 2019 on a positive note and we expect to build on the successes achieved at Rainy River in 2019 with a disciplined strategy of driving operational and cost efficiencies throughout the operation. It is with a renewed commitment that we have relaunched a development strategy for the New Afton C-zone which will signifi cantly extend the mine life of this core asset and unlock its long-term value potential. We look forward to delivering positive results from both our core assets to create sustainable shareholder value."

1. Continuing operations include the Rainy River, New Afton and Cerro San Pedro Mines.

Fourth Quarter and Annual Production Highlights

Gold Produced (oz)                             Q1 18   Q2 18   Q3 18   Q4 18   2018    2018 Guidance
Rainy River                                    39,325  55,219  55,538  77,202  227,284 210,000 - 250,000
New Afton                                      19,998  18,637  19,916  18,778  77,329  55,000 - 65,000
Cero San Pedro                                 4,448   2,895   2,079   1,448   10,870  10,000 - 15,000
Total Produced - Continuing Operations1 (oz)   63,771  76,751  77,533  97,428  315,483 275,000 - 330,000
Mesquite2                                      33,111  31,799  36,492  13,131  114,533 140,000 - 150,000
Peak3                                          25,433  -       -       -       25,433  N/A
Total Gold Produced (oz)                       122,315 108,550 114,025 110,559 455,448 415,000 - 480,000
Copper Produced (Mlbs)                         Q1 18   Q2 18   Q3 18   Q4 18   2018    2018 Guidance
New Afton                                      22.2    20.4    21.7    20.8    85.1    75 - 85
Total Produced - Continuing Operations1 (Mlbs) 22.2    20.4    21.7    20.8    85.1    75 - 85
Peak3                                          4.4     -       -       -       4.4     N/A
Total Copper Produced (Mlbs)                   26.6    20.4    21.7    20.8    89.5    75 - 85

1.     Continuing operations include the Rainy River, New Afton and Cerro San Pedro Mines.
2.     The Company completed the sale of the Mesquite Mine on October 30, 2018.
3.     The Company completed the sale of Peak Mines in early April 2018.

Rainy River Mine Operational Highlights

Rainy River Mine                     Q1 18   Q2 18   Q3 18   Q4 18   2018
Tonnes mined per day (ore and waste) 112,432 107,416 102,290 111,507 108,392
Ore tonnes mined per day             36,296  36,043  30,439  32,054  33,687
Strip ratio (waste:ore)              2.1     1.98    2.36    2.48    2.22
Tonnes milled per calendar day       17,534  16,549  16,962  20,668  17,934
Tonnes milled run rate1              22,771  22,364  22,318  25,835  23,291
Gold grade milled (g/t)              1.08    1.24    1.21    1.42    1.25
Gold recovery (%)                    81%     87%     87%     89%     86%
Mill availability (%)                77%     74%     76%     80%     77%
Gold production (oz)                 39,325  55,219  55,538  77,202  227,284

1.    Run rate is defined by (total tonnes milled / mill availability) / calendar days.

-- In the first full year of operations, Rainy River's safety performance continued to improve throughout the year with the mine reporting a 0.93 Total Reported Injury Frequency Rate (TRIFR) by the end of the year, as compared to 2.94 in 2017.

-- During the fourth quarter, the Rainy River Mine reported continued improvement in overall operational performance and delivered the best ever quarterly gold production of 77,202 ounces (66,123 ounces sold) and 227,284 ounces (214,804 sold) for the year, achieving revised annual guidance.

-- The mill run rate averaged 25,835 tonnes per day for the quarter, the first full quarter in which the mill averaged a daily run rate above the target 24,000 tonnes per day. Milling operations were suspended for approximately ten days during the quarter in order to repair the Semi-Autogenous Grinding (SAG) mill starter and to address the ball mill trunnion, which will be replaced during the first quarter of 2019.

-- Mill gold recovery for the quarter was 89%. During the quarter, considerable efforts were deployed to improve the carbon regeneration and stripping circuits, allowing for an improved overall recovery of more than 90% during the second half of December. Mill recoveries are expected to continue to improve over the next two quarters as ongoing mill upgrades and the optimization of the grinding circuit are completed.

-- A total of 10.3 million ex-pit tonnes were mined during the quarter, for an average of 111,507 tonnes per day, including 2.53 million tonnes of medium and high-grade ore.

-- Grade reconciliation for the quarter continued to be in line with the resource and dig-shape models, providing additional confidence in the deposit.

-- Consistent with the renewed vision of repositioning the Rainy River Mine for long-term success, the Company has adopted a disciplined approach to capital allocation as well as mine life optimization and accordingly, management has deferred the 2019 underground mine development plan to 2020. During 2019, the Company will launch a comprehensive review that includes alternative underground mining scenarios with the overall objective of reducing capital and improving the return on investment for the underground portion of the life of mine. Further details will be provided in the 2019 guidance press release, scheduled for release in the second half of January.

New Afton Mine Operational Highlights

New Afton Mine           Q1 18  Q2 18  Q3 18  Q4 18  2018
Underground mine tpd     16,751 13,654 17,105 17,099 16,156
Gold grade milled (g/t)  0.57   0.50   0.55   0.51   0.53
Gold recovery (%)        84.1   85.5   84.7   83.5   84.5
Gold production (oz)     19,998 18,637 19,916 18,778 77,329
Copper grade milled (%)  0.94   0.82   0.89   0.82   0.87
Copper recovery (%)      83.2   83.8   83.0   83.0   83.2
Copper production (Mlbs) 22.2   20.4   21.7   20.8   85.1

-- The New Afton Mine achieved a significant safety milestone in late December reaching one million person hours without lost-time injury.

-- The mine produced 18,778 gold ounces for the quarter and 77,329 ounces for the year, exceeding the high end of annual guidance. Copper production for the quarter was 20.8 million pounds and 85.1 million pounds for the year, reaching the high end of annual guidance.

-- An ore segregation strategy commenced during the quarter and was further enhanced with the recent commissioning of an ore scanner, which is expected to increase overall mill grade.

-- The initial phase of a two-phase mill upgrade to address supergene ore recovery was completed on time and on budget during the quarter, which included the installation of pressure jigs and a magnetic separator with commissioning currently underway. The second phase of the planned upgrade will be launched during the first quarter of 2019 with commissioning scheduled for the third quarter.

-- An internally funded development strategy for the New Afton C-zone has been launched. The development of the C-zone would provide mine life extension to 2030 with robust economics. Further details will be provided in the upcoming 2019 guidance press release scheduled for release in the second half of January.

Corporate Highlights

-- The sale of the Mesquite Mine was completed in the quarter for gross proceeds of $158 million, providing enhanced liquidity to advance the Company's short-term operational plan.

-- Mr. Rob Chausse was appointed as Chief Financial Officer effective November 5, 2018. Mr. Chausse brings more than 25 years of international finance experience exclusively in the mining sector that enhances the collective experience of the leadership team.

-- On December 11, 2018, the Company announced a restructuring of the senior leadership team to better align the corporate structure with the smaller asset base of two operating assets, the Rainy River and New Afton Mines, as well as the Blackwater project.

Upcoming News

-- 2019 Guidance (second half of January).

-- Q4 Financial Results and updated Reserves and Resources (before market February 14).

-- First Quarter 2019 production preview (mid-April).

About New Gold Inc.

New Gold is a Canadian-focused intermediate gold mining company. The Company has a portfolio of two core producing assets in top-rated jurisdictions, the Rainy River and New Afton Mines in Canada. The Company also operates the Cerro San Pedro Mine in Mexico (which transitioned to residual leaching in 2016). In addition, New Gold owns 100% of the Blackwater project located in Canada. New Gold's objective is to be a leading intermediate gold producer, focused on the environment and social responsibility. For further information on the Company, please visit www.newgold.com.