New Gold Provides Development and Exploration Update on New Afton and Blackwater Projects in British Columbia (cnw)

(All figures are in US dollars unless otherwise indicated)

VANCOUVER, April 17, 2012 /CNW/ - New Gold Inc. ("New Gold") (TSX and NYSE AMEX:NGD) today provides a development and exploration update for its two exciting British Columbia growth projects, New Afton and Blackwater. The company's New Afton project remains on schedule with milling starting in June 2012 and commercial production expected in August of this year. At Blackwater, exploration activity continues to accelerate with the completion of 112 holes totaling 44,334 metres in the first three months of the year. Today, New Gold is reporting assays for an additional 38 holes totaling 15,104 metres received since its March 7, 2012 resource and exploration update. In March, after the signing of exploration agreements with the two local First Nations, New Gold received a Multi-Year Area Based ("MYAB") exploration permit enabling the company to expand its drill grid in the Blackwater area. There are currently 10 drills active at site. Four to six additional drills will be added in May which will further increase the drilling rate at Blackwater.

New Afton 2012 Development Highlights - Through March 31, 2012

• Nine drawbells completed in first three months of 2012 bringing total number of drawbells to 17
  • Meeting targeted monthly drawbell development rate
  • On track for 26 drawbells by the end of June to support a 6,600 tonne per day initial mining rate
• Currently mining at a rate of ~4,200 tonnes per day, or 38% of the nameplate 11,000 tonne per day capacity
• Ore stockpiled on surface totaled 565,000 tonnes at March 31, 2012
  • Average grade of 0.97 grams per tonne gold and 1.04% copper
• Underground crusher and conveyors to surface fully commissioned and operating at design capacity
• Buried piping 100% complete with water and gas lines in service
• All major processing equipment installed with piping and cabling more than 80% complete
• Dry commissioning of mill services in progress

As New Afton is now less than two months from starting production, the company is pleased to report that the final stages of development are coming together as planned. The underground block caving operation is active and progressing as expected with continued drawbell development, mining rate build-up and growth of the surface ore stockpile all meeting or exceeding expectations. The final stages of completion of the mill building are also on track, with the first ore scheduled to be put through the mill circuit in June as originally planned.

"This is a very exciting time for us as New Afton, which is such an important part of the history of New Gold, is about to begin production to further propel our company forward," stated Robert Gallagher, President and Chief Executive Officer. "We are proud of what the teams have accomplished at New Afton thus far and we remain focused on executing a rapid transition from development to operations."

After its June production start, New Afton is forecast to produce 35,000 to 45,000 ounces of gold and 30 to 35 million pounds of copper at total cash cost(1), net of by-product credits, of ($1,200) to ($1,300) per ounce in 2012. On a co-product basis, total cash costs(1) in 2012 are expected to be $630 to $650 per ounce of gold and $1.35 to $1.45 per pound of copper, respectively. Both the by-product and co-product costs at New Afton are expected to come down meaningfully in 2013 and beyond as the mine hits its full capacity.

New Afton's production range includes gold and copper produced between mill start-up and achievement of commercial production. The revenue from this pre-commercial production will be offset against capital costs. New Afton gold and copper sales for 2012 from the point of commercial production forward are expected to be 20,000 to 30,000 ounces and 20 to 25 million pounds, respectively.

Over its currently estimated 12 year mine life, New Afton is expected to produce an average of 85,000 ounces of gold and 75 million pounds of copper annually at total co-product cash costs(1) of approximately $525 per ounce of gold and $1.15 per pound of copper, or a total cash cost(1), net of by-product credits, of approximately ($1,750) per ounce.

Once production starts at New Afton, New Gold's exploration team will further drill the C-zone block of mineralization that lies below and to the side of the New Afton reserve blocks. New Gold has budgeted $5 million for exploration at New Afton in the second half of 2012.

Blackwater Exploration Update

The highlights shown confirm strong continuity of mineralization across the Blackwater deposit and extension of mineralization in other areas. Holes BW-331, BW-334, BW-337, BW-343 and BW-352, located in the northern portion of the deposit, continue to demonstrate that the Blackwater resource remains open, particularly to the north beyond the limits of the current delineation drill grid. Additional step-out drilling farther north is planned. At the same time, holes BW-344, BW-353, BW-354 and BW-366 further increase the confidence in continuity of gold grades in the central and southeastern portions of the resource where open pit mining could commence. In particular, hole BW-344 has yielded a 47.49 g/t gold intercept over a 15 meter down-hole thickness, representing one of the highest grade intercepts encountered at Blackwater to date.

"Today's results provide further confirmation of the robust potential of the Blackwater deposit," stated Mark Petersen, Vice President Exploration. "We are excited to see such strong and persistent mineralization as we continue to explore for the outer limits of the deposit while also working to upgrade the mineral resource classification. Our plans to expand our drilling activities across the greater Blackwater area as well as at Capoose only add to our enthusiasm."

For the latest drill hole location map and complete summary of the drill hole assays received thus far in 2012, please refer to the company's website at http://www.newgold.com/Properties/Projects/Blackwater/default.aspx.

In addition to ongoing exploration drilling, New Gold continues to progress its environmental baseline studies and geotechnical drilling. The company looks forward to providing additional updates on the progress at Blackwater over the coming months and the completion of a Preliminary Economic Assessment on the project in the third quarter of 2012.

Quality Assurance/Quality Control, Mineral Resource Estimation Parameters and Qualified Persons

New Gold maintains a Quality Assurance/Quality Control ("QA/QC") program at the Blackwater Project using industry best practices that are consistent with the QA/QC protocols in use at all of its exploration and development projects. Key elements of New Gold's QA/QC program include controlled chain of custody of samples, regular insertion of certified reference standards and blanks, and duplicate check assays. Drill core is halved and shipped in sealed bags to ALS Global, Vancouver, British Columbia, where it is analyzed for gold and silver along with a suite of other elements. Gold analyses are performed via fire assay/AA finish methods and silver analyses are performed via Induction Coupled Plasmaspectrometry ("ICP"). Silver ICP analyses are not known with the same precision as gold fire assay analyses so the reader is cautioned regarding the relative precision of silver grades when compared to gold grades reported in the current mineral resource estimate.

ALS Global is an independent ISO accredited and registered analytical services provider.