New Gold Continues to Grow Blackwater Project's Gold Resource Base - Announces Further 30% Increase in Indicated Resources (cnw)

VANCOUVER, July 18, 2012 /CNW/ - New Gold Inc. ("New Gold") (TSX and NYSE MKT:NGD) today announces an updated National Instrument 43-101 compliant mineral resource estimate for its Blackwater Gold Project in central British Columbia. This latest resource update incorporates an additional four and a half months of drill hole data added to the project's resource database when compared to the previous estimate announced in March 2012. With this additional data, the indicated and inferred mineral resources have increased by 30%, or 1.7 million ounces of gold, and 7%, or 0.2 million ounces of gold, respectively. The resource estimate now includes all drilling through May 14, 2012, adding 151 holes totaling 57,064 metres since the March 2012 estimate. In total, the current Blackwater mineral resource estimate is supported by analytical data received from 417 holes totaling 147,619 metres. An additional 32 holes supplied geologic information, but assays had not been received by the cut-off date for this July resource estimate.

• Indicated mineral resource: 230 million tonnes at an average grade of 0.96 grams gold per tonne containing 7.1 million ounces of gold at a 0.40 gold-equivalent gram per tonne cut-off grade
• Inferred mineral resource: 98 million tonnes at an average grade of 0.77 grams gold per tonne containing 2.5 million ounces of gold at a 0.40 gold-equivalent gram per tonne cut-off grade

As this latest resource estimate provides New Gold with additional information regarding the continuously evolving Blackwater mineral resource, the company plans to use this July resource estimate, rather than the March 2012 estimate, as the basis for its Preliminary Economic Assessment ("PEA"). The PEA is targeted for completion in September 2012. A table detailing the updated mineral resource estimate is provided below.

Note: 0.40 gold-equivalent cut-off highlighted as most comparable to previously reported 0.40 gold cut-off grade

See section entitled Quality Assurance/Quality Control, Mineral Resource Estimation Parameters and Qualified Persons at the conclusion of this news release for details of the parameters that form the basis of the above noted mineral resource estimate.

"We are very pleased with the continued resource growth rate at Blackwater," stated Mark Petersen, Vice President Exploration. "To see the indicated resource grow by 1.7 million ounces in four and a half months is remarkably gratifying and speaks to the quality of our team at Blackwater and the continued potential of this deposit. We look forward to continuing to build on this momentum through the remainder of 2012 and beyond."

The additional assays received further demonstrate strong continuity of gold mineralization as the mineral resource continues to expand, particularly to the north and northwest. Beyond the positive gold-related results, the recent assays have also returned some of the highest silver grades found on the deposit to date. As a result, the inferred silver grades have increased by 103%, to 7.7 grams per tonne, when compared to the March 2012 mineral resource estimate. These results occur within a zone of higher grade silver mineralization along the outer northwestern portion of the mineral resource. This zone offers excellent potential for expanding the silver mineral resources at Blackwater and is an area of focus for renewed exploration drilling by the company.

New Gold currently has 18 drills actively exploring at the project. With 13 drills conducting resource delineation and infill drilling at the primary Blackwater deposit, New Gold remains well on track to fulfill its 2012 program, where the company is targeting the completion of approximately 500 holes totaling over 200,000 metres. The company's exploration efforts on its broader property position have also been accelerated. Three drills are testing the mineral potential of proposed infrastructure sites and two drills are exploring the potential to expand the Capoose gold-silver deposit located approximately 25 kilometres from Blackwater. In addition, the Blackwater regional exploration program has commenced with reconnaissance mapping and geochemical sampling on the company's 1,000 square kilometre land position.

New Gold is also pleased to report that its local Vanderhoof office and sample preparation lab opened in June, further establishing the company's commitment to the local community. The company looks forward to the completion of a PEA on the project in September 2012.

New Afton Update

The commissioning of the company's New Afton mill, which began processing ore from underground and the surface stockpile on June 28, 2012, continues to progress well. The daily mill throughput has steadily increased and over the last five days has averaged over 10,000 tonnes per day. The first concentrate was trucked from New Afton to the Vancouver wharves on July 5, 2012. The company continues to expect that commercial production at New Afton, defined as 30 days of operation at 60% of the 11,000 tonne per day capacity, or 6,600 tonnes per day, will be achieved in August 2012. New Gold looks forward to providing further updates on the ramp-up of production at New Afton as part of its second quarter operational and financial results announcement scheduled for August 1, 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 by fire assay/AA finish methods and silver analyses are performed by 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 accuracy of silver grades relative to gold grades reported in the current mineral resource estimate. ALS Global is an independent ISO accredited and registered analytical services provider.

The July mineral resource estimate is based on a geologic block model consisting of two principal structural domains and constrained by a 0.20 g/t gold grade shell. Gold and silver grade estimation was carried out by the ordinary kriging and inverse distance methods using 10 metre downhole drill hole composites. After comparing the results using a change of support check, the inverse distance squared method was selected as the best representation. Gold grades were capped prior to compositing at a level of 40 g/t. Silver grades were capped at 150 g/t except for those falling within a 10 g/t Ag grade shell domain. Classified blocks have been constrained by a Lerch-Grossman optimized mineral resource pit shell using a gold price of $1,300 per ounce. Block dimensions were 10 by 10 by 10 metres. Block density values were estimated by the inverse distance squared method based on 19,181 bulk density measurements of drill core. To account for increasing silver mineralization, the mineral resource is reported at a nominal base case lower cut-off of 0.40 g/t gold-equivalent. The resource is also presented at lower cut-offs of 0.30 g/t gold and 0.50 g/t gold-equivalent to provide additional information of resource sensitivity to changing cut-off.

The July 2012 mineral resource estimate was prepared by Mr. Ronald Simpson, P. Geo, President of Geosim Services Inc., an independent "Qualified Person" under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The scientific and technical information contained in this news release was prepared under the supervision of Mr. Mark Petersen, New Gold Vice President Exploration for New Gold and "Qualified Person" under NI 43-101 who reviewed and approved the contents of this news release.

About New Gold Inc.

New Gold is an intermediate gold mining company. The company has a portfolio of four producing assets and two significant development projects. New Gold's New Afton project met its targeted June 2012 production start and is scheduled to begin commercial production in August 2012. Together with the Mesquite Mine in the United States, the Cerro San Pedro Mine in Mexico and Peak Gold Mines in Australia, the company is forecasting between 405,000 and 445,000 ounces of gold production in 2012. In addition, New Gold owns 30% of the world-class El Morro project located in Chile and 100% of the exciting Blackwater project in Canada. For further information on the company, please visit www.newgold.com.