New Gold announces start of production at New Afton Mine in British Columbia

New Gold Inc. has announced that production at its New Afton Mine has started with the first ore having been processed through the mill circuit on June 28, 2012.

New Gold is pleased that the June production start met the company’s originally stated timeline and the commissioning of the mill circuit has been consistent with its expectations. Since the first ore was placed in the mill circuit, the mill has been running on a continuous basis with progressively more ore being added to the circuit. The company anticipates that over the course of the coming weeks, the daily milling rate will continue to increase. New Gold’s target for commercial production at New Afton, defined as 30 days of operation at 60 per cent of capacity, or 6,600 tonnes per day, remains August 2012.

In addition to the recent mill production start, New Afton’s underground mining operations, which began in the fourth quarter of 2011, continue to perform well. The daily mining rate and the growth in the surface ore stockpile are all tracking at or ahead of targeted levels.

“After a tremendous amount of hard work on the part of the entire team at New Afton, we are very excited that production has now started. We are proud to be in a position to deliver this project on schedule, and to see it become the fourth operating mine in our portfolio,” said Robert Gallagher, president and chief executive officer. “New Afton is an important part of the history of our company and we look forward to this mine becoming our most significant cash flow generator.”

New Afton’s total development cost remains approximately C$765 million. The total development cost is net of revenue from gold and copper sales between the start of production and the commencement of commercial production in August.

New Afton highlights – Through June 28, 2012

• First ore processed through the mill circuit on June 28, 2012
• 28 drawbells completed, project-to-date already ahead of the target, which was 26 drawbells by end of June
• Average mining rate over the last 30 days was in excess of 5,250 tonnes per day, or 47 per cent of the nameplate 11,000-tonne-per-day capacity
• Mining rate on schedule to reach 11,000 tonnes per day in early 2013
• Surface ore stockpile of one million tonnes, which equates to approximately three months of production at full 11,000-tonne-per-day capacity
• Average stockpile grade of 0.88 grams per tonne gold and 0.94 per cent copper