(All dollar figures are in US dollars unless otherwise indicated)

TORONTO, Feb. 22, 2017 /CNW/ - New Gold Inc. ("New Gold") (TSX:NGD) (NYSE MKT:NGD) is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and Scotiabank (the "Underwriters"), pursuant to which they have agreed to purchase, on a bought deal basis, 53,600,000 common shares ("Common Shares") of New Gold at a price of US$2.80 per share (the "Offering"), for aggregate gross proceeds to New Gold of approximately US$150 million. In addition, New Gold has agreed to grant to the Underwriters an option to purchase up to an additional 8,040,000 Common Shares at a price of US$2.80 per share, on the same terms and conditions as the Offering, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering to New Gold will be approximately US$172.6 million.

New Gold intends to use the net proceeds from the Offering to finance the completion of the construction of the Rainy River gold project in Ontario, Canada.

New Gold's cash and cash equivalents balance and the net proceeds from the sale of New Gold's gold stream on the El Morro project and the Offering, together with funds available for draw under New Gold's secured revolving credit facility, are sufficient to complete construction of the Rainy River project based on current cost estimates.

Members of New Gold's board of directors and executive management team have expressed an intention to participate in the Offering on the same terms as other investors.

The Offering is scheduled to close on or about March 10, 2017, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange, the NYSE MKT and securities regulatory authorities.

The Offering will be made by way of a short form prospectus that will be filed with securities regulatory authorities in all provinces and territories of Canada and will also be filed in the United States with the U.S. Securities and Exchange Commission (the "SEC") as part of a registration statement on Form F-10 (the "Registration Statement") in accordance with the multi-jurisdictional disclosure system established between Canada and the United States.

New Gold has filed the Registration Statement (including a short form prospectus) with the SEC for the Offering to which this communication relates. Before you invest, you should read the short form prospectus in the Registration Statement and other documents New Gold has filed with the SEC for more complete information about New Gold and this Offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, New Gold, any underwriter or any dealer participating in the Offering will arrange to send you the short form prospectus in Canada by contacting RBC Capital Markets, Distribution Centre, RBC Wellington Square, 8th Floor, 180 Wellington St. W., Toronto, Ontario, M5J 0C2 (Tel: 1-416-842-5349; E-mail: Distribution.RBCDS@rbccm.com) or Scotiabank, Scotia Plaza, 66th Floor, 40 King Street West, M5W 2X6, Toronto, Ontario, Attention: Equity Capital Markets (Tel: 1-416-862-5837), and, in the United States, by contacting RBC Capital Markets, LLC, 200 Vesey Street, 8th Floor, New York, NY 10281-8098; Attention: Equity Syndicate; (Tel: 1-877-822-4089; E-mail: equityprospectus@rbccm.com) or Scotia Capital (USA) Inc., 250 Vesey Street, 24th Floor, New York, New York, 10281, Attention: Equity Capital Markets (Tel: 1-212-225-6853).

This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.