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

TORONTO, July 25, 2018 /PRNewswire/ - New Gold Inc. ("New Gold" or the "Company") (TSX:NGD) (NYSE American:NGD) today announces its 2018 second quarter results and updated 2018 outlook. Unless otherwise noted, all operating and financial results have been presented on a continuing basis and exclude Peak Mines, which has been classified as a discontinued operation and was sold in April 2018.

2018 Second Quarter Highlights

Gold production of 108,550 ounces and copper production of 20.4 million pounds
Operating expense of $680 per gold ounce and $1.67 per copper pound
All-in sustaining costs(1) of $877 per ounce, including total cash costs(2) of $453 per ounce
Operating cash flows generated from continuing operations of $66 million, or $0.11 per share
Loss from continuing operations of $302 million, or $0.52 per share, including an impairment loss, net of tax of $282 million, or $0.49 per share
June 30, 2018 total liquidity of $270 million, including cash and cash equivalents of $167 million
Updated 2018 outlook: 415,000 to 480,000 ounces of gold production (previously 525,000 to 595,000 ounces of gold) at all-in sustaining costs of $1,080 to $1,120 per ounce (previously $860 to $900 per ounce)
Rainy River updated life-of-mine plan completed, NI 43-101 Technical Report will be released in early August
2018 Outlook Update

As our Rainy River Mine is well into its start-up year, New Gold today provides an updated 2018 production and cost outlook. Gold production at New Afton, the Company's largest cash flow contributor, Mesquite and Cerro San Pedro remain in line with New Gold's original guidance. However, largely due to the variability in the process facility's start-up performance and lower gold grade and recoveries, the Company is lowering its 2018 annual production guidance for Rainy River from earlier estimates.

Annual consolidated gold production for 2018 is expected to be between 415,000 and 480,000 ounces, with Rainy River contributing between 210,000 and 250,000 ounces. Annual consolidated copper production remains in line with the original guidance range of 75 to 85 million pounds.

New Gold expects its consolidated 2018 all-in sustaining costs to be between $1,080 to $1,120 per ounce, total cash costs to be between $445 to $485 per ounce, and operating expense to be between $655 to $695 per gold ounce. These estimates have increased due to Rainy River's revised 2018 production outlook and a $15 million increase in Rainy River's sustaining capital expenditures associated with completing the full tailings dam footprint. Growth capital at Rainy River is also expected to increase by $15 million due to higher underground development costs. For the balance of the year, the cost targets include assumptions for gold, silver and copper prices of $1,300 per ounce, $16.00 per ounce and $3.00 per pound, respectively, and a Canadian dollar exchange rate of $1.30 to the U.S. dollar.

Gold Production (Koz)
Q2'2018 YTD'2018 Original Guidance Revised Guidance

Rainy River 55 95 310 - 350 210 - 250
New Afton 19 39 55 - 65 No change
Mesquite 32 65 140 - 150 No change
Cerro San Pedro 3 7 20 - 30 10 - 15
Consolidated 109 205 525 - 595 415 - 480

All-in Sustaining Costs ($/oz)
Q2'2018 YTD'2018 Original Guidance Revised Guidance

Rainy River $1,295 $1,794 $990-$1,090 $1,600 - $1,700
New Afton ($917) ($1,118) ($1,020)-($980) No change
Mesquite $875 $864 $1,005-1,045 No change
Cerro San Pedro $2,522 $2,020 $1,330-$1,370 $2,000 - $2,140
Consolidated $877 $1,037 $860-$900 $1,080 - $1,120

Gold Operating Expense ($/oz)
Q2'2018 YTD'2018 Original Guidance Revised Guidance

Rainy River $802 $993 $430 - $470 $730 - $770
New Afton $412 $410 $455 - $495 No change
Mesquite $848 $832 $890 - $930 No change
Cerro San Pedro $2,425 $1,905 $1,255 - $1,295 $1,960 - $2,000
Consolidated $680 $725 $555 - $595 $655 - $695

2018 Second Quarter and Year-To-Date Operational Results from Continuing Operations

New Gold's second quarter gold production of 108,550 ounces was higher than 2017 primarily due to additional ounces from Rainy River that more than offset the planned lower production at New Afton, Mesquite and Cerro San Pedro. Quarterly copper production decreased by 11% to 20.4 million pounds when compared to the second quarter of 2017.

Second quarter operating expense per gold ounce of $680 increased relative to the prior-year quarter mainly due to higher operating expenses at Rainy River in its second full quarter of operation due to start-up challenges impacting both production and costs. The Company had second quarter all-in sustaining costs of $877 per ounce, including total cash costs of $453 per ounce. The increase in all-in sustaining costs relative to the prior-year quarter was attributable to the combined impact of a $164 per ounce increase in total cash costs and a $48 per ounce, or $17 million, increase in the Company's consolidated sustaining costs, which include New Gold's cumulative sustaining capital, exploration, general and administrative, and amortization of reclamation expenditures. The increase in consolidated total cash costs was primarily driven by lower than run-rate quarterly production at Rainy River, resulting in higher per ounce costs. The increase in consolidated sustaining costs was primarily related to increased Rainy River sustaining capital expenditures as the operation continues its first full year of operations.

For the six-month period ended June 30, 2018, New Gold's gold production of 205,432 ounces was significantly higher than 2017 as additional ounces from Rainy River more than offset the planned lower production at New Afton, Mesquite and Cerro San Pedro. Year-to-date copper production remained in line with the prior-year period.

Year-to-date operating expense per gold ounce of $725 increased relative to the prior year mainly due to higher operating expenses at Rainy River in its first full year of operation. For the six-month period ended June 30, 2018, the Company delivered all-in sustaining costs of $1,037 per ounce, including total cash costs of $502 per ounce. The increase in consolidated total cash costs was primarily driven by lower than run-rate production at Rainy River, resulting in higher per ounce costs. The increase in consolidated sustaining costs was primarily related to Rainy River sustaining capital expenditures as the operation continues its first full year of operations.

Three months ended June 30 Six months ended June 30 2018 2017 2018 2017

Operating information
Gold (ounces):
Produced 108,550 79,025 205,432 140,005
Sold 105,924 73,707 204,612 133,620
Copper (millions of pounds):
Produced 20.4 22.8 42.6 43.3
Sold 19.6 20.8 40.9 40.7

Silver (millions of ounces):
Produced 0.2 0.3 0.4 0.5
Sold 0.2 0.2 0.4 0.4

Revenue:
Gold ($/ounce) 1,279 1,246 1,292 1,242
Copper ($/pound) 2.91 2.32 2.89 2.33
Silver ($/ounce) 15.89 16.72 16.00 16.90

Average realized price(5):
Gold ($/ounce) 1,297 1,278 1,312 1,277
Copper ($/pound) 3.18 2.56 3.16 2.56
Silver ($/ounce) 16.49 17.22 16.56 17.37

Operating expense:
Gold ($/ounce) 680 603 725 604
Copper ($/pound) 1.67 1.21 1.75 1.21
Silver ($/ounce) 8.64 8.10 9.15 8.22

Total cash costs ($/ounce) 453 289 502 265
All-in sustaining costs ($/ounce) 877 665 1,037 617

Rainy River
Three months ended June 30 Six months ended June 30 2018 2017 2018 2017

Operating information

Gold (ounce)
Produced 55,219 - 94,544 -
Sold 51,832 - 92,712 -
Silver (ounces):
Produced 60,451 - 115,215
Sold 55,889 - 114,677 -

Operating expense:
Gold ($/ounce) 802 - 993 -
Silver ($/ounce) 10.20 - 12.59 -
All-in sustaining costs ($/ounce) 1,295 - 1,794 -

All-in sustaining costs on a co-product basis:
Gold ($/ounce) 1,295 - 1,787 -
Silver ($/ounce) 16.46 - 22.65 -
As it continues through its ramp up, Rainy River demonstrated further increases in throughput, grade and recovery through the second quarter of 2018. During the quarter, a total of 3.3 million tonnes of ore was mined, 1.5 million tonnes of ore was processed at an average gold grade of 1.24 grams per tonne with recoveries of 87%.

Process facility performance continued to improve, however, operational and mechanical challenges consistent with project startups impacted availability during the second quarter. Review and implementation of design improvements is underway to reduce equipment wear and failure and increase operational stability.

Importantly, the crushing and grinding circuit is robust and is operating consistently, and the process facility continues to demonstrate its operational potential with throughput rates increasingly achieving over 24,000 tonnes per day. As previously discussed, the Company is implementing a plan to increase Rainy River's throughput to a steady 24,000 tonne per day rate. This expansion project is on time, and adjustments to the back end of the process facility are expected to be completed by the beginning of the fourth quarter at minimal capital, allowing for an immediate increase to the mine's throughput rate.

Gold recoveries in the second quarter showed steady improvement, increasing to 87%, compared to 81% in the first quarter. Recoveries are expected to continue to improve throughout 2018 as the mine achieves consistent, steady-state operations.

Since the commencement of mining in 2017, total ore mined has reconciled positively with the global mineral reserve estimate. While gold grade increased in the second quarter to 1.24 grams per tonne from 1.08 grams per tonne in the first quarter, the identification and segregation of discrete higher-grade ore blocks has been less predictable than originally contemplated.

Improvements to grade control, sampling procedures and mine planning criteria are being developed and implemented to address the variability of mined gold grades on production.

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