Rainy River Reports Improved Productivity in September
(All dollar figures are in US dollars unless otherwise indicated)

TORONTO, Oct. 24, 2018 /PRNewswire/ - New Gold Inc. ("New Gold" or the "Company") (TSX:NGD) (NYSE American:NGD) today announces its 2018 third quarter results. Unless otherwise noted, all operating and financial results have been presented on a continuing basis and exclude the Mesquite Mine and Peak Mines, which have been classified as discontinued operations.

( For detailed information, please refer to the Company's Third Quarter Management's Discussion and Analysis and Financial Statements that are available on the Company's website at www.newgold.com and on SEDAR at www.sedar.com. The Company uses certain non-GAAP financial performance measures throughout this news release. Please refer to the "Non-GAAP Financial Performance Measures" section of this news release.)

2018 Third Quarter Highlights

Appointed Mr. Renaud Adams as President and CEO effective September 12, 2018
Appointed Mr. James Gowans to the Board of Directors effective July 8, 2018
Announced the sale of the Mesquite Mine for gross proceeds of $158 million, subject to closing adjustments, expected to close during the fourth quarter
Gold production from total operations of 114,025 ounces and copper production of 21.7 million pounds
Operating expense from continuing operations of $644 per gold ounce and $1.57 per copper pound
All-in sustaining costs from total operations(1) of $966 per ounce, including total cash costs(2) of $424 per ounce
Revenues of $147 million from continuing operations
Operating cash flows of $51 million, or $0.09 per share
Operating cash flows before changes in non-cash operating working capital of $83 million, or $0.14 per share
Loss from continuing operations of $2 million, or $0.00 per share
Net loss of $166 million, or $0.29 per share, including an impairment loss, net of tax of $162 million, relating to the sale of the Mesquite Mine
September 30, 2018 total liquidity of $253 million, including cash and cash equivalents of $129 million, prior to the receipt of Mesquite sale proceeds
"The third quarter included many positive changes for New Gold that will help reposition the Company as a leading, Canadian-focused intermediate gold producer. We strengthened the technical experience of the Board and senior executive team and announced the sale of the Mesquite Mine, which improves our cash position, secures the liquidity to complete the ramp-up of Rainy River, and allows us to focus exclusively on our two producing assets, Rainy River and New Afton, and unlocking value for our Blackwater project," stated Renaud Adams, President and Chief Executive Officer. "The fourth quarter will be a pivotal quarter for New Gold as we advance a short-term operational plan at Rainy River to reposition this core operation for long-term success. We are confident that additional productivity improvements will be realized during the fourth quarter. Our New Afton Mine continues to deliver solid and consistent results, and we are currently evaluating alternative scenarios to advance the development of the C-zone beginning in early 2019. We will launch exploration programs at both assets as we seek to achieve organic growth opportunities by expanding our resource base."

2018 Third Quarter and Year-To-Date Financial Results
Three months ended September 30 Nine months ended September 30
(in millions of U.S. dollars, except per share amounts) 2018 2017 2018 2017

CONTINUING OPERATIONS(i)
Revenues 147.1 93.0 447.1 265.2
Operating margin(6) 64.5 51.6 197.6 143.0
Asset impairment, net of taks - - 282.1 -
(Loss) earnings from continuing operations (1.6) 26.7 (343.1) 68.9
Earnings (loss) from continuing operations per share (basic) (0.00) 0.05 (0.59)
0.12
Adjusted (loss) earnings from continuing operations (4.6) 2.6 (33.3) (0.1)
Adjusted (loss) earnings per share from continuing operations (0.01) 0.00
(0.06) (0.00)
Operating cash flows generated from continuing operations 43.2 54.8 135.2 138.8
Operating cash flows generated from continuing operations before changes in
non-cash operating working capital 69.7 45.6 189.8 114.3

TOTAL OPERATIONS (includes Mesquite and Peak Mines)
Net (loss) earnings (165.8) 27.0 (497.3) 87.6
Net (loss) earnings per share (basic) (0.29) 0.05 (0.86) 0.16
Cash generated from operations 51.1 66.0 182.1 223.4

i. Continuing operations include the Rainy River, New Afton and Cerro San Pedro Mines.
Third Quarter Financial Highlights - Continuing Operations

Revenues for the quarter from continuing operations increased by $54 million, or 58%, relative to the prior-year period, due to higher gold sales volumes which offset lower gold prices. Relative to the prior-year period, gold sales increased by 169%, attributable to the start-up of Rainy River.
The average realized gold price for the quarter decreased by $85 per ounce, or 7%, and the average realized copper price for the quarter increased by $0.15 per pound, or 5%, relative to the prior-year quarter, which was only partially offset by a 6% decrease in copper sales at New Afton.
Operating margin for the quarter increased by $13 million relative to the prior-year period, driven by the higher gold sales volumes, which were partially offset by higher operating expenses as well as a heap leach inventory and net realizable value inventory write-down of $12 million at Cerro San Pedro as the mine moved to reclamation activities.
The Company reported a loss from continuing operations of $2 million, or $0.00 per share in the quarter, a decrease relative to earnings of $27 million, or $0.05 per share, in the prior-year period. The third quarter loss from continuing operations included the net impact of finance costs of $18 million, an $11 million pre-tax foreign exchange gain, and a $5 million gain on the revaluation of the gold stream obligation, while the prior-year period included a $31 million pre-tax foreign exchange gain.
New Gold had an adjusted net loss from continuing operations of $5 million, or $0.01 per basic share, in the third quarter of 2018 relative to adjusted earnings of $3 million, or $0.01 per basic share in the prior-year quarter. Quarterly adjusted loss from continuing operations included the net impact of a $16 million increase in finance costs as the Company ceased capitalization of interest to its qualifying development property due to the commencement of commercial production at Rainy River, a $20 million increase in depreciation and depletion expenses, partially offset by a $23 million increase in operating margin and a decrease of $6 million in exploration, business development, and corporate general and administrative expenses.
Operating cash flows generated from continuing operations for the quarter, before changes in non-cash operating working capital of $70 million, was $24 million, or 53%, higher than the prior-year period due to the increase in operating margin and a reduction in exploration and corporate general and administrative expenses. Operating cash flows generated from continuing operations for the quarter were lower than the prior-year period due to the increase in stockpile inventory at Rainy River.
Year-to-Date Financial Highlights - Continuing Operations

Revenues for the period from continuing operations increased by $182 million, or 69%, relative to the prior-year period, due to higher gold sales volumes and higher copper prices. Relative to the prior-year period, gold sales increased by 147%, attributable to the start-up of Rainy River.
The average realized gold price for the period decreased by $10 per ounce, or 1%, and the average realized copper price for the quarter increased by $0.44 per pound, or 17%, relative to the prior-year period.
Operating margin for the period increased by $55 million relative to the prior-year period driven by higher gold sales volumes and higher copper prices, which was partially offset by higher operating expenses.
During the second quarter of 2018, the Company completed an updated Rainy River life-of-mine plan, and in early August 2018 an updated National Instrument 43-101 Technical Report for Rainy River was released. The updated life-of-mine plan contains updated per unit costs, changes to the sequencing in gold production and a less than 3% reduction in gold production over the life-of-mine. The updated life-of-mine plan incorporates changes to open pit design and extraction sequencing, resulting in higher ore tonnes mined and processed at a lower average gold grade. As a result of the updated life-of-mine plan and the associated revision of Rainy River's 2018 outlook, the Company reported an impairment loss, net of tax, of $282 million in the second quarter of 2018.
The Company reported a loss from continuing operations of $343 million, or $0.59 per share, for the period relative to earnings from continuing operations of $69 million, or $0.12 per share, in the prior-year period. The loss from continuing operations included the net impact of the after?tax impairment charge of $282 million relating to Rainy River, finance costs of $52 million, a $14 million gain on the revaluation of the gold stream obligation, a $7 million gain on the revaluation of copper price option contracts, a $17 million pre-tax foreign exchange loss, and a $2 million restructuring charge, while the prior-year period included a $53 million pre-tax foreign exchange gain and a $33 million gain on the sale of the El Morro stream.
New Gold had an adjusted loss from continuing operations of $33 million, or $0.06 per basic share, in the period relative to $0.1 million, or $0.00 per basic share in the prior-year period. Adjusted net loss from continuing operations included the net impact of a $71 million increase in depreciation and depletion expenses, and a $48 million increase in finance costs, as the Company ceased capitalization of interest to its qualifying development property due to the commencement of commercial production at Rainy River, partially offset by a $65 million increase in operating margin, a $13 million decrease in exploration, business development, and corporate general and administrative expenses, and an $8 million increase in income tax recovery.
Operating cash flows generated from continuing operations for the period, before changes in non-cash operating working capital of $190 million, was $75 million, or 66%, higher than the prior-year period due to the increase in operating margin. Operating cash flows generated from continuing operations for the period were consistent with the prior-year period, as the increase in operating margin was offset in the prior-year period by the receipt of an outstanding concentrate receivable of $21 million at New Afton, and in the current period by an increase in working capital associated with the increase in stockpile inventory at Rainy River.
Third Quarter Financial Highlights - Total Operations (including Mesquite and Peak Mines)

For total operations, a net loss of $166 million, or $0.29 per share, was reported for the quarter. The decrease in net earnings relative to earnings from continuing operations relates to an after-tax impairment loss of $162 million on the classification of Mesquite as an asset held for sale.
Cash generated from total operations of $51 million for the quarter was lower than the prior-year period due to the increase in stockpile inventory at Rainy River and the prior-year year period including Peak Mines, which was sold early in the second quarter of 2018.
Year-to-Date Financial Highlights - Total Operations (including Mesquite and Peak Mines)

The Company reported a net loss of $497 million, or $0.86 per share for the period. The decrease in net earnings relative to earnings from continuing operations primarily relates to the after-tax impairment loss of $162 million on the classification of Mesquite as an asset held for sale.
Cash generated from operations for the nine-month period of $182 million, was lower than the prior-year period, primarily due to the receipt of an outstanding concentrate receivable of $21 million at New Afton in the prior-year period and an increase in working capital associated with the increase in stockpile inventory at Rainy River which was only partially offset by the increase in operating margin. The prior-year period also included Peak Mines, which was sold early in the second quarter of 2018.
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