- (All figures are in US dollars unless otherwise indicated)
VANCOUVER, May 1, 2013 /CNW/ - New Gold Inc. ("New Gold") (TSX and NYSE MKT:NGD) today announces financial and operational results for the first quarter of 2013. The company is also pleased to provide an updated Mineral Resource estimate for the C-Zone at New Afton.

First Quarter 2013 and New Afton C-Zone Mineral Resource Update Highlights

First Quarter 2013
Gold production of 94,695 ounces
Total cash costs(1) of $485 per ounce, a decrease of $58 per ounce when compared to the same period of 2012
Net earnings of $36 million, or $0.08 per share
Net cash generated from continuing operations increased by 59% to $59 million from $37 million in the first quarter of 2012
Cash and cash equivalents of $672 million at March 31, 2013
New Afton C-Zone Mineral Resource update

Measured and Indicated gold and copper resources increased by over 300% to 0.3 million ounces and 211 million pounds
Measured and Indicated gold and copper grades increased to 0.77 grams per tonne gold and 0.77% copper from 0.62 grams per tonne and 0.68% copper
Inferred gold and copper resources increased by over 30% to 0.4 million ounces and 301 million pounds
"The first quarter provided a solid start to the year for our company. Consistent with our plans, the operations are expected to have progressively stronger quarters as we move through 2013. We look forward to quarterly increases in gold production and cash flow as a result," stated Randall Oliphant , Executive Chairman. "Beyond our focus on operations, we see continued scope to add meaningful value to our portfolio of assets with today's New Afton C-Zone update being just one example. For the C-Zone resource base to have already grown so substantially after just eight months of exploration is a testament to the continued potential of this mine."

During the first quarter, the company produced 94,695 ounces of gold at total cash costs(1) of $485 per ounce. The combination of solid gold production and well below industry average cash costs underpinned New Gold's financial results. The company generated revenue of $202 million, earnings from mine operations of $58 million, net earnings of $36 million, or $0.08 per share, and net cash generated from continuing operations of $59 million.

Operations Overview
New Gold 2013 First Quarter Summary Operational Results
Three months ended
March 31,
2013 2012
Gold Production (thousand ounces)
New Afton 14.9 -
Cerro San Pedro 26.4 34.0
Mesquite 25.5 44.4
Peak Mines 27.9 20.9
Total Gold Production 94.7 99.3

Total Gold Sales 95.2 93.7
Average realized gold price ($ per ounce) $1,494 $1,575

Silver Production (thousand ounces)
Cerro San Pedro 358.9 456.6

Total Silver Sales 360.9 439.1
Average realized silver price ($ per ounce) $29.51 $32.70

Copper Production (million pounds)
New Afton 11.8 -
Peak Mines 4.2 3.7
Total Copper Production 16.0 3.7

Total Copper Sales 15.9 1.8
Average realized copper price ($ per pound) $3.44 $4.14

Total Cash Costs(1) ($ per ounce)
New Afton ($770) -
Cerro San Pedro 495 233
Mesquite 879 628
Peak Mines 819 915
Total Cash Costs(1) $485 $543

Average realized margin ($ per ounce) $1,009 $1,032


Gold Production

Gold production and sales were similar to the prior year quarter. Production increases from New Afton now being part of New Gold's operating portfolio and higher gold grades at the Peak Mines were offset by lower production at Cerro San Pedro and Mesquite due to planned mining of lower grade ore.

New Afton's production increased in each consecutive month of the first quarter with further increases being seen in April. Production in early 2013 was impacted by the better-than-planned ramp up of the New Afton mill in the second half of 2012. As a result, the vast majority of New Afton's ore stockpile was milled in 2012. Thus, the company supplemented underground ore feed in January with remnant lower grade ore from the historical Afton open pit which also reduced the overall mill recoveries for the quarter. As planned, in late January, the installation of the permanent underground crusher was completed. This resulted in the underground mining rate steadily increasing to an average of 11,000 tonnes per day in March, which compares to an average mining rate of 7,200 tonnes per day in the fourth quarter of 2012.

As the New Afton mine and mill are now running at equivalent throughput rates, consistent with the operation's 11,000 tonne per day nameplate capacity, and at planned gold and copper grades, the company anticipates steady increases in gold and copper production as the year progresses.

At Cerro San Pedro and Mesquite, planned mine sequencing resulted in below reserve grade ore being placed on the leach pads which led to production being below that of the first quarter of 2012 when grades closer to reserve grade were mined. Per the company's plans, gold grades and production are scheduled to increase during the balance of the year. In addition, at Mesquite, the two haul trucks the company had planned to add to the fleet are now in operation. These trucks should enable Mesquite to increase the mining rate and ore tonnes placed on the leach pad.

Gold production at the Peak Mines increased by 33% when compared to the same period of 2012. The increase was primarily attributable to a 21% increase in gold grade and a 9% increase in ore tonnes processed.

Silver Production

Silver production was in line with the company's plans, however, below that of the same period of the prior year due to scheduled mining of a lower grade area of the Cerro San Pedro open pit.

Copper Production

Copper production increased by 334% when compared to the first quarter of 2012 driven by the combination of New Afton's contribution to production as well as higher production at the Peak Mines. New Afton's copper production profile during the quarter was consistent with that of its gold production outlined above. As monthly and quarterly copper production is expected to increase through 2013, New Gold's total cash costs(1) should continue to decline as further discussed below. Production at the Peak Mines increased when compared to the same period of 2012 through a combination of an increase in ore tonnes processed and a 9% increase in copper recoveries.

Total Cash Costs(1)

New Gold's first quarter total cash costs(1) were $485 per ounce, declining from the first quarter of 2012 and remaining well below the industry average. The decrease in the company's cash costs was primarily driven by increased copper sales volumes which were partially offset by a combination of lower realized copper prices, lower silver sales volumes and realized prices as well as the scheduled mining of lower grade ore.

New Afton's total cash costs(1) were negative $770 per ounce on a by-product basis and $721 per ounce and $1.56 per pound on a co-product basis. Consistent with planned increases in gold and copper production during the remaining quarters of 2013, New Afton's cash costs are expected to decline over the balance of the year.

At Cerro San Pedro, costs were consistent with the company's quarterly plans. The increase in total cash costs(1) when compared to the same period of 2012 is attributable to the combination of a $4 million decrease in silver by-product revenue, the appreciation of the Mexican Peso and planned lower gold production.

Mesquite's total gross operating costs remained consistent with the prior year period with the mine benefitting from lower fuel and explosive costs. As such, the increase in total cash costs(1) per ounce sold was primarily driven by the planned mining of lower grade ore resulting in costs being spread over a lower production base.

Costs at the Peak Mines decreased by $96 per ounce when compared to the same period of the prior year. This decrease in total cash costs(1) was attributable to a combination of high copper by-product revenue, the depreciation of the Australian dollar and higher gold production. These benefits were partially offset by the sale of higher cost inventory.

On a consolidated basis, New Gold's total cash costs(1) are expected to steadily decline throughout the remainder of 2013.

All-in Sustaining Costs(2)

As part of the company's 2013 annual guidance released on February 5, 2013, New Gold estimated all-in sustaining costs(2) for the year of $875 per ounce. The estimate included: total cash costs(1), corporate general and administrative expenses, exploration expenditures and sustaining capital. As this cost standard should be finalized by the World Gold Council in June, which will provide additional clarity on the treatment of certain costs, New Gold intends to provide its quarterly and year-to-date all-in sustaining costs(2) that conform to the official standard as part of the company's second quarter results. At that time, New Gold also plans to confirm its 2013 full year estimate for all-in sustaining costs(2) taking into account the formal definition, but does not anticipate it changing materially from the $875 per ounce previously discussed.

"We are proud of our operational performance in the first quarter, particularly given the lower grade ore processed at three of our four operations," stated Robert Gallagher , President and Chief Executive Officer. "We look forward to progressively stronger quarters as the year moves ahead and, importantly, remain on track with our guidance."

Financial Results Overview
New Gold 2013 First Quarter Summary Financial Results
Three months ended
Figures in US$ millions, except per share amounts March 31,
2013 2012

Revenue 201.8 168.8

Earnings from Mine Operations
New Afton 18.4 -
Cerro San Pedro 22.6 40.0
Mesquite 3.1 27.5
Peak Mines 13.7 10.2
Earnings from Mine Operations 57.8 77.7

Net Earnings 36.3 33.5
Net Earnings per Share 0.08 0.07
Adjusted Net Earnings(3) 20.6 44.2
Adjusted Net Earnings per Share(3) 0.04 0.10

Cash Generated from Operations before Working Capital(4) 81.1 82.4
Pre-tax Cash Generated from Operations 68.2 66.1
Net Cash Generated from Operations 58.5 36.7


Revenue increased by 20% when compared to the same period of the prior year. The increase in revenue was attributable to higher gold and copper sales volumes which were partially offset by lower silver sales volumes as well as lower average realized prices for each of the three metals the company produces. Consistent with the quarter-over-quarter changes in consolidated gold production, the benefits of increased earnings from mine operations from New Afton and the Peak Mines were more than offset by decreases at Cerro San Pedro and Mesquite due to planned mining of lower grade ore at the company's two open pit operations. At Cerro San Pedro, the average gold grade was 0.32 grams per tonne compared to 0.46 grams per tonne in the first quarter of 2012 and a reserve grade of 0.50 grams per tonne. For full year 2013, Cerro San Pedro's average gold grade is expected to average approximately 10% above reserve grade, with this targeted improvement in grade benefitting the balance of 2013. Similarly, at Mesquite, the first quarter grade averaged 0.32 grams per tonne versus 0.59 grams per tonne in the prior year quarter and a reserve grade of 0.57 grams per tonne. As Mesquite is in a planned lower grade cycle, grades are expected to improve markedly through the balance of 2013, however, are scheduled to average approximately 30% below reserve grade for 2013. As previously noted, Mesquite's future quarters should also benefit from an increase in ore tonnes mined.

Net earnings in the first quarter of 2013 were $36 million, or $0.08 per share. Net earnings were positively impacted by a non-cash $23 million pre-tax gain on the mark to market of the company's share purchase warrants which was partially offset by a pre-tax foreign exchange loss of $6 million. Adjusted net earnings(3) were $21 million, or $0.04 per share.

Net cash generated from operations increased by 59% during the first quarter when compared to the same period of the prior year. This increase was primarily driven by New Afton now being a meaningful contributor to the company's cash flow generation. In the first quarter of 2012, the company made a $7 million income tax payment at Cerro San Pedro related to 2011.

Development Project Update

El Morro

New Gold's share of the El Morro project provides the company with a 30% fully-carried interest in an advanced stage, world-class copper/gold project in northern Chile. Under the terms of New Gold's agreement with Goldcorp Inc. ("Goldcorp"), Goldcorp is responsible for funding New Gold's 30% share of capital costs. The carried funding accrues interest at a fixed rate of 4.58%. New Gold will repay its share of capital plus accumulated interest out of 80% of its share of the project's cash flow with New Gold retaining 20% of its share of cash flow from the time production commences.

The El Morro and La Fortuna deposits currently represent the two principal zones of gold-copper mineralization. Future exploration efforts will also test the potential for bulk-mineable gold and copper production below the bottom of the La Fortuna open pit.

Activity at site has been limited recently due to the previously announced temporary suspension of the project's environmental permit. The Chilean Environmental Permitting Authority, the Servicio de Evaluación Ambiental, is actively consulting with the group of indigenous people who asserted that the multiple rounds of consultation leading up to the approval of the Environmental Impact Assessment ("EIA") in March of 2011 were insufficient. It is anticipated this consultation process could be completed by late 2013 with the expectation that the modified EIA should be approved shortly thereafter. Project capital expenditures during the three months ended March 31, 2013 were $19 million (100% basis).

Blackwater

The company's Blackwater project was further advanced during the first quarter. In addition to completing the previously announced Mineral Resource update, the team focused on progressing the environmental assessment reports, completing required condemnation drilling for proposed infrastructure sites and preparing for the regional exploration program on the company's 1,000 square kilometre land package.

First Quarter 2013 Highlights

Updated Blackwater Mineral Resource estimate to be used for Feasibility Study on April 4, 2013:
Measured and Indicated gold resources for direct processing increased to 8.6 million ounces of gold at 0.88 grams per tonne and 57.5 million ounces of silver at 5.8 grams per tonne
Measured gold resources increased by 44% to 3.9 million ounces at 1.04 grams per tonne
Completed 12 deep exploration holes totaling 7,425 metres to further prove up and potentially extend the high grade zones in the west and north-central portions of deposit
Advanced exploration target selection for Capoose and other prospective areas identified for reconnaissance drilling in 2013
The Feasibility Study for the Blackwater project remains on target for completion in late 2013. The Feasibility Study will build upon the Preliminary Economic Assessment ("PEA") which was completed in September of 2012 and outlined the parameters of a conventional truck and shovel open pit mine with a 60,000 tonne per day processing plant that had the potential to produce an average of over 500,000 ounces of gold per year(4).

The PEA is preliminary in nature and includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The company looks forward to providing additional updates on the results of its 2013 regional exploration program on the multiple previously identified targets across the 1,000 square kilometre Blackwater land package.

2013 Outlook

New Gold is pleased to reiterate its guidance for 2013 which is scheduled to provide shareholders with increased gold production at lower cost when compared to 2012.
New Gold 2013 Guidance

2013 Guidance
Gold Production Silver Production Copper Production Total Cash Costs(1)
(koz.) (Moz.) (Mlbs.) ($ per ounce)

New Afton 75 - 85 66 - 74 ($1,410) - ($1,390)

Cerro San Pedro 140 - 150 1.4 - 1.6 375 - 395

Mesquite 130 - 140 830 - 850

Peak Mines 95 - 105 12 - 14 670 - 690

New Gold Consolidated 440 - 480 1.4 - 1.6 78 - 88 $265 - $285


New Gold's copper and silver by-product revenue continues to provide an effective natural hedge against the various cost pressures being faced by the broader industry which allows the company to deliver lower costs.

Assumptions used in the 2013 guidance include gold, silver and copper prices of $1,600 per ounce, $30.00 per ounce and $3.50 per pound and Canadian dollar, Australian dollar and Mexican peso exchange rates of $1.00, $1.00 and $13.00 to the U.S. dollar. The diesel price assumed for 2013 is $3.70 per gallon. Realized commodity prices and average foreign exchange rates were in line with these assumptions during the first quarter, however, prices of gold, silver and copper have declined below the assumed levels in recent weeks. Though the company's cash costs would be negatively impacted should copper and silver prices remain below the assumed prices, other cost-related factors, such as declining oil prices, lower explosive and cyanide costs as well as the depreciation of the Canadian dollar, would benefit costs. At today's commodity prices and foreign exchange rates it is anticipated the company's total cash costs(1) would be in the order of $350 per ounce. The following table provides an overview of the impact on total cash costs(1), both by asset and consolidated, of movements in certain key assumptions.

Total Cash Costs(1) - Sensitivities

Category - Silver Price Copper Price AUD/USD CDN/USD MXN/USD Diesel
Base Assumption - $30.00 $3.50 $1.00 $1.00 $13.00 $3.70
Sensitivity - +/-$1.00 +/-$0.25 +/-$0.05 +/-$0.05 +/-$1.00 +/-10%

Total cash costs(1) - impact

New Afton -- +/-$220 -- +/-$75 -- --

Cerro San Pedro +/-$10 -- -- -- +/-$25 --

Mesquite -- -- -- -- -- +/-$15

Peak -- +/-$30 +/-$50 -- -- --

New Gold Total +/-$3 +/-$45 +/-$10 +/-$15 +/-$8 +/-$5


The company continues to view its commodity mix, and the correlated offsets that copper and silver revenues provide against certain input costs, as a differentiating factor that should allow New Gold to remain a lowest quartile cost producer for the benefit of its shareholders.

Lead Director

New Gold is pleased to announce the appointment of Mr. James Estey as the company's lead director. Mr. Estey is the retired Chairman of UBS Securities Canada Inc. and has over 30 years of experience in the financial markets. He has been an independent member of the New Gold Board of Directors since July of 2008.

New Afton C-Zone Gold and Copper Resources Grow by Over 300 Percent

The C-Zone resource, which lies immediately down plunge of the block of mineralization currently being mined, has been updated to incorporate the drilling that was completed through the end of February 2013.

Today's New Afton Mineral Resource update is specific to the C-Zone. The balance of the New Afton Mineral Reserves and Resources remain unchanged from the year-end 2012 Mineral Reserve and Resource statement, net of first quarter mine production. The C-Zone update incorporates an additional 31 holes totaling 17,156 metres over the previous estimate and extends the mineralization both along strike and at depth. The company currently has three drills actively exploring the C-Zone and continues to target the completion of 30,000 metres of drilling in 2013. The company also recently initiated a 17,000 metre program targeting extensions to the main reserve, with two surface core drills and one underground drill currently active.

At December 31, 2012, New Afton's Proven and Probable Mineral Reserves included 1.1 million ounces of gold at 0.65 grams per tonne and 1,080 million pounds of copper at 0.93%, resulting in a planned current base mine life of 14 years. The objective of the C-Zone exploration drilling is to add to the mine's life while, at the same time, New Gold continues to evaluate opportunities to increase the throughput rate beyond the nameplate capacity of 11,000 tonnes per day.

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