New Gold’s New Afton mine reached commercial production, defined as 30 days of operation at 60% of capacity (6,600 mt/d), on August1, 2012. The New Afton mine is an underground block cave operation designed to produce 4 million mt/y of copper-gold ore for processing through a mill and flotation concentrator. New Gold Inc. started processing ore at its New Afton project in British Columbia on June 28, 2012.

                                The New Afton project is located approximately 350 km northeast of Vancouver and 10 km west of the city of Kamloops in south-central British Columbia on the site of the Afton open-pit mine operated by Teck Resources. Afton came into production in 1977, closed in 1991, re-opened in 1994 and closed permanently in 1997. The current site includes the historic pit, new underground workings, historic support facilities, a new concentrator, and a recently constructed tailings facility. The New Afton deposit extends to the southwest from immediately beneath the Afton pit.

                                New Afton is forecast to produce 35,000 to 45,000 oz of gold and 30 million to 35 million lb of copper during 2012. Over its currently estimated 12-year mine life, the project is expected to produce an average of 85,000 oz/y of gold and 75 million lb/y of copper.

                                In addition to the processing start-up at New Afton, New Gold reported that the project’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 were tracking at or ahead of targeted levels. The average mining rate over the previous 30 days was in excess of 5,250 mt/d, or 47% of the nameplate 11,000-mt/d capacity, and the mining rate was on schedule to reach 11,000 mt/d in early 2013. A surface ore stockpile of 1 million mt had been built, with an average stockpile grade of 0.88 g/mt gold and 0.94% copper.

                                New Afton’s total development cost remains at 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.

                                A further benefit of New Afton’s production start was that New Gold’s exploration team could focus on drilling the C-zone block of mineralization that lies below and to the side of the New Afton reserve block in an effort to add to the mine’s base 12-year life. The exploration team had previously limited its work on this initiative, because the on-time production start at New Afton was the company’s priority. New Gold has budgeted $5 million for exploration at New Afton in the second half of 2012 to further explore and delineate the C-zone.

                                “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,” New Gold President and CEO Robert Gallagher said. “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.”

                                New Gold’s other operating mines are the Cerro San Pedro gold-silver heap-leach operation in central Mexico, the Mesquite gold heap-leach operation in southern California, and the Peak Mines gold-copper underground mining operation in New South Wales, Australia. Including production from New Afton, New Gold’s four mines are forecast produce between 405,000 and 445,000 oz of gold during 2012.

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