All dollar figures are in US dollars unless otherwise indicated)
TORONTO, July 28, 2015 /CNW/ - New Gold Inc. ("New Gold") (TSX:NGD) (NYSE MKT:NGD) today announces its 2015 second quarter operational and financial results.

2015 SECOND QUARTER HIGHLIGHTS

Gold production of 86,442 ounces relative to 89,460 ounces in the prior-year quarter
Copper production of 23.6 million pounds relative to 25.5 million pounds in the prior-year quarter
Silver production of 0.4 million ounces consistent with prior-year quarter
All-in sustaining costs(1) of $922 per ounce, including total cash costs(2) of $410 per ounce
Net cash generated from operations before changes in working capital(3) of $63 million, or $0.12 per share
New Afton mill expansion successfully commissioned, ahead of schedule and under budget, resulting in increased recoveries of gold and copper as planned
June 30, 2015 cash balance of $327 million
Further strengthened financial flexibility by previously announced $175 million Rainy River streaming transaction with Royal Gold


"The second quarter further solidified our company's strong start to the year," stated Randall Oliphant, Executive Chairman. "Our gold production year-to-date has been consistent with our plans. After investing in the mill expansion and waste stripping at our open pit operations in the first six months of 2015, we are now positioned to benefit from higher gold production coupled with lower costs in the second half of the year. At the same time, we further increased our financial flexibility by $175 million with the recently announced Rainy River streaming transaction. We look forward to the acceleration of construction activity at Rainy River through the remainder of this year and into 2016."

CONSOLIDATED YEAR-TO-DATE OPERATIONAL RESULTS AND 2015 GUIDANCE

Consistent with the company's February 2015 guidance for the year, production of all metals was planned to be weighted to the second half of 2015. Based on the company's solid production through the first six months of the year, led by Mesquite and Cerro San Pedro, full-year gold production has the potential to be toward the high end of the original guidance range of 390,000 to 430,000 ounces. At the same time, consolidated copper production may be at the low end of the guidance range of 100 to 112 million pounds and consolidated silver production is expected to be within the original range of 1.75 to 1.95 million ounces.

New Gold's 2015 cost guidance was for all-in sustaining costs(1) of $745 to $785 per ounce, including total cash costs(2) of $340 to $380 per ounce. The company's cost guidance is based on assumptions of $2.75 per pound of copper and $16.00 per ounce of silver and foreign exchange rates for the Canadian dollar, Australian dollar and Mexican peso of $1.25, $1.25 and $15.00 to the U.S. dollar.

For the six-month period ended June 30, 2015, New Gold's all-in sustaining costs(1) were $969 per ounce, including total cash costs(2) of $449 per ounce. As the company's gross operating expenses are tracking in line with guidance, the primary driver behind all-in sustaining costs(1) and total cash costs(2) per ounce being above guidance in the first half of the year is the impact of the lower gold and copper production weighting noted above.

Looking forward, the company's all-in sustaining costs(1) and total cash costs(2) per ounce are expected to decrease as a result of the higher production in the second half of 2015. Year-to-date, the impact of the decrease in the copper price relative to the company's guidance assumption of $2.75 per pound has been largely offset by the benefit associated with the continued deprecation of the Canadian and Australian dollars relative to the U.S. dollar. Beyond the continued potential for changes in the relative movements of the copper price and foreign exchange rates in the second half of 2015, New Gold's full-year all-in sustaining costs(1) and total cash costs(2) per ounce may be impacted by two primary factors. As noted, full-year copper production may be at the low end of the guidance range and the relative gold production contribution from the company's higher cost mines has the potential to increase relative to the initial guidance.

Based on the company's guidance assumption of $2.75 per pound, a five million pound change in full-year copper production has the potential to impact costs by approximately $30 to $35 per ounce. At the same time, as a higher percentage of production is expected to be delivered by New Gold's open pit mines, all-in sustaining costs(1) and total cash costs(2) per ounce may be impacted by an additional $15 to $20 per ounce. As a result of these two factors, and despite the company's gross operating and sustaining capital expenditures being in line with guidance, New Gold's all-in sustaining costs(1) and total cash costs(2) per ounce may be approximately $50 per ounce above their guidance ranges.

2015 SECOND QUARTER OPERATIONAL RESULTS

New Gold's second quarter gold production of 86,442 ounces was slightly below that of the prior-year quarter. The slight decline in quarterly gold production was primarily attributable to lower production from the Peak Mines, the impact of which was only partially offset by increased production at both Mesquite and Cerro San Pedro. Consolidated copper production of 23.6 million pounds decreased relative to the prior-year quarter and silver production of 0.4 million ounces remained consistent.

Total cash costs(2) of $410 per ounce increased relative to the prior-year quarter primarily due to a $12 million, or $136 per ounce, decrease in copper and silver by-product revenues stemming from lower realized copper and silver prices(4). Quarterly all-in sustaining costs(1) of $922 per ounce decreased by $92 per ounce relative to the first quarter of 2015, however, were above those of the prior-year quarter due to the impact of lower by-product revenues. New Gold's second quarter cumulative sustaining capital, exploration, general and administrative, and amortization of reclamation expenditures remained in line with the prior-year quarter at $45 million, or $512 per ounce.

New Afton

Gold production at New Afton during the second quarter of 24,358 ounces was slightly below the prior-year quarter. Quarterly production was impacted as a planned increase in throughput was offset by the combination of lower gold grade and recovery decreases associated with the lower grade. The completion of the mill expansion project during the second quarter yielded positive results. With the benefit of finer grind size resulting from the commissioning of the vertical grinding mill, gold recovery in the second quarter was 83% relative to 80% in the first quarter of 2015.

New Afton's quarterly copper production of 19.9 million pounds was in line with the second quarter of 2014. An increase in throughput offset a decrease in copper grade, while copper recovery remained consistent. Similar to the benefits for gold recovery associated with the mill expansion, copper recovery in the second quarter averaged 86% relative to 82% in the first quarter of 2015.

The $322 per ounce increase in New Afton's total cash costs(2) to ($940) per ounce was primarily attributable to a $7 million, or $286 per ounce, decrease in copper by-product revenue relative to the prior-year quarter driven by a decrease in the realized price(4). Total cash costs(2) in the second quarter were further affected by the increase in ore tonnes mined and processed, the impact of which was largely offset by a 13% depreciation of the Canadian dollar relative to the U.S. dollar. New Afton's sustaining capital expenditures of $17 million increased by $3 million, or $111 per ounce, relative to the prior-year quarter, thus resulting in all-in sustaining costs(1) of ($235) per ounce in the second quarter of 2015.

NEW GOLD SUMMARY OPERATIONAL RESULTS
Three months ended June 30 Six months ended June 30
2015 2014 2015 2014

GOLD PRODUCTION (thousand ounces)
New Afton 24.4 26.3 48.3 53.7
Mesquite 22.5 18.4 48.2 44.2
Peak Mines 14.9 27.9 34.3 48.8
Cerro San Pedro 24.7 16.8 50.6 34.1
Total Gold Production 86.4 89.5 181.4 180.8

Total Gold Sales (thousand ounces) 87.8 84.7 180.2 178.8
Average Realized Gold Price per ounce(4) $1,191 $1,304 $1,210 $1,306

COPPER PRODUCTION (million pounds)
New Afton 19.9 21.0 39.5 43.0
Peak Mines 3.7 4.5 7.1 8.4
Total Copper Production 23.6 25.5 46.6 51.4

Total Copper Sales (million pounds) 23.7 24.3 45.8 49.4
Average Realized Copper Price per pound(4) $2.72 $3.09 $2.66 $3.03

SILVER PRODUCTION (thousand ounces)
New Afton 61.2 59.7 121.4 123.4
Peak Mines 26.8 34.5 52.3 66.8
Cerro San Pedro 338.9 326.0 635.5 644.7
Total Silver Production 426.9 420.2 809.2 834.9

Total Silver Sales (thousand ounces) 444.1 414.2 776.8 830.8

Average Realized Silver Price per ounce(4) $16.23 $19.53 $16.41 $19.97

TOTAL CASH COSTS(2)($ per ounce)
New Afton ($940) ($1,262) ($889) ($1,273)
Mesquite 839 993 867 928
Peak Mines 1,157 627 974 681
Cerro San Pedro 879 1,169 944 1,051

Total Cash Costs(2) $410 $251 $449 $253

All-IN SUSTAINING COSTS(1)($ per ounce)
New Afton ($235) ($678) ($295) ($671)
Mesquite 1,533 1,413 1,632 1,191
Peak Mines 1,549 928 1,337 1,000
Cerro San Pedro 889 1,322 955 1,193
All-in Sustaining Costs(1)$922$745$969$707
New Afton's second quarter co-product cash costs(2) were $466 per ounce of gold and $1.06 per pound of copper relative to $442 per ounce and $1.02 per pound in the prior-year quarter. The mine's second quarter co-product all-in sustaining costs(1) of $708 per ounce of gold and $1.61 per pound of copper increased when compared to $643 per ounce and $1.48 per pound in the second quarter of 2014 due to the $3 million increase in sustaining capital expenditures.

For the six-month period ended June 30, 2015, gold production at New Afton of 48,270 ounces was below the prior-year period production of 53,676 ounces as the combination of lower gold grade and first quarter recovery was only partially offset by higher throughput.

New Afton's first half copper production of 39.5 million pounds was below prior-year period production of 43.0 million pounds for reasons consistent with those noted above for gold production.

New Afton's total cash costs(2) for the six-month period ended June 30, 2015 of ($889) per ounce were impacted by a $22 million, or $469 per ounce, decrease in copper by-product revenue relative to the prior-year period driven by a combination of the decrease in the realized price(4) and lower copper sales volumes. New Afton's sustaining capital expenditures in the first half of 2015 of $27 million remained in line with the prior-year period, thus resulting in all-in sustaining costs(1) of ($295) per ounce for the six-month period ended June 30, 2015.

New Afton's co-product cash costs(2) were $480 per ounce of gold and $1.04 per pound of copper in the first half of 2015 relative to $427 per ounce and $0.97 per pound in the prior-year period and the mine's co-product all-in sustaining costs(1) were $689 per ounce of gold and $1.49 per pound of copper compared to $636 per ounce and $1.45 per pound.

As New Afton moves into the second half of 2015, production of both gold and copper is expected to benefit from the completion of the mill expansion in the second quarter. Production should increase in each of the final two quarters of the year and New Afton is expected to finish the year within its gold production guidance range of 105,000 to 115,000 ounces. Full-year copper production is expected to be at the low end of the guidance range of 85 to 95 million pounds as year-to-date realized copper grades have been slightly below the company's expectations. Though New Afton's gross operating costs have been in line with the company's plans, the year-to-date average realized copper price(4) of $2.66 per pound has been below the company's guidance assumption of $2.75 per pound which, when combined with planned lower first half gold and copper production, has negatively impacted the mine's total cash costs(2) and all-in sustaining costs(1) per ounce relative to guidance. At New Afton, every $0.25 per pound change in the copper price results in an approximate $200 per ounce change in the mine's total cash costs(2) and all-in sustaining costs(1) per ounce.

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