- (All figures are in Canadian dollars unless otherwise indicated)
VANCOUVER, Dec. 21, 2011 /CNW/ - New Gold Inc. ("New Gold") (TSX:NGD) (AMEX:NGD) and Geo Minerals Ltd. ("Geo") (TSX.V:GM) today announce that New Gold has completed the acquisition of all the shares of Geo. Under the terms of the court approved arrangement ("Arrangement") all the shares of Geo (including shares issued in the Arrangement in exchange for options and warrants) were acquired for an aggregate cash consideration of $22 million. Adjusting for New Gold's acquisition of Geo's cash balance at closing, the net cash payment by New Gold was $18 million.

Through the acquisition of Geo, New Gold added 15km2 of land immediately to the northwest of the company's Blackwater Project ("West Blackwater Properties").

"The acquisition of this land package immediately adjacent to the current Blackwater mineral resource provides us further flexibility as we continue to delineate, and ultimately develop, the Blackwater Project," stated Robert Gallagher, New Gold President and Chief Executive Officer.

Under the terms of the Arrangement, each Geo shareholder will receive $0.16 for each Geo share held. In addition, Geo shareholders will receive one common share of a new exploration company, GeoNovus Minerals Corp. ("GeoNovus"), for every 15 Geo common shares held. As a result of the Arrangement, all of the assets of Geo, other than its interest in the West Blackwater Properties and cash, were transferred to GeoNovus and New Gold became the holder of 1.4 million common shares of GeoNovus, which represents 13% of the GeoNovus common shares currently outstanding on a non-diluted basis.

The TSX Venture Exchange will disseminate a notice announcing the delisting of the Geo shares. Geo shareholders should send their completed and executed letters of transmittal and Geo share certificates to the depository, Computershare Investor Services as soon as possible in order to receive the consideration to which they are entitled under the Arrangement. A copy of the letter of transmittal is available on SEDAR at www.sedar.com under Geo's profile.

About New Gold Inc.
New Gold is an intermediate gold mining company. The company has a portfolio of three producing assets and three significant development projects. The Mesquite Mine in the United States, the Cerro San Pedro Mine in Mexico and Peak Gold Mines in Australia are expected to produce between 380,000 and 400,000 ounces of gold in 2011. The fully-funded New Afton project in Canada is scheduled to add further growth in 2012. In addition, New Gold owns 30% of the world-class El Morro project located in Chile and, in June 2011, New Gold acquired the exciting Blackwater project in Canada. For further information on the company, please visit www.newgold.com