2016 | SUMMER ISSUE

NEW LOOK!NEW REPORT!

NOTE FROM Manager - Environment, Social responsibility and Tailings New Gold and the New Afton Mine place a high value of Social Responsibility and proper Environmental Stewardship. The commitment to these is shared by everyone from our CEO to our front line workers. Social Responsibility means working to make the Communities near our mines stronger from our presence.

New Afton encourages its employees to be active locally whether it be through sponsorship of different organizations and events, donations to support local charities, or volunteering within the community. Environmental Stewardship involves support for local groups such as the Nature Conservancy of Canada to protect fragile grasslands and the Earth Rangers school program to educate youth on habitat protection and conservation. Environmental

Stewardship also applies to conducting research with Thompson Rivers University on species at risk, such as the Great Basin Spadefoot or creating an artificial bat habitat to help better understand bats. Working locally on initiatives, such as these, helps to build capacity in the Community and leave behind a positive legacy.

If you would like to learn more about our operation or would like to provide feedback please use our feedback hotline 250.377.2100 or email us at info@newgold.com.

Scott Davidson

Manager – Environment, Social Responsibility and Tailings

New Afton Sustainability Newsletter

2016 | SUMMER ISSUE

Safety Spotlight

1.5 Million hours without a lost time incident

2015 John T. Ryan Safety Award

Mine Rescue Competition Overall Winner

Our PerformanceGold production at New Afton during the first quarter increased by 5% to 25,068 ounces relative to the prior-year quarter. The higher production was due to the combined benefit of a 14% increase in mill throughput and a 2% increase in gold recovery to 82%, more than offsetting a planned decrease in gold grade. As a result of the successful completion of the mill expansion in mid-2015, New Afton’s average mill throughput during the first

quarter was 15,250 tonnes per day.

At the same time, New Afton’s quarterly copper production increased by 14% to 22.4 million pounds when compared to the first quarter of 2015. The mine’s copper production similarly benefited from the higher mill throughput and a 3% increase in coppery recovery to 85%. Copper grade remained in line with the prior-year quarter.

Three months ended March 31

OUTPUTS 2016 2015

Ore Processed (thousand tonnes) 1,388 1,216

Tailings Produced (tonnes) 1,350,832 1,178,756

Average gold grade of ore (g/tonne) 0.69 0.76

Average copper grade (%) 0.87 0.90

Copper Produced (million lbs) 22.4 19.6

Gold Produced (thousand ounces) 25.1 23.9

Safety...Live by it!New Afton’s safety slogan toencourage employees to live the safety culture both at work and at home.

Health and Safety PerformanceAt New Afton we understand that responsible mining starts with keeping our people safe and healthy. From the ground up, our people are passionate about doing the right thing and holding true to our values: Integrity, Commitment, Creativity, Employee Development and Teamwork.

New Afton is proud to have reached over 1.5 million person hours without a Lost Time Incident in April 2016. In addition to this milestone, the 2015 John T. Ryan Award for Lowest Total Reportable Injury Rate was presented to New Afton at the Mine Rescue Competition in Kimberly, BC on June 5th. The award is a symbol of excellent safety performance and can be regarded as acknowledgment for the hard work and commitment to safety of the workers here at New Afton.

Mines REscue competition teamThe staff at New Gold would like to congratulate our New Afton Mine Rescue Competition Team on their 1st place finish at the 61st Annual Provincial Mine Rescue Competition. The team traveled to Kimberley, BC to demonstrate their skills in First Aid, Practical Bench, Fire Safety, Written and Obstacle and Recovery. Please join us in congratulating our Team, Mike Owens

(Coach), Kris Edwards (Captain), Carson Fraser, Andrew Horton, Jared Moe (Coordinator), Peter Klaponski (Vice-Captain) and Daniel Waterman.

Our Achievements

61st Annual Provincial Mine

Rescue Competition Awards

2016 Richard Booth, Best Underground Written Score

2016 USWA Mine-Mill Trophy, Best Underground Coordinator

2016 Sullivan Cup, Best First Aid by an Underground Team

2016 Levitt Fire Trophy

2016 Keith Bracewell Memorial Award, Best Obstacle & Recovery

2016 Overall Underground Mine Rescue Award

New Afton Sustainability Newsletter 2016 | Summer Issue

Environment Performance

Towards Sustainable Mining (TSM) verification occurs every three years, unless a site is looking to move up a rating. New Afton was externally verified in April of 2016, and achieved an overall ‘A’ rating, with significant ‘AA’s and highlighted

‘AAA’s. The audit identified areas in which the mine is performing well, as well as ways to strive for continuous improvement. Based on the TSM audit schedule, New Afton will be externally audited next in 2019.

Towards Sustainable Mining

Environmental Scorecard

Three Months ended March 31 2016 2015 2014

Environmental Non-Compliances 0 0 0

Externally Reported Spills 1 2 2

Number of Fines Incurred 0 0 0

Environmental Complaints 0 0 2

New Afton prides itself on its environmental performance and continual improvement. At New Afton we work with our First Nations

partners and other communities of interest to ensure we achieve this goal.

Awards and RecognitionCEM Energy of Excellence in Energy Management Award2015 John T. Ryan Safety Award (BC/YK) for Lowest Total Reportable Injury Rate

Audits TSM External Certification, Overall ‘A’ Rating

Community engagement development management system (CEDMS) External audit, Zero Major Non Conformances

ReclamationNew Afton practices progressive reclamation every year as obligated under Mining Permit M-229. This enables reclamation to be completed as the opportunity arises and also allows for New Afton to refine reclamation methodologies prior to full scale mine closure. In 2015 a series of projects were completed, including;

• Rough and loose treatment and grass seeding (0.4 ha) at the Bat Cave Project.

• Invasive and noxious weed management (primarily knapweed) over 35.7ha.

• Continuation of the TRU Masters project monitoring Spadefoot habitat and behaviors.

• Cleaning and scarifying of local native seed species collected by Tk’emlúps te Secwepemc in 2014.

• Continuation of Closure Working Group meetings with Tk’emlúps te Secwepemc, Skeetchestn Indian Bands and the Stk’emlupsemc te Secwepemc Nation.

• Hydro-seeding of the new topsoil (3100m2).

Planned reclamation activities for the next 5 years include:

• Continued seeding and re-vegetation of disturbed areas.

• Supporting Tk’emlúps te Secwepemc and Skeetchestn Indian Bands in greenhouse projects.

• Investigation of an industrial compost program with local First Nations.

• Native tree planting projects with local First Nation schools.

• Bird box building, painting and educational presentations with local First Nation schools.

• Continued monitoring and research at the old Afton ore reclaim bunker bat hibernacula.

New Afton utilizes a variety of seed mixes for site reclamation. Stump Lake mix was specifically developed for the local Kamloops ecosystem and is utilized in areas that are being permanently reclaimed. New Gold Stump mix is the traditional Stump mix with a heavy addition of fall rye, which is used in areas for temporary re-vegetation or sites which face re-vegetation challenges (i.e. less than optimal soil quality or grade). Annual Fall Rye is used for quick growth to aid in soil stabilization and weed control, plus helps to increase biomass and nutrients to the soils.

2016 tree planting On Earth Day, New Afton hosted grades 6 and 7 students from Skeetchestn Community School and Skelep School of Excellence to assist us in planting trees on site for reclamation. The students had the opportunity to learn why we plant trees on site and become a part of the process in regards to reclamation.

SPECIES LATIN NAME # PLANTED LOCATION

Saskatoon Amelanchier alnifolia 10 Adjacent bat cave – North West

Prairie Rose Rosa woodsii 10 Adjacent bat cave – North West

Douglas Maple Acer glabrum 10 Adjacent bat cave – North West

Smooth Sumac Rhus glabra 10 Adjacent bat cave - South

New Afton Sustainability Newsletter 2016 | Summer Issue

Wildlife

OUR PEOPLEAt New Afton, we acknowledge our success can be attributed back to our workforce. Together we can accomplish the goals set before us as at the mine site.

Looking back, members of our team have now been with the New Afton Team for many years contributing to the overall success of the operations. This issue, New Afton would like to spotlight Jenifer McCarthy, our Senior Accountant. Jenifer is celebrating 10 years with the New Afton Team.

Three Months ended March 31 2016

Total # of Employees on Payroll 432 100%

Employees hired from Kamloops region 334 77%

Employees hired from BC, outside Kamloops 64 15%

Employees from BC 398 92%

Employees from outside BC 36 8%

First Nations Employees 99 23%

First Nations Employees from Tk’emlúps te Secwepemc and Skeetchestn Indian Band

32 7%

Female Employees 50 12%

Males Employees 384 88%

Average Age 39.6

“After working as an accountant in public practice for several years, I took an exciting opportunity to join New Gold Inc. during the feasibility stage of the New Afton project. I have been a part of the finance team as we moved through feasibility, construction and into the production phase of the mine. This has provided a unique opportunity to learn about the mining industry. Working in a fast pace, evolving environment has provided me with a solid accounting background and valuable work experience that I am excited to share as the company continues to grow and change.”

Employee SpotlightJenifer McCarthySenior Accountant

New Afton is home to a variety of species that are considered “at risk” in BC. During Spring, the Great Basin Spadefoot Toad and Western Toad begin their breeding period which means they will be more active at night time and may be present on roadways. New Afton has a Wildlife Observation process to record sightings, as per the Great Basin Spadefoot and Western Toad Management Plan. This management plan was developed based on a Masters research project considering the habitat of Great Basin Spadefoots on and around the mine site.

New Afton records wildlife interactions or relevant sightings in order to track how wildlife use the site. In 2015 an American Badger which is a red listed species in BC and endangered under the

Species at Risk Act (SARA) was observed traveling through the site and some burrows were noted. During the summer of 2016, staff will be taking care to record any evidence of badger activity on the site.

New Afton has engaged with a number of researchers to support the development of the historic Afton ore reclaim structure into a bat hibernaculum. There are several yellow listed bat species common to this area, including the Small-footed Myotis, and the recently listed Little Brown Bat. Bats are currently of high interest to researchers as a disease called White-nose Syndrome is severely impacting populations in the eastern part of North America and was recently discovered in Washington.

New Afton has had good use of bird boxes for providing habitat for local species

onsite.

OUR COMMUNITYFIRST NATIONS

OUR COMMUNITYNew Afton is a proud member of the local Kamloops Community. We pride ourselves on doing the right thing and holding true to our values: Integrity, Commitment, Creativity, Employee Development and Teamwork.

Together our team has participated in Adopt a Highway Clean-Up, caring for the stretch of highway adjacent to the mine; Meet a Machine, an event to support the Juvenile Diabetes Research Foundation; 96 participants in the annual Boogie the Bridge event; Mining Day in Kamloops, an open house at the Big Little Science Centre; Kamloops Exploration Group’s annual conference in Kamloops; and provided a Mine Rescue demonstration to SD73’s Heavy Metal Rocks program.

In addition to volunteering time at events, we pride ourselves on sponsoring local events and/or programs that have a direct impact on the community of Kamloops. To date, New Afton has provided sponsorship to over 15 local events or programs, including: BC Wildlife Park, Boogie the Bridge, MWS Hospice, Centre for Seniors Information, SPCA, Kamloops Search & Rescue, Western Canada Theatre and Kamloops Central Business Improvement to name a few.

Our goal is to support local initiatives that contribute significantly to the development and well-being of the community as a whole.

Adopt a Highway CLean-upOn April 8, 2016, New Afton had 18 employees volunteer their time to help clean-up the Trans Canada Highway adjacent to the mine.

Adopt a Highway Clean-up is an annual initiative that the mine takes part in to do our part in maintaining a clean surrounding area. New Afton has participated in Adopt a Highway since 2011.

New Gold values the relationship created with the Stk’emlupsemc te Secwepemc Nation (Skeetchestn & Tk’emlúps te Secwepemc) to build a mutually beneficial relationship. To date New Afton has participated in the

Health & Safety Open House at Tk’emlúps te Secwepemc and the Career Day out at the Skeethestn Community School.

New Afton Sustainability Newsletter 2016 | Summer Issue

Elders from Tk’emlúps te Secwepemc and Skeetchestn Indian Band visted New Afton for a luncheon and surface and underground tour of the mine site. The Elders were pleased with the operation and one noted,

“Doing the tour was an eye opener for me. I had no idea what to expect going underground or how the operation of a mine works. The best part was learning about how the company was preserving plants, soil, in total the environment. You hear all the wrong things in the news and from others who really don’t know. Everyone should do the tour. Great learning experience for sure and the food was yummy.” – Lucienne Jules, Tk’emlúps te Secwepemc Elder

Elders LUncheon and Tour

Boogie the bridge - A word fro Jo and the amazing Boogie TeamA huge thank you to New Gold/New Afton mine for your ongoing support and sponsorship to the CFJC-TV Boogie The Bridge. Because of your support, we are changing lives together. Thank you New Gold/New Afton: Movement is Change!

The 3 pillars of Boogie are:

1) Community Health (movement)

2) Community Contribution (fund-raising)

3) A signature event for Kamloops

This year Boogie had 2, 672 participants and raised $160,281.172 (before expenses). Boogie has raised over $1 million dollars to date.

New Gold/New Afton continues to inspire our team. Having had the largest corporate team for the past 4 years and being an elite corporate sponsor has had a huge positive impact on the event and the community.

Boogie started in 1998 after the death of my mom from depression. Through this very difficult time, I started to connect the dots between depression and movement. Boogie began with 68 participants and celebrated a way of life with the intent to share the positive mental health benefits of moving outdoors and in community. Today we see a wider shift towards taking the stigma off mental health and how important it is to take care of our mental

health as passionately as our physical health.

Thank you New Gold for sharing in the vision and being a huge part of the growth and success of Kamloops largest fitness event. WE love and appreciate your passionate efforts! See you April 2017 .

- Jo and the amazing Boogie Team.

Boogie Employee Spotlight “My Family has been coming to the Kamloops Boogie the Bridge since 2012. It’s a great annual event that brings us together as a family. The Bajkov Team has grown over the years. We started with 7 team members and now we have 9, and another addition for 2017’s boogie. My Son, Mason, and Niece, Claire, ran their first mini boogie this spring and my nephew, Parker was in the stroller. My parents and sister’s family all travel down annually from Prince George. My grandparents have also made the trip to cheer us all on, which puts us at 4 generations of boogie goers!

- Matthew Bajkov, Safety Advisor

Further InformationIf you have any comments on this report or would like further information on the New Afton Operation, please contact either of the following:

Scott Davidson Environment and Social Responsibility Manager

New Afton Ph: +1 250 377 2785 Fax: +1 250 377 2702

New Gold Inc. Corporate Office Brookfield Place 181 Bay Street, Suite 3510 Toronto, Ontario M5J 2T3

New Afton welcomes your feedback Call us at 250.377.2100 or email us at info@newgold.com

To learn about New Afton’s current career opportunities please visit www.newgold.com under the careers link.

While every effort has been made to ensure accuracy of the information presented, please note that all figures are unaudited.