New Gold Reports Successful Exploration Drilling Results from New Afton C-Zone and Peak Mines

New Gold Inc. ("New Gold") today provides an update on results of the company's exploration programs at the New Afton C-zone and Peak Mines ("Peak") for the first half of 2016.

NEW AFTON C-ZONE

In February 2016, the company announced the results of its New Afton C-zone feasibility study, which added 25 million tonnes of gold and copper ore to New Afton's mineral reserves and outlined the potential to add five years of mine life at current throughput rates. The C-zone is the down-plunge extension of the B-zone block cave which New Gold is currently mining at New Afton. As the C-zone mineralization remains open along strike and down plunge, the company's primary focus for 2016 has been to test the potential to increase the C-zone mineral resource immediately around the currently contemplated block cave volume for incorporation into the C-zone block cave reserve mine plan. Additionally, New Gold has been exploring for potential extensions of the resource as it continues laterally and down plunge farther to the west.

Drilling along strike from the upper portions of the current C-zone block cave volume has intercepted copper-gold mineralization extending up to 75 metres to the west, as highlighted by hole 156. At the same time, drill intercepts along strike between the top of the currently estimated cave volume and the proposed extraction level indicate that the zone of mineralization may narrow between 50 and 75 metres to the west before widening again between 75 and 100 metres to the west. As part of the company's first half 2016 program, New Gold has also drilled up to 100 to 150 metres west of the current block cave volume, with three holes (161, 164 and 165) intercepting significant copper-gold mineralization over true widths ranging from 30 to 55 metres, further supporting the potential for the C-zone to remain open even farther along strike and down plunge to the west.

For a full summary of the company's first half 2016 exploration drilling results and related information, refer to the news release filed on SEDAR at www.sedar.com or on the company's website at www.newgold.com.

"The results of the 2016 C-zone drilling confirm the continuity of mineralization immediately to the west of the block cave volume included in our C-zone feasibility study reserve, indicating good potential to further increase New Afton's overall mine life," stated Mark Petersen, Vice President, Exploration. "Looking forward, it is particularly encouraging to see step out holes as far as 150 metres west of the planned block cave continue to intersect copper and gold mineralization at grades similar to those currently being mined."

Year to date, New Gold has completed approximately 60% of the company's planned 10,000-metre 2016 exploration program at New Afton. Based on the encouraging results received to date, the company plans to complete the remainder of its $6 million budgeted program during the second half of the year. Results of the 2016 exploration program will be incorporated into New Gold's 2016 year-end mineral reserve and resource estimates.

PEAK

In November 2015, New Gold announced the discovery of two new zones of polymetallic mineralization, Chronos and Anjea, both located adjacent to current and past-producing mines distributed along the nine-kilometre Peak mine corridor. Chronos is a zone of gold-silver-lead-zinc mineralization located adjacent to the Peak mill and directly above the Perseverance ore body which is currently being mined. Anjea is a zone of copper-gold and silver-lead-zinc mineralization located adjacent to the historic Great Cobar mine and approximately nine kilometres north of the Peak mill. After discovering these two new zones in 2015, New Gold's objective in 2016 has been to further delineate the Chronos and Anjea mineral resources for incorporation into the company's 2016 year-end mineral reserve and resource estimates.

The company's 2016 exploration budgeted program at Peak totals $8 million, which is expected to include approximately 10,000 metres of drilling at each of Chronos and Anjea, as well as continued drill testing of other prospective targets along the Peak mine corridor.

"Following the successful discoveries of Chronos and Anjea in 2015, we continue to be encouraged by the positive drilling results we are receiving, as they provide further evidence of Peak's robust potential to replace and grow its mineral resources well into the future," added Mr. Petersen.

CHRONOS

The Chronos zone is comprised of three sub-parallel vertically oriented mineralized lenses – Main, East and West. The Main lens includes high-grade gold along with associated silver, copper, lead and zinc while the East and West lenses contain primarily silver, lead and zinc with some localized gold. Since the November 2015 announcement of the Chronos discovery, over 100 additional holes have been drilled which have successfully expanded the dimensions of the mineralized zone. When compared to November 2015, the 2016 delineation drilling program has grown the Chronos zone from 280 to 350 metres in vertical height, extended it from 45 metres to 120 metres along strike, and increased the average thickness from a range of 10 to 25 metres to approximately 40 metres.

At the end of 2015, the company's Inferred mineral resources included 190,000 tonnes grading 13.4 grams per tonne of gold from the Chronos Main lens. The focus of the company's 2016 drilling at Chronos has been on delineating the overall limits of the zone, including the East and West lenses, to support an Inferred mineral resource estimate and delineating the Main lens to the Measured and Indicated classification level for incorporation into New Gold's 2016 year-end mineral reserve estimates and Peak's longer-term mine plan.

ANJEA

The Anjea zone is located approximately 200 metres to the south of the historic Great Cobar mine and begins at a relatively shallow depth of less than 100 metres from surface. Similar to Chronos, the Anjea zone is made up of sub-parallel vertically oriented lenses, Anjea East and Anjea West. While both lenses consist predominantly of copper mineralization with subordinate amounts of gold, a localized zone of higher gold grades has also been intercepted during the recent drilling of Anjea East. Additionally, the 2016 drilling program continues to return positive results from a separate lens of silver-lead-zinc mineralization situated approximately 40 metres west of the Anjea zone, providing further upside potential for future development at Great Cobar.

For a full summary of the company's first half 2016 exploration drilling results and related information, refer to the news release filed on SEDAR at www.sedar.com or on the company's website at www.newgold.com.

The drilling completed to date at Anjea is expected to be sufficient for inclusion in the company's Inferred mineral resource estimate at the end of 2016. However, as both the Anjea zones remain open at depth, New Gold plans to follow up with additional drilling during the second half of the year.

EMERGING PEAK MINE CORRIDOR TARGETS

Exploration of three earlier stage targets along the Peak mine corridor has also returned positive results to date. The three targets, Dapville, Gladstone and Proteus, are all located within one kilometre of the New Cobar and Chesney mines.

Dapville is located along the trend that extends to the south between the Anjea zone and the New Cobar mine. Following up on historic drill results in the area, drilling at Dapville has intercepted significant copper mineralization along with associated silver, lead and zinc. Copper grades intercepted to date range from 1% to 5% over one to five-metre true widths at depths from surface ranging from 250 to 500 metres. Dapville remains open at depth and along strike.

Gladstone is located one kilometre south of the Dapville target and approximately 400 metres west and midway between the New Cobar and Chesney mines. Preliminary drilling has intercepted copper mineralization with grades ranging from 1% to 7% copper over true widths of two to 10 metres. Drilling to date has focused on the northern portion of the Gladstone target and is considered sufficient to support inclusion in the company's year-end 2016 Inferred resource estimate.

Reconnaissance drilling in the Proteus area has intercepted significant copper mineralization over a vertical depth that ranges from 100 to 500 metres from surface with grades ranging from 1% to 3% copper and true widths ranging from approximately three to 11 metres. Proteus represents a 500 metre long trend of mineralized structures located approximately 500 metres south of the Chesney mine. The Proteus zone remains open at depth and along strike.

For a full summary of the company's first half 2016 exploration drilling results and related information, refer to the news release filed on SEDAR at www.sedar.com or on the company's website at www.newgold.com.

New Gold looks forward to providing future updates on the company's exploration initiatives.