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Re: News Release - Monday, March 31, 2008
2007 Financial Results, Project Cost Update and Project Update
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March 31, 2008, Vancouver, British Columbia -- New Gold Inc. (the
"Company" or "New Gold") (NGD: TSX/AMEX) is pleased to provide 2007
financial year end results and an update on its New Afton Copper Gold
Project situated 10 kilometres west of Kamloops, British Columbia.

2007 Year End Results

The Company incurred a loss of $61.4 million or $2.00 per share in 2007
compared with a loss of $3.5 million or $0.15 per share in 2006. The
increased loss is primarily attributable to the $50.1 million
impairment charge which the Company took in 2007 in respect of its
investments in non-bank sponsored Asset Backed Commercial Paper
("ABCP"). In addition, the Company expensed $22.1 million related to
interest and accretion charges in respect of the debt issuances which
were completed in June and July 2007, which do not qualify for
capitalizing to the New Afton Copper Gold Project (the "Project")
costs. Partially offsetting these two items is an increase in interest
income of $3.8 million as well as the recognition of a future tax
recovery of $9.9 million in 2007 relating to available loss carry
forward amounts and share and debt issue costs.

In 2007, the Company expended $39.3 million, including capitalized
financing costs, on the Project and Ajax property as compared to $20.2
million in 2006. In 2007, the Company's primary expenditures were $25.7
million on the underground development related to the expansion of the
existing 2 kilometre decline and commencement of new development faces,
$5.0 million on interest capitalized and paid in 2007, $3.0 million in
payments to complete the feasibility study on the Project, $4.5 million
on surface exploration in and around the New Afton deposit and $0.8
million on exploration of the Company's Ajax property and optioned
properties. In 2006, the Company spent $6.3 million on the feasibility
study on the Project, $6.1 million on underground exploration,
including support services for the underground exploration, and $2.3
million for tunneling costs (expended in 2005 but paid in 2006).

In addition, the Company spent $30.0 million on property, plant and
equipment in 2007 as compared to only $0.4 million in 2006. The
significant increase relates to the receipt of the initial portion of
the mine development fleet ($11.2 million) and installment payments
made on long lead mill equipment orders ($1.6 million). Additionally,
the Company completed the acquisition of the surface rights for the
Project in the fourth quarter of 2007 for consideration of $16.3
million.

On June 28, 2007 and July 27, 2007, the Company completed an offering
(the "Offering") through a syndicate of underwriters, pursuant to
which the following securities were issued:

- 237,000 Series D units at a price of $1,000 per unit, each unit
consisting of a $1,000 principal amount unsecured note (the "Note") and
100 share purchase warrants;
- 55,000 5% subordinated convertible debentures at a price of $1,000
per debenture;
- 2,055,000 flow-through shares at $9.75 per share; and
- 10,700,000 shares at $7.50 per share.

The total Offering generated gross cash proceeds of $392.3 million (net
proceeds $374.5 million).

Cash Resources

As at December 31, 2007, the Company had cash and cash equivalents
totalling $190.2 and negative working capital of $29.6 million. The
negative working capital position is due to the classification of the
Company's Notes as a current liability, because of a provision in the
Note Indenture governing such Notes, which requires the Company to
obtain permits related to the Project on or before June 27, 2008. The
Mine Permit, which is the principal approval required for the
development of the mine, was received on October 31, 2007. The
additional material permits relate to the use of water and waste
management respecting effluent, sewage and air emissions. The Company
is in the process of applying for all of these permits; however if the
permits are not obtained by June 28, 2008 the Company may be obligated
under the Note Indenture to offer to redeem the Notes at par value
($237 million) from the holders. The Company is presently reviewing
alternatives, including seeking an extension to the June 28, 2008 date.
The negative working capital position is also due to the classification
of the Company's investments in ABCP as non-current assets and will
continue to be classified as such until no sooner than the
restructuring of the ABCP is completed. The Company has $120 million of
estimated recoverable value ($170 million face value) in investments
subject to the ABCP restructuring in Canada.

The Company will be required to raise additional capital either from
the issuance of flow-through shares which qualify for the vast majority
of the underground development costs, additional debt, although this
market is currently limited due to the restrictive credit markets
world-wide, or equity financings. The timing and amount of these will
be impacted by the timing and ultimate resolution of the Company's ABCP
investments.


Project Update

Construction started in 2007 with underground mine development which is
the critical path component of the Project. Cementation Canada Inc.
("Cementation"), which was engaged as the Company's underground
contractor in late 2006, has completed the expansion of the existing 2
kilometre exploration decline suitable for the larger development
equipment. It is now proceeding on progressing three underground faces
plus the surface portal from which mining commenced in January 2008.
In support of the mining activities there are presently 3 mining crews
working 7 days a week, 20 hours a day. The Cementation crew totals 71
contractors and their efforts are being supported by 4 mining jumbos, 6
haulage trucks, 4 rock bolters, 7 mining scoops and a fleet of
equipment to deliver and apply shotcrete.

The Company has ordered the long lead mill components and ordered and
received the initial mine development fleet. Additional major
components for the surface facilities that have been awarded since
December 31, 2007 include the electrical transformers, power line
upgrading and the mill building and site office facilities.

At the end of February 2008, the mine site employee and contractor
levels totaled 146. The development crews will increase from three to 6
crews once the underground development reaches the bottom of the ore
body and the ore access development commences in the second half of
2008.

The Company has retained AMEC Americas Ltd. ("AMEC") as its EPCM
Contractor and Ledcor Projects Inc ("Ledcor") is being engaged to
construct the surface facilities including the plant and tailings
facilities. Ledcor is scheduled to commence excavation of the surface
facilities in April of 2008 and building erection is planned to
commence in September/October of 2008.

Project Cost Update

Costs of building mining projects world-wide have been increasing as a
result of higher labour and material costs. As a result of a
comprehensive review overseen by AMEC and including input from
Cementation, Ledcor and AMC Consultants (Pty) Ltd., the Company's
mining consultant, the construction costs for the Project are now
projected to total $592 million (which includes a contingency of $48.6
million), 19.6% over the projected costs contained in the Feasibility
Study and are as follows:

Major Area ($M) % of Total Costs
Mining $197.5 33
Site Development $16.3 3
Process $90.5 15
Utilities $12.5 2
Ancillary Buildings $12.3 2
Water/Waste Management $14.4 2
Total Direct Costs $343.5 58
EP Cost $22.1 4
Construction Management $12.3 2
Construction Indirects $77.1 13
Other Indirect costs $11.3 2
Total Indirect Costs $122.8 21
Owner's costs $74.0 12
Contingency $48.6 8
Capitalized Operating Costs $3.3 1
Total Other Costs $125.9 21
Total Costs $592.2 100

These capital costs will see the mine reach the 4 million tonne per
year throughput rate and a portion of these costs can be funded by
operations during the initial 1.6 million tonne per year ramp up
period. The Company is presently completing its review of the financial
and operational consequences of reducing the ramp up period of less
than 12 months from the presently disclosed 27 months and any
corresponding effect on funding requirements. The Project cost increase
is primarily related to labour cost increases which are now based on
actual contractor labour rates for the surface and underground
contractors, particularly in the underground development area plus
escalation on material costs. The Project scope has not been amended
from that contained in the Feasibility Study.
To December 31, 2007, the Company has expended approximately $39
million of the Project capital costs.

Participation Agreement with First Nations
As announced on March 24, 2008, the Company has entered into a
Participation Agreement with the Kamloops Division of the Secwepemc
Nation, comprising the Kamloops Indian Band and the Skeetchestn Indian
Band. The purpose of the Participation Agreement is to establish a
co-operative and mutually beneficial relationship between the First
Nations and the Company with respect to the Project and provide a
long-term framework for communication, collaboration and cooperation.
The Agreement will provide the Kamloops Division with economic
opportunities and social and financial benefits, including employment,
education, training and business opportunities. The Agreement secures
the consent of the Kamloops Division to the Project and its support
through all project phases.

Finalization of Arrangements with Abacus Mining & Exploration Corp

As announced on March 25, 2008, the arrangements with Abacus Mining &
Exploration Corp. ("Abacus") and with Teck Cominco Ltd. ("Teck"), which
were first reported on in the October 30, 2007 release, have been
finalized. The agreement between Abacus, Teck and the Company is
intended to ensure that New Gold and Abacus are able to freely develop
their assets in the area of the New Afton Project. This agreement will
ensure that Abacus maintains the rights of access previously granted to
it by Teck and provides Abacus with shared use of New Gold's water
pipeline in the event that it develops a new milling operation. New
Gold will be provided access from the Trans-Canada Highway to its New
Afton operations over a small portion of the land which Abacus is
purchasing from Teck around the old Afton mill building.

The agreement between Abacus and the Company is intended to ensure that
any economic mineralization within and surrounding the past producing
Ajax pits, is explored, delineated and developed in the most effective
manner. As a result the agreement is intended to grant Abacus an
option to explore for, and potentially develop, mineralization in the
area surrounding Abacus' Ajax Mineral Claims, which overly the
past-producing Ajax pits. Under this agreement Abacus must spend $2.5
million over 2 years over a portion of New Gold's mineral claims
surrounding the Ajax pits, and complete a preliminary economic study
within 6 months following the 2 year period. If economic
mineralization is established, it will be developed as a joint venture
between the two companies. In the event of an open pit operation the
interests will be 60:40 in favour of Abacus who will be the operator.
In the event of an underground operation the interests will be 60:40 in
favour of New Gold who will be the operator.

Move to Kamloops

With the financial, personnel, administration and Project functions all
having been moved to Kamloops, we have decided to close our Vancouver
office effective March 31, 2008. All enquiries regarding investor and
shareholder matters should now be directed to our Toronto office.

For more information contact:

Mr Cliff Davis, President and Chief Executive Officer
or Ms. Laura Sandilands, Manager of Investor Relations
New Gold Inc.
70 University Avenue
Toronto, Ontario
M5J 2M4

Phone: (416) 977-1067
Toll free: (877) 977-1067


Certain of the statements made and information contained herein is
"forward- looking information" within the meaning of the Securities Act
(Ontario) and the Securities Act (Alberta) or "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934 of the United States. Forward-looking statements
are subject to a variety of risks and uncertainties which could cause
actual events or results to differ from those reflected in the
forward-looking statements, including, without limitation, risks and
uncertainties relating to the interpretation of drill results and the
estimation of mineral resources and reserves, the geology, grade and
continuity of mineral deposits, the possibility that future
exploration, development or mining results will not be consistent with
the Company's expectations, metal recoveries, accidents, equipment
breakdowns, title matters and surface access, labour disputes or other
unanticipated difficulties with or interruptions in production, the
potential for delays in exploration or development activities or the
completion of feasibility studies, the inherent uncertainty of
production and cost estimates and the potential for unexpected costs
and expenses, commodity price fluctuations, currency fluctuations,
failure to obtain adequate financing on a timely basis and other risks
and uncertainties, including those described under Risk Factors in the
Company's Annual Information Form and in each management discussion and
analysis. Forward-looking information is in addition based on various
assumptions including, without limitation, the expectations and beliefs
of management, the assumed long term price of copper and gold, that the
feasibility study will confirm that a technically viable and economic
operation exists, that the Company will receive required permits and
access to surface rights, that the Company can access financing,
appropriate equipment and sufficient labour and that the political
environment within British Columbia and Canada will continue to support
the development of environmentally safe mining projects so that the
Company will be able to commence the development of the New Afton
project within the timetable to be established by the feasibility
study. Should one or more of these risks and uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may
vary materially from those described in forward-looking statements.
Accordingly, readers are advised not to place undue reliance on
forward-looking statements.
Cautionary note to U.S. investors concerning estimates of Measured and
Indicated Resources, and the use the terms "measured" and "indicated
resources." We advise U.S. investors that, while those terms are
recognized and required by Canadian regulations, the U.S. Securities
and Exchange Commission does not recognize them. U.S. investors are
cautioned not to assume that any part or all of mineral deposits in
these categories will ever be converted into reserves.
WARNING: The Company relies upon litigation protection for
"forward-looking" statements

Associated File:
http://www.newgoldinc.com/i/pdf/Year end D5 March 29 Final.pdf
98 KB in size, approx. 19 seconds to download at 56.6Kbps

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Copyright (c) 2008 NEW GOLD INC. (TSX/AMEX:NGD) All rights reserved.
For more information visit our website at http://www.newgoldinc.com/ or
send mailto:invest@newgoldinc.com
Message sent on Mon Mar 31, 2008 at 4:55:37 AM Pacific Time
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