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Re: News Release - Thursday, August 16, 2007
Corporate Update
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August 16 2007, Vancouver, British Columbia - New Gold Inc.
(NGD:TSX/AMEX). In light of recent uncertainty in global credit
markets, the Company felt it prudent to provide an update on the status
of its cash holdings of approximately $420 million. The Company has
continued to invest this in accordance with its investment policy, the
objectives of which are (in decreasing order of importance) to preserve
capital by investing in highly rated instruments, to ensure liquidity,
and to ensure adequate returns. All of the Company's invested assets
are rated (by DBRS Ltd.) R1 High and were selected on the basis of
professional advice.

An "A" note of $6.5 million held with a Coventree Inc. ("Coventree"
COF:TSX) sponsored fund, which came due and payable to the Company on
August 13, 2007 was not paid and remains outstanding. New Gold is
currently investigating the situation and potential solutions through a
number of avenues including direct dialogue with Coventree, who have
publicly stated that this situation has been caused by a disruption in
the liquidity in certain areas of the market for asset backed
securities. DBRS Ltd. continues to confirm the R1 High rating of the
Coventree sponsored funds. The Company holds an additional
approximately $152 million A Notes issued by a number of Coventree Inc.
sponsored funds which have varying maturity dates to September 7, 2007.
It is also important to note that the A notes are supported by
liquidity facilities that are intended to protect investors from a
market disruption. In a press release dated August 14, 2007, Coventree
stated that a number of investors have elected to renew their
investments as they matured. The majority of the Company's remaining
cash is held in Bankers Acceptances or bank sponsored Asset Backed
Securities, which predominantly mature by August 24, 2007.

Notwithstanding this information, the Company currently believes it has
sufficient cash available to maintain its development schedule, and
financial obligations, for its New Afton Project during this period of
market uncertainty.

Work at the Company's New Afton Cu-Au Project continues according to
schedule, with the focus on the underground development. Positive
progress continues to be made on the mine permit application and the
Company is working with the Government of BC to obtain this permit as
soon possible. Initial preparatory work has begun for the hole planned
to be wedged from hole AF-125 (results for which were recently
announced on August 7, 2007). As discussed in the August 7, 2007
press release, the presence of high grade mineralization 200 metres
below the resource is very encouraging, indicating the strength of the
mineralized system persists, and remains open, at depth. The goal of
the wedge hole is to intersect the target area, potentially as much as
500 -- 600 metres vertically below the mineralized intersection in
AF-125. A second diamond drill is testing for extensions of
mineralization from the Hanging Wall Lenses south of the Afton Open
Pit. In addition to exploration at the New Afton site the Company has
been conducting exploration work on its Ajax Property and Magnum
option, which is located immediately west of the Ajax Property. To
date this work has consisted of geological mapping and geochemical
sampling, which, in conjunction with previous geophysical surveys, are
being used to define targets for diamond drilling to be completed later
this year.

For further information on New Gold Inc. and the New Afton Project,
please contact:

Chris Bradbrook
President and Chief Executive Officer
New Gold Inc.
601 - 595 Howe Street, Vancouver, B.C. V6C 2T5
Tel: 877-977-1067 or 604-687-1629, Fax: 604-687-2845
Email: invest@newgoldinc.com
Website: www.newgoldinc.com

Certain of the statements made and information contained herein is
"forward- looking information" within the meaning of the Securities Act
(Ontario) and 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 Relating to the Company's
Business 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 Company will receive required permits and
access to surface rights, that the Company can access the total
required 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 complete the development
of the New Afton project. 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.
WARNING: The Company relies upon litigation protection for
"forward-looking" statements.

Associated File:
http://www.newgoldinc.com/i/pdf/08-16-07_Corporate Update.pdf
25 KB in size, approx. 6 seconds to download at 56.6Kbps

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Copyright (c) 2007 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 Thu Aug 16, 2007 at 6:11:29 AM Pacific Time
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