VANCOUVER, Nov. 3 /CNW/ - New Gold Inc. ("New Gold") (TSX and NYSE AMEX - NGD) today announced unaudited financial and operational results for the third quarter ended September 30, 2009. Gold production was 79,531 ounces in comparison to 68,801 ounces in the same quarter in 2008. Earnings from mine operations increased by 67% to $22.6 million from $13.5 million in the third quarter of 2008.

Q3 2009 Highlights

- 16% increase in gold sales to 77,645 ounces from 67,156 ounces in the

corresponding quarter in 2008

- 17% decrease in total cash cost(1) per ounce sold, net of by- product

sales, to $470 from $565 in the corresponding quarter of 2008

- Cash and cash equivalents of $242.6 million at September 30, 2009

- Recent El Morro announcement increased the market value of the

project

"We are very pleased to report increased production and reduced cash cost in the third quarter, which demonstrates that we continue to deliver on our operational targets and we fully expect to continue on this trend going forward. The company has built tremendous momentum over the last six months and plans to continue to enhance value through assets such as El Morro and delivering on our growth strategy." said Robert Gallagher, President and Chief Executive Officer.

Third Quarter Financial Review

In the third quarter 2009, earnings from mine operations were $22.6 million in comparison to $13.5 million in the third quarter of 2008. Third quarter net earnings were $4.1 million, or $0.01 per basic share, in comparison to a net loss of $148.9 million, or $0.70 per basic share, in the same period in 2008. The third quarter 2009 increase in net earnings is primarily due to: higher gold and silver production at Cerro San Pedro, initiation of production from the high copper grade Chesney ore body at Peak, the successful acquisition of the Mesquite mine which positively impacted earnings and a loss from discontinued operations of $166.9 million on the Amapari mine in the third quarter 2008.

Third quarter gold sales improved by 16% to 77,645 ounces at an average realized gold price of $959 per ounce compared to 67,156 ounces at an average realized gold price of $870 per ounce in the corresponding quarter of 2008. The increase in gold sales in comparison to 2008 is mainly due to a significant increase in total tonnes of ore mined at Cerro San Pedro and from the successful acquisition of the Mesquite mine.

Total cash cost(1) per gold ounce sold, net of by-product sales, decreased by 17% in the third quarter to $470 from $565 in the third quarter of 2008. This was primarily due to a significant increase in silver revenues at Cerro San Pedro, an increase in copper revenues at Peak Mines and a favorable Australian dollar exchange rate versus the US dollar.

Cash flow from operations in the third quarter 2009 was $6.0 million compared to cash flow used by operations of $5.4 million for the same period in 2008. The 2009 increase is mainly attributable to increased gold production, a 10% increase in average realized gold price per ounce sold of $959 in comparison to $870 in the third quarter 2008 and increased by-product revenue. Consistent with New Gold's mine plans, cash flow from operations should continue to move higher in the fourth quarter of 2009 as production continues to increase.

Nine Month Period

For the nine months ended September 30, 2009, earnings from mine operations were $48.9 million in comparison to $36.0 million in the same period in 2008. For the year to date 2009 period, the net loss was $186.7 million, or $0.67 per basic share, compared to a net loss of $143.8 million, or $1.14 per basic share, in the same period in 2008.

For the nine months ended September 30, 2009 gold sales were 185,932 ounces at an average realized gold price of $935 per ounce compared to 159,397 ounces at an average realized gold price of $915 per ounce in the corresponding period in 2008. The increase in gold sales in comparison to 2008 is mainly due to a 121% increase total tonnes of ore mined primarily from the acquisition of Mesquite and from ramping up Cerro San Pedro.

For the nine months ended September 30, 2009, total cash cost(1) per gold ounce sold, net of by-product sales, decreased by 19% to $460 from $568. The reduction in total cash cost(1) compared to the same period in 2008, is mainly due to: a significant increase in silver revenues at Cerro San Pedro and increased copper revenues at Peak Mines, which was partially offset by an unfavourable movement in the Australian dollar exchange rate.

For the nine months ended September 30, 2009, cash flow from operations increased by $18.9 million to $24.6 million from $5.7 million in the same period in 2008. The increase in cash flow from operations is mainly attributable to increased gold production and increased by-product revenues.

Operational Review

Mesquite

Gold sales at Mesquite for the third quarter totaled 27,594 ounces, compared to the quarterly record gold sales of 47,535 ounces in the corresponding quarter of 2008. For the nine months ended September 30, 2009, gold sales were 87,647 ounces compared to 80,255 ounces sold in the same period in 2008, which includes the first five months of production in 2009 and the full period in 2008 prior to New Gold ownership. As the strip ratio has decreased during this period in comparison to 2008, Mesquite has been able to increase the tonnes processed by 3.0 million to 8.7 million tonnes, which will continue to positively impact production going forward.

Total cash cost(1) per gold ounce sold in the third quarter of 2009 was $662 compared to $390 in the third quarter of 2008. Total cash cost(1) per gold ounce sold for the nine months ended September 30, 2009 was $624 compared to $503 in the same period last year. The total cash cost(1) increase during this period is mainly attributable to lower production and the following temporary items: use of a mining contractor to catch-up on waste stripping, fewer ounces of gold and more waste than modelled in the Rainbow 3 pit, increased cost associated with abnormal equipment maintenance and a one-time change-over from bias ply to radial tires for the entire haulage fleet. Additionally, Mesquite has increased cyanide and lime consumption to achieve optimum recovery. As outlined in the mine plan, production at Mesquite began ramping up in the month of September and is expected to continue on this trend in the fourth quarter, providing the highest production levels for the year.

Cerro San Pedro

Cerro San Pedro gold sales totaled 27,193 ounces for the third quarter compared to 26,070 ounces in the same quarter in 2008. For the nine months ended September 30, 2009, gold sales were 68,857 ounces compared to 64,182 ounces sold in the same period in 2008, which includes the first six months of production in 2008 prior to New Gold ownership. The increase in gold sales during the quarter was due to higher tonnes placed on the pad and increased recovery rate, partially offset by lower feed grade. Silver sales for the third quarter increased significantly to 382,278 ounces compared to 305,430 ounces sold in the third quarter of 2008. For the nine months ended September 30, 2009, silver sales were 1.2 million ounces compared to 0.8 million ounces sold in 2008, which includes the first six months of production in 2008 prior to New Gold ownership. The increase in silver production in the quarter is attributed to higher silver grades mined and the benefits of secondary leaching which commenced during the first half of 2009.

Total cash cost(1) per gold ounce sold, net of by-product sales, for the third quarter was $416 compared to $367 in the third quarter of 2008.