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New Gold Announces Higher El Morro Reserves and Resources

Thursday, February 10, 2011 8:12 AM


(All figures are in US dollars unless otherwise indicated)

VANCOUVER - New Gold Inc. ("New Gold") (TSX and NYSE AMEX:NGD) today announces that Goldcorp Inc. ("Goldcorp"), its 70% joint venture partner in the El Morro project, has updated the reserves and resources for the project as of December 31, 2010. Highlights attributable to New Gold's 30% share of the project include:

    -   22% increase in Proven and Probable gold reserves to 2.5 million
        ounces
    -   8% increase in Proven and Probable copper reserves to 1.8 billion
        pounds
    -   1.2 million ounce and 0.5 billion pound increase in Inferred gold and
        copper resources, respectively, reflecting increased tonnes and
        higher gold and copper grades in the deeper portions of the La
        Fortuna deposit as it extends below the current reserve pit(1)

Combining this El Morro update with the reserves and resources at New Gold's other properties, as updated on February 2, 2011, brings the company's December 31, 2010 Proven and Probable gold reserves to 8.4 million ounces and Measured and Indicated gold resources, inclusive of reserves, to 12.9 million ounces. The 8.4 million ounces of Proven and Probable gold reserves represents a 0.8 million ounce increase over the year end 2009 balance of 8.2 million ounces when taking into account the approximately 0.6 million ounces that were mined during 2010. Further updates to El Morro reserves and resources are anticipated as Goldcorp intends to commence drilling programs following the approval of the Environmental Impact Assessment ("EIA").

"We are pleased with the El Morro reserve and resource update and believe the significant increase in inferred resources substantiates our belief in the upside of this world-class project," stated Robert Gallagher, President and Chief Executive Officer. "We are particularly excited to have a highly motivated partner in Goldcorp who is poised to begin drilling programs in the coming months to further delineate the pit at El Morro and expand on positive results from other targets on the property."

For additional detail on Reserves and Resources, including related assumptions and disclosure, please refer to the section below entitled Detailed Reserves and Resources Summary at the conclusion of this news release.

    Note 1: Per Goldcorp's estimation criteria: All measured and indicated
    resources are contained within the current mineral reserve pit and all
    mineral resources occurring external to the reserve pit are classified as
    inferred. Thus, some measured and indicated resources that were included
    in the previous mineral resource statement have been reclassified as
    inferred in this updated mineral resource statement.

    Detailed Reserve and Resource Summary
    -------------------------------------------------------------------------
         Mineral Reserves and Resources Summary as of December 31, 2010
    -------------------------------------------------------------------------
                                Contained Metals
    -------------------------------------------------------------------------
                     Gold        Silver     Copper       Zinc        Lead
                     (Koz)       (Koz)      (Mlbs)      (Mlbs)      (Mlbs)
    -------------------------------------------------------------------------
    Reserves
      Proven        2,662        24,074        930          -           -
      Probable      5,706        22,334      1,956          -           -
                    -----        ------      -----
    Total P&P       8,368        46,408      2,886          -           -
    -------------------------------------------------------------------------
    Resources
      Measured      4,243        35,388      1,939        355          73
      Indicated     8,671        48,126      1,599        765         133
                    -----        ------      -----        ---         ---
    Total M&I      12,914        83,514      3,538      1,120         206
    -------------------------------------------------------------------------
    Inferred        4,097        48,531      1,128      1,436         254
    -------------------------------------------------------------------------
    See Notes to Mineral Reserve & Resource Statements below for further
    detail on Reserve and Resource calculations.
    -------------------------------------------------------------------------
              Mineral Reserve Statement as of December 31, 2010
    -------------------------------------------------------------------------
                               Metal Grade              Contained Metal
    -------------------------------------------------------------------------
                      Tonnes   Gold   Silver  Copper   Gold   Silver  Copper
                       000's    g/t     g/t      %      Koz     Koz    Mlbs
    -------------------------------------------------------------------------
    Mesquite
      Proven          13,915    0.74       -       -     331       -       -
      Probable       155,198    0.56       -       -   2,794       -       -
                     -------    ----                   -----
    Mesquite P&P     169,113    0.57       -       -   3,125       -       -
    -------------------------------------------------------------------------
    Cerro San Pedro
      Proven          36,294    0.61    20.3       -     712  23,688       -
      Probable        33,473    0.51    17.6       -     549  18,941       -
                      ------    ----    ----             ---  ------
    CSP P&P           69,767    0.56    19.0       -   1,261  42,629       -
    -------------------------------------------------------------------------
    Peak Mines
      Proven           1,689    4.75     7.1    0.72     258     386      27
      Probable         1,724     4.0     5.4    0.82     222     299      31
                       -----     ---     ---    ----     ---     ---      --
    Peak P&P           3,413     4.4     6.2    0.77     480     685      58
    -------------------------------------------------------------------------
    New Afton
      Proven               -       -       -       -               -       -
      Probable        47,400    0.69    2.03    0.95   1,052   3,094     993
                      ------    ----    ----    ----   -----   -----     ---
    New Afton P&P     47,400    0.69    2.03    0.95   1,052   3,094     993
    -------------------------------------------------------------------------
    El Morro                      100% Basis                 30% Basis
                   ----------------------------------------------------------
      Proven         240,020    0.59       -    0.57   1,361       -     903
      Probable       291,103    0.39       -    0.48   1,089       -     932
                     -------    ----            ----   -----             ---
    El Morro P&P     531,123    0.48       -    0.52   2,450       -   1,835
    -------------------------------------------------------------------------
    See Notes to Mineral Reserve & Resource Statements below for further
    detail on Reserve and Resource calculations.

    ------------------------------------------------------------------------
            Mineral Resource Statement (Inclusive of Reserves) as of
                                December 31, 2010
    -------------------------------------------------------------------------
                                        Metal Grade
    -------------------------------------------------------------------------
                   Tonnes     Gold     Silver    Copper     Zinc      Lead
                    000's      g/t       g/t        %         %         %
    -------------------------------------------------------------------------
    Mesquite
      Measured      24,992      0.61         -         -         -         -
      Indicated    336,006      0.48         -         -         -         -
                   -------      ----
    Mesquite M&I   360,998      0.49         -         -         -         -
    -------------------------------------------------------------------------
    Cerro San Pedro
      Measured
       (oxide)      39,566      0.43     16.48         -         -         -
      Indicated
       (oxide)      65,478      0.29     13.04         -         -         -
                    ------      ----     -----
    CSP M&I
     (oxide)       105,044      0.34     14.34         -         -         -
    Measured
     (sulphide)     19,405      0.53     16.78         -      0.83      0.17
    Indicated
     (sulphide)     51,004       0.4     10.84         -      0.68      0.12
                    ------       ---     -----                ----      ----
      CSP M&I
       (sulphide)   70,409       0.4     12.48         -      0.72      0.13
    -------------------------------------------------------------------------
    Peak Mines
      Measured       3,091       4.9       8.0      0.90         -         -
      Indicated      4,205       3.6       5.8      1.15         -         -
                     -----       ---       ---      ----
    Peak M&I         7,296       4.2       6.7      1.04         -         -
    -------------------------------------------------------------------------
    New Afton
      Measured      35,100      0.91       2.8      1.26         -         -
      Indicated     29,900      0.67       2.2      0.85         -         -
                    ------      ----       ---      ----
    New Afton M&I   65,000      0.80       2.6      1.07         -         -
    -------------------------------------------------------------------------
    El Morro                            100% Basis
                  -----------------------------------------------------------
      Measured     240,020      0.59         -      0.57         -         -
      Indicated    291,103      0.39         -      0.48         -         -
                   -------      ----                ----
    El Morro M&I   531,123      0.48         -      0.52         -         -
    -------------------------------------------------------------------------

    ---------------------------------------------------------------
                                  Contained Metal
    ---------------------------------------------------------------
                    Gold     Silver     Copper     Zinc      Lead
                     Koz       Koz       Mlbs      Mlbs      Mlbs
    ---------------------------------------------------------------
    Mesquite
      Measured         490         -         -        -         -
      Indicated      5,185         -         -        -         -
                     -----
    Mesquite M&I     5,675         -         -        -         -
    ---------------------------------------------------------------
    Cerro San Pedro
      Measured
       (oxide)         547    20,964         -        -         -
      Indicated
       (oxide)         610    27,451         -        -         -
                       ---    ------
    CSP M&I
     (oxide)         1,157    48,415         -        -         -
    Measured
     (sulphide)        331    10,469         -      355        73
    Indicated
     (sulphide)        656    17,776         -      765       133
                       ---    ------                ---       ---
      CSP M&I
       (sulphide)      987    28,245         -    1,120       206
    ---------------------------------------------------------------
    Peak Mines
      Measured         487       795        61        -         -
      Indicated        487       784       107        -         -
                       ---       ---       ---
    Peak M&I           974     1,579       168        -         -
    ---------------------------------------------------------------
    New Afton
      Measured       1,027     3,160       975        -         -
      Indicated        644     2,115       560        -         -
                       ---     -----       ---
    New Afton M&I    1,671     5,275     1,535        -         -
    ---------------------------------------------------------------
    El Morro                           30% Basis
    ---------------------------------------------------------------
      Measured       1,361         -       903        -         -
      Indicated      1,089         -       932        -         -
                     -----                 ---
    El Morro M&I     2,450         -     1,835        -
    ---------------------------------------------------------------

    -------------------------------------------------------------------------
                  Inferred Resource Statement as of December 31, 2010
    -------------------------------------------------------------------------
                                        Metal Grade
    -------------------------------------------------------------------------
                   Tonnes     Gold     Silver    Copper     Zinc      Lead
                    000's      g/t       g/t        %         %         %
    -------------------------------------------------------------------------
    Mesquite        59,232      0.53         -         -         -         -
    -------------------------------------------------------------------------
    Cerro San Pedro
    Open Pit
    --------
     Inferred
     --------
     Resources
     ---------
      Oxides        42,380       0.2      8.03         -          -        -
      Sulphides     40,457      0.29     11.63         -        0.9     0.07
                    ------      ----     -----                  ---     ----
                    82,837      0.24      9.79         -
                   ----------------------------------------------------------
    Underground
    -----------
     Inferred
     --------
     Resources
     ---------
      Manto
       Sulphides     6,098      1.89    105.15         -       4.71     1.42
    -------------------------------------------------------------------------
    Peak Mines       3,665       2.6       4.0      1.54          -        -
    -------------------------------------------------------------------------
    New Afton       25,200      0.54       1.7      0.66          -        -
    -------------------------------------------------------------------------
    El Morro                                100% Basis
                  -----------------------------------------------------------
                   137,555      0.99         -      0.70          -        -
    -------------------------------------------------------------------------

    ---------------------------------------------------------------
                                    Contained Metal
    ---------------------------------------------------------------
                    Gold     Silver     Copper     Zinc      Lead
                     Koz       Koz       Mlbs      Mlbs      Mlbs
    ---------------------------------------------------------------
    Mesquite         1,019         -         -         -         -
    ---------------------------------------------------------------
    Cerro San Pedro
    Open Pit
    --------
     Inferred
     --------
     Resources
     ---------
      Oxides           273    10,941         -         -         -
      Sulphides        377    15,127         -       803        63
                       ---    ------                 ---        --
                       650    26,068         -       803        63
                   ------------------------------------------------
    Underground
    -----------
     Inferred
     --------
     Resources
     ---------
      Manto
       Sulphides       371    20,615         -       633       191
    ---------------------------------------------------------------
    Peak Mines         306       471       124         -         -
    ---------------------------------------------------------------
    New Afton          438     1,377       367         -         -
    ---------------------------------------------------------------
    El Morro                           30% Basis
                   ------------------------------------------------
                     1,313                 637         -         -
    ---------------------------------------------------------------
    See Notes to Mineral Reserve & Resource Statements below for further
    detail on Reserve and Resource calculations.

    -------------------------------------------------------------------------
    Notes to Mineral Reserve & Resource Statements
    -------------------------------------------------------------------------
       Mineral reserves are contained within measured and indicated mineral
       resources. Measured and indicated mineral resources that are not
       mineral reserves do not have demonstrated economic viability. Inferred
       mineral resources are not known with the same degree of certainty as
       measured and indicated resources, do not have demonstrated economic
       viability, and are exclusive of mineral reserves.
    1) Mineral Reserves
       ----------------
       Mineral reserves for the company's mining operations and development
       projects have been calculated based on the following metal prices and
       lower cut-off criteria:
       ----------------------------------------------------------------------
                          Gold    Silver   Copper
       Mineral Property  US$/oz   US$/oz   US$/lb          Lower cutoff
       ----------------------------------------------------------------------
       Mesquite            $900        -        -   0.19 g/t  Au - Oxide
                                                     reserves
                                                    0.37 g/t Au - Non-oxide
                                                     reserves
       ----------------------------------------------------------------------
       Cerro San Pedro     $900   $15.00        -   US$2.58/t NSR
       ----------------------------------------------------------------------
       Peak Mines          $900   $15.00    $2.25   AU$123 - 156/t NSR
       ----------------------------------------------------------------------
       New Afton           $800   $12.00    $2.00   US$19/t NSR
       ----------------------------------------------------------------------
       El Morro            $950        -    $2.00   0.40 g/t Au
       ----------------------------------------------------------------------
       Mineral reserves have been estimated and reported in accordance with
       the standards of the Canadian Institute of Mining, Metallurgy and
       Petroleum and National Instrument 43-101, or the AusIMM JORC
       equivalent.
    -------------------------------------------------------------------------
    2) Mineral Resources
       -----------------
       Mineral resources for the company's mining operations and development
       projects have been calculated based on the following metal prices and
       lower cut-off criteria:
       ----------------------------------------------------------------------
       Mineral      Gold   Silver  Copper   Zinc    Lead
       Property    US$/oz  US$/oz  US$/lb  US$/lb  US$/lb  Lower cut-off
       ----------------------------------------------------------------------
       Mesquite    $1,000       -       -       -       -  0.11 g/t Au -
                                                            Oxide resources
                                                           0.22 g/t Au -
                                                            Non-oxide
                                                            resources
       ----------------------------------------------------------------------
       Cerro San
        Pedro      $1,000  $18.00       -   $1.00   $0.75  0.1 g/t AuEq -
                                                            Open pit oxide
                                                            resources
                                                           0.4 g/t AuEq -
                                                           Open pit
                                                            sulphide
                                                            resources
                                                           2.5 g/t AuEq -
                                                            Underground
                                                            manto sulphide
                                                            resources
       ----------------------------------------------------------------------
       Peak Mines    $900  $15.00   $2.25   $0.85   $0.65  AU$90 - 100/t NSR
       ----------------------------------------------------------------------
       New Afton   $1,000  $18.00   $2.75       -       -  0.4% CuEq - All
                                                            resources
       ----------------------------------------------------------------------
       El Morro
       ----------------------------------------------------------------------
         Meas'd &
          Ind        $950       -   $2.00       -       -  0.40 g/t Au
       ----------------------------------------------------------------------
         Inferred  $1,100       -   $2.50       -       -  0.33 g/t Au
       ----------------------------------------------------------------------
       Mineral resources have been estimated and reported in accordance with
       the standards of the Canadian Institute of Mining, Metallurgy and
       Petroleum and National Instrument 43-101, or the AusIMM JORC
       equivalent.
    -------------------------------------------------------------------------
    3) Cerro San Pedro mineral resources include measured, indicated and
       inferred resources that are contained within a "Mineral Resource Pit"
       and reported at lower cut-offs of 0.1 g/t AuEq for oxide
       mineralization and 0.4 g/t AuEq for sulphide mineralization based on
       the mineral resource metal prices noted above. Inferred manto sulphide
       mineral resources represent mineralization that is potentially
       mineable via underground mining methods and delimited by a 2.5 g/t
       AuEq grade shell based on the mineral resource metal prices noted
       above.
    -------------------------------------------------------------------------
    Qualified Persons
    -----------------
         The following table sets out the individuals who are the Qualified
         Persons as defined by Canadian National Instrument 43-101 in
         connection with New Gold's Mineral Reserve and Mineral Resource
         Statements as of December 31, 2010.
         Mark Petersen, Vice President, Exploration, New Gold Inc., who is a
         "qualified person" as such term is defined under National Instrument
         43-101, has reviewed and approved the contents of this news
         release.
    -------------------------------------------------------------------------
    Mineral Property                     Qualified Person
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Mesquite
      Reserves         Mr. Hubert Schimann, P.Eng. and Corporate Mining
                        Engineer for New Gold Inc.
      Resources        Mr. Rex Berthelsen, FAusIMM, CPGeo and Principal
                        Geologist for New Gold Inc.
    Cerro San Pedro
      Reserves         Mr. Hubert Schimann, P.Eng. and Corporate Mining
                        Engineer for New Gold Inc.
      Resources        Mr. Rex Berthelsen, FAusIMM, CPGeo and Principal
                        Geologist for New Gold Inc.
    Peak Mines
      Reserves         Mr. Sean Pearce, AusIMM Manager Mining for Peak Gold
                        Mines Pty. Ltd.
      Resources        Mr. Manfred Wimberger, MAusIMM, and Geology
                        Superintendent for Peak Gold Mines Pty. Ltd.
    New Afton
      Reserves         Mr. Dennis Bergen, P.Eng. and Associate Principal
                        Mining Engineer for Scott Wilson Roscoe Postle
                        Associates Inc.
      Resources        Mr. David Rennie, P. Eng. and Principal Geologist for
                        Scott Wilson Roscoe Postle Associates Inc.
    El Morro
      Reserves         Ms. Maryse Belanger, P. Geo., Ms. Sophie Bergeron,
                        Ing. Goldcorp Inc.
      Resources        Ms. Maryse Belanger, P. Geo., Ms. Sophie Bergeron,
                        Ing. Goldcorp Inc.
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    About New Gold Inc.
    New Gold is an intermediate gold mining company. The Mesquite Mine in the
    United States, the Cerro San Pedro Mine in Mexico and Peak Gold Mines in
    Australia are expected to produce between 380,000 and 400,000 ounces of
    gold in 2011. The fully-funded New Afton project in Canada is scheduled
    to add further growth in 2012. In addition, New Gold owns 30% of the
    world-class El Morro project located in Chile. For further information on
    the company, please visit www.newgold.com.
    -------------------------------------------------------------------------

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this news release, including any information relating to New Gold's future financial or operating performance may be deemed "forward looking". All statements in this news release, other than statements of historical fact, that address events or developments that New Gold expects to occur, are "forward-looking statements". Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond New Gold's ability to control or predict. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause New Gold's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, without limitation: significant capital requirements; fluctuations in the international currency markets and in the rates of exchange of the currencies of Canada, the United States, Australia, Mexico and Chile; price volatility in the spot and forward markets for commodities; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves and resources and between actual and estimated metallurgical recoveries; changes in national and local government legislation in Canada, the United States, Australia, Mexico and Chile or any other country in which New Gold currently or may in the future carry on business; taxation; controls, regulations and political or economic developments in the countries in which New Gold does or may carry on business; the speculative nature of mineral exploration and development, including the risks of obtaining and maintaining the validity and enforceability of the necessary licenses and permits and complying with the permitting requirements of each jurisdiction that New Gold operates, including, but not limited to, Mexico, where New Gold is involved with ongoing challenges relating to its environmental impact statement for the Cerro San Pedro Mine; the lack of certainty with respect to the Mexican and other foreign legal systems, which may not be immune from the influence of political pressure, corruption or other factors that are inconsistent with the rule of law; the uncertainties inherent to current and future legal challenges the company is or may become a party to, including the third party claim related to the El Morro transaction with respect to New Gold's exercise of its right of first refusal on the El Morro copper-gold project in Chile and its partnership with Goldcorp Inc., which transaction and third party claim were announced by New Gold in January 2010; diminishing quantities or grades of reserves; competition; loss of key employees; additional funding requirements; actual results of current exploration or reclamation activities; changes in project parameters as plans continue to be refined; accidents; labour disputes; defective title to mineral claims or property or contests over claims to mineral properties. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance to cover these risks) as well as "Risk Factors" included in New Gold's latest annual information form, management's discussion and analysis of financial condition ("MD&A") and management information circular filed on and available at www.sedar.com. Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. All of the forward-looking statements contained in this news release are qualified by these cautionary statements. New Gold expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.

Cautionary Note to U.S. Readers Concerning Estimates of Measured, Indicated and Inferred Mineral Resources

Information concerning the properties and operations of New Gold has been prepared in accordance with Canadian standards under applicable Canadian securities laws, and may not be comparable to similar information for United States companies. The terms "Mineral Resource", "Measured Mineral Resource", "Indicated Mineral Resource" and "Inferred Mineral Resource" used in this press release are Canadian mining terms as defined in accordance with NI 43-101 under guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms "Mineral Resource", "Measured Mineral Resource", "Indicated Mineral Resource" and "Inferred Mineral Resource" are recognized and required by Canadian regulations, they are not defined terms under standards of the United States Securities and Exchange Commission. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve calculation is made. As such, certain information contained in this press release concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the United States Securities and Exchange Commission. An "Inferred Mineral Resource" has a great amount of uncertainty as to its existence and as to its economic and legal feasibility. It cannot be assumed that all or any part of an "Inferred Mineral Resource" will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. Readers are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into Mineral Reserves. Readers are also cautioned not to assume that all or any part of an "Inferred Mineral Resource" exists, or is economically or legally mineable. In addition, the definitions of "Proven Mineral Reserves" and "Probable Mineral Reserves" under CIM standards differ in certain respects from the standards of the United States Securities and Exchange Commission.

SOURCE New Gold Inc.

(Source: PR Newswire )
(Source: Quotemedia)

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