New Gold Inc. - Annual Report - Reserves and Resources

RESERVES & RESOURCES

2008

New Gold’s global mineral reserves comprise an estimated 4.8 million ounces of gold, 54.7 million ounces of silver and 2.75 billion pounds of copper. These mineral reserves are part of a larger global mineral resource inventory containing an estimated 8.0 million ounces of gold, 68.8 million ounces of silver and 3.6 billion pounds of copper in the measured and indicated categories.

During 2008, New Gold’s exploration and development program at the Peak Gold Mine resulted in the delivery of an updated mineral reserve containing approximately 514,000 ounces of gold and 76 million pounds of copper, an increase that more than offsets depletion from the previous two years’ mine production. These increases are due to a combination of successful delineation drilling and mine design efforts to convert mineral resources to mineral reserves and the positive impact of higher gold and copper prices. At Cerro San Pedro, mine production since commencement of commercial production in May 2007 resulted in a decrease of 256,000 ounces of total contained gold and 10.9 million ounces of total contained silver from pre-production mineral reserves, consistent with the Cerro San Pedro life-of-mine plan.

Consolidated mineral reserve and resource statements for the Peak, Cerro San Pedro and Amapari mines as of December 31, 2008, and previously reported mineral reserve and resource statements for New Gold’s New Afton project and its 30% owned El Morro development project are presented below.

New Gold Mineral Reserves & Resources Summary as of December 31, 2008

		Contained Metal
	Gold M oz	Silver M oz	Copper M lbs
Reserves^(1),(3-6)
Proven	2.427	49.929	931
Probable	2.394	4.753	1,819
Total P&P	4.821	54.682	2,750
Resources^(2),(7-13)
Measured	4.437	63.284	2,025
Indicated	3.528	5.574	1,612
Total M&I	7.9651	68.858	3,637
Inferred	1.793	1.679	361

^{Notes to the mineral reserve and resource statements are provided in a separate table below.}

Mineral Reserve Statements as of December 31, 2008

			Metal Grade			Contained Metal
	Tonnes 000's	Gold g/t	Silver g/t	Copper %	Gold Koz	Silver Koz	Copper Mlbs
Operating Mines
Peak Mines ^(1),(3),(13)
Proven	1,048	3.96	-	0.95	133	-	22
Probable	2,557	4.60	-	0.96	380	-	54
Peak P&P	3,605	4.40	-	0.96	514	-	76
Cerro San Pedro^(1),(4),(13)
Proven	69,640	0.55	22.3	-	1,231	49,929	-
Probable	2,054	0.52	22.9	-	34	1,512	-
CSP P&P	71,694	0.55	22.3	-	1,266	51,441	-
Development Projects
New Afton^(1),(5),(13)
Proven	-	-	-	-	-	-	-
Probable	44,400	0.72	2.30	0.98	1,028	3,240	959
New Afton P&P	44,400	0.72	2.30	0.98	1,028	3,420	959
El Morro^(1),(6),(13)		^{100% basis}			^{30% basis}
Proven	208,473	0.53	-	0.66	1,062	-	909
Probable	241,761	0.41	-	0.50	951	-	806
El Morro P&P	450,234	0.46	-	0.58	2,013	-	1,715

^{Notes to the mineral reserve and resource statements are provided in a separate table below.}

Mineral Resource Statements as of December 31, 2008

			Metal Grade			Contained Metal
Measured & Indicated Resources	Tonnes 000's	Gold g/t	Silver g/t	Copper %	Gold Koz	Silver Koz	Copper Mlbs

Peak Mines ^(2),(7),(13)
Measured	2,405	3.75	-	1.02	290	-	54
Indicated	3,694	4.71	-	1.00	559	-	82
Peak M&I	6,099	4.33	-	1.01	849	-	136
Cerro San Pedro ^(2),(8),(13)
Measured	90,160	0.55	20.6	-	1,597	59,557	-
Measured	6,370	0.46	18.7	-	94	3,830	-
CSP M&I	96,530	0.54	20.4	-	1,691	63,387	-
Amapari ^(2),(9),(13)
Measured	8,700	1.03	-	-	288	-	-
Measured	14,249	1.85	-	-	848	-	-
Amapari M&I	22,949	1.54	-	-	1,136	-	-
New Afton ^{(2),(10),(13)}
Measured	43,250	0.83	2.68	1.12	1,154	3,727	1,068
Indicated	22,410	0.66	2.42	0.84	476	1,744	415
New Afton M&I	65,660	0.77	2.59	1.02	1,630	5,471	1,483
El Morro ^{(2),(11),(13)}		^{100% basis}			^{30% basis}
Measured	211,164	0.54	-	0.65	1,108	-	903
Indicated	347,242	0.46	-	0.49	1,551	-	1,115
El Morro M&I	558,406	0.49	-	0.55	2,659	-	2,018
Inferred Resources	Tonnes 000's	Gold g/t	Silver g/t	Copper %	Gold Koz	Silver Koz	Copper Mlbs
Peak Mines	2,713	4.50	-	0.90 388	-	52
Cerro San Pedro	1,658	0.47	24.1	-	25	1,283	-
Amapari	13,716	2.37	-	-	1,045	-	-
New Afton	7,940	0.88	1.6	0.96	225	396	168
El Morro	62,335	0.18	-	0.34	110	-	141

^{Notes to the mineral reserve and resource statements are provided in a separate table below.}

Qualified Persons for New Gold Mineral Reserve & Resource Statements

Peak Mines
Reserves	Mr. Eric Strom, P.Eng. and Technical Services Superintendent for Peak Gold Mines Pty Ltd.
Resources	Mr. Rex Berthelsen, Member AusIMM and Principal Geologist for New Gold Inc.
Cerro San Pedro Mine
Reserves	Mr. William L. Rose, P.E. and Principal Mining Engineer for WLR Consulting, Inc.
Resources	Mr. William L. Rose, P.E. and Principal Mining Engineer for WLR Consulting, Inc.
Amapari Mine
Resources	Mr. Rex Berthelsen, Member AusIMM and Principal Geologist for New Gold Inc.
New Afton Project
Reserves	Mr. Mike Thomas, Member AusIMM and Principal Mining Consultant for AMC Consultants Pty Ltd.
Resources	Mr. David Rennie, P. Eng. and Consulting Geological Engineer for Scott Wilson Roscoe Postle Associates
El Morro Project
Reserves	Mr. Richard J. Lambert, P. E.and formerly Principal Mining Engineer for Pincock, Allen & Holt Inc., currently Executive Vice President with Scott Wilson Roscoe Postle Associates
Resources	Mr. Barton G. Stone, P. Geo. and Chief Geologist for Pincock, Allen & Holt Inc.

Notes to Mineral Reserve & Resource Statements

⁽¹⁾	^{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.}
⁽²⁾	^{Mineral resources for all mines and development projects have been estimated using industry standard three-dimensional geostatistical block model estimation methods (e.g. one or a combination of ordinary kriging, multiple indicator kriging or inverse distance to an exponential power) constrained by geological and metal grade domains 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⁾	^{Peak Gold Mines mineral reserves have been calculated based on a gold price of US$750/oz, a copper price of US$2.00/lb and variable lower NSR cut-offs ranging from AUD$112/t to AUD$130/t that vary between individual mines and their proximity to the Peak operation processing facility.}
⁽⁴⁾	^{Cerro San Pedro mineral reserves have been calculated based on a gold price of US$750/oz, a silver price of US$10.00/lb and a lower NSR cut-off of US$2.64/t. The Cerro San Pedro mineral reserve estimates account for mining extraction from January 1, 2007 through the end of 2008.}
⁽⁵⁾	^{New Afton mineral reserves been calculated based on a gold price of US$475/oz, a copper price of US$1.45/lb and a lower NSR cut-off of CAD$15/t of ore.}
⁽⁶⁾	^{El Morro mineral reserve tonnes and grade are reported on a 100% basis; contained metals are reported on a 30% basis to reflect New Gold's 30% ownership interest in the project. Mineral reserves have been calculated based on a gold price of $500/oz, a copper price of US$1.25/lb and a cut-off of 0.30% copper-equivalent ("EqCu") where: EqCu(%) = Cu(%) + 0.592 x Au (g/t) and Cu(%) = percent copper, Au(g/t) = grams per tonne gold}
⁽⁷⁾	^{Peak Gold Mines mineral resources have been estimated based on a gold price of US$750/oz, a copper price of US$2.00/lb and variable lower NSR cut-offs ranging from AUD$85/t to AUD$95/t that vary between individual mines and their proximity to the Peak operation processing facility.}
⁽⁸⁾	^{Cerro San Pedro mineral resources have been estimated based on a gold price of US$1000/oz, a silver price of US$21/oz and a lower grade cut-off of 0.2 g/t gold and are constrained within an economically constrained "mineral resource pit" that uses the same cost and metal recovery parameters used to define mineral reserves as of December 31, 2008. The Cerro San Pedro mineral resource estimates account for mining extraction from January 1, 2007 through the end of 2008.}
⁽⁹⁾	^{Amapari mineral resources have been estimated based on a gold price of US$750/oz and a variable lower grade cut-offs ranging from 0.6 g/t to 0.8 g/t gold for open pit oxide and sulphide resources and 1.7 g/t gold for underground sulphide resources that vary between individual mineral resources and their proximity to the Amapari operation processing facility.}
⁽¹⁰⁾	^{New Afton mineral resources have been estimated based on a gold price of US$450/oz, a silver price of US$5.25/oz, a copper price of US$1.20/lb and a lower NSR cut-off of CAD$10.00/t of mineralized material.}
⁽¹¹⁾	^{El Morro mineral resource tonnes and grade are reported on a 100% basis; contained metals are reported on a 30% basis to reflect New Gold's 30% ownership interest in the project. El Morro mineral resources have been estimated based on a gold price of US$500/oz, a copper price of US$1.25/lb and a cut-off of 0.3% copper-equivalent ("EqCu") where EqCu(%) = Cu(%) + 0.592 x Au (g/t) and Cu(%) = percent copper, Au(g/t) = grams per tonne gold Mineral resources are based on an economically constrained "mineral resource pit" that uses the same cost and metal recovery parameters used to define mineral reserves as described in the May 2008 NI 43-101 technical report for the project.}
⁽¹²⁾	^{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.}
⁽¹³⁾	^{Numbers may not add due to rounding.}