EQUITY RESEARCH. Q2/14 Review: Steady as she goes. Outperform AMEX: NGD; USD 6.14; TSX: NGD Price Target USD Scenario Analysis*

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1 EQUITY RESEARCH July 31, 2014 Q2/14 Review: Steady as she goes Our view: New Gold capped off H1/14 on solid footing. With higher production expected during H2/14 the company is well on track to deliver on guided production and cash costs. With reliable cash flow, district exploration potential, strong underlying growth, consistent strategy and long-term optionality, New Gold remains a preferred name. Key points: Well positioned to deliver on full year expectations New Gold delivered another solid quarter operationally which puts the company on track to meet full year guidance. Although the company faced a couple of operational challenges in 2013 (Mesquite/CSP), New Gold has regained the consistent form which saw it deliver on full year guidance 4 years in a row prior to last year. With a solid first half, New Gold reiterated full year production and cash cost guidance. For the year, the company expects to produce Koz at a by-product cash cost of $ /oz and AISC of $ /oz (181 Koz at $253/oz and $707/oz through H1). We currently forecast full year production of 394 Koz at a total cash cost of $321/oz and AISC of $825/oz. Development projects continue to advance as planned New Gold reiterated that its development projects remain on time and on budget with projects not only benefiting from a slow down in global mine development, but also a weaker CAD. New Afton: Mill expansion remains on schedule for completion in 2015 with capital budget of $45M intact. Rainy River: Environmental approval is expected in late-2014/ early-2015 paving the way for first gold in late Capital purchases of C$180M have been committed with costs in-line or slightly below the company's original estimates. Management noted on the conference call that it expects to fully fund Rainy River internally. A preferred name amongst precious metal producers New Gold remains a preferred name within our precious metal universe given the company's underlying growth potential, strong/reliable cash flow, experienced/technical management team, district scale exploration prospects and low geo-political risk profile. RBC Dominion Securities Inc. Dan Rollins, CFA (Analyst) (416) dan.rollins@rbccm.com Mark Mihaljevic (Associate) (416) mark.mihaljevic@rbccm.com Outperform AMEX: NGD; USD 6.14; TSX: NGD Price Target USD 8.00 WHAT'S INSIDE Rating/Risk Change Price Target Change In-Depth Report Est. Change Preview News Analysis Scenario Analysis* Downside Scenario % Current Price 6.14 *Implied Total Returns Key Statistics Shares O/S (MM): Dividend: 0.00 NAVPS: 4.81 BVPS: 0.00 ROE: 2.8% Float (MM): Debt to Cap: 29% Price Target % Upside Scenario % Market Cap (MM): 3,094 Yield: 0.0% P/NAVPS: 1.3x Tr. 12 ROE: 2.27% 3-Yr. Est. EPS Growth: 12.70% RBC Estimates FY Dec 2013A 2014E 2015E 2016E EPS, Adj Diluted Prev P/AEPS 47.2x 40.9x 21.2x 18.1x CFPS Diluted Prev P/CFPS 23.6x 10.4x 8.4x 7.9x FCFPS (0.38) (0.13) (0.30) (0.14) Prev. (0.30) (0.06) P/FCF nm nm nm nm EPS, Adj Diluted Q1 Q2 Q3 Q A 0.01A 0.04A 0.03A A 0.02A 0.04E 0.06E Prev. 0.03E 0.06E 0.07E E 0.07E 0.08E 0.08E Prev. 0.07E 0.08E CFPS Diluted A (0.09)A 0.10A 0.10A A 0.09A 0.18E 0.15E Prev. 0.19E 0.16E E 0.16E 0.22E 0.17E Prev. 0.20E 0.15E 0.21E All values in USD unless otherwise noted. A key differentiator, in our view, is New Gold's consistent strategy, which has allowed the company to avoid the "flavour of the day" approach seen too often in the gold space. Outperform rating and $8 price target maintained Given our favourable view on the underlying fundamentals of the company as well as improving valuation, we maintain our Outperform rating. Our $8 price target remains unchanged as we have made only modest revisions to our operational and financial forecasts. Priced as of prior trading day's market close, EST (unless otherwise noted). For Required Non-U.S. Analyst and Conflicts Disclosures, see page 11.

2 Target/Upside/Downside Scenarios Exhibit 1: m 40m 20m 125 Weeks 09MAR12-31JUL M A M J J A S O N 2013 D J F M A M J J A S O N 2014 D J F M A M J NGD Rel. S&P 500 COMPOSITE MA 40 weeks J UPSIDE TARGET Source: Bloomberg and RBC Capital Markets estimates for Upside/Downside/Target CURRENT 6.14 DOWNSIDE 5.50 Jul 2015 Target price/ base case Our price target of $8 is derived by applying a 1.3x multiple to our estimated NAVPS and 18x multiple to our estimated 12- month forward AdjCF (net of sustaining capex). The multiples used to value New Gold reflect the company s longer term growth prospects, capital flexibility, operational track-record, low geo-political risk profile and consistent strategy. Our Upside and Downside scenarios do not take into account potential changes in commodity prices and are intended to demonstrate the upside and downside potential of the company at constant commodity prices. Upside scenario Our upside scenario assumes that New Gold successfully brings Rainy River into production and the market begins attributing greater value to the strong cash flow potential of the company's operations. Applying P/NAV and EV/AdjCF multiples of 1.5x and 20x (reflecting increased investor sentiment), we estimate an upside scenario of $9. Downside scenario Our downside scenario assumes that development of Rainy River is delayed and cost escalation erodes the return potential of the project. Should the development of Rainy River be hampered by delays and/or cost overruns, we would expect the company to trade at lower multiples reflecting a decline in investor sentiment. Assuming P/NAV and P/CF multiples of 0.8x and 13x, we estimate a downside scenario of $5.50. Investment summary New Gold is a Tier II gold producer with four producing mines located in mining friendly and geopolitically stable jurisdictions. Led by a strong management team and board of directors, New Gold is well positioned financially and technically to deliver on its long-term strategy and growth opportunities. Solid longer term growth: Although production is expected to decline near-term as Cerro San Pedro winds down, longer term, New Gold offers attractive growth prospects with gold production expected to increase at 3- and 5-year CAGRs of 7% and 10% respectively through 2017 and Strong sustaining cash flow: With low cost production from New Afton and declining capital expenditures at Mesquite, New Gold offers strong sustaining cash flow (AdjCF). The company's underlying cash generation in combination with current balance sheet should allow the company to fund the development of Rainy River internally. Consistent strategy: A key differentiator has been New Gold's consistent strategy, which within the precious metal sector, is essential to delivering long-term shareholder value. Unlike many of its peers that have followed a "flavour of the day" approach, New Gold has stuck with its strategy of building a low-cost intermediate producer with assets in favourable jurisdictions. Operational consistency: Outside of unexpected challenges at Cerro San Pedro and Mesquite in 2013, New Gold has delivered on original operational guidance 4 out of the last 5 years, a significant feat relative to many of its peers. Potential catalysts and share price drivers Exploration: With drilling targeting deeper mineralization at New Afton as well as testing regional targets at Blackwater and Rainy River, exploration could provide New Gold with positive news flow going forward. Clarity on El Morro: Although the environmental permit has been reinstated, construction activities remain suspended until a power solution has been finalized and project optimizations completed. Clarity on the potential development of the project would likely be viewed constructively by investors (carried interest). Permitting: We expect receipt of environmental approval for Rainy River and Blackwater to be viewed favourably as it would further de-risk both projects and enhance the company's underlying optionality. Risks to valuation Commodity price risk Permitting/development risk Operational risk July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 2

3 Appendix I: Quarterly operational/financial summary New Afton On track Near record quarterly gold and copper production of 26.3 Koz and 21.0 Mlb with steady throughput (12,750 tpd), grades (0.83 g/t and 0.95%) and recoveries (85% and 86%) Costs continue to benefit from lower Canadian dollar as well as strong copper byproduct revenues o New Afton remains a low all-in sustaining cost producer on both a by-product (negative $678/oz) and co-product ($643/oz) basis Mill expansion to 14,000 tpd: o Progressing on budget ($45M) and on schedule (mid-2015) o Completed over 50% of detailed engineering, started early construction works, and ordered all long lead time items Mesquite Improving Peak On track Cerro San Pedro Improving Rainy River Advancing Blackwater Permitting El Morro (30% NGD/70% GG) On track Production was slightly weaker than expected given the lag effect of fewer tonnes stacked in Q1 and fact a majority of ore was stacked in June Following a planned increase in waste stripping during H1/2014, tonnes stacked increased throughout Q2 and are expected to trend higher in Q3. With higher tonnes stacked and improving grades, New Gold expects to deliver operating gains at the mine in H2 Given the relatively fixed cost nature of the operation, we expect cash costs to decline as production rebounds over the next couple quarters Strong rebound in production to 27.9 Koz from 20.9 Koz as the company processed significantly higher gold grades Grades are expected to moderate toward planned grades during H2 As planned, production remained low as the company focused on waste stripping for the final pit layback Lower tonnes stacked were partially offset by improved recoveries which benefitted from changes in cyanide concentration and side slope leaching Production forecast to increase sequentially once pit layback is complete Continuing to advance the project with key long lead time items ordered (approximately C$180 million in commitments) with costs in-line or below feasibility study estimates The company noted the project continues to benefit from reduced activity in the mining space and depreciation of the Canadian dollar Permitting prospects and local stakeholder engagement remain positive with the company continuing to expect receipt of permits in late-2014/early-2015 Positive exploration results west of the planned open-pit and southeast of the Intrepid deposit with additional drilling planned in Q3 Focus remains on enhancing value by advancing the project through the permitting phase in ,000 metre regional drill program started in late-q2 After the Copiapo Court of Appeals lifted the injunction that had suspended construction and development activities, the injunction was appealed to the Chilean Supreme Court with a decision expected in Q3/14 July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 3

4 Exhibit 2: New Gold Steady as she goes Q2/2014 Q1/2014 Q4/2013 Q3/2013 Q2/2013 Actual RBC Actual Actual Actual Actual Attributable Production (Prior to Payables) Mesquite Cerro San Pedro Peak New Afton Total gold production (Koz) Total silver production (Koz) Total copper production (Mlb) Consolidated Sales (After Payables) Mesquite Cerro San Pedro Peak New Afton Total gold sales (Koz) Total silver sales (Koz) Total copper sales (Mlb) By-product cash costs Mesquite $993 $1,000 $893 $841 $1,017 $925 Cerro San Pedro $1,169 $1,061 $947 $911 $723 $610 Peak $627 $871 $757 $778 $856 $948 New Afton ($1,262) ($1,032) ($1,283) ($1,428) ($1,310) ($1,104) Total Cash Cost ($/oz) - Reported $251 $390 $254 $316 $280 $429 Adjustments $0 $0 $0 $0 $0 $0 Total Cash Cost ($/oz) - RBC $251 $390 $254 $316 $280 $429 Sustaining Capital $326 $416 $303 $462 $404 $374 Corporate Overhead/Exploration/Other $144 $129 $100 $108 $202 $196 Total All-in Sustaining Cash Cost ($/oz) - RBC $720 $935 $657 $886 $886 $1,000 Realized Prices Gold ($/oz) $1,304 $1,288 $1,308 $1,233 $1,359 $1,276 Silver ($/oz) $19.53 $19.62 $20.40 $20.10 $21.31 $22.08 Copper ($/lb) $3.09 $3.08 $2.98 $3.24 $3.25 $3.06 Financials Adjusted earnings ($/sh) $0.02 $0.03 $0.04 $0.03 $0.04 $0.01 Unlevered operating cash flow ($/sh) $0.13 $0.13 $0.18 $0.14 $0.10 ($0.05) Levered operating cash flow ($/sh) $0.09 $0.09 $0.18 $0.10 $0.10 ($0.09) Levered sustaining cash flow ($/sh) $0.07 $0.05 $0.12 $0.05 $0.02 ($0.13) Source: Company reports, RBC Capital Markets estimates July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 4

5 ABX GG KGC NEM AEM BTO DGC EGO IAG* NGD AUY Net cash to market cap E (%) ABX GG KGC NEM AEM BTO DGC EGO IAG NGD AUY EV/AdjCF E (x) ABX GG KGC NEM AEM BTO DGC EGO IAG NGD AUY P/NAV (x) Appendix II: Relative valuation analysis Exhibit 3: New Gold Trading at a modest premium to peers on a P/NAV basis 1.6x 1.4x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x Exhibit 4: New Gold EV/AdjCF (net sustaining capex) valuation in-line with Tier I and II peers 25x 20x 15x 10x 5x 0x Exhibit 5: New Gold Manageable leverage with a strong cash position and long dated debt 0% -10% -20% -30% -40% -50% *Includes value of bullion holdings July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 5

6 Appendix III: Operational/financial forecast, NAV breakdown, and model Exhibit 6: New Gold Operational and financial forecast summary E 2015E 2016E 2017E 2018E 2019E 2020E Operational Summary Attributable Production Gold (Koz) Silver (Koz) 1,605 1,721 1,704 1, ,031 1,071 Copper (Mlb) Attributable Cash Costs By-product cash costs ($/oz) - RBC $377 $321 $318 $112 $213 $242 $410 $414 All-in sustaining cash costs ($/oz) - RBC $964 $825 $700 $474 $561 $498 $621 $604 All-in cash costs - Current Ops ($/oz) - RBC $1,066 $1,018 $724 $474 $561 $498 $621 $604 Realized/Forecast Commodity Prices Gold ($/oz) $1,337 $1,337 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 Silver ($/oz) $23.46 $21.02 $23.50 $23.50 $23.50 $23.50 $23.50 $23.50 Copper ($/lb) $3.24 $3.09 $3.00 $3.25 $3.75 $4.00 $2.75 $2.75 Financial Summary Consolidated Financials Adjusted EBITDA ($/sh) $0.56 $0.68 $0.88 $0.93 $1.03 $1.28 $1.21 $1.24 Adjusted Earnings ($/sh) $0.13 $0.15 $0.29 $0.34 $0.36 $0.49 $0.45 $0.46 Operating Cash Flow ($/sh) - Unlevered $0.34 $0.67 $0.81 $0.85 $0.97 $1.21 $1.16 $1.18 Operating Cash Flow ($/sh) - Levered $0.26 $0.59 $0.73 $0.78 $0.89 $1.13 $1.08 $1.12 Sustaining Cash Flow ($/sh) - Unlevered ($0.00) $0.38 $0.57 $0.67 $0.74 $1.00 $0.96 $1.01 Sustaining Cash Flow ($/sh) - Levered ($0.08) $0.30 $0.50 $0.59 $0.66 $0.92 $0.89 $0.94 Operating Free Cash Flow ($/sh) - Levered ($0.38) ($0.13) ($0.30) ($0.14) $0.50 $0.92 $0.89 $0.94 Net Free Cash Flow ($/sh) - Levered ($0.38) ($0.13) ($0.30) ($0.14) $0.50 $0.92 $0.89 $0.35 Source: New Gold, RBC Capital Markets estimates Exhibit 7: New Gold Production forecast breakdown E 2015E 2016E 2017E 2018E 2019E 2020E Attributable Productionn Gold Production New Afton Mesquite Peak Cerro San Pedro Rainy River Gold (Koz) Total (oz/thousand shares) Silver (Koz) 1,605 1,721 1,704 1, ,031 1,071 Copper (Mlb) July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 6

7 Exhibit 8: New Gold Cash cost summary breakdown E 2015E 2016E 2017E 2018E 2019E 2020E Attributable Cash Costs By-Product Basis New Afton ($1,196) ($1,231) ($1,165) ($1,421) ($1,896) ($2,094) ($1,045) ($1,152) Mesquite $907 $834 $729 $671 $677 $677 $677 $677 Peak $850 $683 $719 $680 $583 $544 $735 $727 Cerro San Pedro $675 $1,176 $894 $553 $553 $553 $0 $0 Rainy River $0 $0 $0 $0 $965 $674 $555 $547 Total Cash Cost ($/oz) - Reported $377 $321 $318 $112 $213 $242 $410 $414 Adjustments $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Cost ($/oz) - RBC $377 $321 $318 $112 $213 $242 $410 $414 Sustaining Capex $432 $381 $282 $248 $254 $189 $159 $140 Corporate Overhead - Cash Only $68 $72 $65 $74 $61 $49 $44 $43 Exploration $87 $51 $35 $39 $33 $18 $8 $8 Other $0 $0 $0 $0 $0 $0 $0 $0 All-in Sustaining Cash Costs ($/oz) - RBC $964 $825 $700 $474 $561 $498 $621 $604 Non-Sustaining Capex - Current Operations $101 $193 $23 $0 $0 $0 $0 $0 Other $0 $0 $0 $0 $0 $0 $0 $0 All-in Cash Costs - Current Ops ($/oz) - RBC $1,066 $1,018 $724 $474 $561 $498 $621 $604 Co-Product Basis - Gold Total Cash Costs ($/oz) - RBC $805 $800 $752 $658 $730 $664 $638 $633 All-in Sustaining Cash Costs ($/oz) - RBC $1,177 $1,110 $998 $876 $947 $835 $799 $779 All-in Cash Costs ($/oz) - RBC $1,242 $1,229 $1,013 $876 $947 $835 $799 $779 Realized/Forecast Commodity Prices Gold ($/oz) $1,337 $1,337 $1,400 $1,400 $1,400 $1,400 $1,400 $1,400 Silver ($/oz) $23.46 $21.02 $23.50 $23.50 $23.50 $23.50 $23.50 $23.50 Copper ($/lb) $3.24 $3.09 $3.00 $3.25 $3.75 $4.00 $2.75 $2.75 Implied Cash Margins Total Cash Margin ($/oz) $960 $1,016 $1,082 $1,288 $1,187 $1,158 $990 $986 All-in Sustaining Cash Margin ($/oz) $373 $512 $700 $926 $839 $902 $779 $796 All-in Cash Margin ($/oz) $272 $319 $676 $926 $839 $902 $779 $796 July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 7

8 Exhibit 9: New Gold NAV breakdown Location Status Ownership DR NAV P/NAV (%) (%) M $ $/sh (x) Operating Assets Mesquite USA Operational 100% 7.0% $375 $0.74 Cerro San Pedro Mexico Operational 100% 7.0% $65 $0.13 Peak Mines Australia Operational 100% 7.0% $226 $0.44 New Afton Canada Operational 100% 7.0% $1,297 $2.55 Rainy River Canada Development 100% 9.0% $410 $0.81 Total $2,373 $4.66 Non-Operating Assets Blackwater 11.1 Moz AuE at $10/oz $111 $0.22 El Morro 12.4 Moz AuE at $25/oz $309 $0.61 New Afton C-Zone 2.9 Moz AuE at $90/oz $265 $0.52 Other 1.4 Moz AuE at $10/oz $14 $0.03 Total $699 $1.37 Corporate Assets/Liabilities Cash and working capital $500 $0.98 Funds raised through future dilution $18 $0.03 Debt (excludes El Morro loan) ($800) ($1.57) Corporate items (net of tax shield) ($266) ($0.52) Reclamation/Employee provisions ($77) ($0.15) Total ($625) ($1.23) Total net asset value $2,446 $ x Diluted shares outstanding Exhibit 10: New Gold Price target methodology (50/50 P/NAV and EV/AdjCF) Value Multiple Target NAV Target Operating NAV ($/sh) $ x $6.06 Adjustments ($/sh) $ x $0.14 Implied target $6.20 Adjusted Cash Flow Target (NTM) Adjusted CFPS - net of sustaining capital ($/sh) $ x $10.34 Adjustments ($/sh) ($0.71) 1.0x ($0.71) Implied target $9.63 Average implied target $7.92 Target Price ($/sh) - Rounded to nearest $1.00 $8.00 July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 8

9 E 2015E 2016E 2017E 2018E 2019E 2020E Gold ($/oz) E 2015E 2016E 2017E 2018E 2019E 2020E Gold (Koz) Exhibit 11: New Gold Model New Gold Price Target: $8.00 Rating: Outperform RBC Capital Markets / Dan Rollins, CFA / Share Price ($/sh): $6.14 Implied Return (%): 30.3% AMEX: NGD Market Value (M $): $3, E Dividend ($/sh): $0.00 Implied Total Return (%): 30.3% TSX: NGD Enterprise Value (M $) $3,453 NAV ($/sh): $4.81 P/NAV (x) 1.28x All USD unless noted Year Ended December 31 All USD unless noted Year Ended December 31 RATIO ANALYSIS E 2015E 2016E REALIZED & FORECAST PRICES / REVENUE SPLIT E 2015E 2016E Earnings - Adjusted $/sh $0.13 $0.15 $0.29 $0.34 Gold Price $/oz $1,337 $1,337 $1,400 $1,400 P/E Multiple x 49.1x 40.4x 21.2x 18.2x Proportion of revenue - Gold % 63% 61% 64% 60% Cash Flow - Levered $/sh $0.26 $0.59 $0.73 $0.78 Proportion of revenue - Gold & Silver % 68% 65% 69% 63% P/CF Multiple x 23.3x 10.3x 8.4x 7.9x PRODUCTION & CASH COSTS E 2015E 2016E Free Cash Flow - Levered $/sh ($0.38) ($0.13) ($0.30) ($0.14) Gold - attributable Koz FCF Yield % (6.2% ) (2.2% ) (4.9% ) (2.2% ) Copper - attributable Mlb Dividends Per Share $/sh $0.00 $0.00 $0.00 $0.00 By-product cash costs - Total $/oz $377 $321 $318 $112 Dividend Yield % 0.0% 0.0% 0.0% 0.0% By-product cash costs - AISC $/oz $964 $825 $700 $474 LTD/(Total Cap) % 27.9% 28.9% 29.4% 30.0% Co-product cash costs - Total $/oz $805 $800 $752 $658 INCOME STATEMENT E 2015E 2016E Co-product cash costs - AISC $/oz $1,177 $1,110 $998 $876 Revenue M $ $809 $837 $930 $882 Operating Costs M $ ($534) ($494) ($483) ($407) EBITDA M $ $275 $343 $447 $475 DD&A M $ ($177) ($220) ($230) ($221) EBIT M $ $98 $123 $217 $254 Other Income/Expenses M $ ($289) ($32) ($19) ($20) EBT M $ ($192) $91 $199 $234 Taxes M $ $0 ($26) ($52) ($62) Net Income - Reported M $ ($191) $65 $146 $172 Adjustments M $ $253 $12 $0 $0 Net Income - Adjusted M $ $61 $77 $146 $172 Weighted average diluted shares M CASH FLOW STATEMENT E 2015E 2016E Cash Flows from Operating Activities Net Income M $ ($191) $65 $146 $172 DD&A M $ $177 $220 $230 $221 Taxes Paid M $ ($32) ($9) ($32) ($37) Non Recurring/Other M $ $227 $77 $80 $91 Operating Cash Flow M $ $182 $352 $424 $447 Changes in Working Capital M $ ($10) ($21) $0 $0 Net Operating Cash Flow M $ $172 $331 $424 $447 Cash Flows From Investing Activities ATTRIBUTABLE RESERVES & RESOURCES Capital Expenditure M $ ($315) ($385) ($562) ($501) Au EV AuE* EV Other M $ ($79) $18 ($12) ($12) Moz $/oz Moz $/oz Net Investing Cash Flow M $ ($394) ($368) ($574) ($513) Proven/Probable Reserve (P&P) 18.5 $ $134 Cash Flows From Financing Activities Measured/Indicated Resource (M&I) - Inclusive 27.5 $ $91 Equity Issues (net of costs) M $ $6 $0 $1 $16 Inferred Resource 4.2 $ $74 Net Borrowings M $ ($67) ($39) ($16) ($16) Dividends Paid & Other M $ $14 $12 $12 $12 *AuE assumes RBC CM long-term commodity price forecasts Net Financing Cash Flow M $ ($47) ($27) ($2) $12 OTHER DATA Increase (Decrease) in Cash M $ ($269) ($63) ($152) ($54) Issued Shares M Cash at End of Year M $ $414 $351 $199 $145 Issued Shares (fully diluted) M Operating Free Cash Flow M $ ($143) ($54) ($138) ($54) NET ASSET VALUE (2014E) DR (%) M $ $/sh % Free Cash Flow M $ ($185) ($67) ($153) ($70) Operating Value BALANCE SHEET E 2015E 2016E Mesquite 7.0% $375 $ % Cash & Equivalents M $ $414 $351 $199 $145 Cerro San Pedro 7.0% $65 $0.13 3% Other Current Assets M $ $244 $289 $289 $289 Peak 7.0% $226 $ % PP&E & Mining Interests M $ $3,337 $3,496 $3,841 $4,133 New Afton 7.0% $1,297 $ % Other Long Term Assets M $ $205 $215 $215 $215 Rainy River 9.0% $410 $ % Total Assets M $ $4,199 $4,352 $4,544 $4,783 Total Operating Value 7.3% $2,373 $ % Current Liabilities M $ $90 $102 $102 $102 Exploration $699 $1.37 Long Term Debt M $ $863 $894 $910 $928 Cash & Working Capital $500 $0.98 Other Long Term Liabilities M $ $526 $569 $590 $615 Long-term Debt ($800) ($1.57) Total Liabilities & Minority Interest M $ $1,479 $1,565 $1,601 $1,644 Other ($325) ($0.64) Shareholder Equity M $ $2,720 $2,787 $2,943 $3,139 Total Net Asset Value $2,446 $4.81 Total Liabilities & Shareholder Equity M $ $4,199 $4,352 $4,544 $4,783 FINANCIAL RATIOS E 2015E 2016E Return on Equity (ROE) % 2.3% 2.8% 5.1% 5.6% Return on Capital (ROIC) % 2.8% 2.5% 4.3% 4.7% Source: Company Reports, RBC Capital Markets estimates $1,500 $1,250 $1,000 $750 $500 $250 $0 New Afton Mesquite Peak Cerro San Pedro Rainy River By-Product Ongoing capital G&A/Exploration/Other AISC Margin July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 9

10 Valuation We value New Gold on a hybrid (50/50) P/NAV and EV/AdjCF methodology. Applying a 1.3x multiple to our NAVPS estimate and a 18x multiple to the company's 12-month forward AdjCF (net of sustaining capex), we derive our $8 price target. The multiples used to value New Gold reflect the company s longer term growth prospects, capital flexibility, operational trackrecord, low geo-political risk profile and consistent strategy. Price target impediments Impediments to our price target include fluctuations in commodity prices, greater than expected mine operating and new project construction costs and increasing energy, material and manpower costs. In a very competitive environment, New Gold, as with all mining companies, faces challenges in finding and replacing mined reserves. Company description New Gold is a Tier II gold producer with an operational focus in geo-politically stable and mining-friendly jurisdictions. With four producing assets (Cerro San Pedro, Mesquite, New Afton, and Peak) plus three development stage projects (Blackwater, Rainy River, and El Morro), New Gold is well positioned to provide investors with near- and long-term production and cash flow growth. New Gold's shares are listed on the New York and Toronto stock exchanges under the symbol "NGD". July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 10

11 Required disclosures Non-U.S. analyst disclosure Dan Rollins and Mark Mihaljevic (i) are not registered/qualified as research analysts with the NYSE and/or FINRA and (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Conflicts disclosures The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated by investment banking activities of the member companies of RBC Capital Markets and its affiliates. Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in, this report. To access current conflicts disclosures, clients should refer to DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7. A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from in the past 12 months. RBC Capital Markets, LLC makes a market in the securities of. A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than investment banking services from during the past 12 months. During this time, a member company of RBC Capital Markets or one of its affiliates provided non-securities services to. RBC Capital Markets is currently providing with non-securities services. RBC Capital Markets has provided with investment banking services in the past 12 months. RBC Capital Markets has provided with non-securities services in the past 12 months. The author is employed by RBC Dominion Securities Inc., a securities broker-dealer with principal offices located in Toronto, Canada. Explanation of RBC Capital Markets Equity rating system An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst's sector average. Although RBC Capital Markets' ratings of Top Pick (TP)/Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same because our ratings are determined on a relative basis. Ratings Top Pick (TP): Represents analyst's best idea in the sector; expected to provide significant absolute total return over 12 months with a favorable risk-reward ratio. Outperform (O): Expected to materially outperform sector average over 12 months. Sector Perform (SP): Returns expected to be in line with sector average over 12 months. Underperform (U): Returns expected to be materially below sector average over 12 months. Risk Rating As of March 31, 2013, RBC Capital Markets suspends its Average and Above Average risk ratings. The Speculative risk rating reflects a security's lower level of financial or operating predictability, illiquid share trading volumes, high balance sheet leverage, or limited operating history that result in a higher expectation of financial and/or stock price volatility. July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 11

12 Distribution of ratings For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/ Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same because our ratings are determined on a relative basis (as described below). Distribution of ratings RBC Capital Markets, Equity Research As of 30-Jun-2014 Investment Banking Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [Top Pick & Outperform] HOLD [Sector Perform] SELL [Underperform] References to a Recommended List in the recommendation history chart may include one or more recommended lists or model portfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists include a former list called the Prime Opportunity List (RL 3), the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Large Cap (RL 7), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio: Midcap 111 (RL 9), the Guided Portfolio: ADR (RL 10), and the Guided Portfolio: Global Equity (U.S.) (RL 11). RBC Capital Markets recommended lists include the Strategy Focus List and the Fundamental Equity Weightings (FEW) portfolios. The abbreviation 'RL On' means the date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date a security was removed from a Recommended List. Equity valuation and risks For valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, please see the most recent company-specific research report at or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7. Conflicts policy RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. To access our current policy, clients should refer to July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 12

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If you do not obtain independent advice, you should consider whether the product is suitable for you. Past performance is not indicative of future performance. If you have any questions related to this publication, please contact the Royal Bank of Canada, Singapore Branch or Royal Bank of Canada (Asia) Limited. To Japanese Residents: Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd., a registered type one financial instruments firm and/or Royal Bank of Canada, Tokyo Branch, a licensed foreign bank.. Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license. Copyright RBC Capital Markets, LLC Member SIPC Copyright RBC Dominion Securities Inc Member CIPF Copyright RBC Europe Limited 2014 Copyright Royal Bank of Canada 2014 All rights reserved July 31, 2014 Dan Rollins (416) ; dan.rollins@rbccm.com 14