New Gold Inc.
TSX : NGD
AMEX : NGD

New Gold Inc.

October 20, 2005 10:33 ET

New Gold Inc.: Encouraging Underground Sample Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 20, 2005) -

Higher Grade Mineralization than Indicated by the Resource Model

Up to 1.49% Cu and 1.01g/t Au Across 51 Metres

New Gold Inc. (TSX:NGD)(AMEX:NGD) is pleased to announce encouraging results from the underground sampling program at the Company's 100%-owned New Afton Copper-Gold (Cu-Au) Project, Kamloops, B.C., Canada. This program of sampling was conducted from the cross-cut which intersected the top of the mineralized zone on Section 44E. The highlights of this program are summarized below. All copper equivalent (Cu Eq.) grades were calculated using the following metal prices - Copper (Cu) US$0.85/lb; Gold (Au) US$375/oz; Silver (Ag) US$5.25/oz; and Palladium (Pd) US$200/oz. This is consistent with the metal prices used in the existing independently calculated resource and is also consistent with metal prices used in preparation of the independent Scoping Study (by Behre Dolbear under the supervision of qualified person James Currie, P.Eng.)

In the main cross-cut Interval A contained 1.49% Cu, 1.01g/t Au, 2.12g/t Ag, and 0.06g/t Palladium Pd, or 2.18% Cu Eq., across 51 metres (m), which is 9% higher than indicated by the resource model. For this same interval the resource model indicated grades of 1.26% Cu, 1.11g/t Au, 2.18g/t Ag, and 0.02g/t Pd, or 2.00% Cu Eq.

This interval was contained within the wider Interval B, which contained 1.22% Cu, 0.80g/t Au, 1.90g/t Ag, and 0.10g/t Pd, or 1.78% Cu Eq. across 91m, which is 11% higher than indicated by the resource model. For this same interval the resource model indicated grades of 1.02% Cu, 0.85g/t Au, 1.73g/t Ag, and 0.07g/t Pd, or 1.60% Cu Eq.

In the south cross-cut, Interval C contained 1.02% Cu, 0.93g/t Au, 1.60g/t Ag, and 0.08g/t Pd, or 1.66% Cu Eq. across 43m, which is 50% higher than indicated by the resource model. For this same interval the resource model indicated grades of 0.71% Cu, 0.56g/t Au, 1.34g/t Ag, and 0.12g/t Pd, or 1.11% Cu Eq.

At the northern end of the north cross-cut, a number of samples contained in excess of 1.0% Cu Eq. This is higher than the grades of 0.10% to 0.83% Cu Eq. indicated by the resource model for the same area. Elsewhere, the sampling in the main, north and south branches of the cross-cut returned results in line with those indicated by the resource model.

The current resource model was developed using the results of approximately 100 previously completed surface diamond drill holes. The comparison of results from the underground sampling to the model is represented in the attached plan and sectional views. Sample results have been compiled, and are summarized in the attached tables. As a result of the orientation of the main cross-cut perpendicular to the mineralization, the thicknesses recorded for intervals A and B in the main cross-cut approximate true thicknesses. While the grade encountered, locally exceeded that anticipated from the resource model, the actual occurrence of mineralization corresponded well with that indicated by the resource model. For example, the western limit of mineralization (in the main cross-cut) and the eastern limit of mineralization (in the south cross-cut) were approximately where indicated by the resource model.

In releasing these results President and CEO, Chris Bradbrook, stated, "We are very encouraged by the results from this underground sampling program at our New Afton Cu-Au Project. The results from the cross-cut verify, and improve upon the current resource model in the area of the cross-cut. In the main cross-cut, the mineralized intervals approximate true thickness and therefore represent impressive thicknesses of significant grade Cu-Au mineralization.

One of the primary purposes of the underground exploration program of sampling and diamond drilling was to provide greater confidence in the resource model, and to ultimately allow us (in conjunction with a feasibility study) to convert the resources to reserves. To date, the results of all our underground work have increased our confidence in our ability to do this.

The cross-cut also will enable us to conduct the metallurgical sampling and geotechnical analysis which will be required in the completion of the feasibility study."

UNDERGROUND SAMPLING PROGRAM

Sampling was conducted after each 3.6m advance was completed. Continuous chip samples were taken from both walls of the cross-cuts and muck samples were also collected. The sample locations are indicated on the attached plan view. The attached tables of sample results provides the average grades of the chip samples from both walls.

PROJECT UPDATE

The previously announced (Sep 16, 2005) program of extending the underground decline has begun. The main decline is being extended at least 125m to the west in order to facilitate additional exploration for extensions of the main Cu-Au mineralization which remains open to the west. In addition, the north cross-cut is being advanced up to 125m further to the northeast in order to facilitate additional sampling of different mineralization types.

The program of underground infill drilling continues and is scheduled for completion by year-end 2005. The short-listed engineering companies who have expressed their interest in completing the feasibility study, have received the final request for proposal documents, and the Company expects to select the successful candidate and award the contract by the end of November, 2005. It is anticipated that this study could be completed by Q3, 2006. The feasibility study will determine the economic parameters of, and potential for, developing a new underground mine at the Company's New Afton Project. The initial permitting process has also commenced and is on-going.

CURRENT RESOURCE

The current resource at the New Afton Project was calculated using the results of approximately 100 diamond drill holes completed from surface. It was independently calculated from a kriged block model as part of an independent advanced scoping study conducted by Behre Dolbear in 2003 and updated in 2004 under the supervision of qualified person James A. Currie, P.Eng. Metal prices used in the scoping study and the resource calculation were US$0.85 per lb Cu, US$375 per oz Au, US$5.25 per oz Ag, and US$200 per oz Pd. At a cut-off of 0.70% Cu equivalent the Measured and Indicated Mineral Resource was calculated to be 68.7 Million Tonnes grading 1.68% Cu equivalent or 2.61g/t Au equivalent (1.08% Cu, 0.85g/t Au, 2.62g/t Ag, 0.12g/t Pd), which contains approximately 1.6 billion pounds of copper, and 1.9 million ounces of gold. The scoping study suggested that the project has very robust economics, with an after-tax IRR of 20% at the metal prices used. The Measured Resource category was calculated to be 9.5 Million Tonnes grading 1.29% Cu, 0.95g/t Au, 3.44g/t Ag, and 0.12g/t Pd. The Indicated Resource category was calculated to be 59.2 Million Tonnes grading 1.05% Cu, 0.83g/t Au, 2.49g/t Ag, and 0.12g/t Pd.

QUALIFIED PERSON

These exploration results have been prepared and approved by Mike Hibbitts P.Geo., Vice President Exploration and Development for New Gold Inc. who is a Qualified Person under National Instrument 43-101. He is therefore qualified to confirm the validity and veracity of these results.

A Quality Assurance/Quality Control Program (QA/QC) was established under the direction of Roscoe Postle Associates, a well known Canadian geological and mining consulting company. Samples are analyzed at Eco Tech Laboratories of Kamloops, British Columbia, Canada. Copper is analyzed through Aqua Regia digestion with AA finish. Samples containing native copper are analyzed for "metallic" copper. Gold is analyzed using a Fire Assay with an AA finish on a 30 gram sample. The accuracy of analyses is constantly monitored by systematically submitting duplicate samples and control (or standard) samples to the Laboratory for analysis.

New Gold is in excellent financial condition with cash of approximately CDN$18 million and no debt. The Company has only 15.0 million shares outstanding and 16.8 million shares fully diluted.

Safe Harbor Statement under the United States Private Securities Litigation Act of 1995: This release made may contain forward-looking statements that are affected by known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed, implied or anticipated by such forward-looking statements. Such forward-looking statements herein represent management's best judgment as of the date hereof based on information currently available. The Company does not intend to update this information and disclaims any legal liability to the contrary. Cautionary Note to U.S. Investors concerning resource estimates. This press release discusses the results of a scoping study, which is a "preliminary assessment" as defined in the Canadian NI 43-101, under which the use of inferred mineral resources is permitted under certain circumstances. The U.S. Securities and Exchange Commission regulations do not recognize any circumstances in which inferred mineral resources may be so used. U.S. investors are cautioned not to assume that any part or all of an inferred resource category described as a 'resource falling within the mine plan' will ever be converted into 'reserves' within the definition of that term in SEC Industry Guide 7. Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section uses the terms "measured" and "indicated resources". We advise U.S. investors that, while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

WARNING: The Company relies upon litigation protection for "forward-looking" statements.



NEW GOLD INC.

TABLE 1
NEW AFTON COPPER-GOLD PROJECT

RESULTS OF UNDERGROUND CHIP SAMPLING
MAIN CROSS-CUT

October 20, 2005

--------------------------------------------------------------
Sample # Cu (%) Au (g/t) Ag (g/t) Pd (g/t) Cu Eq. (%)
--------------------------------------------------------------
397 0.06 0.06 0.00 0.00 0.09
399 0.23 0.09 0.25 0.00 0.29
401 1.43 0.25 2.30 0.00 1.61
403 1.41 0.39 3.15 0.02 1.69
405 1.30 0.39 2.85 0.02 1.58
407 0.78 0.24 1.20 0.00 0.94
409 0.87 0.32 1.10 0.00 1.08
411 1.46 0.86 1.30 0.00 2.02
413 1.01 0.53 1.25 0.00 1.36
415 3.21 2.05 4.50 0.00 4.56
417 1.55 0.54 2.00 0.00 1.91
419 2.04 0.69 2.00 0.00 2.50
421 2.20 0.84 2.65 0.00 2.76
423 1.75 1.18 2.35 0.00 2.53
425 1.47 1.15 2.00 0.00 2.23
427 1.10 0.84 1.30 0.00 1.65
429 1.09 1.07 1.80 0.00 1.79
431 1.81 1.97 3.15 0.09 3.13
433 0.90 0.96 1.40 0.16 1.58
436 0.85 0.85 2.10 0.26 1.51
437 1.20 0.94 2.20 0.00 1.82
440 0.68 0.69 1.85 0.42 1.28
443 0.34 0.40 1.00 0.56 0.80
448 0.82 0.80 1.75 0.42 1.49
450 0.80 1.09 1.75 0.17 1.57
455 0.93 0.98 1.60 0.18 1.63
460 0.14 0.16 0.10 0.11 0.28
464 0.55 0.66 0.80 0.22 1.06
468(i) 0.18 0.12 0.00 0.13 0.30
472 0.37 0.35 0.60 0.17 0.65
--------------------------------------------------------------
(i) Muck Sample

Averages

------------------------------------------------------------------
Sample Length Cu Au Ag Pd Cu Eq.
Interval #'s (m) (%) (g/t) (g/t) (g/t) (%)
------------------------------------------------------------------
A 411-440 51 1.49 1.01 2.12 0.06 2.18
B 401-464 91 1.22 0.80 1.90 0.10 1.78
------------------------------------------------------------------


NEW GOLD INC.

TABLE 2
NEW AFTON COPPER-GOLD PROJECT

RESULTS OF UNDERGROUND CHIP SAMPLING
SOUTH CROSS-CUT

October 20, 2005

--------------------------------------------------------------
Sample # Cu (%) Au (g/t) Ag (g/t) Pd (g/t) Cu Eq. (%)
--------------------------------------------------------------
439 0.94 1.14 1.40 0.06 1.70
445(i) 1.35 1.43 2.90 0.23 2.38
447 1.19 1.09 1.85 0.25 1.99
451 0.61 0.64 0.65 0.22 1.10
453 0.65 0.82 0.75 0.12 1.23
456 0.86 0.95 1.20 0.09 1.51
459 1.21 0.81 2.00 0.00 1.75
463 1.38 1.02 2.10 0.00 2.06
465 0.63 0.57 1.00 0.00 1.00
467 0.37 0.28 1.00 0.00 0.56
469 1.70 1.20 2.00 0.00 2.49
471 1.33 1.25 2.40 0.00 2.16
473 0.24 0.24 0.35 0.04 0.41
475 0.27 0.32 0.75 0.11 0.51
477 0.72 0.91 2.00 0.61 1.52
479 0.40 0.68 0.95 0.25 0.93
481 0.33 0.37 0.65 0.05 0.59
483 0.29 0.32 0.70 0.02 0.50
486 0.01 0.09 0.00 0.00 0.06
488 0.00 0.04 0.00 0.00 0.02
490 0.06 0.06 0.15 0.00 0.10
492 0.01 0.05 0.00 0.00 0.03
494 0.02 0.04 0.00 0.00 0.04
496 0.02 0.02 0.00 0.00 0.03
498 0.02 0.04 0.00 0.00 0.04
500 0.01 0.00 0.00 0.00 0.01
--------------------------------------------------------------
(i) Muck Sample

Averages

------------------------------------------------------------------
Sample Length Cu Au Ag Pd Cu Eq.
Interval #'s (m) (%) (g/t) (g/t) (g/t) (%)
------------------------------------------------------------------
C 439-471 43 1.02 0.93 1.60 0.08 1.66
------------------------------------------------------------------


NEW GOLD INC.

TABLE 3
NEW AFTON COPPER-GOLD PROJECT

RESULTS OF UNDERGROUND CHIP SAMPLING
NORTH CROSS-CUT

October 20, 2005

--------------------------------------------------------------
Sample # Cu (%) Au (g/t) Ag (g/t) Pd (g/t) Cu Eq. (%)
--------------------------------------------------------------
461 0.24 0.30 0.80 0.36 0.56
466 1.11 0.92 2.00 0.17 1.78
470 0.71 0.57 1.00 0.11 1.12
474 1.16 0.74 1.70 0.08 1.67
476 0.59 0.49 0.85 0.04 0.92
478 0.49 0.62 1.30 0.03 0.91
480 0.25 0.33 0.50 0.04 0.47
482 0.02 0.00 0.00 0.00 0.02
484 0.02 0.00 0.00 0.00 0.02
485 0.02 0.00 0.00 0.00 0.02
487 0.01 0.02 0.00 0.00 0.02
489 0.01 0.00 0.00 0.00 0.01
491 0.01 0.00 0.05 0.00 0.01
493 0.01 0.00 0.10 0.00 0.01
495 0.00 0.00 0.05 0.00 0.00
497 0.01 0.00 0.10 0.00 0.01
499 0.11 0.13 0.10 0.00 0.19
501 0.27 0.32 1.05 0.03 0.49
503 0.14 0.13 0.35 0.11 0.26
504 0.29 0.30 0.55 0.12 0.53
505 0.34 0.50 0.60 0.12 0.70
506 0.10 0.07 0.30 0.02 0.15
507 0.34 0.30 1.50 0.21 0.61
508 0.30 0.43 0.60 0.12 0.62
509 0.67 0.23 2.15 0.06 0.85
510 0.60 0.24 0.75 0.07 0.78
511 0.27 0.24 0.10 0.09 0.45
512 0.36 0.40 1.15 0.23 0.70
513 0.61 0.58 0.95 0.24 1.07
514 0.59 0.51 0.60 0.15 0.97
515 0.98 1.23 0.75 0.12 1.81
516 0.46 0.60 0.10 0.19 0.91
517 0.58 0.51 1.10 0.06 0.93
518 0.57 0.64 2.25 0.16 1.05
519 0.64 0.69 0.55 0.08 1.12
520 0.58 0.66 1.15 0.26 1.10
521 0.84 0.74 1.10 0.14 1.37
522 0.27 0.30 0.25 0.15 0.51
523 0.46 0.46 0.30 0.54 0.93
--------------------------------------------------------------



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