Mr. Douglas Forster reports

NEWMARKET GOLD ACHIEVES RECORD QUARTERLY PRODUCTION OF 61,191 OUNCES IN Q2, 2016, PRODUCES 119,248 OUNCES IN FIRST HALF OF 2016

Newmarket Gold Inc. has released production results for the three and six months ended June 30, 2016. Full financial results for the three and six months ended June 30, 2016, will be released July 29, 2016.

(All dollar amounts are in U.S. dollars unless otherwise noted.)

Second quarter 2016 highlights:

• Cash balance of $69.9-million as of June 30, 2016, representing an increase of 34 per cent or $17.8-million from $52.1-million as at March 31, 2016, after investing approximately $3.6-million in growth expenditures during the quarter; preliminary working capital at quarter-end strengthened to $56.3-million;
• Record quarterly consolidated gold production of 61,191 ounces, up 9 per cent from second quarter 2015 with first half 2016 consolidated gold production of 119,248 ounces on track to exceed full-year production guidance (205,000 to 220,000 ounces);
• Fosterville delivered a quarterly record 37,245 ounces, achieving record mill grade of 7.50 grams per tonne gold and record quarterly recovery of 90.8 per cent, supported by successful commissioning of the new gravity gold circuit, including a record monthly recovery in June of 91.3 per cent;
• Cosmo achieved record quarterly recovery of 94.2 per cent, producing 15,442 ounces at an average grade of 3.01 g/t Au;
• Stawell delivered 8,504 ounces, at an average grade of 1.48 g/t Au and 79.3-per-cent recovery;
• Harrier South gold system drill results from the Fosterville gold mine intercepted the first recorded visual gold; results include: 22.13 grams per tonne gold over 3.4 metres in hole UDH1559 (estimated true width (ETW) of 3.3 metres) and 10.3 g/t Au over 3.35 m (ETW of 3.27 m) in hole UDH1596 (see Newmarket press release dated June 27, 2016);
• Maud Creek gold project preliminary economic assessment (PEA) delivered strong results, including a pretax net present value discounted at 5 per cent of $201-million (Australian) ($155-million (U.S.)), an internal rate of return of 116 per cent and a 1.25-year payback period at $1,550 (Australian) per ounce gold ($1,200 (U.S.) per ounce) (see Newmarket press release dated May 18, 2016).

Douglas Forster, president and chief executive officer of Newmarket Gold, stated: "We are very pleased to report record quarterly consolidated production of 61,191 ounces in Q2 2016, driven by record production, grade and recoveries at our flagship Fosterville gold mine. Strong operating performance resulted in a significant increase in our cash balance at quarter-end to $69.9-million, an increase of 34 per cent or $17.8-million from Q1 2016. Fosterville's production of 37,245 ounces for the quarter represented 61 per cent of our consolidated production, with Fosterville mill grades increasing to 7.50 g/t Au, a 27-per-cent increase from the Q2 2015 grade of 5.92 g/t Au. Fosterville's newly commissioned gravity gold circuit recovered 17 per cent of the gold produced during the quarter and was largely responsible for the record quarterly recovery of 90.8 per cent, a 4.0-per-cent increase from Q1 2016 recovery of 86.8 per cent. Growth activities continued at Fosterville during Q2 2016, with both surface and underground diamond drill rigs operating during the period. Ongoing drill programs are targeting both mineral resource growth and resource definition in both the Lower Phoenix and Harrier South gold systems with eight drill rigs currently in operation.

"Entering the second half of 2016, Newmarket Gold is well positioned with a strong balance sheet, essentially no debt, record Q2 2016 operating results, unhedged production with the Australian-denominated gold price averaging $1,689 (Australian) per ounce over the quarter and an experienced leadership team that is focused on creating shareholder value. As a result of our strong first half operating results, Newmarket is reviewing 2016 production and cost guidance with the view to revising guidance when the company announces our Q2 2016 financial results on July 29, 2016."

                           CONSOLIDATED OPERATING RESULTS
  
                           Q2 2016      Q2 2015      Q1 2016     YTD 2016     YTD 2015

Ore milled (tonnes)        564,401      588,381      572,451    1,136,852    1,174,101
Grade (g/t Au)                3.75         3.31         3.63         3.69         3.44
Recovery (%)                 89.8%        88.0%        86.8%        88.3%        87.2%
Gold ounces produced        61,191       55,998       58,057      119,248      115,674

                         OPERATIONAL RESULTS
  
                                 Q2 2016      Q2 2015      Q1 2016
Fosterville gold mine
Ore milled (tonnes)              169,884      173,323      161,868
Grade (g/t Au)                      7.50         5.92         7.34
Recovery (%)                        90.8%        89.0%        86.8%
Gold production (oz)              37,245       29,648       33,138
Cosmo gold mine
Ore milled (tonnes)              169,252      193,084      181,025
Grade (g/t Au)                      3.01         2.97         3.09
Recovery (%)                        94.2%        92.7%        90.7%
Gold production (oz)              15,442       17,073       16,340
Stawell gold mines
Ore milled (tonnes)              225,265      221,974      229,558
Grade (g/t Au)                      1.48         1.57         1.43
Recovery (%)                        79.3%        83.1%        79.9%
Gold production (oz)               8,504        9,277        8,579
Total gold ounces produced        61,191       55,998       58,057

Second quarter 2016 operational highlights

Fosterville gold mine

Fosterville produced a quarterly record 37,245 ounces in the second quarter, surpassing the first quarter 2016 production of 33,138 ounces. This result marked a 12-per-cent increase over the previous quarter and a 26-per-cent increase over second quarter 2015.

Mine production continued to deliver strong, consistent performance during the quarter, delivering 160,889 tonnes at an average grade of 8.30 g/t Au, compared with 169,931 tonnes at 7.22 g/t Au in first quarter 2016 and 178,186 tonnes at 5.59 g/t Au in second quarter 2015. Tonnes mined were down slightly from the corresponding period of 2015; however, grade has continued to increase to a new quarterly record level, a 15-per-cent increase over the previous quarter and a 48-per-cent increase on second quarter 2015 grade. The improvement was driven by continuing high-grade development and stope production on multiple levels in the Lower Phoenix area, where both higher-grade west- and east-dipping lenses were extracted. The slightly lower mined tonnage reflects the deliberate change to a total extraction mining method, which incorporates cemented backfill into the production cycle to optimize the mined grade.

Mine development advanced 1,697 m during second quarter 2016, slightly above the previous quarter. In addition, during the quarter, Newmarket advanced a total of 121 metres on growth development to complete a drill drive-off of the Harrier decline, which establishes a platform for growth drilling to test down-plunge extensions of the Phoenix and Lower Phoenix gold systems. Growth activities continue at Fosterville with eight drill rigs in operation, targeting both mineral resource growth and resource definition in both the Lower Phoenix and Harrier South gold systems.

Tonnes milled in the second quarter were 169,884 tonnes at a record average grade of 7.50 g/t Au, compared with 161,868 tonnes at 7.34 g/t Au in first quarter 2016, and 173,323 tonnes at 5.92 g/t Au in second quarter 2015. Mill throughput was driven by availability of mine tonnes, coupled with a 9,000-tonne drawdown in stockpiles. The mill achieved a record quarterly recovery of 90.8 per cent, a 4.0-per-cent increase over first quarter 2016 recoveries of 86.8 per cent. The quarter culminated with a site record monthly recovery of 91.3 per cent in June. The injury-free and on-schedule commissioning of the new gravity circuit in March, 2016, is the main contributing reason for the second quarter record recoveries. During second quarter, 6,454 ounces, or 17 per cent, of the quarterly production was recovered from the gravity circuit. The continued focus on process improvements at Fosterville is demonstrated with year-to-date 2016 recovery being 88.9 per cent, versus full-year average recoveries of 88.5 per cent in 2015 and 86.4 per cent in 2014.

Cosmo gold mine

With gold production of 15,442 ounces in second quarter 2016, Cosmo produced 31,782 ounces of gold in the first half of 2016, a 24-per-cent improvement over the second half of 2015 due to a 3-per-cent increase in mined tonnes, a 17-per-cent improvement in grade and a 3-per-cent improvement in mill recovery.

Mine production slowed this quarter in terms of volume and grade compared with the previous quarter, producing 155,737 mined tonnes at an average grade of 2.97 g/t Au compared with 192,939 tonnes at 3.12 g/t Au in first quarter 2016 and 183,307 tonnes at 2.98 g/t Au in second quarter 2015. Tonnage decreased 19 per cent compared with first quarter 2016 as new mining areas were developed into the newer Sliver and Hinge areas, as well as additional rehabilitation works required in some of the stope areas with poor ground conditions. Mined grade was 5 per cent lower than first quarter 2016 as lower-grade blocks had to be mined in June to ensure the mining sequence was maintained.

Mine development was in line with the previous quarter with 413 m compared with 450 m in first quarter 2016. The mine utilized one jumbo drill in the 640 drill drive and for rehabilitation works associated with stoping in areas with poor ground conditions.

With the mill now focused on quality and optimizing recovery as opposed to maximizing tonnage, the benefits are clearly evident with a record quarterly recovery of 94.2 per cent in second quarter, up from 90.7 per cent in the previous quarter and 86.9 per cent in fourth quarter 2015. The mill processed 169,252 tonnes at an average grade of 3.01 g/t Au compared with 181,025 tonnes at 3.09 g/t Au in first quarter 2016, and 193,084 tonnes at 2.97 g/t Au in second quarter 2015.

Stawell gold mine

Stawell produced 8,504 ounces of gold in second quarter 2016, in line with the first quarter of 2016 and down 8 per cent compared with second quarter 2015 due to lower underground ore grade. Mined tonnes for the second quarter were 116,550 tonnes at 2.37 g/t Au, with production consisting predominantly of higher-grade reserve material from the Federal Albion South, complemented with non-reserve material from the upper levels.

Mine development was 818 m in second quarter 2016 compared with 824 m in the previous quarter. Capital development advanced 254 m into the U2 production area while operating development advanced 564 m to open additional mining fronts in the Federal Albion South area.

Low-grade oxide stockpiles continued to supplement underground ore, resulting in total mill feed of 225,265 tonnes at 1.48 g/t Au and recovery of 79.3 per cent, generally consistent with the first quarter of 2016.

Growth activities at Stawell have continued to progress the understanding of the Aurora B gold discovery and extending the Aurora B mineral resource reported in first quarter 2016. An eight-hole program was completed during the second quarter, which demonstrated the continuation of mineralization both up and down plunge. Drilling will continue in the third quarter with two rigs focused on the Aurora B gold zone on the East flank of the Stawell gold system. The West flank of the Stawell gold system has produced 2.3 million ounces over 30 years of continuous mining whereas the East flank has no recorded production.

Second quarter development-stage gold project highlights

During second quarter 2016, Newmarket Gold reported positive results from the Maud Creek gold project preliminary economic assessment, which was completed by SRK Consulting (Australasia) Pty. Ltd. (see Newmarket press release dated May 18, 2016). Highlights of the PEA include a pretax net present value at a 5-per-cent discount rate of $201-million (Australian) ($155-million (U.S.)) and an internal rate of return (IRR) of 116 per cent with a 1.25-year payback period. The project also has a 9.5-year mine life with annual gold production of 52,000 ounces per year with a peak annual production rate of 70,000 ounces. Total recovered gold is 496,000 ounces with an average diluted head grade of 4.2 g/t Au. The cash operating costs are estimated to be $822 (Australian) per ounce ($632 (U.S.) per ounce) with preproduction capital cost of $32-million and life-of-mine capital costs of $112 (Australian) per ounce. With the positive outcome from the Maud Creek PEA, during the third quarter, Newmarket will be reviewing options to conduct a feasibility study.

Cash balance and working capital position

Newmarket Gold ended the second quarter with a cash balance of $69.9-million, a $17.8-million increase from March 31, 2016. Working capital at quarter-end was approximately $56.3-million and includes approximately $3.6-million in growth expenditures during the quarter.

Qualified person

Mark Edwards, MAusIMM (CP), MAIG, general manager, exploration, Newmarket Gold, is a qualified person as such term is defined in National Instrument 43-101 and has reviewed and approved the technical information and data included in this press release.

Second quarter 2016 financial earnings conference call details

Full financial results and associated operating and all-in sustaining cash cost details for the three and six months ended June 30, 2016, will be released July 29, 2016, before the opening of the North American stock markets.

Mr. Forster, president and chief executive officer, Darren Hall, chief operating officer, and Robert Dufour, chief financial officer, will also host a conference call to discuss the results on July 29, 2016, at 11 a.m. (EDT).

Participants may listen to the call by dialling toll-free 1-877-291-4570 at approximately 10:50 a.m. (EDT) and ask to join the Newmarket Gold conference call. International or local callers should dial 1-647-788-4919 at approximately 10:50 a.m. (EDT) and ask to join the Newmarket Gold conference call.

The call will be webcast live and available at the Newmarket Gold website in the events and webcast section under the investor relations tab.

The live audio webcast will be archived and made available for replay at the Newmarket Gold website.

Presentation slides, which accompany the conference call, will be made available in the investors section of the Newmarket Gold website, under presentations, prior to the conference call.

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