Mr. Randall Oliphant of New Gold reports

NEW GOLD AGREES TO ACQUIRE RAINY RIVER RESOURCES GROWING GOLD RESERVES BY OVER 40 PERCENT PER SHARE

New Gold Inc. and Rainy River Resources Ltd. have entered into a definitive acquisition agreement, whereby New Gold will offer to acquire all of the outstanding common shares of Rainy River through a friendly takeover bid. Under the terms of the agreement, New Gold will offer, at the election of each holder of Rainy River common shares, 0.5 of a common share of New Gold or $3.83 in cash, in each case subject to proration. The offer represents a premium of 42 per cent over the closing price of the Rainy River shares on the Toronto Stock Exchange on May 30, 2013, the last day of trading prior to announcement of the offer, and a 67-per-cent premium to Rainy River's 20-day volume-weighted average trading price. The maximum number of New Gold shares to be issued will be approximately 25.8 million and the maximum cash consideration will be approximately $198-million. The offer values the fully diluted in-the-money share capital of Rainy River, net of Rainy River's current cash balance, at approximately $310-million.

Transaction highlights -- New Gold

• Accretive on all key per share metrics -- gold reserves, net asset value, future production and cash flow;
• Adds 4.0-million-ounce gold reserve in Ontario, further growing New Gold's Canadian presence;
• Asset located in great mining jurisdiction, near infrastructure;
• Enhances pipeline by adding asset with annual average production potential of over 225,000 ounces over the life of the mine, at below industry average total cash costs;
• Modest transaction size with minimal equity dilution to New Gold shareholders;
• Further strengthens New Gold technical development team, which has a record of delivering on projects.

"The acquisition of Rainy River is consistent with our strategy of identifying opportunities to create shareholder value," stated Randall Oliphant, New Gold executive chairman. "We have followed Rainy River for some time and see this as an opportune time to add this great asset to our portfolio. We view the combination of Rainy River's ideal location, sizable reserve, robust production potential and experienced team as presenting a truly compelling opportunity."

Transaction highlights -- Rainy River

• Significant and immediate premium of 42 per cent to current share price and 67 per cent to 20-day volume-weighted average share price;
• Flexibility to elect form of consideration in either cash or highly liquid New Gold shares;
• Opportunity to gain exposure to New Gold's current operating cash flow and attractive growth portfolio;
• Access to New Gold's strong balance sheet and current and future operating cash flow to develop the Rainy River project;
• Ability to partner with New Gold's experienced management and operating teams.

"This is a great outcome for Rainy River shareholders," stated Dale Peniuk, chair of the special committee of the board of directors of Rainy River. "To be able to realize a meaningful premium, while gaining the ability to combine with a well-established mine builder in New Gold, is a win-win scenario for our shareholders. New Gold's offer is a testament to both the quality of the Rainy River management team and their efforts to advance the Rainy River project to this point."

Rainy River gold project

The Rainy River gold project is an advanced-stage gold project situated in the Richardson township, approximately 65 kilometres northwest of Fort Frances in Northwestern Ontario. The property has excellent infrastructure, with year-round road access and powerlines in close proximity, as well as a railway located 21 kilometres to the south of the property. The Fort Frances area has a population of approximately 10,000 people from which a work force could be sourced for future development.

On April 10, 2013, Rainy River announced the results of a feasibility study for the project, with 4.0 million ounces in proven and probable gold reserves and 6.2 million ounces in measured and indicated gold resources, inclusive of reserves. The feasibility study contemplates a 21,000-tonne-per-day processing rate from a combination of open pit, underground and stockpiled ore. The project has the potential to produce over 225,000 ounces of gold annually, at below industry average cash costs, for an initial mine life of 16 years. The feasibility study also highlights the potential to process higher grade ounces in the project's early years, while stockpiling lower grades for processing toward the end of the mine life. This should help drive higher production and lower costs at the beginning of the mine life, enhancing both cash flow and the overall economics of the project.

                                                                                          
                          RAINY RIVER MINERAL RESOURCE ESTIMATE                           

                                                  Metal grade              Contained metal

                            Tonnes            Au                Ag            Au      Ag
                             (Mt)           (g/t)              (g/t)        (koz)   (koz)

Proven                        27.7          1.14               1.94         1,015   1,728 
Probable                      88.6          1.06               3.01         3,017   8,587 
Total reserves               116.3          1.08               2.76         4,032  10,315 
Measured                      27.6          1.33               1.90         1,182   1,689 
Indicated                    130.9          1.18               2.77         4,985  11,649 
Total measured + indicated   158.5          1.21               2.62         6,167  13,338 
Inferred                      93.8          0.76               2.32         2,280   6,983 

Additional details of offer

The board of directors of Rainy River, upon the unanimous recommendation of its special committee, after consultation with its financial and legal advisers, has unanimously approved entering into the agreement and recommends that Rainy River shareholders tender their shares to the offer. BMO Capital Markets, the financial adviser to Rainy River, has provided a verbal opinion to the effect that, as of the date of such opinion and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration proposed to be paid to the holders of Rainy River common shares pursuant to the offer is fair from a financial point of view to such holders. CIBC World Markets has provided a separate verbal opinion solely to Rainy River's special committee to the effect that, as of the date of such opinion and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration proposed to be paid to the holders of Rainy River common shares pursuant to the offer is fair from a financial point of view to such holders.

Rainy River's board of directors and management team have entered into lock-up agreements with New Gold agreeing to tender their shares, including shares issuable on the exercise of stock options, and support the transaction.

The agreement between New Gold and Rainy River provides for, among other things, a non-solicitation covenant on the part of Rainy River subject to customary "fiduciary out" provisions, a right in favour of New Gold to match any superior proposal and a payment to New Gold of a termination fee of approximately $14-million in certain circumstances, including if Rainy River accepts a superior proposal.

The offer is expected to commence during the week of June 10, 2013, upon the mailing of New Gold's takeover bid circular and related documents, which will include full details of the offer. Rainy River's directors circular, which will set out the unanimous recommendation of the board of Rainy River that shareholders accept the offer, will also be mailed. The offer will be open for acceptance for a period of not less than 35 days from the date of mailing of the takeover bid circular and will be conditional upon, among other things, there being deposited under the offer, and not withdrawn at the expiry time, shares representing not less than 66-2/3 per cent of the Rainy River shares on a fully diluted basis. In addition, the offer will be subject to certain customary conditions, including receipt of relevant regulatory approvals and the absence of a material adverse change with respect to Rainy River.

New Gold's financial adviser is RBC Capital Markets and its legal advisers are Cassels Brock & Blackwell LLP in Canada and Paul, Weiss, Rifkind, Wharton & Garrison LLP in the United States. Rainy River's financial adviser is BMO Capital Markets and its legal advisers are Bull, Housser & Tupper LLP and Davies Ward Phillips & Vineberg LLP. CIBC World Markets provided a fairness opinion to Rainy River's special committee.

Webcast and conference call

New Gold will hold a conference call and webcast on Friday, May 31, 2013, at 7:30 a.m. Eastern Time to discuss the proposed acquisition. A live audio webcast will be available on New Gold's homepage. Participants may also join the conference by calling 1-647-427-7450 or toll-free 1-888-231-8191 in North America. To listen to a recorded playback of the call after the event, please call 1-416-849-0833 or toll-free 1-855-859-2056 in North America -- passcode 88929900. The archived webcast will also be available after the call at the company's website.

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