Mr. Patrick Godin reports

NEW AFTON ACHIEVES SIGNIFICANT MILESTONE WITH COMPLETION OF THE FIRST DRAW BELL AT C-ZONE ON TIME AND C-ZONE COMMERCIAL PRODUCTION ON-TRACK FOR SECOND HALF OF 2024

New Gold Inc. has achieved of two key milestones at New Afton's C-zone project -- completion of the first draw bell at New Afton's C-zone and commissioning of the final two of 29 dewatering wells at the new Afton tailings storage facility (NATSF), as planned. C-zone will now transition to the production ramp-up phase and remains on track to achieve commercial production in the second half of 2024.

"These are important milestones for New Gold and the New Afton team," stated Patrick Godin, president and chief executive officer. "Completing the first draw bell from C-zone is a positive step in significantly increasing our production profile at New Afton over the coming years and final commissioning of all 29 dewatering wells at the NATSF marks the completion of major activities for the tailings stabilization project. The C-zone project remains on track and on budget and we will build on the momentum from these milestones and continue to advance C-zone towards commercial production expected in the second half of 2024."

Key milestones

C-zone is the fourth block cave at New Afton, after completion of Lift 1 in 2022 and the currently producing B3 cave. With current C-zone mineral reserves of 486 million pounds of copper and 653,000 ounces of gold, the C-zone production period of 2024 to 2030 is expected to increase average annual production at New Afton to approximately 90,000 ounces of gold and approximately 70 million pounds of copper, both 60-per-cent increases over the midpoint of the company's 2023 guidance. The operation will take advantage of the existing excess processing capacity at the mill to process up to 16,000 tonnes per day from C-zone. Unit mining, processing, and G&A (general and administrative) costs per tonne are expected to decrease with the higher throughput rates and there will be minimal capital expenditure after construction of the C-zone project in 2025. As a result, all-in sustaining costs during that period are expected to significantly decrease, leading to strong free cash flow for the operation.

Development of the dual ramps from B3 to C-zone commenced in the first quarter of 2019, reaching the cave footprint in the second quarter of 2022. The footprint includes an undercut level, for initiating the cave, and the extraction level from which ore will be mucked from drawpoints for the life of the cave. Two drawpoints make up one draw bell and C-zone is designed with 91 draw bells arranged in a herringbone layout. Block caving requires upfront capital investment in development and footprint construction, followed by a production period with minimal capex and the lowest unit mining costs of all the underground mining methods. Construction of the first draw bell is significant because it is the transition point at which the block cave gradually ramps up ore production.

From now until the second half of 2024, additional draw bells will continue to be constructed until the cave reaches hydraulic radius to achieve steady-state self-cave propagation (considered commercial production for C-zone), after which the extraction rate can be accelerated. Relative to other block caves, New Afton ore caves well, with Lift 1 and B3 achieving hydraulic radius as expected without any preconditioning required. C-zone is expected to achieve hydraulic radius in the second half of 2024. Operating costs at C-zone are expected to be significantly lower than current B3 unit mining costs because the extraction and processing rate will increase from approximately 8,500 tonnes per day currently to 16,000 tonnes per day, spreading the fixed costs over a greater tonnage.

A second gyratory crusher will be installed and connected by conveyors to the existing Lift 1 conveyor system to surface, eliminating the cost of truck haulage. Of the three additional main conveyor legs, two are already installed and operational. Excavation of the crusher chamber is complete and has been handed over to the construction crew with commissioning expected in the second half of 2024 to align with the increased extraction rate.

The C-zone project also includes three major activities related to tailings management, including the thickened and amended tailings (TAT) plant, the stabilization of the historical Afton tailings storage facility (HATSF), and the stabilization of NATSF. Surface subsidence, inherent in block caving, is modelled to progress in the direction of the HATSF (now closed) and the NATSF. Therefore, a new TAT plant was constructed, and non-flowable, thickened tailings is diverted into the historic Afton pit. The TAT project was successfully completed on time in late 2022 and, to date, performance is exceeding design density and strength targets. In-pit tailings have sufficient capacity to double the remaining mine life with minimal capital or permitting requirements. Stabilization of the HATSF and NATSF is achieved through lowering the phreatic surface, resulting in tailings consolidation and reduced pore water pressure. Tailings stabilization on the HATSF was completed in Q4 2022. Stabilization of the NATSF reached an important milestone in September, with commissioning of the final dewatering wells. With all 29 wells now complete and operating, the piezometer network is showing that dewatering is trending within expectations to the target dewatering rate. Additionally, a total of five evaporators are in operation, with an additional seven being commissioned to remove surface water from the NATSF. The overall NATSF stabilization project is on track for completion in the first half of 2026.

New Afton is at a pivotal moment, with expected near-term increasing production to lead to a decline all-in sustaining costs, leading to strong free cash flow for the operation. Coupled with several underground and regional exploration opportunities the company continues to advance, New Gold believes there remains strategic upside to the operation's future mine life and production.

About New Gold Inc.

New Gold is a Canadian-focused intermediate mining company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. The company also holds other Canadian-focused investments. New Gold's vision is to build a leading diversified intermediate gold company based in Canada that is committed to the environment and social responsibility.

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