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New Gold AMEX: NGD DIV: Nil RECENT: $5.88 9/30/12** ASSETS Prod Au Eqv Net Cash 6/30/13 (1) Cash $647.6 $562.5 (1) Period Prod/oz Cost/oz* 23.4 Tot 09 302K $465 Accts Rec 67.6 Tot 10 383K $428 218.3 Inventory 158.0 Tot 11 387K $448 Other 54.7 200.4 3,202.8 Net PP&E 3,053.4 1Q12 99K $543 4,207.4 TOTAL 3,981.3 2Q12 95K $472 LIAB'S 3Q12 105K $443 Curr Liab 243.2 4Q12 113K $254 88.4 Tot 12 412K $421 — Curr Debt 0.0 855.5(2) 95K $485 LT Debt 897.5 (2) 1Q13 Other 449.0 2Q13 505.8 102K $430 2,757.7 EQUITY 2,391.6 3Q13 502.2mil(1) # Shrs Cmn 462.5 mil 4Q13 Tot 13 # Fully Dil 509.3 mil (3) 541.0mil(2) Fin Notes: *NGD takes Ag & Cu revs as by-prod credit for net cash/oz. $150 mil undrawn credit facility. (1) Not adjusted for Aug-13 acquis of Rainy River except for # of shares (2) $293 mil 7.0% notes due Apr-20, $72 mil 4.6% El Morro loan from Goldcorp. $491 mil 6.25% notes due Nov-2022. (3) Incl 11.1 mil options at C$5.78 and 35.7 mil wts at C$15. New Gold has four operating mines with total prod of 412K oz Gold/yr in 2012. New Afton boosts Gold prod to 460K/yr in 2013. With projects Rainy River, El Morro and Blackwater will double prod to over 1 mil oz/yr in ~2018 w/cash cost below $400/oz due large copper by-product. New Gold Inc. 200 Bay St. Suite 3120 Toronto, Ontario, Canada M5J 2J4 www.newgold.com Ph: 416-324-6000 Exec Chair: Randall Oliphant Pres: Robert Gallagher EVP-CFO: Brian Penny VP Op’s: Ernie Mast IR: Hannes Portmann 416-324-6014 www.GoldStockAnalyst.com © 2013 GOLD STOCK ANALYST New Gold Properties Rainy River 1 New Gold P+P and Mnrliz Gold Gold Copper Silver P+P oz Other oz P+P lbs P+P oz Mesquite 2.3 mil 4.0 mil — — San Pedro 0.8 mil 1.8 mil — 26 mil Peak 0.6 mil 0.4 mil 0.1 bil 1 mil New Afton 1.1 mil 1.4 mil 1.1 bil 4 mil El Morro 2.9 mil 1.3 mil 2.1 bil — Blackwater 0.0 mil 9.2 mil — — Rainy River 4.0 mil 4.3 mil — — TOTALS 11.7 mil 22.3 mil 3.3 bil 31 mil Reserves at $1,300/oz Au, $3/lb Cu and $24/oz Ag. Site New Gold – Page 2 © 2013 GOLD STOCK ANALYST www.GoldStockAnalyst.com MINES: NEW AFTON: British Columbia. Former Teck Open Pit New Afton mine restarted as UnderGround block caving operation. Targeted 11K tons/day rate reached Sep-12. 2012 saw prod of 37K Au oz and 28 mil lbs Cu lbs at –$1,043 cash cost/oz due copper by-prod. Co sees recoveries improving to ~90% by optimizing Mill circuit. Drilling in B and C zones below main pit to expands mnrliz and increases prod and life-of-mine (LOM). Fcsts 80K Au oz prod at -$1,400 cash cost/oz in 2013 due 80 mil lbs Cu by-prod. MESQUITE: 150 miles east of San Diego, CA. Shut by Newmont in 2001 due low Gold price, re-opened 2008 by Western Goldfields which was bot by NGD in May-09. Three pits Rainbow, Big Chief and Vista for heap leaching. Prod 142K Au oz in 2012 at $690 cash/oz. Co sees cash costs up to $840 in 2013 and prod lower at 135K oz due to low grade cycle. Prod resumes historical avg ~170K Au oz in 2014. CERRO SAN PEDRO: Central Mexico. Prod 138K Au oz in 2012; 1.9 mil Ag oz by-prod gave net $232 cash/oz. Sees Au prod increasing to 145K Au oz ‘13, but higher $380 cash cost due lower 1.5 mil oz Ag prod. PEAK: Australia. 96K Au oz in 2012 at $764 net cash cost/oz after 14 mil lbs Cu by-prod credit. Sees 96K Au oz prod at lower $680 net cash cost/oz due easing Aussie inflation. DEVELOPMENT PROJECTS: EL MORRO (30%): 650 km north of Santiago, Chile. Goldcorp is 70% owner with NGD 30%. Great deal for New Gold as its 30% share of $3.9 bil total capex is funded by Goldcorp and repaid by NGD from 80% of its 30% share of cash flow. Based on revised Jan-12 feasibility, NGD’s net 30% = 90K Au oz and 85 mil Cu lbs/ yr prod at –$700/oz cash cost w/prod in 2018. Early-12, protesters demanded stricter enviro protection and wider distribution of benefits. Chilean court suspended EIS Apr-12 due need to compensate locals. GG halted work to focus on amending project. Consultation on deficiencies due complete late 2013. BLACKWATER (100%): British Columbia. Located ~100 miles from New Afton. NGD paid $513 mil in shares Apr-11 for Richfield Ventures w/90% of project and 3.8 mil oz Au mnrliz grading 1.3 g/t and later gained 100% w/$138 mil purchases in 2011/12. Project now holds 9.1 mil oz Au and 119 mil Ag oz mnrliz. Sep-12 Pre-Feasibility Study saw $1.8 bil capex for 60K t/d mill and 543K Au oz/yr at $467 cash/oz (net of 2 mil oz/yr Ag by-prod), w/prod start mid-17. Co drilled 250K meters in 2012 further defining Blackwater reserves and exploring large (10K km2) land package including Capoose deposit (from SilverQuest) already w/net 1.0 mil oz Au and 56 mil oz Ag mnrliz. New Gold spends $45 mil completing Feasibility Study by end-13. Plans funding project’s capex from cash balances. RAINY RIVER (100%): Co spent ~$310 mil cash/shares in August-13 friendly acquis of Co w/Full Feasib Study showing 4.0 mil oz Au P+P and 4.4 mil Other Au oz. Study shows $713 mil capex for 21K t/day mill to prod 225K Au oz/yr at $468 cash/oz, net for 500K oz/yr Ag for 16 years. If permits issue 3Q14, production seen by end-16. NGD now had two projects on nearly the same development timeline w/prod in 2017. Co will continue to advance both to a “ready to build stage” and let permitting and/or funding needs determine which goes first. New Afton El Morro Rainy River Blackwater 2 New Gold – Page 3 © 2013 GOLD STOCK ANALYST www.GoldStockAnalyst.com Mine Metal 2013 2014 2015 2016 2017 2018 135K oz 150K oz 150K oz 150K oz 150K oz 150K oz Mesquite Au Prod 145K oz 140K oz 140K oz 140K oz 140K oz 140K oz Cerro San Pedro Au Prod 100K oz 95K oz 95K oz 95K oz 95K oz 95K oz Peak Au Prod 80K oz 85K oz 85K oz 85K oz 85K oz 85K oz New Afton Au Prod — — — — 9K oz* 18K oz* El Morro* Au Prod — — — — 250K oz 500K oz Blackwater Au Prod 113K oz 225K oz Rainy River Au Prod — — — — 14 mil lb 14 mil lb 14 mil lb 14 mil lb 14 mil lb 14 mil lb Peak Cu Prod 75 mil lb 75 mil lb 75 mil lb 75 mil lb 75 mil lb 75 mil lb New Afton Cu Prod — 8 mil lb* 17 mil lb* Cu Prod — — — El Morro* 2.0 mil oz 2.0 mil oz 2.0 mil oz 2.0 mil oz 2.0 mil oz 2.0 mil oz Cerro San Pedro Ag Prod — — — — 1.0 mil oz 2.0 mil oz Blackwater Ag Prod — — — — 0.3 mil oz 0.5 mil oz Ag Prod Rainy River Total Gold Production 460K oz 470K oz 470K oz 470K oz 842K oz 1,213K oz 2.0 mil oz 2.0 mil oz 2.0 mil oz 2.0 mil oz 3.3 mil oz 4.5 mil oz Total Silver Production 89 mil lb 89 mil lb 89 mil lb 89 mil lb 97 mil lb 106 mil lb Total Copper Production $308/oz $304/oz $304/oz $304/oz $363/oz $387/oz Au Cash Cost (net by-prods) $548 mil $562 mil $562 mil $562 mil $956 mil $1,351 mil Total Operating Cash Flow 27% 26% 26% 26% 18% 14% Copper % of OCF 541 mil shrs 541 mil shrs 541 mil shrs 541 mil shrs 541 mil shrs 541 mil shrs Full Diluted Shares Out $1.01/shr $1.04/shr $1.04/shr $1.04/shr $1.77/shr $2.50/shr OCF/Share $7.80 $8.00 $8.00 $8.00 $13.61 $19.22 Average 7.7X Multiple** Gold: $1,500/oz Prices Used: Silver: $25/oz Copper: $3.00/lb *Prod based on 20% of NGD's 30% share due capex payback of 80% of OCF. **Multiple based on GSA average since Oct-08. Gold Prod oz Net Cash Cost/oz ANALYSIS: New Gold’s Board of Directors includes Pierre Lassonde (Franco Nevada), Ian Telfer (Goldcorp) & Randall Oliphant (ex-CEO of Barrick). These industry legends turned Wheaton River into Goldcorp & Silver Wheaton. And like Goldcorp, NGD will use Cu by-prod to lower cash cost/oz and generate $500+ mil operating cash flow/yr to grow Gold production to 1.2 mil oz/yr in 2018. The long term is bright, but Co faces two minor short term challenges (See graphic below): 1) Flat production 2013-2016. In 2013 New Gold’s production rises to 460K Au oz, but remains steady at ~470K Au oz/yr through 2016 as major projects Blackwater, Rainy River, and El Morro do not come online until 2017 and jump prod to 1.2+ mil oz in 2018. Mr Market gets bored while mines are being built. 2) Too much Copper, at 26% of total revenue from 2013-16. When Base Metal revenues exceed 20% of total revenues, miners begin losing their Gold premiums. NGD’s latest mine, New Afton in prod from mid-12, raises Operating Cash Flow (OCF) to $548 mil in 2013, but heavy Cu component (63% of total mine revenue) increases Cu to ~26% of total NGD revenue through 2016 (see table above and chart below). Fortunately, this too is cured over time as Blackwater and Rainy River are mostly Gold (w/total 2.5 mil oz/yr Silver by-prod), so copper falls to 14% of total revenues in 2018, an acceptable level for Mr Market. Blackwater and Rainy River will need a total $2.5 bil for capex to produce ~750K oz/yr. As seen in above table, this is handled by Co’s $550 mil operating cash flow New Gold's Au Production Growth $500 for next 4 years. Coupled with the current $560 mil 1,400K oz cash balance, they both can be internally financed. 1,200K oz GG pays for El Morro, so it’s not a capex concern. $450 But we would not be surprised by a deal that 1,000K oz added 100+K oz/yr of production to fill the flat pe$400 800K oz riod thru 2016 (see graphic) and keep Mr Market Net Cash Cost/oz excited about NGD. 600K oz $350 Flat Production for 4 years The table at top is GSA’s fcst for NGD prod thru 2018, but we are more comfortable using 2017 as a 400K oz the year for our target price. Based on $1,500 Gold, $300 200K oz $25 Silver and $3.00 Copper, we see Operating Cash Flow (OCF) at $1.77/shr. Using the industry’s 7.7X $250 0K oz 2013 2014 2015 2016 2017 2018 average OCF multiple since the Oct-08 market botPrices Used: Gold $1,500/oz, Silver:$25/oz, Copper:$3.00/lb tom, we see a $13.61 target for New Gold. RoundRainy River Blackwater El Morro* ing to the nearest 50 cents, NGD remains GSA Top New Afton Peak Cerro San Pedro 10 with a $13.50 Target Price. Buy! Mesquite Total Net By-Prod Cash Cost 3
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