In 2014, New Gold continued to enhance its financial flexibility. We remained steadfast in our disciplined and prudent approach to managing the Company’s financial resources.

For the year, we strengthened our financial position as our operations met production guidance and also beat guidance for all-in sustaining costs. Even in a lower gold price environment, we delivered the highest cash flow in our Company’s history at $310 million net cash generated from operations before changes in working capital, an increase of 20 percent over the prior year.

We finished the year with $371 million of cash and, to add further financial flexibility, during 2014 we put in place a $300 million revolving credit facility with potential to extend it by $50 million.

Our total debt remains very manageable, with no repayments due until 2020. At the end of 2014, the Company’s long-term debt was $888 million.

Although metal prices declined, the Company benefitted from lower fuel prices. In addition, our cash tax burden was reduced, primarily due to tax synergies at our Canadian properties, from which we expect to continue to benefit in 2015 and beyond.

The Canadian dollar’s weakness has a significant positive impact on our operations and on the capital to be spent on projects. It has significantly reduced Rainy River’s development costs in U.S. dollars, the currency in which we report, as approximately 80 percent of our capital expenditures at the project are in Canadian dollars, and has also reduced Blackwater’s estimated development costs by about $250 million.

An example of our prudent fiscal approach is our decision to extend Rainy River’s development schedule by six months to 2.5 years. Once Rainy River hits production, our cash flow is expected to increase significantly, giving us the flexibility to decide when to build our Blackwater project.

With substantial free cash flow from our operations, we believe we are well positioned to fund the development of the Rainy River project. As of year-end 2014, New Gold had $371 million in cash and equivalents and an undrawn credit facility of $258 million for a liquidity position of $629 million. If you consider our expected cash flow generation under the current year’s commodity prices over the next 2.5 years, our liquidity position becomes even stronger.

New Gold is well positioned to fund Rainy River. Nevertheless, the Company continues to maintain the flexibility to adjust our project development schedules as market conditions evolve.

We are constantly monitoring the relevant factors, including gold and copper prices and exchange rate movements, for their impact on our development plans.

We are prudent business managers investing in value creation with the discipline that our shareholders expect of us.

Yours truly,

Brian Penny Signature

Brian Penny