PRESS RELEASE

PRESS RELEASE

NEW GOLD BEGINS CAMPAIGN OF REPRESSION AGAINST OPPOSITION TO ITS CERRO DE SAN PEDRO PROJECT.

New Gold's fully owned Mexican subsidiary Minera San Xavier has responded in alarming ways to the cancellation of the Municipal Development Plan of the Cerro de San Pedro in the state of San Luis Potosi. This plan had been driven by the company as a means of by-passing the Official State Decree passed on the 24th of September, 1993, classfiying Cerro de San Pedro and its environs as a conservation and heritage area. It on basiss of that decree that Mexican superior courts have annulled New Gold's EIA and licence for the project.

The background is as follows. In July 2010, representatives of Minera San Xavier met with the state government of San Luis Potosi, the mayor of the town of Cerro de San Pedro, officials of the SEDUVOP, and representatives of the University of San Luis Potosi in order to design the strategy needed to overturn the 1993 decree.

Thanks to the webs of corruption operating at the three levels of government (federal, state and municipal) a new Municipal Development Plan was presented which arbitrarily changed the land-use zoning of Cerro de San Pedro from a zone of biological conservation to a zone of industrial mining activity. Thanks to this plan, on the 5th of August, 2011 the SEMARNAT (Ministry of the Environment and Natural Resources) re-authorized the operation of New Gold's project. This is the third time the SEMARNAT has authorized the project in the face of clear and unappealable decisions by Mexican Superior Administrative courts cancelling the project on grounds of its infraction of numerous environmental laws and regulations.

The Municipal Development Plan was subsequently ruled to be unconstitutional by the Fourth District Appeals Court in Guadalajara, thereby annulling the SEMARNAT latest re-authorization of the New Gold's mine. The reaction of the company was not long in coming. Its lawyers accused one of the residents of Cerro de San Pedro, RAFAEL FLORES LOPEZ, of perjury and filed a demand for investigation and prosecution before the authorities [Oficio: 1512/2012. Expediente: A.P. PGR/SLP/SLP-IV/411/D/2012].

This is not the first time that New Gold and its subsidiary has resorted to legally vexacious means to intimidate citizens opposed to its project. Six individuals, including three lawyers, were criminally accused of forging a signature - this was proven to be untrue and unfounded. In 2010 another group of opponents were accused of illegal association, the use of false documents, property damafe, and fraud. This accusation was never prosecuted by authorities and has since disappeared from the archives of the prosecutor's office in San Luis Potosí.

Today, more than ever, the company and the authorities who collude in this illegal mining operation face a serious credibility problem as these facts have come to light and that people recall that New Gold has never operated with a legal permit given that each permit that is received over the years violates the 1993 State Decree making the zone a conservation area. This has been proven and decided in Mexican courts in a number of well-publicized cases. That New Gold continues to work simply proves that it has been able to operate outside the bounds of Mexican law with the complicity of complacent authorities.

San Luis Potosí S.L.P. September 20,2012 FAO