New Gold hits deeper mineralization at Afton (May 25, 2006)

Vancouver – Underground drilling by New Gold (NGD-T, NGD-X) on its New Afton copper-gold deposit, just west of Kamloops, British Columbia, has turned up a new area of mineralization below the current resource shell.

Several holes have intersected deep mineralization that may represent a new zone or extension to the existing deposit. Drilling has cut the zone over a vertical extent of over 200 metres and as much as 300 metres below the current resource with the deepest intercepts about one km below surface.

Results from the drill program include:

• Hole UA-69 cutting 112 metres (from 596 metres) of new mineralization grading 1.7% copper, 1.47 grams gold per tonne, 3.5 grams silver per tonne and 0.09 gram palladium per tonne, giving a 2.7% copper equivalent grade;
• Hole UA-77 returned 182 metres (from 294 metres) of 0.78% copper, 0.96 gram gold, 1.4 gram silver and 0.15 gram palladium (1.45% copper equivalent) in the Main zone, followed by a deeper section of 32 metres (from 518 metres) averaging 1.24% copper, 1.34 grams gold, 1.3 gram silver and 0.23 gram palladium (2.2% copper equivalent) in the new zone; and
• Hole UA-80 intersected 38 metres (from 326 metres) of 1.1% copper, 1.2 grams gold and 1.8 grams silver (1.9% copper equivalent), followed by 52 metres (from 404 metres depth) grading 1.2% copper, 1.53 grams gold, 2.3 grams silver and 0.13 gram palladium (2.24% copper equivalent) in the Main zone. A deeper 90-metre section (from 560 metres) in the hole returned 1.4% copper, 1.26 grams gold, 2.1 grams silver and 0.2 gram palladium (2.3% copper equivalent) in the new zone.

New Gold president and CEO Chris Bradbrook stated, “these results illustrate what we have long maintained, that mineralization remains open at depth.” The company is considering a deep surface drill program to further test the depth extent of potential extensions to existing mineralization, which remains open in all directions.

Additional drilling will target this new zone with the hope of adding the mineralization to an updated New Afton resource calculation anticipated by year-end 2006. A current feasibility study is examining the potential of an underground (block-caving) mine at New Afton, beneath the past producing open pit. A major component of the study is the almost 2 km of exploration decline recently constructed into the deposit to facilitate drilling and rock studies.

New Afton hosts a measured and indicated resource of 68.7 million tonnes grading 1.08% copper, 0.85 gram gold, 2.6 grams silver and 0.12 gram palladium; giving a 1.68% copper equivalent or 2.61 grams gold equivalent using a 0.7% copper equivalent cut-off grade and metal prices of US$0.85 per pound copper, US$375 per oz. gold, US$5.25 per oz. silver and US$200 per oz. for palladium.

New Gold, which recently closed a $75-million financing, posts a $263-million market capitalization based on its recent $11.00 trading level and 23.9 million shares outstanding. The stock has had a 52-week price range of $4.95-to-$13.24.