(All figures are in Canadian dollars unless otherwise indicated)

VANCOUVER, Oct. 16, 2013 /PRNewswire/ – New Gold Inc. (“New Gold”) (TSX: NGD)
(NYSE MKT:NGD) today announces that it has successfully completed its
compulsory acquisition of the approximately 2.5% of the outstanding
shares of Rainy River Resources Ltd. (“Rainy River”) not previously
acquired by New Gold. As of the close of business on October 15, 2013,
New Gold became the registered owner of 100% of the outstanding shares
of Rainy River.

Rainy River shareholders who disposed of their shares in the compulsory
acquisition, and who elected, or were deemed to have elected, the cash
option will receive $2.00 in cash and 0.239 New Gold shares for each
Rainy River share. Those who elected the share option will receive 0.5
New Gold shares for each Rainy River share. New Gold will pay an
aggregate of approximately $5.6 million and issue approximately 0.7
million` New Gold shares in connection with the compulsory acquisition.

Rainy River shareholders who have not delivered their share
certificate(s) and properly completed letter of transmittal to
Computershare Trust Company of Canada at the office specified in the
Notice of Compulsory Acquisition dated August 12, 2013 must do so in
order to receive the cash and New Gold shares to which they are
entitled. Such Rainy River shareholders will be deemed to have elected
the cash option. The Notice of Compulsory Acquisition and accompanying
letter of transmittal is available under Rainy River’s profile at www.sedar.com.

“We are pleased to have completed the acquisition of Rainy River and
look forward to advancing it through the various stages of
development,” stated Randall Oliphant, Executive Chairman. “As we have
managed to do through the development of Mesquite, Cerro San Pedro and,
most recently, New Afton, we see scope to add significant value to this
project as we continue to move it forward.”

The company is in the process of completing its detailed review and
update of the Rainy River feasibility study as well as advancing the
permitting efforts for the project.

About New Gold Inc.

New Gold is an intermediate gold mining company. The company has a
portfolio of four producing assets and three significant development
projects. The New Afton Mine in Canada, the Cerro San Pedro Mine in
Mexico, the Mesquite Mine in the United States and the Peak Mines in
Australia provide the company with its current production base. In
addition, New Gold owns 100% of the Blackwater and Rainy River
projects, both in Canada, as well as 30% of the El Morro project
located in Chile. New Gold’s objective is to continue to establish
itself as a leading intermediate producer, focused on the environment
and sustainability. For further information on the company, please
visit www.newgold.com.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this news release, including any
information relating to New Gold’s future financial or operating
performance may be deemed “forward looking”. All statements in this
news release, other than statements of historical fact, that address
events or developments that New Gold expects to occur, are
“forward-looking statements”. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the use of forward-looking terminology such as “plans”,
“expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“forecasts”, “intends”, “anticipates”, “projects”, “potential”,
“believes” or variations of such words and phrases or statements that
certain actions, events or results “may”, “could”, “would”, “should”,
“might” or “will be taken”, “occur” or “be achieved” or the negative
connotation. Forward looking statements in this news release include
statements regarding advancement of the development of Rainy River. All
forward-looking statements in this news release are based on the
opinions and estimates of management as of the date such statements are
made and are subject to important risk factors and uncertainties, many
of which are beyond New Gold’s ability to control or predict.
Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results, level of
activity, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. Such
factors include, without limitation: significant capital requirements;
fluctuations in the international currency markets and in the rates of
exchange of the currencies of Canada and the United States; price
volatility in the spot and forward markets for commodities;
discrepancies between actual and estimated reserves and resources and
between actual and estimated metallurgical recoveries; changes in
international, national and local government legislation in Canada;
taxation; controls, regulations and political or economic developments
in the countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development, including
the risks of obtaining and maintaining the validity and enforceability
of the necessary licenses and permits and complying with the permitting
requirements of each jurisdiction that New Gold operates; the
uncertainties inherent to current and future legal challenges the
company is or may become a party to; diminishing quantities or grades
of reserves; competition; loss of key employees; additional funding
requirements; actual results of current exploration activities; changes
in project parameters as plans continue to be refined; accidents;
labour disputes; defective title to mineral claims or property or
contests over claims to mineral properties; and uncertainties with
respect to obtaining all necessary surface rights for the Rainy River
Project. In addition, there are risks and hazards associated with the
business of mineral exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses (and
the risk of inadequate insurance or inability to obtain insurance to
cover these risks) as well as “Risk Factors” included in New Gold’s
disclosure documents filed on and available at www.sedar.com.

Forward-looking statements are not guarantees of future performance, and
actual results and future events could materially differ from those
anticipated in such statements. All of the forward-looking statements
contained in this news release are qualified by these cautionary
statements. New Gold expressly disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of
new information, events or otherwise, except in accordance with
applicable securities laws.

SOURCE New Gold Inc.