Julie Taylor - Director, Investor Relations Hannes Portmann - President and Chief Executive Officer Raymond Threlkeld - Interim Chief Operating Officer

Rahul Paul - Canaccord Genuity David Haughton - CIBC Mike Parkin - National Bank Financial Dan Rollins - RBC Capital Markets Steven Butler - GMP Securities Don MacLean - Paradigm Capital

Thank you, operator, and good morning, everyone. We appreciate you joining us today for New Gold's 2017 second quarter earnings results conference call and webcast.

On the line today, we have Hannes Portmann, President and CEO; Ray Threlkeld, our Interim COO; and Brian Penny, our CFO, will also be available during the Q&A period at the end of the call. Should you wish to follow along with the webcast, please sign in from our homepage at newgold.com.

If you are participating in the webcast, you may type your questions online through the interface. Before the team begins the presentation, I would like to direct your attention to our cautionary language related to forward-looking statements found on Slide 3 of the presentation.

Today’s commentary includes forward-looking statements relating to New Gold. In this respect, we refer you to our detailed cautionary note regarding forward-looking statements in the presentation.

You are cautioned that actual results and future events could differ materially from those expressed or implied in forward-looking statements. Slide 3 provides additional information and should be reviewed.

We also refer you to the section entitled Risk Factors in New Gold’s latest MD&A and other filings available on SEDAR, which set out certain material factors that could cause actual results to differ. In addition, at the conclusion of the presentation, there are a number of end notes that provide important information and should be reviewed in conjunction with the material presented.

I will now turn the call over to Hannes. Hannes?

Thanks, Julie. Good morning, everyone and thank you for joining us today.

As you are aware, we issued two news release yesterday evening with a number of important updates regarding our company. Before we begin our quarterly results discussion, I would like to take a few minutes to discuss some key management and board appointments.

As we continue to build out our company's leadership team and with Rainy River scheduled to transition into operation in September, Paula Myson will join New Gold in late August as our CFO to lead the company's financial team. Paula has over 25 years of experience in Finance, Treasury, Corporate Development and Investor Relations with public companies.

During her 23 years working at Sherritt International Paula held multiple senior roles, including CFO Oil and Gas, Corporate Treasurer and CFO Power. Most recently, Paulo was Vice President, Finance at Callidus Capital, a specialty lender.

In addition, Peter Woodhouse will join the company in mid-August as the Vice President, Projects. Peter has over 30 years of experience in engineering and project management.

Over his career Peter has been responsible for all aspects of project management, team development, and project execution through all project phases. Peter joins us from Centerra Gold where he was most recently Vice President, Projects.

Prior to Centerra, Peter was the President and sole owner of an engineering and project management company for 17 years. I am delighted to welcome both Paula and Peter to our team.

Paula's extensive experience in mining and strong financial background will both complement and enhance the New Gold leadership team. In addition, Peter's engineering and project management experience will be a great asset for the company as he leads the evaluation and advancement of our various organic growth initiatives including the Blackwater project and the C-zone at New Afton.

In connection with these management changes Barry O'Shea our Vice President, Finance has been appointed Vice President, Business Development. In his new role Barry will take on responsibility for Corporate Development, Investor Relations and Capital Allocation.

I am pleased to announce the appointment of Marilyn Schonberner to our board. Marilyn is currently the Chief Financial Officer and a Senior Vice President of Nexen Energy where she joined in 1997.

In her current role, Marilyn is responsible for overall financial management of Nexen, including accounting, tax, treasury, and insurance. Marilyn when brings a wealth of knowledge to our board with her strong background in finance and accounting.

Brian Penny, our current Executive Vice President and Chief Financial Officer will remain with the company until October 31 in order to support a smooth transition. Brian has been CFO of New Gold since its business combination with Western Goldfields in 2009.

I would like to thank Brian for all he has done to contribute to New Gold's success over the last eight years. In particular, I thank him and our finance team for the successful transactions they completed in the first half of 2017 that has left as positioned to fund the balance of the Rainy River capital and that have also increased our longer-term financial flexibility.

He has been a wonderful business partner and friend over many years and then behalf of the entire New Gold team I wish him nothing but the best. I have no doubt that the next step in his already great career in the mining industry will be a very successful one.

With the addition of Peter Woodhouse later this summer, and the planned start-up of Rainy River in September Ray Threlkeld will step away from his Interim Daily Management responsibilities, which are primarily focused on supporting Rainy River's development. Ray will continue to be part of the New Gold team and will remain on the Board of Directors to provide his support and knowledge to the operations and projects teams going forward.

On behalf of the Board of Directors and the entire New Gold team, I would like to thank Ray for stepping into this role at a critical time in the development of Rainy River and I look forward to continuing to work with the Ray. Now, moving to the second quarter results.

Slide 5 provides a few key highlights from the quarter. Higher quarterly production from Mesquite resulted in consolidated gold production of 105,000 ounces and copper production of approximately 26 million pounds.

Costs during the quarter were slightly higher than 2016, due to a higher proportion of quarterly sales from Mesquite, partially offset by lower sustaining capital. These low all-in sustaining costs resulted in our company generating a very robust margin of $542 an ounce or 42%.

As a result of a strong first half operating performance, we are pleased to reiterate both our gold production guidance of 380,000 ounces to 430,000 ounces, as well as our previously lowered all-in sustaining cost guidance of $760 to $800 an ounce. In the second quarter, we generated $80 million of after-tax cash flow or $0.14 a share.

We further increased our financial flexibility with the redemption of our 2020 senior notes and the issuance of 2025 senior notes, as well as the extension of a revolving credit facility. We finished the quarter with $199 million in cash.

At Rainy River, construction activity continues to move forward. Capital expenditures during the quarter were $160 million in-line with our updated plan.

The project schedule also remains in-line with start-up targeted for mid-September. Finally, we have initiated a process to divest our Peak Mines located in New South Wales, Australia.

The sale of Peak should further enable us to focus on America's centric portfolio of operating mines and development project. There has been a strong demand for this asset over the years and we believe Peak will provide a perspective buyer with an opportunity to unlock its continued potential.

We’re targeting closing the transaction by year-end. Slide 6 provides a summary of our second quarter consolidated and mine by mine operating results.

At New Afton gold production decreased relative to the second quarter of 2016, due to a planned decrease in grade and recovery. Copper production was slightly higher than the prior-year quarter, due to higher throughput.

Operating expenses remained in-line with the prior-year quarter. All-in sustaining costs decreased in the quarter as the benefit of lower operating expenses and higher byproduct revenues was only partially offset by higher sustaining cost.

At Mesquite, gold production increased in the quarter due to higher recoveries as ore tons mine in place included less transitional material compared to 2016, and we also increased the process solution flow on the heap leach pad. As a result of the increased process solution, quarterly operating expenses increased slightly, while Mesquite's all-in sustaining cost decreased, primarily due to lower sustaining cost.

At Peak, gold production decreased relative to 2016, due to a planned decrease in gold grade. Copper production remained in-line with the prior-year quarter.

Operating expenses for the quarter increased due to lower gold sales volumes and All-in sustaining costs also increased as the benefit of higher byproduct revenues was offset by higher sustaining capital. As planned Cerro San Pedro’s gold production decreased as the mine finished active mining late in the second quarter of 2016, and has now transitioned to residual leaching.

Slide 7 provides additional details on our financial results. Revenues during the quarter increased by 3% to $186 million, due to higher metal prices.

Quarterly operating expenses increased slightly as a result of mining and processing more tons leading to our slight decrease in operating margin. New Gold reported net earnings of $23 million or $0.04 per share.

This included an $18 million non-cash foreign exchange gain and a $3 million pre-tax loss on the revaluation of the company's gold price option contract. The company reported adjusted net earnings of $13 million or $0.02 per share.

The increase in earnings relative to 2016 was primarily due to the increase in revenues and a decrease in depreciation and depletion and income tax expense, which were partially offset by an increase in operating expenses. As a result of our solid operating performance and low quarterly costs, we generated quarterly cash flow of $80 million or $0.14 per share.

Slide 8 provides an overview of our liquidity position. During the second quarter, we further enhanced our financial flexibility with the redemption of our 2020 senior notes and the issuance of 2025 senior notes, as well is the extension of our revolving credit facility.

We also to prudent steps to enhance our cash flow certainty over the last six months of 2017 with gold price option contracts covering 120,000 ounces of gold at a floor price of 12.50 an ounce with upside to $1,400 per ounce. At the end of the quarter, we had $199 million in cash and $174 million of undrawn room on our credit facility.

Combining these we had $373 million in total liquidity, which exceeds the remaining Rainy River capital even before taking into account the cash flow that will be generated from our current operations in the second half of the year. Slide 9 provides key highlights of our progress at Rainy River.

Mining activities have progressed well during the second quarter. I am pleased to report that the mining rate averaged over 115,000 tons per day, which was in-line with our updated plan.

More importantly, the mining rate in June averaged approximately 125,000 tons per day and we should see this momentum build over the summer months. Overall, earthworks are approximately 85% complete.

The starter cell is scheduled to be completed in August. Energization of all key site overhead power lines and construction of the tailings management area corridor pipeline have also been completed.

All of the key structural components of the process facilities have been finalized and the team is setting mechanical equipment and installing piping electrical and instrumentation services, which are now very close to being completed. The primary crusher and conveyor system was successfully commissioned on schedule with the first crush on May 11.

Commissioning of the Ball and SAG mills have started and is scheduled to be completed in August. Over the weekend, we completed a four hour full speed test of the Ball mill which went very well.

On Tuesday of this week, we performed similar tests on the SAG mill, which also went very well. Commissioning of the refining portion of the process circuit has also started and dry and wet commissioning remains on schedule for August.

Construction of the starter tailing cell is expected to be completed in August. This starter cell provides us with six months of tailing storage capacity when operating at 100% mill capacity and does not require a Schedule 2 amendment.

The company requires a Schedule 2 amendment to close two very small creeks within the broader tailings facility. The proposed amendment was published and Canada gets that one on May 13 and was followed by a 30-day public comment period, which concluded on June 12.

It is our understanding that the comments received were in favor of the Rainy River project proceeding as planned. In light of this, and based on discussions with Environment and Climate Change Canada we expect the receipt of the Schedule 2 amendment in the fourth quarter of this year.

We continue to execute on our updated plan and we look forward to Rainy Rivers targeted start-up in September. In closing, Slide 10 highlights New Gold's investment thesis, which remains intact and directly supports our goal of long-term shareholder value creation.

We are fortunate to have a portfolio that has three key characteristics. Our assets are low cost, our assets are in great jurisdictions, and our assets provide us with growth opportunities.

We firmly believe that by combining these portfolio characteristics with the relentless focus on execution we are well positioned to create long-term shareholder value. Thank you again for joining us today and for your continued support of New Gold.

We look forward to providing you with updates on our operations and our progress at Rainy River as we move forward. That concludes our presentation, and we would now be happy to answer any of your questions.

Hi everyone. At Rainy River we saw an increase in mining rates into Q2 and more importantly the month of June despite spring thaw, that is impressive.

I’m just wondering if you could provide us with more color on the reasons, is it entirely to do with improved productivity or is that the result of more equipment or are you into better ground conditions, perhaps doing more hard rock versus overburden than you were in Q1?

Yes Rahul it is Hannes Portmann speaking. Thank you.

It’s really a combination of a few of the things you referenced. There isn't any more equipment or anything like that that’s been added.

It’s a more a reflection of the pit opening up getting through some of the more challenging layers of overburden and basal till, I’m not suggesting entirely through those, but we’ve moved a lot of that material. So, we are in more competent rock and hence we can move more, but really it is just as the pit opens up and gives us more flexibility in terms of working phases.

It enables our teams to just become that much more productive and layered on top of that. The teams are just getting better and better from a performance standpoint.

And as a follow-up, do you expect that trend to continue i.e. the ground condition, basically the mix of overburden versus waste rock do you expect that to - the mix to improve as you go through the next few quarters?

Yes, that’s exactly right Rahul. So, as we move lower down the pit, we get more and more into the better up.

Fair enough. And then how much ore have you mined to date and what is the size of your stockpile now and how big do you expect to get before you start-up the mill?

Yes Rahul it is still fairly limited and that’s consistent with our plan. We have about 40,000 to 50,000 tons at the moment, but really it’s through August and into early September that we will begin to see more of a stockpile be developed, consistent with our expectations.

Okay. Thanks Hannes that’s all that I had.

Appreciate it. Thank you Rahul.

Good morning Hannes and thank you for the update. Schedule 2 has bought forward your expected receipt of it, can you remind us how long you would expect it would take to complete the dam upon receipt of that Schedule 2?

Yes David it is about six weeks.

Okay. And with the CapEx for that completion being included in the $229 million that you’ve identified for CapEx to commercial production or is that slightly beyond that?

No that is included in the EIC, so the 229 remaining.

Excellent. Okay, just shifting over to New Afton C-zone, I see that you have done some engagement with First Nations et cetera, just wondering what your idea of timing could be for the start-up of the C-zone and is there a sensitive time in which you have to get it started to avoid a gap between the current cave versus drawing [ph] all from C-zone?

Yes David, well the development timeline to drive the decline to the bottom of the C-zone and then to put in the block cave infrastructure and access levels is sort of 5 years to 6 years. So, really what we need to do is work backwards from when the B-zone ore would be exhausted.

Now we have some flexibility of course and that we are currently mining at rates closer to 15,000, 16,000 tons per day when post our mill expansion we were really targeting kind of 13,000 to 14,000. So there is flexibility in that 5 year to 6 year window, but effectively it’s our objective to begin driving the decline down towards the bottom of the C-zone in early 2018 and that would allow for again a seamless continuity between the completion of the B-zone reserves and then ultimately the mining and processing of the C-zone reserves.

And what you can see from your engagement with the various parties on permitting, that’s achievable?

Yes, it is.

In your opinion.

Yes.

So, a number of personnel changes, are you still looking for a COO or will Peter kind of fill that role once Ray steps out?

Yes, David we don't have any intent at the moment to fill the COO role, you know that’s a role that Ray filled on an interim basis. Ray was very much focused more on the project side of the business, so he was sort of a COO project, if you will.

Cory Atiyeh , our Vice President of Operations has done an outstanding job overseeing in conjunction with our General Managers at our operating sites, and I think the operating results are a testament to that, and now that we have Peter joining us to really take ownership and have accountability of the Project side of the business we are very well positioned with those two individuals to carry those two key parts of the business forward.

Great, thank you Hannes.

Thank you, David.

Hi guys, couple of questions, mostly related to Rainy, about a year ago or almost a year ago, you guys had the site tour and at that time you’re tracking below $3 a ton on your mining costs, are you continuing to see that improve a little bit as you’re ramping up your mining rates at Rainy?

Yes Mike it is Hannes. We’re right around that $3 mark.

So actually a little higher than where we would have been at that time a year ago, and really that’s a function. That’s a sort of fully loaded cost that’s burdened with the additional contractors we have right now getting us through those more complex layers of the overburden and basal till and Pete.

So, we remain confident that we can get that mining costs down, but it is right now hovering around that $3 mark.

Okay. Another factor to I guess would be the longer haul distance, you are not putting everything into waste dump [indiscernible] you are taking, you are still bring some of the stuff up towards dams?

Yes that’s exactly right. So, yes we have the longer hauls, which is around close to believe its 3 kilometers to 4 kilometers out to our TMA, so when we are delivering construction rock that’s obviously a materially longer haul than the waste dumps or the ore stockpile, which are adjacent to the open pit.

When do you expect the kind of be done those long hauls be transitioning more into those waste dumps?

Well we will complete the starter cell as noted during the comments on the call in August, so that will - I mean that’s the heavy focus of a portion of those longer hauls now and then it will be a reduced amount of trucks required to do those long hauls to fix up or complete the permanent dam. So it will be a slow progression as opposed to on a single day we stop.

Right, okay. And what about your mind fleet itself, can you just remind us where you are in terms of number of pieces of equipment and what you might be bringing on over the next 6 to 12 months?

Yes, we have pretty much everything we need Mike, there is not any material additions slated into 2018, possibly we may look to add a couple of trucks, but in terms of shovels and the more expensive pieces of equipment we are pretty much set.

Okay good. And then with copper running nicely here you guys thinking about anything in terms of like a first half 2018 hedge program to just help de-risk the budget for next year.

Yes, Mike we will keep a close eye on it. We have done some corporate hedging and the gold callers for 2017 really to assure the revenue and cash flow or heighten the revenue and cash flow certainty as we continue to spend a fair bit of capital at Rainy River.

On the copper side, it is something we could consider as we look to the first half of 2018, but as we’ve said for many, many years, the copper and the Canadian dollar interaction are such that they sort of provide a bit of natural offset to one another. And with Rainy River up and running next year, we will have that operating cost Canadian exposure, but nicely offset by the production of somewhere in the 19 million pounds of copper range.

Okay. And just last question from me, with regards to the Rainy River pit are you finding your fragmentation is performing well or is there any opportunity to possibly space [indiscernible] tighten them up, what are your thoughts towards, and how the results are attracting so far, are you still relatively high in the benches where you are not willing to kind tweak patterns yet?

Hi, this is Ray. We’re not closing down our spacing as of yet or opening it up, I should say.

I think, we need to get into ore and we need to learn our ore control with the spacing prior to looking at fragmentation changes. So, we’re still - we're not into full benches of ore, so we really can't judge what that ore control is yet.

So, we will keep our spacing the way it is, and then over time I think as the mine develops, we might be able to spread it out in overburden or I mean in waste rock, but we still have to make sure that our ore control is spot on.

Okay. That’s it from me, thanks again and congrats.

Thanks Mike.

Yes, thanks very much Hannes and team and congrats on the new people joining the company. Hannes, just a question, two questions, first one on Mesquite, big quarter in Q2 obviously there is quarter-over-quarter volatility with the heap leach operation there, where do you sort of see Mesquite sort of trailing for Q3 and Q4, at similar levels or somewhere between Q1 and Q2?

Yes Dan it will, I mean the guidance for the full year for Mesquite remains intact, I think we see some scope to be, I would say towards the high end of that guidance, but with 79,000 ounces produced in the first half and guidance sort of in that 150 range it’s - H2 should be fairly similar to H1. I don't have at my fingertips for Mesquite specifically, the split between Q3 and Q4, I don't expect there to be a hugely material variance between those two quarters.

As we noted in our news release for the consolidated portfolio for H2 there is a waiting to Q4, so of the second half production we anticipate only about 40% of it in the third quarter and 60% of it in the fourth quarter.

Okay, perfect. And then just moving on to Peak, you announced the potential divestments there.

One, how long is the process sort of in place and on previous conversations we've had with yourself and in the past management there is sort of discussion about may be looking at divesting a Peak post the start of a rainy river, just wondering sort of what’s the change to the impetus to push it before Rainy River sort of up and running as steady state?

Sure. I guess a couple of questions there that I will take in order, so the process really kicked off about a week ago.

So it’s just getting going, and while your second question is a fair one it’s really trying to time and not to say that we’re trying to get this so perfect, but you actually have it sold when Rainy River is up and running. As you know these processes can take multiple months and we expect this one to take multiple months and it’s our goal to be in a position to complete the transaction before year-end, but I think it also speaks to the confidence we have in Rainy River's planned start-up.

So, I think that and the fact that the Australian market continues to be very robust we’ve seen moves in copper, which is clearly a component of Peak's future. So, just a combination of all those things made this a good time to move forward.

Okay, perfect and then any proceeds I guess would be used to [indiscernible].

Thanks Dan.

Hannes, yes the question is previously addressed, so just one last one, just coming back to Mesquite, the press release talked about an increase of the process solution flow on the heap leach pad relative to 2016 Q2, is there any change in application of cyanide at Mesquite that comes into play here or is it just a matter of year-over-year there was more cyanide been applied in the solution flow basis this year?

Yes, more the latter Steve, so we have increased the cyanide a little bit, which has enabled us to draw down more of the heap leach pad inventory, so it’s positively responded from a recovery perspective. So it’s something, we will be fine tune it sort of perpetually to try to maximize the recovery curve, but we’ve seen the portion of the leach pad that’s under leach has responded very well to slightly higher cyanide and solution levels and hence give us a nice strong quarter.

So, Ray just coming back to Rainy, so was the Mill pretty much ready to go at this point, in other words, the Mill waits for ore or is there anything else needs to be tested and run through in the mill here pre-start-up?

Actually quite a bit of test work remains for the month of August. We will be into wet commissioning and getting the refineries end of things up and running.

We’re about on schedule with the mine. It’s been very well coordinated and well done.

We don't expect any hiccups or any change. We will probably be, we will be getting ore through the Mill and hopefully getting the first course in September.

Okay, thanks very much guys.

Thanks Steve.

Hi good morning. Thanks for taking the questions.

With Peak proceeds going to the revolver, can you talk about how you think about free cash flow going forward in 2018 with the CapEx cycle with Rainy River being behind you, whether you are going to start thinking about paying down 6.25 or building cash with Blackwater? Thanks.

Yes, Nick well we provide guidance sort of always one year out. So we haven't provided any formal guidance for 2018, and we will do that early next year as we have done customarily, but from a big picture perspective you’ve touched on it, I mean Rainy River goes from being an extremely significant consumer of cash and our guidance for this year is about 515 million US of capital to moving into production and beginning to generate cash.

Meanwhile, the other operations should continue to do well. I’d say the first priority for free cash flow would be to pay down the credit facility and get that back to zero and have that there as flexibility, if we were ever to need it.

And then from there we would want a healthy cash balance, but then longer-term as we’ve said since January, getting our overall leverage down is certainly a top of mind priority, and what we’ll do is compare and contrast the benefits and costs of that with our desire to continue to advancing some of our other projects. So that’s it in a nut shell.

Okay, thanks.

Good morning guys. Just a follow up from Mike's question about the Rainy River mining cost, as you were saying the fully loaded cost is running a bit over $3 a ton now, can you give us a bit of color on what the price is for the contractor per ton moved and what proportion of the tons in the quarter or in June the contractor represented?

Don, I don't have that specific number at my fingertips in terms of the exact split of our owner cost per ton and kind of the weighted averaging of the contractor cost per ton, but I can follow up with you on.

Okay, maybe just color in terms of it, I presume the contractor is doing some pretty tough work in [indiscernible] higher price?

Yes, at a qualitative level Don the contract is probably double that $3 a ton of moving a lot less times because they are in the overburden the Peak, hence it kind of have blends back down, but it’s exactly as you say, it’s the more complex work, it’s the lower tonnage work and hence it is the higher cost per ton work.

Right. But within that $3 plus per ton there is going to be a material impact for that?

Yes.

Great. Okay.

Yes, I will be happy to follow-up with you Hannes. Thank you.

Sure. Thank you, Don.

Thanks very much Julie. To all of you who have joined us today, thank you again.

As always should you have any additional questions, please do not hesitate to reach out to us by phone or email, we wish all of you a great rest of the summer.