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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001137171-06-001244.txt : 20060516
<SEC-HEADER>0001137171-06-001244.hdr.sgml : 20060516
<ACCEPTANCE-DATETIME>20060516104013
ACCESSION NUMBER:		0001137171-06-001244
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20060510
FILED AS OF DATE:		20060516
DATE AS OF CHANGE:		20060516

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			New Gold Inc. /FI
		CENTRAL INDEX KEY:			0000800166
		STANDARD INDUSTRIAL CLASSIFICATION:	METAL MINING [1000]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31722
		FILM NUMBER:		06844396

	BUSINESS ADDRESS:	
		STREET 1:		#601-595 HOWE STREET, SUITE
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 2T5
		BUSINESS PHONE:		(604) 687-1629

	MAIL ADDRESS:	
		STREET 1:		#601-595 HOWE STREET, SUITE
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 2T5

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DRC RESOURCES CORP                                      /FI
		DATE OF NAME CHANGE:	19860904
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>newgold6k051506.htm
<DESCRIPTION>NEW GOLD INC. 6-K
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="Bradley J. Dick">
<META NAME="date" CONTENT="05/12/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>U.S. SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="line-height:13pt; margin:0pt; font-size:11pt" align=center><B>Washington, D.C. 20549</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:16pt; margin:0pt; font-size:14pt" align=center><B>FORM 6-K</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>REPORT OF FOREIGN PRIVATE ISSUER</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>PURSUANT TO RULE 13a-16 or 15d-16 OF</B></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>THE SECURITIES EXCHANGE ACT OF 1934</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>For the month of May, 2006</P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>Commission File Number 1-31722</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:16pt; margin:0pt; padding-left:32.4pt; text-indent:-32.4pt; font-size:14pt" align=center><B>NEW GOLD INC.</B></P>
<P style="margin:0pt; padding-left:32.4pt; text-indent:-32.4pt" align=center><I>(Exact name of registrant as specified in its charter)</I></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:32.4pt; text-indent:-32.4pt; font-size:11pt" align=center><B>595 Howe Street, Suite #601, Vancouver, British Columbia, Canada &nbsp;V6C 2T5</B></P>
<P style="line-height:13pt; margin:0pt; padding-left:32.4pt; text-indent:-32.4pt; font-size:11pt" align=center><B>(604) 687-1629</B></P>
<P style="margin:0pt; padding-left:32.4pt; text-indent:-32.4pt" align=center><I>(Address of principal executive offices)</I></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:32.4pt; font-size:12pt" align=justify>Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:32.4pt; font-size:12pt" align=justify>Form 20-F&nbsp;<U>__X__</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 40-F&nbsp;<U>___</U></P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:32.4pt; font-size:12pt" align=justify>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1):&nbsp;___</P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:32.4pt; font-size:12pt" align=justify>Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):&nbsp;___</P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:36pt; font-size:12pt" align=justify>Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.</P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:36pt; font-size:12pt" align=justify>Yes&nbsp;<U>_X__</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;__<U> _</U></P>
<P style="line-height:14pt; margin-top:12pt; margin-bottom:0pt; text-indent:36pt; font-size:12pt" align=justify>If &quot;Yes&quot; is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): <U>82- 713___</U>.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:14pt; margin:0pt; padding-left:36pt; padding-right:36pt; font-size:12pt" align=center><B>EXHIBIT INDEX</B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt">The following is a list of Exhibits included as part of this Report on Form 6-K.</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:93.3pt; text-indent:-72pt; font-size:12pt">1</P>
<P style="line-height:14pt; margin:0pt; padding-left:93.3pt; font-size:12pt"><a href="financials.htm">First Quarter Report 2006</a></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="margin:0pt; page-break-before:always" align=center><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>SIGNATURES</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=216.9></TD><TD width=36></TD><TD width=225.9></TD></TR>
<TR><TD valign=top width=289.2>&nbsp;</TD><TD valign=top width=349.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>NEW GOLD INC.</B></P>
</TD></TR>
<TR><TD valign=top width=289.2>&nbsp;</TD><TD valign=top width=349.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>(Registrant)</P>
</TD></TR>
<TR><TD valign=top width=289.2>&nbsp;</TD><TD valign=top width=349.2 colspan=2>&nbsp;</TD></TR>
<TR><TD valign=top width=289.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Date:&nbsp;&nbsp;May 10, 2006</P>
</TD><TD valign=top width=48><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B>By:</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=301.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify><B><I>&#147;Christopher J. Bradbrook&#148;</I></B></P>
</TD></TR>
<TR><TD valign=top width=289.2>&nbsp;</TD><TD valign=top width=48>&nbsp;</TD><TD valign=top width=301.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>Christopher J. Bradbrook</P>
<P style="line-height:14pt; margin:0pt; font-size:12pt" align=justify>President and Chief Executive Officer</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:10pt; margin-bottom:0pt" align=justify><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>financials.htm
<DESCRIPTION>FIRST QUARTER REPORT 2006
<TEXT>
<!doctype html public "-//IETF//DTD HTML//EN">
<HTML>
<HEAD>
<TITLE>CC Filed by Filing Services Canada Inc. 403-717-3898</TITLE>
<META NAME="author" CONTENT="System Manager">
<META NAME="date" CONTENT="05/12/2006">
</HEAD>
<BODY style="line-height:12pt; font-family:Times New Roman; font-size:10pt; color:#000000">
<P style="margin:0pt"><img src="newgoldlogo.jpg" alt="[financials002.gif]" height=97 width=188></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:14pt; margin:0pt; font-family:Arial Narrow; font-size:12pt" align=center><FONT FACE="Arial Narrow"><B>NEW GOLD INC.</B></FONT></P>
<P style="margin:0pt; font-family:Arial" align=center><FONT FACE="Arial"><I>(an Exploration Stage Company)</I></FONT></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:14pt; margin:0pt; font-family:Arial; font-size:12pt" align=center><B>INTERIM FINANCIAL STATEMENTS</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=center><B>March 31, 2006</B></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=center><BR></P>
<P style="margin:0pt" align=right><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">BALANCE
SHEETS</font></b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; font-family:Arial"><B>As at March 31,
2006</B></P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian dollars)</I></P>
<P style="margin:0pt; page-break-before:always" align=right>&nbsp;</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=284.4></TD><TD width=18></TD><TD width=81></TD><TD width=19.8></TD><TD width=79.2></TD></TR>
<TR><TD valign=top width=379.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=26.4>&nbsp;</TD><TD valign=top width=105.6>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=379.2>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>March 31</B></P>
<P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; font-family:Arial" align=right>December 31 2005</P>
</TD></TR>
<TR><TD valign=top width=379.2><P style="margin:0pt; font-family:Arial"><B>ASSETS</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108><P style="margin:0pt; font-family:Arial" align=center><B>&nbsp;</B></P>
</TD><TD valign=top width=26.4>&nbsp;</TD><TD valign=top width=105.6><P style="margin:0pt; font-family:Arial" align=center><B>&nbsp;</B></P>
</TD></TR>
<TR><TD valign=top width=379.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108><P style="margin:0pt; font-family:Arial" align=center><B>&nbsp;</B></P>
</TD><TD valign=top width=26.4>&nbsp;</TD><TD valign=top width=105.6>&nbsp;</TD></TR>
<TR><TD valign=top width=379.2><P style="margin:0pt; font-family:Arial"><B>Current assets</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108><P style="margin:0pt; font-family:Arial" align=center><B>&nbsp;</B></P>
</TD><TD valign=top width=26.4>&nbsp;</TD><TD valign=top width=105.6><P style="margin:0pt; font-family:Arial" align=center><B>&nbsp;</B></P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial">Cash and cash equivalents</P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>82,269,293</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,178,820</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial">Accrued interest receivable</P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>234,000</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19,763</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial">Amounts receivable</P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>246,808</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;305,810</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2><P style="margin:0pt; font-family:Arial">Prepaid expenses</P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>88,218</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;107,686</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>82,838,319</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,612,079</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>Mineral Properties &#150; Schedule </B><I>(Note 2)</I></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>26,703,258</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22,561,015</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2><P style="margin:0pt; font-family:Arial"><B>Property and Equipment </B><I>(Note 3)</I></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>662,689</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;578,499</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=379.2>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>110,204,266</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=26.4><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41,751,593</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>LIABILITIES</B></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>Current Liabilities</B></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial">Accounts payable and accrued liabilities</P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>2,530,415</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,767,475</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2><P style="margin:0pt; font-family:Arial">Current portion of capital lease payable <I>(Note 4)</I></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>-</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,228</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>2,530,415</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,797,703</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2><P style="margin:0pt; font-family:Arial"><B>Future income taxes </B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>4,258,951</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,384,680</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>6,789,366</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,182,383</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>SHAREHOLDERS&#146; EQUITY</B></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>Share Capital </B><I>(Note 5)</I></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>108,024,809</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;39,461,796</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>Common share purchase warrants </B><I>(Note 6)</I></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>2,000,160</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD valign=top width=379.2 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial"><B>Contributed surplus</B><I> (Note 9)</I></P>
</TD><TD valign=top width=24 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=108 style="background-color: #FFFFFF"><P style="margin:0pt; font-family:Arial" align=right><B>2,346,150</B></P>
</TD><TD valign=top width=26.4 style="background-color: #FFFFFF">&nbsp;</TD><TD valign=top width=105.6 style="background-color: #FFFFFF"><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,727,584</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2><P style="margin:0pt; font-family:Arial"><B>Deficit</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;(8,956,219)</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=right>(7,620,170)</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=379.2>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>103,414,900</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=26.4>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 0.5pt solid #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;33,569,210</P>
</TD></TR>
<TR><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=379.2>&nbsp;</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>110,204,266</B></P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=26.4><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="background-color: #FFFFFF; border-bottom: 2pt double #000000" valign=top width=105.6><P style="margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41,751,593</P>
</TD></TR>
</TABLE>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-family:Arial; font-size:11pt"><B>Commitments and Contingent Liabilities</B><I> (Note 12)</I></P>
<P style="margin:0pt; text-indent:356.4pt; font-family:Arial"><I>See accompanying notes.</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt"><B>APPROVED BY THE BOARD</B></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-family:Arial; font-size:11pt"><B><I>&#147;Chris Bradbrook&#148;</I></B></P>
<P style="line-height:13pt; margin:0pt; text-indent:288pt; font-family:Arial; font-size:11pt"><B><I>&#147;Paul B. Sweeney&#148;</I></B></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-family:Arial; font-size:11pt">___________________________</P>
<P style="line-height:13pt; margin:0pt; text-indent:288pt; font-family:Arial; font-size:11pt">__________________________</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-family:Arial; font-size:11pt">Chris Bradbrook</P>
<P style="line-height:13pt; margin:0pt; text-indent:288pt; font-family:Arial; font-size:11pt">Paul B. Sweeney</P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; font-family:Arial; font-size:11pt">Director</P>
<P style="line-height:13pt; margin:0pt; text-indent:288pt; font-family:Arial; font-size:11pt">Director</P>
<P style="margin:0pt"><BR></P>
<A NAME="OLE_LINK1"></A><P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.<FONT FACE="Arial Narrow"><B> </B></FONT></P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin:0pt; font-family:Arial; font-size:7.2pt"><B><font size="2">STATEMENTS OF OPERATIONS AND DEFICIT</font></B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; font-family:Arial"><B>For the three month periods ended March 31, 2006 and 2005</B></P>
<P style="margin:0pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian dollars)</I></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size: 10pt" cellspacing=0><TR><TD width=284.4 height="18"></TD><TD width=11.8 height="18"></TD><TD width=78.2 height="18"></TD><TD width=18 height="18"></TD><TD width=81 height="18"></TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">&nbsp;</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">&nbsp;</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=top width=379.2 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=15.733 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=104.267 height="17"><P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=24 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=108 height="17"><P style="margin:0pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">&nbsp;</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial"><B>Income</B></P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">&nbsp;</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">&nbsp;</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Interest and other income</P>
</TD><TD valign=top width=15.733 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>366,175</B></P>
</TD><TD valign=top width=24 height="18"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;146,355</P>
</TD></TR>
<TR><TD style="border-top: 0.5pt solid #000000" valign=top width=379.2 height="17">&nbsp;</TD><TD style="border-top: 0.5pt solid #000000" valign=top width=15.733 height="17">&nbsp;</TD><TD style="border-top: 0.5pt solid #000000" valign=top width=104.267 height="17">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-top: 0.5pt solid #000000" valign=top width=24 height="17">&nbsp;</TD><TD style="border-top: 0.5pt solid #000000" valign=top width=108 height="17">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial"><B>Expenses</B></P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Amortization</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28,145</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22,040</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="34"><P style="margin:0pt; font-family:Arial">Consulting and management fees</P>
</TD><TD valign=top width=15.733 height="34">&nbsp;</TD><TD valign=top width=104.267 height="34"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,646</B></P>
</TD><TD valign=top width=24 height="34">&nbsp;</TD><TD valign=top width=108 height="34"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,579 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Foreign exchange</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>5,506</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2,519)</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="30"><P style="margin:0pt; font-family:Arial">Insurance</P>
<P style="margin:0pt; font-family:Arial">Loss on disposal of fixed assets</P>
</TD><TD valign=top width=15.733 height="30">&nbsp;</TD><TD valign=top width=104.267 height="30"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43,436</B></P>
<P style="margin:0pt; font-family:Arial" align=right><B>8,122</B></P>
</TD><TD valign=top width=24 height="30">&nbsp;</TD><TD valign=top width=108 height="30"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;60,159</P>
<P style="font-family: Arial; margin: 0pt" align=right>-&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2><P style="margin:0pt; font-family:Arial">Office and miscellaneous</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=104.267><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34,241</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;26,543</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Professional fees</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;91,325</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>17,616</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Regulatory and filing fees</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;124,508</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,569</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Rent</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;29,300</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,419&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Stock-based compensation <I>(Note 8(a))</I></P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>618,566</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;572,615</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Telephone</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>7,315</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,730&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Transfer agent</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>12,698</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,783 </P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial">Travel, conferences and promotion</P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="margin:0pt; font-family:Arial" align=right><B>151,753</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47,910</P>
</TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=top width=379.2 height="17"><P style="margin:0pt; font-family:Arial">Wages and benefits</P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=15.733 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=104.267 height="17"><P style="margin:0pt; font-family:Arial" align=right><B>653,217</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=24 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=108 height="17"><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;190,032&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,823,778</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;971,476</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=top width=379.2 height="17"><P style="margin:0pt; font-family:Arial"><B>Income tax recovery (expense)</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=15.733 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=104.267 height="17"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;121,554</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=24 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=108 height="17"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(787)&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=379.2 height="18"><P style="margin:0pt; font-family:Arial"><B>Loss for the period</B></P>
</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,336,049)</B></P>
</TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(825,908)</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom: 0.5pt solid #000000" valign=top width=379.2 height="17"><P style="margin:0pt; font-family:Arial"><B>Deficit, beginning of year</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=15.733 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=104.267 height="17"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7,620,170)</B></P>
</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=24 height="17">&nbsp;</TD><TD style="border-bottom: 0.5pt solid #000000" valign=top width=108 height="17"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4,220,830)</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom: 2pt double #000000" valign=top width=379.2 height="19"><P style="margin:0pt; font-family:Arial"><B>Deficit, end of period</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=15.733 height="19"><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=104.267 height="19"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8,956,219)</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=24 height="19"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=108 height="19"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,046,738)</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom: 2pt double #000000" valign=top width=379.2 height="19"><P style="margin:0pt; font-family:Arial"><B>Weighted average number of shares outstanding</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=15.733 height="19">&nbsp;</TD><TD style="border-bottom: 2pt double #000000" valign=top width=104.267 height="19"><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22,566,716</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=24 height="19">&nbsp;</TD><TD style="border-bottom: 2pt double #000000" valign=top width=108 height="19"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13,390,604</P>
</TD></TR>
<TR><TD valign=top width=379.2 height="18">&nbsp;</TD><TD valign=top width=15.733 height="18">&nbsp;</TD><TD valign=top width=104.267 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24 height="18">&nbsp;</TD><TD valign=top width=108 height="18">
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom: 2pt double #000000" valign=top width=379.2 height="19"><P style="margin:0pt; font-family:Arial"><B>Loss per share (basic and diluted)</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=15.733 height="19"><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=104.267 height="19"><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.06)</B></P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=24 height="19"><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom: 2pt double #000000" valign=top width=108 height="19"><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.06)</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><I>See accompanying notes.</I></P>
<P style="margin:0pt" align=center><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Arial; page-break-before:always">New Gold Inc.<FONT FACE="Arial Narrow"><B> </B></FONT></P>
<P style="margin-top:0pt; margin-bottom:4.15pt; padding-left:-27pt; padding-right:-18pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin:0pt; padding-left:-27pt; padding-right:-18pt; font-family:Arial; font-size:7.2pt"><B><font size="2">STATEMENTS OF CASH FLOWS</font></B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-left:-27pt; padding-right:-18pt; font-family:Arial"><B>For the three month periods ended March 31, 2006 and 2005 </B></P>
<P style="margin:0pt; padding-left:-27pt; padding-right:-18pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian dollars)</I></P>
<P style="margin:0pt"><BR>
<BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=306></TD><TD width=18></TD><TD width=81></TD><TD width=18></TD><TD width=90></TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=408>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=120><P style="margin:0pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>&nbsp;</TD></TR>
<TR><TD valign=top width=408><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt"><B>Cash provided by (used for)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>&nbsp;</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>&nbsp;</TD></TR>
<TR><TD valign=top width=408><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt"><B>OPERATING ACTIVITIES</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=108>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>&nbsp;</TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">Loss for the period</P>
</TD><TD valign=top width=24><P style="font-family: Arial; margin: 0pt" align=right><B>$</B></P>
</TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,336,049)</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>(825,908)</P>
</TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">Items not involving cash:</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Amortization</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28,145</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22,040</P>
</TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Stock-based compensation</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;618,566</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;572,615</P>
</TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Loss on disposal of fixed assets</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,122</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Future income taxes</P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(125,729)</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;787</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(806,945)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(230,466)</P>
</TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">Net change in non-cash working capital items</P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(112,439)</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(606,607) &nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="line-height:11.5pt; margin:0pt; font-family:Arial; font-size:9.5pt">Cash used for operating activities</P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(919,384)</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>(837,073)</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt"><B>INVESTING ACTIVITIES</B></P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="line-height:11.5pt; margin:0pt; font-family:Arial; font-size:9.5pt">Payments for mineral properties and exploration costs</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,402,631)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,080,817)</P>
</TD></TR>
<TR><TD valign=top width=408><P style="line-height:11.5pt; margin:0pt; font-family:Arial; font-size:9.5pt">Proceeds on sale of equipment</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,228</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>-</P>
</TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">Acquisition of property and equipment</P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(150,685)</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9,910)</P>
</TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">Cash used for investing activities</P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,523,088)</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,090,727)</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial"><B>FINANCING ACTIVITIES</B></P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">Payments on capital lease</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(30,228)</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,667)</P>
</TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">Cash proceeds from shares issued</P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70,563,173</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD style="border-top:0.25pt solid #000000; border-bottom:0.25pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">Cash provided by (used for) financing activities</P>
</TD><TD style="border-top:0.25pt solid #000000; border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-top:0.25pt solid #000000; border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70,532,945</B></P>
</TD><TD style="border-top:0.25pt solid #000000; border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-top:0.25pt solid #000000; border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,667)</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial"><B>Increase (Decrease) in cash and cash equivalents</B></P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64,090,473</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,703,001)</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom:0.25pt solid #000000" valign=top width=408><P style="line-height:11.5pt; margin:0pt; font-family:Arial; font-size:9.5pt"><B>Cash and cash equivalents, beginning of period</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,178,820</B></P>
</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.25pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,029,585</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=408><P style="margin:0pt; font-family:Arial"><B>Cash and cash equivalents, end of period</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=24><P style="font-family: Arial; margin: 0pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;82,269,293</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=24><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21,326,584</P>
</TD></TR>
<TR><TD valign=top width=408>&nbsp;</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial"><B>Cash and cash equivalents comprises:</B></P>
</TD><TD valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=108>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=120>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=408><P style="margin:0pt; font-family:Arial">Cash</P>
</TD><TD valign=top width=24><P style="font-family: Arial; margin: 0pt" align=right><B>$</B></P>
</TD><TD valign=top width=108><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;997,051</B></P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=right>$</P>
</TD><TD valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;160,329</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=408><P style="margin:0pt; font-family:Arial">Term deposits and short-term discount notes</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;81,272,242</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21,166,255</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=408>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=24><P style="font-family: Arial; margin: 0pt" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=108><P style="font-family: Arial; margin: 0pt" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;82,269,293</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=24><P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=120><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21,326,584</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><I>See accompanying notes.</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt; font-family:Arial"><I>*Supplemental disclosure of non-cash investing and financing activities, refer to Note 10.</I></P>
<P style="margin:0pt"><BR>
<BR></P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.<B><SMALL> </SMALL></B></P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><B>SCHEDULES OF MINERAL PROPERTIES</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006 and year ended December 31, 2005</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=221.4></TD><TD width=18></TD><TD width=63></TD><TD width=18></TD><TD width=54></TD><TD width=18></TD><TD width=63></TD><TD width=18></TD><TD width=63></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=295.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>ACQUISITION COSTS</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">Kamloops Afton Claims</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>601,734</P>
</TD><TD valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;601,734</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">Kamloops Ajax-Python Claims</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>48,732</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>48,732</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial">Timmins, Ontario Claims</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>1</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>1</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Balance, End of Period/Year</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>650,467</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>650,467</P>
</TD></TR>
<TR><TD valign=top width=295.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>DEFERRED EXPLORATION COSTS</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>Afton</B></P>
<P style="margin:0pt; font-family:Arial" align=right><B>Claims</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=120 colspan=3><P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><B>Ajax-Python &nbsp;&nbsp;&nbsp;&nbsp;</B></P>
<P style="margin:0pt; padding-right:12.6pt; font-family:Arial" align=right><B>Claims</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt" align=right><BR></P>
<P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right><BR></P>
<P style="font-family: Arial; margin: 0pt" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=295.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Balance, Beginning of Period/Year</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>21,683,446</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>227,102</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>21,910,548</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>5,343,465</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Surface Exploration Costs</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Option payment</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>15,000</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>15,000</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Assays and testing</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>56,649</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>19,465</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>76,114</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>13,430</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Drilling</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>458,371</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>270,066</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>728,437</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;217,441</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Geological consulting</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>219,780</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Miscellaneous</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>17,309</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>7,438</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>24,747</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>16,975</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Staking and filing fees</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>2,127</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Supplies and equipment rental</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>7,385</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,385</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>67,130</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Travel and accommodation</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>16,020</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;</B>Wages and benefits</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>29,476</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>20,981</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>50,457</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>121,207</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>569,190</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>332,950</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>902,140</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>674,110</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Underground Exploration Costs</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right">&nbsp;</p>
  </TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Assays and testing</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>80,508</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>80,508</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>306,938</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Drilling</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>1,803,348</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>1,803,348</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align="right">&nbsp;&nbsp;&nbsp;&nbsp;1,942,818</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Engineering</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>7,360</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>7,360</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>46,943</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Geological consulting</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>9,910</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>9,910</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>680,515</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Insurance</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>5,303</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>5,303</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>6,111</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Office costs</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>34,285</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>34,285</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Miscellaneous</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>28,847</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>28,847</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>6,485</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Road construction and maintenance</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>6,791</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>6,791</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>45,115</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Staking and filing fees</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>517</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>517</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>10,406</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Supplies and equipment rental</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>19,169</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>19,169</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>197,777</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Surveying</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>13,076</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>13,076</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>-</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Travel and accommodation</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>22,049</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>22,049</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>94,941</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Tunneling and decline costs</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>-</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>11,981,887</P>
</TD></TR>
<TR><TD valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Utilities</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>48,235</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>48,235</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>191,462</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Wages and benefits</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>308,005</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>308,005</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>381,575</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>2,387,403</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;2,387,403</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>15,892,973</P>
</TD></TR>
<TR><TD valign=top width=295.2>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=72>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>
    <p style="font-family: Arial; margin: 0pt" align="right"><b>&nbsp;</b></p>
  </TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Feasibility Study</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>852,700 </P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right><B>852,700</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=295.2><P style="margin:0pt; font-family:Arial"><B>Balance, End of Period/Year</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>25,492,739</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72><P style="margin:0pt; font-family:Arial" align=right>560,052</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;26,052,791</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="font-family: Arial; margin: 0pt" align=right>21,910,548</P>
</TD></TR>
<TR><TD style="border-bottom:3pt double #000000" valign=top width=295.2>
<P style="margin:0pt; font-family:Arial"><B>Mineral Properties</B></P>
</TD><TD style="border-bottom:3pt double #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top width=84>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top width=72>&nbsp;</TD><TD style="border-bottom:3pt double #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>&nbsp;$</P>
</TD><TD style="border-bottom:3pt double #000000" valign=top width=84>
<P style="font-family: Arial; margin: 0pt" align="right"><B>&nbsp;&nbsp;&nbsp;26,703,258</B></P>
</TD><TD style="border-bottom:3pt double #000000" valign=top width=24><P style="margin:0pt; font-family:Arial" align=right>&nbsp;$</P>
</TD><TD style="border-bottom:3pt double #000000" valign=top width=84>
<P style="font-family: Arial; margin: 0pt" align=right>22,561,015</P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Arial"><I>See accompanying notes.</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><font size="3"><BR></font></P>
<P style="line-height:9.2pt; margin-top:0pt; margin-bottom:-9.2pt; padding-left:18pt; text-indent:-18pt; font-family:Arial; font-size:7.2pt"><B><font size="3">1.</font></B></P>
<P style="line-height:9.8pt; margin:0pt; padding-left:18pt; font-family:Arial Narrow; font-size:7.8pt"><FONT FACE="Arial Narrow" size="3"><B>NATURE OF OPERATIONS</B></FONT></P>
<P style="line-height:3pt; margin:0pt; padding-bottom:3pt; font-family:Arial; font-size:1pt; border-bottom:0.75pt solid #000000"><FONT FACE="Arial">0.5</FONT></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>New Gold Inc. is in the process of exploring and developing mineral prospects in British Columbia, Canada. Its principal project, the Afton copper-gold project, has previously been subject to exploration, an advanced scoping study and has not yet been confirmed to have economically viable copper/gold reserves. The Company is proceeding to complete a feasibility study in 2006 to confirm whether economical reserves exist. &nbsp;&nbsp;</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>The underlying value of the Company&#146;s mineral claims is dependent upon the existence and economic recovery of mineral reserves, and the ability of the Company to raise financing to complete the development of and operation of the project. &nbsp;In addition, the investments may be subject to changes in government relations related to mining activities, economic instability and access rights disruption.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>The Company believes it has adequate funds available to meet its corporate and administrative obligations plus its funding requirement to complete the feasibility study for the Afton copper/gold project and administration expenses while having surplus funds available for exploration. Management will have to pursue additional financing upon the completion of a positive feasibility to finance the projects construction. There can be no assurance it will be able to raise sufficient funds when these funds are required. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>These interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in Canada and should be read in conjunction with the Company&#146;s audited annual financial statements for the year ended 2005.</P>
<P style="margin:0pt" align=justify><font size="3"><BR></font></P>
<P style="line-height:9.2pt; margin-top:0pt; margin-bottom:-9.2pt; padding-left:18pt; text-indent:-18pt; font-family:Arial; font-size:7.2pt"><B><font size="3">2.</font></B></P>
<P style="line-height:9.8pt; margin:0pt; padding-left:18pt; font-family:Arial Narrow; font-size:7.8pt"><FONT FACE="Arial Narrow" size="3"><B>MINERAL PROPERTIES</B></FONT></P>
<P style="margin:0pt; padding-bottom:3pt; border-bottom:0.75pt solid #000000">&nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:18pt; font-family:Arial"><FONT FACE="Arial"><B><I>a)</I></B></FONT></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:18pt; font-family:Arial; font-size:11pt"><B><I>Kamloops, B.C. &quot;Afton&quot; Mineral Property</I></B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The Afton mineral properties consist of nine new mineral claims staked under the new mineral tenure system in British Columbia and 14 heritage claims, covering a total area of 4,011 hectares.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>Under the terms of two option agreements (&#147;Option&#148;) dated September 22, 1999 to acquire the Afton Mineral Claims, the Company issued, over several years, 2 million common shares and completed an aggregate work commitment totaling $6.5 million to earn the rights to the mineral claims. Under the terms of the Option agreement to acquire the mineral claims for the Afton Mineral Claims, the optionors retained a 10% net profit royalty. (see note 12(a))</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The Company has a 100% interest in the mineral claims subject to the 10% net profit royalty maintained by the optionors, which can be purchased on or before December 1, 2010 for $2 million in cash or shares of the Company.</P>
<P style="margin:0pt"><BR>
<BR></P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:18pt; font-family:Arial"><B><I>b)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:18pt; font-family:Arial; font-size:11pt"><B><I>Kamloops, B.C., &quot;Ajax&quot; Mineral Property</I></B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The Company owns a 100% interest in the Ajax - Python Claim Group, subject to a 2% net smelter royalty, consisting of fifteen new mineral claims staked under the new mineral tenure system in British Columbia and fifteen heritage claims. </P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:9.2pt; margin-top:0pt; margin-bottom:-9.2pt; padding-left:18pt; text-indent:-18pt; font-family:Arial; font-size:7.2pt"><B><font size="3">3.</font></B></P>
<P style="line-height:9.8pt; margin:0pt; padding-left:18pt; font-family:Arial Narrow; font-size:7.8pt"><FONT FACE="Arial Narrow" size="3"><B>PROPERTY AND EQUIPMENT</B></FONT></P>
<P style="margin:0pt; padding-bottom:3pt; border-bottom:0.75pt solid #000000">&nbsp;</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=224.65></TD><TD width=12.05></TD><TD width=64.35></TD><TD width=12.05></TD><TD width=70></TD><TD width=12.05></TD><TD width=64.35></TD></TR>
<TR><TD valign=top width=299.533>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333>&nbsp;</TD><TD valign=top width=101.867 colspan=2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><FONT FACE="Arial"><B>Net Book</B></FONT></P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial"><B>2006</B></P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Accumulated</B></P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Value </B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=299.533>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Cost</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Amortization</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial">Land</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=85.8><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>56,900</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=93.333><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=85.8><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>56,900</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Building</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>104,700</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>11,779</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>92,921</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Transportation vehicles</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>100,209</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>70,231</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>29,978</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Mining equipment</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>445,638</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>60,467</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>385,171</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Office and computer equipment</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>155,489</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>57,770</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>97,719</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=299.533><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial"><B>Balance, March 31, 2006</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=85.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>862,936</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=93.333><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>200,247</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=85.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>662,689</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=224.65></TD><TD width=12.05></TD><TD width=64.35></TD><TD width=12.05></TD><TD width=70></TD><TD width=12.05></TD><TD width=64.35></TD></TR>
<TR><TD valign=top width=299.533>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333>&nbsp;</TD><TD valign=top width=101.867 colspan=2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Net Book</B></P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial"><B>2005</B></P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8>&nbsp;</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Accumulated</B></P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Value</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=299.533>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Cost</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Amortization</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>2005</B></P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial">Land</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=85.8><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>56,900</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=93.333><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>-</P>
</TD><TD valign=top width=16.067><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=85.8><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>56,900</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Building</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>104,700</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>10,470</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>94,230</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Transportation vehicles</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>130,071</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>58,434</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>71,637</P>
</TD></TR>
<TR><TD valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Mining equipment</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>304,296</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>43,845</P>
</TD><TD valign=top width=16.067>&nbsp;</TD><TD valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>260,451</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=299.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Office and computer equipment</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>146,146</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=93.333><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>50,865</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=16.067>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=85.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>95,281</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=299.533><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial">Balance, December 31, 2005</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=85.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>742,113</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=93.333><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>163,614</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=16.067><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=85.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>578,499</P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:9.2pt; margin-top:0pt; margin-bottom:-9.2pt; padding-left:18pt; text-indent:-18pt; font-family:Arial; font-size:7.2pt"><B><font size="3">4.</font></B></P>
<P style="line-height:9.8pt; margin:0pt; padding-left:18pt; font-family:Arial Narrow; font-size:7.8pt"><FONT FACE="Arial Narrow" size="3"><B>CAPITAL LEASE PAYABLE</B></FONT></P>
<P style="margin:0pt; padding-bottom:3pt; border-bottom:0.75pt solid #000000">&nbsp;</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=307.45></TD><TD width=11.8></TD><TD width=64.8></TD><TD width=11.8></TD><TD width=63></TD></TR>
<TR><TD valign=top width=409.933>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=186.133 colspan=3>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=409.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="margin:0pt; font-family:Arial" align=right><FONT FACE="Arial"><B>2006</B></FONT></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin:0pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial">GMAC, 0%, repayable in monthly installments of $1,889,</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4>&nbsp;</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=84>&nbsp;</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; padding-left:14.4pt; font-family:Arial">matures April 30, 2007</P>
</TD><TD valign=top width=15.733><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=center><B>&nbsp;-</B></P>
</TD><TD valign=top width=15.733><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=84><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right>30,228</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=409.933><P style="line-height:13pt; margin:0pt; font-family:Arial">Less: current portion due within one year</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;-</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="line-height:13pt; margin:0pt; padding-right:-10.95pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;(30,228)</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=409.933>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=15.733><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=86.4><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>-</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=15.733><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=84><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>- &nbsp;&nbsp;&nbsp;&nbsp;</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>In January 2006, the Company sold a transportation vehicle to a former director of the Company who took over the related capital lease payments.</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height: 9.2pt; text-indent: -18pt; font-family: Arial; font-size: 7.2pt; margin-top: 0pt; margin-bottom: -9.2pt; padding-left: 18pt"><B>5<font size="3">.</font></B></P>
<P style="line-height: 9.8pt; font-family: Arial Narrow; font-size: 7.8pt; margin: 0pt; padding-left: 18pt"><FONT FACE="Arial Narrow" size="3"><B>SHARE CAPITAL</B></FONT></P>
<P style="border-bottom: 0.75pt solid #000000; margin: 0pt; padding-bottom: 3pt">&nbsp;</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt">&nbsp;</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt">&nbsp;</P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt"><FONT FACE="Arial"><B><I>Authorized</I></B></FONT></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>Unlimited number of common shares without par value. &nbsp;</P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt"><B><I>Issued and Outstanding</I></B></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=298.8></TD><TD width=75.6></TD><TD width=18></TD><TD width=72></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=398.4>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=100.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Number of Shares</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt" align=right><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Amount</B></P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial">Balance, December 31, 2004</P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13,941,766</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>33,008,361</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Issued for cash</P>
</TD><TD valign=top width=100.8>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Private placements, net of share issue costs <I>(a)</I></P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,330,000</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>9,254,319</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Issued for finders&#146; fee <I>(a)</I></P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;103,951</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>669,788</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Tax effect on flow-through shares</P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; padding-right:-12.6pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3,530,672)</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Issued for mineral properties <I>(b)</I></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;200,000</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=96><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>60,000</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial">Balance, December 31, 2005</P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; padding-right:-5.4pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,575,717</P>
</TD><TD valign=top width=24><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=96><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>39,461,796</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Issued for cash</P>
</TD><TD valign=top width=100.8>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96>&nbsp;</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Pursuant to a prospectus offering, net of share issue costs <I>&#169;</I></P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,334,000</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>68,559,813</P>
</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Exercise of stock options</P>
</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;500</P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=96><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>3,200</P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000; border-bottom:3pt double #000000" valign=top width=398.4><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial"><B>Balance, March 31, 2006</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:3pt double #000000" valign=top width=100.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; padding-right:-5.4pt; font-family:Arial"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23,910,217</B></P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:3pt double #000000" valign=top width=24><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-top:0.5pt solid #000000; border-bottom:3pt double #000000" valign=top width=96><P style="line-height:13pt; margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=center><B>&nbsp;&nbsp;108,024,809</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><B><I>a)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>On April 22, 2005, the Company completed a non-brokered private placement by issuing 400,000 flow-through common shares at a price of $7.50 per share for gross proceeds of $3 million (net proceeds $2,793,809). The Company issued 29,000 shares, at a market value of $6.20 per share, as a finders&#146; fee for the placement of common shares.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>On October 6, 2005, the Company completed a non-brokered private placement by issuing 430,000 flow-through common shares at a price of $7.00 per share for gross proceeds of $3.01 million. The Company issued 36,331 shares, at a market value of $5.78 per share, as a finders&#146; fee for placement of the common shares.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>On December 22, 2005, the Company completed a non-brokered private placement by issuing 500,000 flow-through common shares at a price of $8.00 per share for gross proceeds of $4.0 million. The Company issued 38,620 shares, at a market value of $7.25 per share, as a finders&#146; fee for placement of the common shares.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><B><I>b)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; text-indent:-9pt; font-family:Arial; font-size:11pt" align=justify>The Company issued the final share commitment of 200,000 common shares at a deemed value of $0.30 per share in accordance with the Afton mineral claim agreement.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; text-indent:-18pt; font-family:Arial; font-size:11pt" align=justify><B><I>c) </I></B>&nbsp;On February 28, 2006 the Company completed a short form prospectus filing in Canada to issue, through a syndicate of underwriters, 8,334,000 units at $9.00 per unit for gross cash proceeds of $75,006,000. &nbsp;Each unit consisted of one common share and one-half of a share purchase warrant. &nbsp;A commission of 5.25% was paid to the underwriters. &nbsp;The gross proceeds have been allocated $8.52 to the common shares and $0.24 to one-half of a share purchase warrant.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>&nbsp;</P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:normal; margin:0pt; padding-bottom:3pt; font-family:Arial; font-size:12pt; border-bottom:0.5pt solid #000000"><B>6. </B><FONT FACE="Arial Narrow"><B>SHARE PURCHASE WARRANTS</B></FONT></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>As at March 31, 2006, the following common share purchase warrants were issued and outstanding:</P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=298.8></TD><TD width=75.6></TD><TD width=18></TD><TD width=64.8></TD></TR>
<TR><TD valign=top width=398.4>&nbsp;</TD><TD valign=top width=100.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Number of</B></P>
</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86.4>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=398.4>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=100.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Shares</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>Amount</B></P>
</TD></TR>
<TR><TD valign=top width=398.4>&nbsp;</TD><TD valign=top width=100.8>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86.4>&nbsp;</TD></TR>
<TR><TD valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">Issued for cash</P>
</TD><TD valign=top width=100.8>&nbsp;</TD><TD valign=top width=24>&nbsp;</TD><TD valign=top width=86.4>&nbsp;</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=398.4><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Pursuant to a prospectus offering<I> (Note 5&#169;)</I></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=100.8><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>4,167,000</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=24><P style="line-height:13pt; margin:0pt; padding-left:-5.75pt; text-indent:-0.75pt; font-family:Arial" align=center>$</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>2,000,160</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=398.4><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial"><B>Balance, March 31, 2006</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=100.8><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>4,167,000</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=24><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; text-indent:-0.75pt; font-family:Arial"><B>$</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=86.4><P style="line-height:13pt; margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right><B>2,000,160</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>Each whole warrant is exercisable to purchase one common share at a price of $12.00 per share for a period of two years from the date of closing and have been listed for trading on the Toronto Stock Exchange.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align=justify>The exercise of the outstanding share purchase warrants in the loss calculation would be anti-dilutive.</P>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><B>7. STOCK OPTIONS</B></P>
<P style="margin: 0pt; padding-bottom: 3pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><FONT FACE="Arial"><B><I>a)</I></B></FONT></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>On May 4, 2005, at the Company&#146;s Annual General Meeting, the disinterested shareholders approved a change to the Company&#146;s Stock Option Plan (&#147;Plan&#148;). The approved change increased the number of options issuable from a fixed amount of 1,000,000 options to 10% of the outstanding capital of the Company on a reloading basis. The reloading basis allows the number of options eligible to be issued to increase to the current 10% level of the then present outstanding capital of the Company. In addition, exercised options are also automatically reloaded into the Plan. &nbsp;The Plan also requires disinterested shareholders to renew their approval every subsequent third year.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>In addition, the Company has issued under the 2% inducement rules available under the TSX regulations, a total of 500,000 stock options to senior officers which are not included in the 10% allowable issuable amount.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>Options issued subsequent to the approval of the new Plan primarily vest one half after six months and the remainder after one year from the date of issuance.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>As at March 31, 2006, the stock options held by directors, consultants and employees are as follows:</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<P style="margin:0pt" align=justify>&nbsp;</P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=153></TD><TD width=54.4></TD><TD width=71.6></TD><TD width=90.4></TD><TD width=68></TD></TR>
<TR><TD valign=top width=204>&nbsp;</TD><TD valign=top width=168 colspan=2><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;<U>Options Exercisable</U></B></P>
</TD><TD valign=top width=211.2 colspan=2><P style="margin:0pt; font-family:Arial" align=right><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Options Outstanding</U></B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=204><P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt; font-family:Arial" align=justify><B>Option Strike Price</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72.533>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right><B>Weighted Average Remaining Life (Years)</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=120.533>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right><B>Weighted Average Remaining Life (Years)</B></P>
</TD></TR>
<TR><TD valign=top width=204><P style="margin:0pt; font-family:Arial" align=justify>$4.60</P>
</TD><TD valign=top width=72.533><P style="margin:0pt; font-family:Arial" align=right>600,000</P>
</TD><TD valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right>3.5</P>
</TD><TD valign=top width=120.533><P style="margin:0pt; font-family:Arial" align=right>600,000</P>
</TD><TD valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right>3.5</P>
</TD></TR>
<TR><TD valign=top width=204><P style="margin:0pt; font-family:Arial" align=justify>$4.61 to $5.99</P>
</TD><TD valign=top width=72.533><P style="margin:0pt; font-family:Arial" align=right>6,000</P>
</TD><TD valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right>4.5</P>
</TD><TD valign=top width=120.533><P style="margin:0pt; font-family:Arial" align=right>12,000</P>
</TD><TD valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right>4.5</P>
</TD></TR>
<TR><TD valign=top width=204><P style="margin:0pt; font-family:Arial" align=justify>$6.00 to $6.99</P>
</TD><TD valign=top width=72.533><P style="margin:0pt; font-family:Arial" align=right>317,250</P>
</TD><TD valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right>3.7</P>
</TD><TD valign=top width=120.533><P style="margin:0pt; font-family:Arial" align=right>799,500</P>
</TD><TD valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right>4.1</P>
</TD></TR>
<TR><TD valign=top width=204><P style="margin:0pt; font-family:Arial" align=justify>$7.00 to $7.99</P>
</TD><TD valign=top width=72.533><P style="margin:0pt; font-family:Arial" align=right>175,000</P>
</TD><TD valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right>4.0</P>
</TD><TD valign=top width=120.533><P style="margin:0pt; font-family:Arial" align=right>315,000</P>
</TD><TD valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right>4.3</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=204><P style="margin:0pt; font-family:Arial" align=justify>$8.00 to $8.99</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=72.533><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=95.467><P style="margin:0pt; font-family:Arial" align=right>-</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=120.533><P style="margin:0pt; font-family:Arial" align=right>60,000</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=90.667><P style="margin:0pt; font-family:Arial" align=right>5.0</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=204>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=72.533><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right><B>1,098,250</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=95.467><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right><B>3.7</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=120.533><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right><B>1,786,500</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=90.667><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right><B>4.0</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=226.9></TD><TD width=67.65></TD><TD width=14.95></TD><TD width=60.2></TD><TD width=68.55></TD></TR>
<TR><TD valign=top width=302.533>&nbsp;</TD><TD valign=top width=90.2>&nbsp;</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="margin:0pt; font-family:Arial" align=right><B>Weighted</B></P>
</TD><TD valign=top width=91.4><P style="margin:0pt; font-family:Arial" align=right><B>Weighted</B></P>
</TD></TR>
<TR><TD valign=top width=302.533>&nbsp;</TD><TD valign=top width=90.2>&nbsp;</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="margin:0pt; font-family:Arial" align=right><B>Average</B></P>
</TD><TD valign=top width=91.4><P style="margin:0pt; font-family:Arial" align=right><B>Average</B></P>
</TD></TR>
<TR><TD valign=top width=302.533>&nbsp;</TD><TD valign=top width=90.2><P style="margin:0pt; font-family:Arial" align=right><B>Options</B></P>
</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="margin:0pt; font-family:Arial" align=right><B>Exercise</B></P>
</TD><TD valign=top width=91.4><P style="margin:0pt; font-family:Arial" align=right><B>Remaining</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=302.533>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=90.2><P style="margin:0pt; font-family:Arial" align=right><B>Outstanding</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=19.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80.267><P style="margin:0pt; font-family:Arial" align=right><B>Price</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=91.4><P style="margin:0pt; font-family:Arial" align=right><B>Life (Years)</B></P>
</TD></TR>
<TR><TD valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Balance, December 31, 2004</P>
</TD><TD valign=top width=90.2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;700,000</P>
</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;$4.87</P>
</TD><TD valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;4.3</P>
</TD></TR>
<TR><TD valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Granted</P>
</TD><TD valign=top width=90.2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;1,042,000</P>
</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;$6.82</P>
</TD><TD valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;4.5</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Terminated</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=90.2><P style="line-height:13pt; margin:0pt; padding-right:-8.9pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15,000)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=19.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80.267><P style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(6.40)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;-</P>
</TD></TR>
<TR><TD valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">Balance, December 31, 2005</P>
</TD><TD valign=top width=90.2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;1,727,000</P>
</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>$6.04</P>
</TD><TD valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;4.5</P>
</TD></TR>
<TR><TD valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Granted</P>
</TD><TD valign=top width=90.2><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;60,000</P>
</TD><TD valign=top width=19.933>&nbsp;</TD><TD valign=top width=80.267><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>$8.90</P>
</TD><TD valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;5.0</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Exercised</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=90.2><P style="line-height:13pt; margin:0pt; padding-right:-8.9pt; font-family:Arial" align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(500)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=19.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=80.267><P style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(6.40)</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;-</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=302.533><P style="line-height:13pt; margin:0pt; font-family:Arial"><B>Balance, March 31, 2006</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=90.2><P style="line-height:13pt; margin:0pt; padding-right:0.1pt; font-family:Arial" align=right><B>&nbsp;1,786,500</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=19.933>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=80.267><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>$6.35</B></P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=91.4><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right><B>&nbsp;4.0</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The fair value of new options amortized during the period ended March 31, 2006 has been estimated at the date of grant using a Black-Scholes option pricing model. &nbsp;The current period valuation was calculated with the following assumptions: weighted average risk free interest rate of 3.34% to 3.98% (2005 - 3.00% to 3.29%); volatility factor of the expected market price of the Company&#146;s common stock of 44% (2005 - 45%); and a weighted average expected life of the options of 2.5 years (2005 - 2.5 years). &nbsp;The resulting weighted average cost per option granted was $2.19 (2005 - $2.19). &nbsp;The estimated fair value of the options is expensed over the vesting period.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The fair value compensation recorded for the period ended March 31, 2006 in respect of awards granted in 2006 was $618,566 (2005 - $572,615).</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><B><I>b)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify><B><I>Compensation Options</I></B></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>As at March 31, 2006, the following compensation options were issued and outstanding:</P>
<P style="margin:0pt" align=justify><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=279.15></TD><TD width=78.65></TD><TD width=14.6></TD><TD width=64.65></TD></TR>
<TR><TD valign=top width=372.2>&nbsp;</TD><TD valign=top width=104.867>&nbsp;</TD><TD valign=top width=19.467>&nbsp;</TD><TD valign=top width=86.2><P style="margin:0pt; font-family:Arial" align=right><B>Weighted</B></P>
</TD></TR>
<TR><TD valign=top width=372.2>&nbsp;</TD><TD valign=top width=104.867><P style="margin:0pt; font-family:Arial" align=right><B>Number of</B></P>
</TD><TD valign=top width=19.467>&nbsp;</TD><TD valign=top width=86.2><P style="margin:0pt; font-family:Arial" align=right><B>Average</B></P>
</TD></TR>
<TR><TD valign=top width=372.2>&nbsp;</TD><TD valign=top width=104.867><P style="margin:0pt; font-family:Arial" align=right><B>Compensation</B></P>
</TD><TD valign=top width=19.467>&nbsp;</TD><TD valign=top width=86.2><P style="margin:0pt; font-family:Arial" align=right><B>Exercise</B></P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=372.2><P style="margin:0pt; padding-right:214.75pt; font-family:Arial" align=right><B>Expiry Date &nbsp;&nbsp;</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=104.867><P style="margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align=right><B>Options</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=19.467>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.2><P style="margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align=right><B>Price</B></P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=372.2><P style="margin:0pt; font-family:Arial">October 13, 2006</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=104.867><P style="margin:0pt; font-family:Arial" align=right>50,000</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=19.467>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=86.2><P style="margin:0pt; font-family:Arial" align=right>$4.60</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; text-indent:18pt; font-family:Arial; font-size:11pt">The exercise of the outstanding options in the loss calculation would be anti-dilutive.</P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify>&nbsp;</P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><FONT FACE="Arial Narrow"><B><font size="3">8</font></B></FONT><B><font size="3">. &nbsp;RELATED
</font> PARTY<font size="3"> TRANSACTIONS</font></B><BR></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=307.45></TD><TD width=12.95></TD><TD width=63.65></TD><TD width=11.8></TD><TD width=63></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=409.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=17.267>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84.867><P style="margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=center><FONT FACE="Arial"><B>&nbsp;2006</B></FONT></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=84><P style="margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=bottom width=409.933><P style="margin-top:2.5pt; margin-bottom:-12pt; padding-left:18pt; text-indent:-18pt; font-family:Arial"><B><I>a)</I></B></P>
<P style="margin:0pt; padding-left:18pt; font-family:Arial">For wages and consulting services charged by a related &nbsp;&nbsp;person of a Director. &nbsp;Effective January, 2006, these services ceased to be provided by the related party.</P>
</TD><TD valign=bottom width=17.267><P style="margin:0pt; font-family:Arial" align=right><B>$</B></P>
</TD><TD valign=bottom width=84.867><P style="margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;-</B></P>
</TD><TD valign=bottom width=15.733><P style="margin:0pt; padding-left:-6.4pt; padding-right:-1.25pt; font-family:Arial" align=center>&nbsp;&nbsp;$</P>
</TD><TD valign=bottom width=84><P style="margin:0pt; font-family:Arial" align=right>&nbsp;24,000</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height:normal; margin:0pt; font-family:Arial Narrow; font-size:7.2pt"><FONT FACE="Arial Narrow"><B>9</FONT>. &nbsp;CONTRIBUTED SURPLUS</B></P>
<P style="margin:0pt; padding-bottom:3pt; border-bottom:0.75pt solid #000000"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt"><FONT FACE="Arial">The following table identifies the changes in contributed surplus for the period:</FONT></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR><TD width=149.4></TD><TD width=234></TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=312><P style="margin:0pt; font-family:Arial" align=right><B>Stock-Based</B></P>
</TD></TR>
<TR><TD valign=top width=199.2>&nbsp;</TD><TD valign=top width=312><P style="margin:0pt; font-family:Arial" align=right><B>Compensation</B></P>
</TD></TR>
<TR><TD style="border-top:0.5pt solid #000000" valign=top width=199.2><P style="margin-top:1.65pt; margin-bottom:0pt; font-family:Arial">Balance &#150; December 31, 2005</P>
</TD><TD style="border-top:0.5pt solid #000000" valign=top width=312><P style="margin-top:1.65pt; margin-bottom:0pt; font-family:Arial" align=right>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$1,727,584&nbsp;</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" width=199.2><P style="margin-top:0pt; margin-bottom:0.85pt; font-family:Arial">Stock-based compensation</P>
</TD><TD style="border-bottom:0.5pt solid #000000" width=312><P style="margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align=right>618,566 </P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=199.2><P style="margin:0pt; font-family:Arial">Balance &#150; March 31, 2006</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=312><P style="margin:0pt; font-family:Arial" align=right><B>$2,346,150&nbsp;</B></P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><B>10. &nbsp;SUPPLEMENTARY CASH FLOW INFORMATION</B></P>
<P style="margin: 0pt; padding-bottom: 3pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt"><FONT FACE="Arial">The Company conducted non-cash investing and financing activities as follows:</FONT></P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=307.45></TD><TD width=11.8></TD><TD width=64.8></TD><TD width=26.35></TD><TD width=48.45></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=409.933>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=15.733>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="margin:0pt; font-family:Arial" align=right><B>2006</B></P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=35.133>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=64.6><P style="margin:0pt; padding-left:1.15pt; font-family:Arial" align=right>2005</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; font-family:Arial">Investing Activities</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;</B></P>
</TD><TD valign=top width=35.133>&nbsp;</TD><TD valign=top width=64.6><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; text-indent:-307.25pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Non-cash working capital incurred for mineral properties and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;</B></P>
</TD><TD valign=top width=35.133>&nbsp;</TD><TD valign=top width=64.6><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; text-indent:-66.7pt; font-family:Arial">&nbsp;&nbsp;&nbsp;exploration costs</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;(1,249,050)</B></P>
</TD><TD valign=top width=35.133>&nbsp;</TD><TD valign=top width=64.6><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;-</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; font-family:Arial">Financing Activities</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>&nbsp;</B></P>
</TD><TD valign=top width=35.133>&nbsp;</TD><TD valign=top width=64.6><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>&nbsp;</P>
</TD></TR>
<TR><TD valign=top width=409.933><P style="line-height:13pt; margin:0pt; font-family:Arial">&nbsp;&nbsp;&nbsp;Value assigned to options granted</P>
</TD><TD valign=top width=15.733>&nbsp;</TD><TD valign=top width=86.4><P style="line-height:13pt; margin:0pt; padding-right:0.2pt; font-family:Arial" align=right><B>618,566</B></P>
</TD><TD valign=top width=35.133>&nbsp;</TD><TD valign=top width=64.6><P style="line-height:13pt; margin:0pt; font-family:Arial" align=right>572,615 &nbsp;&nbsp;&nbsp;&nbsp;</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><B>11. &nbsp;FINANCIAL INSTRUMENTS</B></P>
<P style="margin: 0pt; padding-bottom: 3pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify><FONT FACE="Arial">The Company's financial instruments consist of cash, term deposits, corporate notes, amounts receivable, accounts payable and accrued liabilities, and capital lease payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial instruments.</FONT><B> </B>The fair values of cash, term deposits, corporate notes, amounts receivable and accounts payable and accrued liabilities approximate their carrying values due to the relatively short period to maturity of these instruments.<B> </B></P>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><B>12. &nbsp;COMMITMENTS AND CONTINGENT LIABILITIES</B></P>
<P style="margin: 0pt; padding-bottom: 3pt"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><FONT FACE="Arial"><B><I>a)</I></B></FONT></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>Under the terms of the Option agreements to acquire the mineral properties for the Afton Mineral Claims, the optionors retained a 10% net profit royalty which can be purchased on or before December 1, 2010 for $2,000,000 in cash or shares of the Company.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify>&nbsp;</P>
<P style="margin:0pt">&nbsp;</P>
<HR style="padding-top:7.2pt; padding-bottom:7.2pt" noshade size=1.333>
<P style="line-height:normal; margin:0pt; font-family:Arial; page-break-before:always">New Gold Inc.</P>
<P style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An Exploration Stage Company)</P>
<P style="margin-top:0pt; margin-bottom:4pt; font-family:Arial; font-size:12pt"><b>NOTES
TO FINANCIAL STATEMENTS</b></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; font-family:Arial"><B>For the three month period ended March 31, 2006</B></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; padding-right:-12.6pt; padding-bottom:3pt; font-family:Arial; border-bottom:0.5pt solid #000000"><I>(Unaudited and Canadian Dollars)</I></P>
<P style="margin:0pt"><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><B><I>b)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>Subsequent to March 31, 2006 the Company will sign definitive contracts totaling $3.7 million for the preparation of a Feasibility Study (&#147;FS&#148;) for the New Afton copper/gold project. &nbsp;The FS is expected to be completed in the fourth quarter of 2006.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; padding-left:36pt; text-indent:-18pt; font-family:Arial" align=justify><B><I>c)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>In February 2006, the Company completed an arm&#146;s length agreement with the owner (&#147;optionor&#148;) of one mineral claim, located in the Kamloops Mining Division and contiguous to the Company&#146;s Ajax Property, to explore the property. As a result, the Company paid $15,000 for the exclusive rights to explore this property for one year. &nbsp;The exclusive exploration rights may be extended by making payments of, respectively, $15,000 and $50,000 for successive one year periods to February 24<SUP>th</SUP> in each of the years 2007 and 2008. &nbsp;The Company may at any time during the option period purchase the property by paying $100,000 and reserving to the optionor &nbsp;a 1.5% net smelter return royalty on production from the property. In the event the Company acquires the property, it holds the sole right, prior to production commencing, to purchase the 1.5% net smelter return royalty f
or $100,000 per one-fifteenth (1/15<SUP>th</SUP>) of the royalty being purchased. All payments subsequent to the initial $15,000 are payable in cash or equivalent value in shares of New Gold at the optionor&#146;s discretion. &nbsp;The Company received transfer of title, which will be retransferred if the Company does not exercise the purchase option.</P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin-top:0pt; margin-bottom:-13pt; padding-left:36pt; text-indent:-18pt; font-family:Arial; font-size:11pt" align=justify><B><I>d)</I></B></P>
<P style="line-height:13pt; margin:0pt; padding-left:36pt; font-family:Arial; font-size:11pt" align=justify>The Company is committed to an operating lease for office premise rentals in the aggregate of $103,707. The future minimum lease payments as at March 31, 2006 are as follows:</P>
<P style="margin:0pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR><TD width=64.8></TD><TD width=16.4></TD><TD width=50.4></TD></TR>
<TR><TD valign=top width=86.4><P style="margin:0pt; font-family:Arial">2006</P>
</TD><TD valign=top width=21.867><P style="margin:0pt; font-family:Arial" align=right>$</P>
</TD><TD valign=top width=67.2><P style="margin:0pt; font-family:Arial" align=right>32,346</P>
</TD></TR>
<TR><TD valign=top width=86.4><P style="margin:0pt; font-family:Arial">2007</P>
</TD><TD valign=top width=21.867>&nbsp;</TD><TD valign=top width=67.2><P style="margin:0pt; font-family:Arial" align=right>46,833</P>
</TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=86.4><P style="margin:0pt; font-family:Arial">2008</P>
</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=21.867>&nbsp;</TD><TD style="border-bottom:0.5pt solid #000000" valign=top width=67.2><P style="margin:0pt; font-family:Arial" align=right>24,528</P>
</TD></TR>
<TR><TD style="border-bottom:2pt double #000000" valign=top width=86.4>&nbsp;</TD><TD style="border-bottom:2pt double #000000" valign=top width=21.867><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>$</P>
</TD><TD style="border-bottom:2pt double #000000" valign=top width=67.2><P style="margin-top:2.5pt; margin-bottom:0pt; font-family:Arial" align=right>103,707</P>
</TD></TR>
</TABLE>
<P style="margin:0pt"><BR></P>
<P style="line-height: normal; font-family: Arial; font-size: 12pt; border-bottom: 0.5pt solid #000000; margin: 0pt; padding-bottom: 3pt"><B>13. &nbsp;ENVIRONMENTAL RISKS</B></P>
<P style="line-height: 13pt; font-family: Arial; font-size: 11pt; margin: 0pt; padding-left: 36pt" align="justify"><BR></P>
<P style="margin:0pt"><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify><FONT FACE="Arial">Existing and possible future environmental legislation, regulations and action could give rise to additional expense, including those for future removal and site restoration costs, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be predicted. Regulatory requirements and environmental standards are subject to constant evaluation and may be significantly increased, which could materially and adversely affect the business of the Company or its ability to develop its mineral properties on an economic basis. Before production can commence on any property, the Company must obtain regulatory and environmental approvals. There is no assurance that such approvals will be obtained on a timely basis or at all. The cost of compliance with changes in government regulations has the potential to reduce the profitability of operations or pre
clude entirely the economic development of mineral properties.</FONT></P>
<P style="margin:0pt" align=justify><BR></P>
<P style="line-height:13pt; margin:0pt; padding-left:18pt; font-family:Arial; font-size:11pt" align=justify>Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against operations as incurred or capitalized and amortized depending on their future economic benefits. Estimated future removal and site restoration costs, when the ultimate liability is reasonably determinable, are charged against operations over the estimated remaining life of the related business operation, net of expected recoveries.</P>
<P style="margin:0pt" align=justify><BR>
<BR></P>
<hr>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Arial"><font FACE="Arial">New Gold Inc.</font></p>
<p style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An
Exploration Stage Company)</p>
<p style="line-height:9.2pt; margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">MANAGEMENT'S
DISCUSSION AND ANALYSIS</font></b></p>
<p style="font-family: Arial; border-bottom: 1 solid #000000; margin: 0pt"><b>March
31, 2006</b><br>
</p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="line-height:14pt; margin:0pt; font-family:Arial; font-size:12pt" align="center"><b>MANAGEMENT'S
DISCUSSION AND ANALYSIS</b></p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="center"><b>OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATION</b></p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="center"><b>AT
MARCH 31, 2006</b></p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><i>This
Management Discussion and Analysis ("MD&amp;A") is intended to supplement
the Company's financial statements and notes ("Statements") thereto and
compares the financial results of the first quarter of 2006 with those of the
comparative quarter in 2005. The reader is encouraged to review the Statements
in conjunction with this document as well as the statements and MD&amp;A as
filed for the year ended December 31, 2005. This report is dated May 10, 2006
and the Company's public filings, including its most recent Annual Information
Form, can be reviewed via the SEDAR website (www.sedar.com).</i></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><i>The
Company prepares and files its financial statements and MD&amp;A in Canadian ("CDN")
dollars and in accordance with Canadian Generally Accepted Accounting Principles
("GAAP"). A note to the financial statement reconciling the figures to
United States Generally Accepted Accounting Principles ("USGAAP") is
included in the annual audited Statements.</i></p>
<p style="border-bottom-color: #000000; border-bottom-width: 0.75pt; margin: 0pt; padding-bottom: 3pt" align="justify"><br>
</p>
<p style="line-height: 9.8pt; font-family: Arial Narrow; font-size: 7.8pt; border-bottom-style: double; border-bottom-color: #000000; margin: 0pt; padding-bottom: 3pt" align="justify"><font FACE="Arial Narrow" size="3"><b>BUSINESS
OVERVIEW</b></font><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">&nbsp;</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">&nbsp;</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><font FACE="Arial"><b><i>Afton
Copper-Gold Project</i></b></font></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">New
Gold Inc. ("New Gold" or the "Company") is a Canadian based resource
company engaged in the exploration and development of base and precious metals
properties in British Columbia Canada. The current principle area of focus is
the New Afton copper/gold project ("Project") located in Kamloops, British
Columbia.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">During
the first quarter of 2006 the Company advanced its activities on the Project
from those in in 2005 when it focused on the underground exploration decline
development and infill drilling to those in 2006 related to completing a
feasibility study and advancing its exploration efforts. The Company began the
feasibility study in the first quarter of 2006 following the announcement of the
group of consulting firms being engaged in December 2005. The Company plans to
complete the feasibility study by the end of 2006. The Company also plans to
perform the activities required to acquire the necessary permits and financing
to be able to make a construction decision by the end of 2006.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
scope of the feasibility study includes an updated resource estimation, mining
method selection, reserves and mine production scheduling, process plant design,
tailings deposition, all infrastructure requirements and the preparation of the
project economic analysis. Once complete, the feasibility study will replace the
prior scoping study completed on the Project (in 2003, and updated in 2004), and
will establish the technical and economical potential of developing a new
underground mine at the Project.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
first phase of the feasibility study has been completed by March 31, 2006 and
phase two is now underway.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="margin:0pt" align="justify"><br>
</p>
<P style="margin:0pt" align=justify>&nbsp;</P>
<hr>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Arial"><font FACE="Arial">New Gold Inc.</font></p>
<p style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An
Exploration Stage Company)</p>
<p style="line-height:9.2pt; margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">MANAGEMENT'S
DISCUSSION AND ANALYSIS</font></b></p>
<p style="font-family: Arial; border-bottom: 1 solid #000000; margin: 0pt"><b>March
31, 2006</b><br>
</p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
Company also announced the final in-fill drilling results from the underground
drilling program which was completed in early 2006. &nbsp;The results of the
Company's drilling can be viewed on the company website (<font COLOR="#0000FF"><b><u>www.newgoldinc.com</u></b></font>)
or on SEDAR.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><b><i>Afton
and Ajax Exploration Properties</i></b></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
Company has embarked on a significant exploration program for 2006 and has
committed $6.5 million to evaluate both the underground targets around the
existing resource at Afton as well as a surface drilling program to evaluate
areas outside of the current resource at Afton and on the Ajax claim areas. The
commitment to spending will be re-evaluated at the mid-year point and any
changes will be based upon the results derived in the first half of the year.</p>
<p style="margin:0pt"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">During
the first quarter of 2006 the Company completed 9,243 metres of underground
drilling at Afton, 4,407 metres of surface drilling at Afton and 2,032 metres of
surface drilling at Ajax. The total metres of 15,682 was below the plan of
20,245 due in part to the later starting of drilling than originally planned.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">In
February 2006, the Company completed an arm's length agreement with the owner
("optionor") of one mineral claim, located in the Kamloops Mining Division
and contiguous to the Company's Ajax Property, to explore the property. As a
result, the Company paid $15,000 for the exclusive right to explore this
property for one year. &nbsp;The exclusive exploration rights may be extended by
making payments of, respectively, $15,000 and $50,000 for successive one year
periods to February 24<sup>th</sup> in each of the years 2007 and 2008.
&nbsp;The Company may at any time during the option period purchase the property
by paying $100,000 and reserving to the optionor a 1.5% net smelter return
royalty on production from the property. In the event the Company acquires the
property, it holds the sole right to purchase the 1.5% net smelter return
royalty for $100,000 per one-fifteenth (1/15<sup>th</sup>) of the royalty being
purchased. All payments subsequent to the initial $15,000 are payable in cash or
equivalent value in shares of New Gold at the optionor's discretion. &nbsp;The
Company received transfer of title, which will be retransferred if the Company
does not exercise the purchase option.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height: 9.8pt; font-family: Arial Narrow; font-size: 7.8pt; border-bottom: 1 solid #000000; margin: 0pt; padding-bottom: 3pt" align="justify"><font FACE="Arial Narrow" size="3"><b>SELECTED
QUARTERLY INFORMATION</b></font></p>
<p style="line-height: 13pt; font-family: Arial; font-size: 11pt; margin: 0pt" align="justify"><br>
</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><font FACE="Arial">The
results of operations are summarized in the following tables which have been
prepared in accordance with Canadian GAAP:</font></p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td width="158.4"></td>
    <td width="82.3"></td>
    <td width="73.4"></td>
    <td width="78.3"></td>
    <td width="72"></td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="211.2">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial"><i>$Cdn</i></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="109.733">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right"><b>2006</b></p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right"><b>1<sup>st</sup>
      Quarter</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="97.867">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2005</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">4<sup>th</sup>
      Quarter</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="104.4">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2005</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">3<sup>rd</sup>
      Quarter</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="96">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2005</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2<sup>nd</sup>
      Quarter</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">&nbsp;</td>
    <td valign="bottom" width="109.733">&nbsp;</td>
    <td valign="bottom" width="97.867">&nbsp;</td>
    <td valign="bottom" width="104.4">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Income
      Statement</b></p>
    </td>
    <td valign="bottom" width="109.733">&nbsp;</td>
    <td valign="bottom" width="97.867">&nbsp;</td>
    <td valign="bottom" width="104.4">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">(Loss)</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-4.1pt; font-family:Arial" align="center"><b>$
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,336,049)</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; padding-right:-2.7pt; font-family:Arial" align="right">$
      (1,279,500)</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align="center">$
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(490,854)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align="center">$
      &nbsp;&nbsp;&nbsp;&nbsp;(803,078)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Loss per share</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-4.1pt; font-family:Arial" align="center"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.06)</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; padding-right:-2.7pt; font-family:Arial" align="right">$(0.08)</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(0.04)
      &nbsp;</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.4pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(0.06)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">&nbsp;</td>
    <td valign="bottom" width="109.733">&nbsp;</td>
    <td valign="bottom" width="97.867">&nbsp;</td>
    <td valign="bottom" width="104.4">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Balance
      Sheet</b></p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>&nbsp;</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>&nbsp;</b></p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Working Capital</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>80,307,904</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">14,814,376</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">13,099,254</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">17,784,732</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Total Assets</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>110,204,266</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">41,751,593</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">34,180,290</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">34,986,982</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">&nbsp;</td>
    <td valign="bottom" width="109.733">&nbsp;</td>
    <td valign="bottom" width="97.867">&nbsp;</td>
    <td valign="bottom" width="104.4">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
</table>
<P style="margin:0pt" align=justify>&nbsp;</P>
<hr>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Arial"><font FACE="Arial">New Gold Inc.</font></p>
<p style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An
Exploration Stage Company)</p>
<p style="line-height:9.2pt; margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">MANAGEMENT'S
DISCUSSION AND ANALYSIS</font></b></p>
<p style="font-family: Arial; border-bottom: 1 solid #000000; margin: 0pt"><b>March
31, 2006</b><br>
</p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="margin:0pt"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td width="158.4"></td>
    <td width="82.3"></td>
    <td width="73.4"></td>
    <td width="78.3"></td>
    <td width="72"></td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Statement of
      Cash Flows</b></p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt"><br>
      </p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt"><br>
      </p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt"><br>
      </p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt"><br>
      </p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; padding-left:14.4pt; text-indent:-14.4pt; font-family:Arial">Payments
      for mineral properties exploration costs</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-4.1pt; font-family:Arial" align="right"><b>(5,402,631)</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; padding-right:-4.1pt; font-family:Arial" align="right">(4,810,406)</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; text-indent:18.1pt; font-family:Arial">(4,422,861)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; text-indent:26.2pt; font-family:Arial">(4,252,999)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="211.2">
      <p style="line-height:13pt; margin:0pt; padding-left:14.4pt; text-indent:-14.4pt; font-family:Arial">Cash
      flow from (used for) financing activities</p>
    </td>
    <td valign="bottom" width="109.733">
      <p style="line-height:13pt; margin:0pt; text-indent:30.6pt; font-family:Arial"><b>70,532,945</b></p>
    </td>
    <td valign="bottom" width="97.867">
      <p style="line-height:13pt; margin:0pt; text-indent:35.6pt; font-family:Arial">6,944,830</p>
    </td>
    <td valign="bottom" width="104.4">
      <p style="line-height:13pt; margin:0pt; text-indent:35.6pt; font-family:Arial">(5,668)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; text-indent:32.9pt; font-family:Arial">2,967,941</p>
    </td>
  </tr>
</table>
<p style="margin:0pt"><br>
</p>
<table style="font-size:10pt" cellspacing="0">
  <tr>
    <td width="173.5"></td>
    <td width="66.25"></td>
    <td width="77.05"></td>
    <td width="75.95"></td>
    <td width="72"></td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" width="231.333">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial"><i>$Cdn</i></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="88.333">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2005</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">1<sup>st</sup>
      Quarter</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="102.733">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2004</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">4<sup>th</sup>
      Quarter</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="bottom" width="101.267">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2004</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">3<sup>rd</sup>
      Quarter</p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" width="96">
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2004</p>
      <p style="line-height:13pt; margin-top:0pt; margin-bottom:0.85pt; font-family:Arial" align="right">2<sup>nd</sup>
      Quarter</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">&nbsp;</td>
    <td valign="bottom" width="88.333">&nbsp;</td>
    <td valign="bottom" width="102.733">&nbsp;</td>
    <td valign="bottom" width="101.267">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Income
      Statement</b></p>
    </td>
    <td valign="bottom" width="88.333">&nbsp;</td>
    <td valign="bottom" width="102.733">&nbsp;</td>
    <td valign="bottom" width="101.267">&nbsp;</td>
    <td valign="bottom" width="96">&nbsp;</td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Income/(Loss)</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; padding-right:-9pt; font-family:Arial" align="center">$
      &nbsp;&nbsp;(825,908)</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-9.35pt; font-family:Arial" align="center">$
      (1,144,892)</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; padding-right:-9.7pt; font-family:Arial" align="center">$
      &nbsp;&nbsp;&nbsp;(146,626)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; padding-right:-10.05pt; font-family:Arial" align="center">$
      &nbsp;&nbsp;&nbsp;&nbsp;(20,422)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Earnings/(Loss)
      per share</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(0.06)</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(0.09)</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(0.01)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; padding-right:-5.75pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.01)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">&nbsp;</td>
    <td valign="bottom" width="88.333">&nbsp;</td>
    <td valign="bottom" width="102.733">&nbsp;</td>
    <td valign="bottom" width="101.267">&nbsp;</td>
    <td valign="bottom" width="96">
      <p style="margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Balance
      Sheet</b></p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>&nbsp;</b></p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Working Capital</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">20,566,933</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">24,166,554</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">26,185,696</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">25,346,309</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial">Total Assets</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">31,639,796</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">31,795,645</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">30,729,760</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">29,456,408</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">&nbsp;</td>
    <td valign="bottom" width="88.333">&nbsp;</td>
    <td valign="bottom" width="102.733">&nbsp;</td>
    <td valign="bottom" width="101.267">&nbsp;</td>
    <td valign="bottom" width="96">
      <p style="margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial"><b>Statement of
      Cash Flows</b></p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right"><b>&nbsp;</b></p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">&nbsp;</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; padding-left:14.4pt; text-indent:-14.4pt; font-family:Arial">Payments
      for mineral claim interest and exploration costs</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; padding-right:-9pt; font-family:Arial" align="center">&nbsp;&nbsp;(3,080,817)</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; padding-right:-9.35pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;(1,699,439)</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; padding-right:-9.7pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(375,412)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; padding-right:-10.05pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(234,459)</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="231.333">
      <p style="line-height:13pt; margin:0pt; padding-left:14.4pt; text-indent:-14.4pt; font-family:Arial">Cash
      flow from (used for) financing activities</p>
    </td>
    <td valign="bottom" width="88.333">
      <p style="line-height:13pt; margin:0pt; padding-right:-9pt; font-family:Arial" align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,667)</p>
    </td>
    <td valign="bottom" width="102.733">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">169,323</p>
    </td>
    <td valign="bottom" width="101.267">
      <p style="line-height:13pt; margin:0pt; padding-right:-9.7pt; font-family:Arial" align="center">&nbsp;&nbsp;(1,362,332)</p>
    </td>
    <td valign="bottom" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial" align="right">155,735</p>
    </td>
  </tr>
</table>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><b><i>Comparative
Periods</i></b></p>
<p style="margin:0pt"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">During
the first quarter of 2006, the Company invested approximately $5.4 million on
its mineral properties as compared to $3.1 million in the comparative quarter in
2005 for an increase of $2.3 million. The increase is primarily the result of
spending $3.8 million, including working capital changes, on underground
exploration and support, $0.5 million on surface drilling activities at Afton
and Ajax as well as $0.5 million on the feasibility study in the first quarter
of 2006 as compared to spending $2.9 million on tunneling and decline
development in comparative quarter in 2005 and only $0.2 million on drilling.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
Company incurred a loss of $1.3 million or $0.06 per share in the first quarter
of 2006 versus a loss of $0.8 million or $0.6 per share in the comparative
quarter of 2005. In the first quarter of 2006 the Company incurred higher costs
for wages and benefits due to higher staffing levels as well increased
regulatory charges due to having more shares outstanding at a higher price and
higher promotional costs due to higher activity levels.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Interest
income was $0.4 million for the current quarter in 2006 versus $0.2 million in
the 2005 comparative period due to higher cash balances as a result equity
raisings completed in December 2005 and February 2006.</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">&nbsp;</p>
<p style="margin: 0pt; padding-bottom: 3pt" align="justify"><br>
<br>
</p>
<P style="margin:0pt" align=justify>&nbsp;</P>
<hr>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Arial"><font FACE="Arial">New Gold Inc.</font></p>
<p style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An
Exploration Stage Company)</p>
<p style="line-height:9.2pt; margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">MANAGEMENT'S
DISCUSSION AND ANALYSIS</font></b></p>
<p style="font-family: Arial; border-bottom: 1 solid #000000; margin: 0pt"><b>March
31, 2006</b><br>
</p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height: 9.8pt; font-family: Arial Narrow; font-size: 7.8pt; border-bottom: 1 solid #000000; margin: 0pt; padding-bottom: 3pt" align="justify"><b><font face="Arial Narrow" size="3">LIQUIDITY
&amp; CAPITAL RESOURCES</font></b></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">As
at March 31, 2006,<b><i> </i></b>the Company had working capital of $80.3
million versus $14.8 million as at December 31, 2005. During the first quarter
of 2006 the Company completed, by way of a short form prospectus in Canada,
through a syndicate of underwriters, an offering of 8,334,000 units priced at
$9.00 per unit for gross cash proceeds of $75 million. &nbsp;Each unit consisted
of one common share and one-half of a share purchase warrant. &nbsp;Each whole
warrant will be exercisable to purchase one common share at a price of $12.00
per share for a period of two years from the date of closing (February 28,
2008).</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">It
is planned that the proceeds of this financing will be predominantly used as the
Company's equity portion towards the ultimate financing for the development of
the Afton project. The Company will also be looking at the availability of
project debt financing, or alternative structured financings, for the project
during the second half of 2006.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
Company plans to complete its feasibility study in 2006 at an estimated cost of
$5.3 million plus undertake a significant exploration program both from the
underground and surface locations at and around the Project as well as at the
Ajax property. The ultimate cost of the 2006 exploration program will be
determined once the initial six month program results are received from a
planned $6.5 million program.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
Company's current working capital level is sufficient to meet its presently
planned funding requirements for this stage of the Project up to the end of
2006.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><b><i>Related
Party Transactions</i></b></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">During
the period ended March 31, 2006 the following related party transactions
occurred:</p>
<p style="margin:0pt" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td width="301.45"></td>
    <td width="18"></td>
    <td width="63"></td>
    <td width="18"></td>
    <td width="58.4"></td>
  </tr>
  <tr>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="401.933">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="24">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="84">
      <p style="margin-top:1.65pt; margin-bottom:0pt; text-indent:21.6pt; font-family:Arial" align="center"><b>&nbsp;2006</b></p>
    </td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="24">&nbsp;</td>
    <td style="border-bottom:0.5pt solid #000000" valign="top" width="77.867">
      <p style="margin-top:1.65pt; margin-bottom:0pt; padding-right:-1pt; text-indent:18.15pt; font-family:Arial" align="right">2005</p>
    </td>
  </tr>
  <tr>
    <td valign="bottom" width="401.933">
      <p style="margin-top:2.5pt; margin-bottom:0pt; text-indent:-238.95pt; font-family:Arial">For
      wages and consulting services charged by a related person of a Director</p>
    </td>
    <td valign="bottom" width="24">
      <p style="margin:0pt; padding-left:-6.4pt; padding-right:-1.25pt; font-family:Arial" align="center">&nbsp;&nbsp;</p>
    </td>
    <td valign="bottom" width="84">
      <p style="margin:0pt; padding-right:0.2pt; font-family:Arial" align="right">-</p>
    </td>
    <td valign="bottom" width="24">
      <p style="margin:0pt; padding-left:-6.4pt; padding-right:-1.25pt; font-family:Arial" align="center">&nbsp;&nbsp;</p>
    </td>
    <td valign="bottom" width="77.867">
      <p style="margin:0pt; padding-right:-1pt; text-indent:9.15pt; font-family:Arial" align="right">24,000</p>
    </td>
  </tr>
</table>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">&nbsp;Subsequent
to December 31, 2005, the services provided ceased to be a related party.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height: 9.8pt; font-family: Arial Narrow; font-size: 7.8pt; border-bottom: 1 solid #000000; margin: 0pt; padding-bottom: 3pt" align="justify"><font FACE="Arial Narrow" size="3"><b>2006
OUTLOOK</b></font></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><font FACE="Arial">The
Company's previously stated priorities remain for 2006. The Company will focus
its main attention on the advancement of the Afton Project through the
feasibility stage in 2006 in parallel with the advancement of the permitting and
financing efforts. The Company is well funded to advance the Project to the
completion of the Feasibility Study and will also assess the potential of its
overall land package through a regional exploration program in 2006. The Company
will seek to finance the Project in 2006 as well as continue to review its
exploration requirements. In addition, the Company will be proceeding with the
permitting process requirements of the Project, including both the environmental
and social requirements.</font></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="margin: 0pt; padding-bottom: 3pt" align="justify">&nbsp;</p>
<P style="margin:0pt" align=justify>&nbsp;</P>
<hr>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<p style="margin:0pt; font-family:Arial"><font FACE="Arial">New Gold Inc.</font></p>
<p style="margin-top:0pt; margin-bottom:4.15pt; font-family:Arial">(An
Exploration Stage Company)</p>
<p style="line-height:9.2pt; margin:0pt; font-family:Arial; font-size:7.2pt"><b><font size="2">MANAGEMENT'S
DISCUSSION AND ANALYSIS</font></b></p>
<p style="font-family: Arial; border-bottom: 1 solid #000000; margin: 0pt"><b>March
31, 2006</b><br>
</p>
<p style="margin:0pt" align="center"><br>
</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">As
at May 10, 2006, the Company's outstanding capital stood at:</p>
<p style="margin:0pt" align="justify"><br>
</p>
<table style="font-size:10pt" cellspacing="0" align="center">
  <tr>
    <td width="131.4"></td>
    <td width="72"></td>
  </tr>
  <tr>
    <td valign="top" width="175.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Common
      shares</p>
    </td>
    <td valign="top" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="right">23,910,217</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="175.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Warrants</p>
    </td>
    <td valign="top" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="right">4,167,000</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="175.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Common
      stock options</p>
    </td>
    <td valign="top" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="right">1,786,500</p>
    </td>
  </tr>
  <tr>
    <td valign="top" width="175.2">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Compensation
      options</p>
    </td>
    <td valign="top" width="96">
      <p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="right">50,000</p>
    </td>
  </tr>
</table>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><b><i>Forward-Looking
Statement</i></b></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">Certain
of the statements made and information contained herein is "forward- looking
information" within the meaning of the Ontario Securities Act or "forward-looking
statements" within the meaning of Section&nbsp;21E of the Securities Exchange
Act of 1934 of the United States. Forward-looking statements are subject to a
variety of risks and uncertainties which could cause actual events or results to
differ from those reflected in the forward-looking statements, including,
without limitation, risks and uncertainties relating to the interpretation of
drill results and the estimation of mineral resources and reserves, the geology,
grade and continuity of mineral deposits, the possibility that future
exploration, development or mining results will not be consistent with the
Company's expectations, metal recoveries, accidents, equipment breakdowns,
title matters and surface access, labour disputes or other unanticipated
difficulties with or interruptions in production, the potential for delays in
exploration or development activities or the completion of feasibility studies,
the inherent uncertainty of production and cost estimates and the potential for
unexpected costs and expenses, commodity price fluctuations, currency
fluctuations, failure to obtain adequate financing on a timely basis and other
risks and uncertainties, including those described under Risk Factors Relating
to the Company's Business in the Company's Annual Information Form and in
each management discussion and analysis. Forward-looking information is in
addition based on various assumptions including, without limitation, the
expectations and beliefs of management, the assumed long term price of copper
and gold, that the feasibility study will confirm that a technically viable and
economic operation exists, that the Company will receive required permits and
access to surface rights, that the Company can access financing, appropriate
equipment and sufficient labour and that the political environment within
British Columbia and Canada will continue to support the development of
environmentally safe mining projects so that the Company will be able to
commence the development of the Afton project within the timetable to be
established by the feasibility study. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in forward-looking
statements. Accordingly, readers are advised not to place undue reliance on
forward-looking statements.</p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify"><b><i>US
Investors Should Note</i></b></p>
<p style="margin:0pt" align="justify"><br>
</p>
<p style="line-height:13pt; margin:0pt; font-family:Arial; font-size:11pt" align="justify">The
U.S. Securities and Exchange Commission ("SEC") permits mining companies, in
their filings with the SEC to disclose only those mineral deposits that a
company can economically and legally extract or produce. The Company may use
certain terms in its publications such as "resources" that are prescribed by
Canadian regulatory policy and guidelines but are not provided for in the SEC
guidelines on publications and filings.</p>
<p style="margin:0pt"><br>
</p>
<p style="margin:0pt"><br>
<br>
</p>
<p style="margin: 0pt" align="justify">&nbsp;</p>
<P style="margin:0pt" align=justify>&nbsp;</P>
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
