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<SEC-DOCUMENT>0001204459-08-001678.txt : 20080814
<SEC-HEADER>0001204459-08-001678.hdr.sgml : 20080814
<ACCEPTANCE-DATETIME>20080814112654
ACCESSION NUMBER:		0001204459-08-001678
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20080630
FILED AS OF DATE:		20080814
DATE AS OF CHANGE:		20080814

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:		081016371

	BUSINESS ADDRESS:	
		STREET 1:		3110 - 666 BURRARD ST.
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 2X8
		BUSINESS PHONE:		(604) 696-4100

	MAIL ADDRESS:	
		STREET 1:		3110 - 666 BURRARD ST.
		CITY:			VANCOUVER
		STATE:			A1
		ZIP:			V6C 2X8

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DRC RESOURCES CORP                                      /FI
		DATE OF NAME CHANGE:	19860904
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>newgoldf6k081408.htm
<DESCRIPTION>FORM 6-K
<TEXT>
<html>

<head>

<title>New Gold Inc.: Form 6-K - Prepared by TNT Filings Inc.</title>
</head>

<body>

<div style="border-top-style: solid; border-top-width: 1; padding-top: 1">
  <hr color="#000000" size="5">
</div>
<p style="text-align: center; margin-top: 14pt; margin-bottom: 0pt"><b>
<font size="5">UNITED STATES</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="5">SECURITIES AND EXCHANGE COMMISSION</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">Washington, D.C. 20549</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;<b><font size="2">___________________</font></b></p>
<p style="text-align: center; margin-top: 6pt; margin-bottom: 0pt"><b>
<font size="5">FORM 6-K</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR<br>
15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">For the month of August 2008</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">Commission File Number 001-31722</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">___________________</font></b></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="6">New Gold Inc.</font></b></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Park Place, 3110-666 Burrard Street</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Vancouver, British Columbia V6C 2X8</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Canada</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">(</font><i><font size="2">Address of principal executive offices</font></i><font size="2">)</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">___________________</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)<br>
&nbsp;</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Form 20-F</font> <font face="Wingdings 2" size="4">&#163;</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size="2">Form
40-F</font> <font face="Wingdings 2" size="4">Q</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">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)</font>
<font face="Wingdings 2" size="4">&#163;</font></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">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)</font>
<font face="Wingdings 2" size="4">&#163;</font></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">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.)</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">Yes</font> <font face="Wingdings 2" size="4">&#163;</font><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No</font>
<font face="Wingdings 2" size="4">Q</font></p>
<p style="text-indent: 0.25in; text-align: left; margin-top: 0pt; margin-bottom: 0pt">
&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">If &quot;Yes&quot; is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82- <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u>.</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<div title="EE+ Page Break" style="font-size: 1pt; page-break-after: always; width: 100%; height: 1px">
  <hr color="#000000" SIZE="5">
</div>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">DOCUMENTS FILED AS PART OF THIS FORM 6-K</font></b></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt"><font size="2">
<a style="text-decoration: none" href="#EXHIBIT INDEX">See the Exhibit Index
hereto.</a></font></p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2">SIGNATURES</font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">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.</font></p>
<p style="text-align: justify; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<table style="border-collapse: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="50%" colSpan="2">&nbsp;</td>
    <td width="50%"><b><small>NEW</small> <small>GOLD</small> <small>INC.</small></b></td>
  </tr>
  <tr>
    <td width="50%" colSpan="2">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%" colSpan="2">&nbsp;</td>
    <td width="50%">&nbsp;</td>
  </tr>
  <tr>
    <td width="49%">&nbsp;</td>
    <td align="left" width="1%">
    <p style="margin-right: 15px"><font size="2">By: </font></td>
    <td style="border-bottom: 1px solid" width="50%"><font size="2">/s/ Basil
    Huxham</font></td>
  </tr>
  <tr>
    <td width="49%">&nbsp;</td>
    <td align="left" width="1%">
    <p style="margin-right: 15px"><font size="2">Name:&nbsp;&nbsp; </font></td>
    <td style="border-top: 1px solid; border-bottom: medium none" width="50%">
    <font size="2">Basil Huxham</font></td>
  </tr>
  <tr>
    <td width="49%">&nbsp;</td>
    <td align="left" width="1%">
    <p style="margin-right: 15px"><font size="2">Title: </font></td>
    <td style="border-top: medium none" width="50%"><font size="2">Executive
    Vice President and Chief Financial Officer</font></td>
  </tr>
  <tr>
    <td width="50%" colSpan="2"><font size="2">Date: August 14, 2008</font></td>
    <td style="border-top: medium none" width="50%">&nbsp;</td>
  </tr>
</table>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">2</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<div title="EE+ Page Break" style="font-size: 1pt; page-break-after: always; width: 100%; height: 1px">
  <hr color="#000000" SIZE="5">
</div>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>
<font size="2"><a name="EXHIBIT INDEX">EXHIBIT INDEX</a></font></b></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<table style="border-collapse: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="14%"><u><b><font size="2">Exhibit</font></b></u></td>
    <td width="86%"><b><font size="2"><u>Description</u></font></b></td>
  </tr>
  <tr>
    <td width="14%" bgColor="#e9f1f8"><font size="2">&nbsp;</font></td>
    <td width="86%" bgColor="#e9f1f8"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="14%" bgColor="#e9f1f8"><font size="2">
    <a href="exh991.htm" style="text-decoration: none">99.1</a></font></td>
    <td width="86%" bgColor="#e9f1f8">
    <p style="color: #000000; text-indent: 0pt; margin-left: 0pt; margin-top: 0pt; margin-bottom: 0pt; padding: 0pt" align="left">
    <font size="2"><a href="exh991.htm" style="text-decoration: none">Second
    Quarter 2008 Financial Statements</a></font></td>
  </tr>
  <tr>
    <td width="14%"><font size="2">&nbsp;</font></td>
    <td width="86%"><font size="2">&nbsp;</font></td>
  </tr>
  <tr>
    <td width="14%"><font size="2">
    <a href="exh992.htm" style="text-decoration: none">99.2&nbsp;</a></font></td>
    <td width="86%"><font size="2">
    <a href="exh992.htm" style="text-decoration: none">Second Quarter 2008
    Management's Discussion &amp; Analysis</a></font></td>
  </tr>
  <tr>
    <td width="14%" bgcolor="#E9F1F8">&nbsp;</td>
    <td width="86%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td width="14%" bgcolor="#E9F1F8"><font size="2">
    <a href="exh993.htm" style="text-decoration: none">99.3</a></font></td>
    <td width="86%" bgcolor="#E9F1F8"><font size="2">
    <a href="exh993.htm" style="text-decoration: none">CEO Certification</a></font></td>
  </tr>
  <tr>
    <td width="14%">&nbsp;</td>
    <td width="86%">&nbsp;</td>
  </tr>
  <tr>
    <td width="14%"><font size="2">
    <a href="exh994.htm" style="text-decoration: none">99.4</a></font></td>
    <td width="86%"><font size="2">
    <a href="exh994.htm" style="text-decoration: none">CFO Certification</a></font></td>
  </tr>
</table>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: left; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">
<font size="2">3</font></p>
<p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&nbsp;</p>
<hr color="#000000" SIZE="5">

</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exh991.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<html>

<head>

<title>New Gold Inc.: Exhibit 99.1 - Prepared by TNT Filings Inc.</title>
</head>

<body>

<div style="border-top-style: solid; border-top-width: 1; padding-top: 1">
  <hr color="#000000" size="5">
</div>
<font SIZE="2">
<p>&nbsp;</p>
</font>
<font SIZE="4">
<p>Interim consolidated financial statements of </p>
</font><font size="6"><b>
<p>New Gold Inc. </p>
</b></font><font SIZE="4">
<p>June 30, 2008 <br>
(Unaudited) </p>
</font>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font size="5"><b>
<p>New Gold Inc. </b><br>
</font><font SIZE="2">June 30, 2008 </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="90%"><font SIZE="4">Table of contents</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8"><font SIZE="2">Consolidated statements of operations and
    comprehensive income (loss)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">1</font></td>
  </tr>
  <tr>
    <td WIDTH="90%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%"><font SIZE="2">Consolidated balance sheets</font></td>
    <td WIDTH="10%" align="right"><font SIZE="2">2</font></td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8"><font SIZE="2">Consolidated statements of shareholders'
    equity</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">3</font></td>
  </tr>
  <tr>
    <td WIDTH="90%">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%"><font SIZE="2">Consolidated statements of cash flows</font></td>
    <td WIDTH="10%" align="right"><font SIZE="2">4</font></td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="90%" bgcolor="#E9F1F8"><font SIZE="2">Notes to the consolidated financial
    statements</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">5-33</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font size="4"><b>
<p>New Gold Inc. </b></font><font SIZE="2"><br>
Consolidated statements of operations and comprehensive income (loss) <br>
Three and six months ended June 30<br>
(Expressed in thousands of U.S. dollars, except share and per share amounts) <br>
(Unaudited) </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">Three months</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">Three months</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">Six months</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">Seven months</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">ended</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">ended</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">ended</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">ended</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">June 30,</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">June 30,</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2008</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2008</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Revenues</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">39,497</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">39,442</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">95,718</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">39,442</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Operating expenses</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(33,265)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(25,289)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(64,632)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(25,289)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">
    <font SIZE="2">Depreciation and depletion</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(7,657)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(9,481)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(14,061)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(9,481)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font SIZE="2">
    <p style="margin-left: 5%; text-indent:-5%">(Loss) earnings from mine operations</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(1,425)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">4,672</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">17,025</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">4,672</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Corporation administration (i)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(3,196)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(5,290)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(7,223)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(5,359)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">
    <font SIZE="2">Exploration</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(1,274)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(907)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(2,218)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(907)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">(Loss) earnings from operations</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(5,895)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(1,525)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">7,584</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(1,594)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Other income (expense)</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Interest and other income</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">1,355</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">1,651</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">3,322</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">1,665</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Interest and finance fees</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(467)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(85)</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(546)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(85)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Gain (loss) on foreign exchange</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(91)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">168</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(1,174)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">169</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">(Loss) earnings before taxes</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(5,098)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">209</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">9,186</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">155</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">
    <font SIZE="2">Income and mining taxes</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">347</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(1,498)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(4,147)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(1,498)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-left: 5%; text-indent:-5%">Net (loss) earnings and comprehensive income (loss)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(4,751)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(1,289)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">5,039</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(1,343)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">(Loss) earnings per share</font></td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Basic</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(0.05)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(0.00)</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">0.07</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(0.00)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 2">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Diluted</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
    <font SIZE="2"><b>(0.05)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
    <font SIZE="2">(0.00)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">0.06</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
    <font SIZE="2">(0.00)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Weighted average number of shares outstanding (in thousands)</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Basic</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">87,432</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">70,239</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">72,633</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">36,797</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Diluted</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">87,432</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">70,239</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">81,970</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">36,797</font></td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%">
    <p style="margin-left: 5%; text-indent:-5%"><font SIZE="2">
    (i) Stock option expense (a non-cash item included in corporation administration)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(617)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(4,084)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(3,178)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(4,084)</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="90%"><font SIZE="2">See accompanying notes to the unaudited
    consolidated financial statements.</font></td>
    <td WIDTH="10%"><font SIZE="2">
    <p align="right">Page 1</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font size="4"><b>
<p>New Gold Inc. </b></font><font SIZE="2"><br>
Consolidated balance sheets<br>
(Expressed in thousands of U.S. dollars) <br>
(Unaudited) </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">June 30,</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">December 31,</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2008</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2"><b>Assets</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Current assets</font></td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 5%">Cash and cash equivalents</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">319,179</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">149,924</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">
    <p style="margin-left: 5%">Short-term investments</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">32,440</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 5%">Accounts receivable</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">37,391</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">18,123</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">
    <p style="margin-left: 5%">Inventories and stockpiled ore (Note 6)</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">47,610</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">39,792</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5%">Prepaid expenses and other</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">3,813</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">1,624</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">407,993</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">241,903</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Investments (Note 7)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">91,193</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Mining interests (Note 8)</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">1,518,830</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">315,831</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Intangible royalty asset</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">14,624</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">14,664</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Goodwill</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">130,364</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Other assets</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">3,958</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2,166,962</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
    <font SIZE="2">
    <p style="margin-right: 4">572,398</font></td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2"><b>Liabilities</b></font></td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Current liabilities</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">
    <p style="margin-left: 5%">Accounts payable and accrued liabilities</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">67,623</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">22,835</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 5%">Short-term borrowings</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">14,054</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5%">Income and mining taxes payable</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">900</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">4,960</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">82,577</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">27,795</font></td>
  </tr>
  <tr>
    <td WIDTH="70%">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Reclamation and closure cost obligations</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">21,264</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">18,036</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Future income and mining taxes</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">264,021</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">25,943</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Long-term debt (Note 9)</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">252,892</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Employee benefits and other</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">4,684</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">3,253</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">625,438</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">75,027</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2"><b>Shareholders' equity</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Common shares</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">1,314,963</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">339,796</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Special warrants (Note 10 (b))</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">104,166</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Contributed surplus</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">24,868</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">6,166</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Share purchase warrants (Note 10 (e))</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">185,480</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">57,673</font></td>
  </tr>
  <tr>
    <td WIDTH="70%"><font SIZE="2">Equity component of convertible debentures</font></td>
    <td WIDTH="15%" align="right"><font SIZE="2"><b>
    <p style="margin-right: 4">21,604</b></font></td>
    <td WIDTH="15%" align="right"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" bgcolor="#E9F1F8"><font SIZE="2">Accumulated other comprehensive loss</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2"><b>(1,566)</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(1,566)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Deficit</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>(3,825)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">(8,864)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(5,391)</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">(10,430)</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">1,541,524</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">497,371</font></td>
  </tr>
  <tr>
    <td WIDTH="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2,166,962</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">572,398</font></td>
  </tr>
</table>
<font SIZE="2">
<p>Commitments and contingencies (Note 13)</p>
<p>Approved by the Board</p>
<i><b>
<p><u>(Signed) Robert Gallagher&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u></b></i>Robert Gallagher, Director</p>
<i><b>
<p><u>(Signed) Craig Nelsen&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;&nbsp;&nbsp;&nbsp;
<br>
</u></b></i>Craig Nelsen, Director</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="90%"><font SIZE="2">See accompanying notes to the unaudited
    consolidated financial statements.</font></td>
    <td WIDTH="10%"><font SIZE="2">
    <p align="right">Page 2</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font size="4"><b>
<p>New Gold Inc. </b></font><font SIZE="2"><br>
Consolidated statements of shareholders' equity <br>
Six months ended June 30, 2008<br>
(Expressed in thousands of U.S. dollars, except share amounts) <br>
(Unaudited) </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Equity</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Accumulated</font></td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Share</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">component of</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">other</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">(Deficit)</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Total</font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="16%" align="right" colspan="2" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4" align="center"><font style="font-size: 8pt">Common shares</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Special</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">Contributed</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">purchase</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">convertible</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">comprehensive</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">retained</font></td>
    <td WIDTH="8%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4">shareholders'</font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">Shares</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">Amount</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">warrants</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">surplus</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">warrants</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">debentures</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">loss</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">earnings</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">equity</font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$</font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt"><b>Balance, November 30, 2006</b></font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">11,505,140</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">25,313</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">104,166</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">59</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">(1,566)</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">127,972</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%"><font style="font-size: 8pt">
    <p style="margin-left: 5%; text-indent:-5%">Issued for cash in private
    placement (Net of issue costs of $14,248)</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">43,500,000</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">209,689</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">57,673</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt"><b>
    <p style="margin-right: 4">267,362</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Issued for acquisition</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">16,000,000</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">103,253</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">103,253</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Exercise of options</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">129,000</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">175</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">(49)</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt"><b>
    <p style="margin-right: 4">126</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Exercise of warrants</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">1,495,000</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">1,366</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">1,366</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Stock-based compensation</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">6,156</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt"><b>
    <p style="margin-right: 4">6,156</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">
    <font style="font-size: 8pt">Net (loss) earnings</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">(8,864)</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>(8,864)</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">
    <font style="font-size: 8pt">Balance, December 31, 2007</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">72,629,140</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">339,796</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">104,166</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">6,166</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">57,673</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">(1,566)</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt">(8,864)</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">497,371</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Exercise of special warrants</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">14,772,333</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">80,448</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">(104,166)</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">23,718</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">-</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Exercise of options</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">31,000</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">42</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">(11)</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt"><b>
    <p style="margin-right: 4">31</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Acquisition of Metallica (Note
    5 (a)(i))</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">87,447,821</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">605,139</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">7,294</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">46,674</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">659,107</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Acquisition of NGI (Note 5 (a)(ii))</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">37,005,717</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">289,538</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">8,241</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">57,415</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">21,604</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom"><font style="font-size: 8pt"><b>
    <p style="margin-right: 4">376,798</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font style="font-size: 8pt">Stock-based compensation</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">3,178</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">3,178</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -5%; margin-left: 5%">
    <font style="font-size: 8pt">Net earnings (loss)</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">5,039</font></td>
    <td WIDTH="8%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">5,039</b></font></td>
  </tr>
  <tr>
    <td WIDTH="28%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">
    <font style="font-size: 8pt"><b>Balance, June 30, 2008</b></font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">211,886,011</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">1,314,963</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">24,868</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">185,480</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">21,604</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">(1,566)</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">(3,825)</font></td>
    <td WIDTH="8%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font style="font-size: 8pt"><b>
    <p style="margin-right: 4">1,541,524</b></font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="90%"><font SIZE="2">See accompanying notes to the unaudited
    consolidated financial statements.</font></td>
    <td WIDTH="10%"><font SIZE="2">
    <p align="right">Page 3</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font size="4"><b>
<p>New Gold Inc. </b></font><font SIZE="2"><br>
Consolidated statements of cash flows <br>
Three and six months ended June 30<br>
(Expressed in thousands of U.S. dollars) <br>
(Unaudited) </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">Three months</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">Three months</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">Six months</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">Seven months</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">ended</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">ended</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">ended</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">ended</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">June 30,</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">June 30,</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2008</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">2008</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">$</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">$</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">$</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2"><b>Operating activities</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Net (loss) earnings</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>(4,751)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(1,289)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">5,039</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(1,343)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Items not involving cash</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Reclamation expenditure</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">720</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">720</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Unrealized foreign exchange loss</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(652)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">674</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">355</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">641</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Depreciation and depletion</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">7,657</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">9,481</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">14,061</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">9,481</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Stock option expense</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">617</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">4,084</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">3,178</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">4,084</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Future income and mining taxes</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">1,981</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(132)</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">3,401</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">(132)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Other</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">175</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">337</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">263</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">336</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Change in non-cash working capital (Note 11)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(8,014)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(8,019)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>(10,890)</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(7,563)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 10%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>(2,987)</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">5,856</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">15,407</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">6,224</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2"><b>Investing activities</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Mining interests</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(9,695)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(8,308)</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>(16,817)</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">(8,308)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Cash acquired in business combination and asset acquisition (Note 5 (a))</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">134,195</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">134,195</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Acquisition, net of cash (Note 5 (b))</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(189,315)</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">(189,759)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">124,500</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(197,623)</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">117,378</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">(198,067)</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2"><b>Financing activities</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-style: none; border-width: medium" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Common shares issued on exercise of warrants/options</font></td>
    <td WIDTH="15%" align="right" style="border-style: none; border-width: medium" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">30</b></font></td>
    <td WIDTH="15%" align="right" style="border-style: none; border-width: medium" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">998</font></td>
    <td WIDTH="15%" align="right" style="border-style: none; border-width: medium" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">30</b></font></td>
    <td WIDTH="15%" align="right" style="border-style: none; border-width: medium" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">1,389</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Common shares issued in private placement, net</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">267,514</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">267,514</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Proceeds from short-term borrowing</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2"><b>
    <p style="margin-right: 4">4,000</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom"><font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Proceeds from marketable securities</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">-</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">-</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">32,440</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">-</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <p style="text-indent: -5%; margin-left: 10%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">30</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">268,512</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">36,470</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">268,903</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 5%; text-indent:-5%">Increase in cash and cash equivalents</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">121,543</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">76,745</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">169,255</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">77,060</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 5%; text-indent:-5%">Cash and cash equivalents, beginning of period</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">197,636</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">643</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">149,924</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">328</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-left: 5%; text-indent:-5%">Cash and cash equivalents, end of period</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">319,179</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">77,388</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">319,179</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">77,388</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Cash and cash equivalents are comprised of</font></td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Cash</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">52,688</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">73,795</font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2"><b>
    <p style="margin-right: 4">52,688</b></font></td>
    <td WIDTH="15%" align="right" valign="bottom" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4">73,795</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-left: 10%; text-indent:-5%">Short-term money market instruments</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">266,491</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">3,593</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2"><b>
    <p style="margin-right: 4">266,491</b></font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom">
    <font SIZE="2">
    <p style="margin-right: 4">3,593</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">319,179</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">77,388</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-right: 4">319,179</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">77,388</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" valign="bottom">
    <p style="text-indent: -5%; margin-left: 5%"><font SIZE="2">Supplemental cash flow information (Note 11)</font></td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="15%" align="right" valign="bottom">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
</table>
<p>&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="90%"><font SIZE="2">See accompanying notes to the unaudited
    consolidated financial statements.</font></td>
    <td WIDTH="10%"><font SIZE="2">
    <p align="right">Page 4</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>

<b>
<p><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>1.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Description of business and
nature of operations </p>
</b>
<p style="margin-left: 5%" align="justify">On June 30, 2008 New Gold Inc. (&quot;NGI&quot;),
Metallica Resources Inc. (&quot;Metallica&quot;) and Peak Gold Ltd. (&quot;Peak Gold&quot; or the
&quot;Company&quot;) completed a business combination and the acquisition of assets (the
&quot;Transaction&quot; see Note 5). In accordance with the provisions of the Canadian
Institute of Chartered Accountants (&quot;CICA&quot;) Handbook Section 1581, <i>Business
Combinations</i>, Peak Gold has been identified as the acquirer for accounting
purposes. As such, these interim consolidated financial statements are a
continuation of the consolidated financial statements of Peak Gold, with the
comparative information being that of Peak Gold. Following completion of the
Transaction, Peak Gold is now known as New Gold Inc. (&quot;New Gold&quot;). References to
NGI in these consolidated interim financial statements refer to transactions
involving the pre-transaction public company New Gold Inc. </p>
<p style="margin-left: 5%" align="justify">In connection with the Transaction
shareholders of Peak Gold exchanged one common share of Peak Gold for 0.1 of a
New Gold common share and nominal cash consideration. All information related to
common shares for the current and prior period has been restated to give effect
to this share exchange. </p>
<p style="margin-left: 5%" align="justify">The Company is a gold producer
engaged in gold mining and related activities including acquisition,
exploration, extraction, processing and reclamation. The Company's assets are
comprised of the Amapari mine in Brazil, the Cerro San Pedro mine in Mexico, and
the Peak mine in Australia. Significant development projects include the New
Afton copper-gold project in Canada and a 30% interest in an advanced stage
copper-gold project in Chile. </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies </p>
</b>
<p style="margin-left: 5%" align="justify">These unaudited interim consolidated
financial statements have been prepared by the Company in accordance with
Canadian generally accepted accounting principles (&quot;Canadian GAAP&quot;). The
preparation of financial data is based on accounting principles and practices
consistent with those used in the preparation of the audited annual financial
statements. The accompanying unaudited interim financial statements should be
read in conjunction with the Company's audited consolidated financial statements
for the thirteen month period ended December 31, 2007, as they do not contain
all disclosures required by Canadian GAAP for annual financial statements. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(a) </p>
<p style="margin-left: 10%; margin-top: -25pt">Basis of presentation and
principles of consolidation </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">These unaudited interim consolidated
financial statements include the accounts of the Company and all of its
subsidiaries. In the opinion of the management, all adjustments (including
normal recurring adjustments) necessary to present fairly the financial position
as at June 30, 2008 and results of operations and comprehensive income (loss),
shareholders' equity and cash flows for all periods presented, have been made.
</p>
<p align="right">Page 5 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(a) </p>
<p style="margin-left: 10%; margin-top: -25pt">Basis of presentation and
principles of consolidation (continued) </p>
</font></i><font size="2">
<p style="margin-left: 10%">The principal subsidiaries of the Company as of June
30, 2008 are as follows: </p>
<dir>
  <dir>
    <dir>
      <dir>
        </font>
      </dir>
    </dir>
  </dir>
</dir>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="65%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font SIZE="2">Subsidiary</font></td>
      <td WIDTH="35%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font SIZE="2">Interest</font></td>
    </tr>
    <tr>
      <td WIDTH="65%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="35%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="65%" bgcolor="#E9F1F8"><font SIZE="2">Metallica Resources Inc. <sup>(1)</sup></font></td>
      <td WIDTH="35%" align="right" bgcolor="#E9F1F8"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%"><font SIZE="2">Metallica Resources Alaska Inc. <sup>(1)</sup></font></td>
      <td WIDTH="35%" align="right"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%" bgcolor="#E9F1F8"><font SIZE="2">Minera Metallica Resources Chile Limitada
      <sup>(1)</sup></font></td>
      <td WIDTH="35%" align="right" bgcolor="#E9F1F8"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%"><font SIZE="2">Minera San Xavier, S.A. de C.V. <sup>(1)</sup></font></td>
      <td WIDTH="35%" align="right"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%" bgcolor="#E9F1F8"><font SIZE="2">Minera&#231;&#227;o Pedra Branca do Amapari Ltda (&quot;Amapari&quot;)</font></td>
      <td WIDTH="35%" align="right" bgcolor="#E9F1F8"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%"><font SIZE="2">Peak Gold Mines Pty</font></td>
      <td WIDTH="35%" align="right"><font SIZE="2">100%</font></td>
    </tr>
    <tr>
      <td WIDTH="65%" bgcolor="#E9F1F8"><font SIZE="2">Sociedad Contractual Minera El Morro <sup>
      (1)</sup></font></td>
      <td WIDTH="35%" align="right" bgcolor="#E9F1F8"><font SIZE="2">100%</font></td>
    </tr>
  </table>
</div>
<font FACE="Verdana" SIZE="1">
<p style="margin-left: 10%"></font><font size="2"><sup>(1)</sup> These
subsidiaries are included in the Company's results from June 30, 2008, the date
of acquisition, onward (Note 5 (b)). </p>
<p align="justify" style="margin-left: 10%">Variable interest entities (&quot;VIE's&quot;)
as defined by the Accounting Standards Board in Accounting Guideline (&quot;AcG&quot;) 15,
<i>Consolidation of Variable Interest Entities</i>, are entities in which equity
investors do not have the characteristics of a &quot;controlling financial interest&quot;
or there is not sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support. VIE's are subject
to consolidation by the primary beneficiary who will absorb the majority of the
entities' expected losses and/or expected residual returns. The Company has
determined that it does not have any investments that qualify as VIE's. </p>
<p align="justify" style="margin-left: 10%">All intercompany transactions and
balances are eliminated. </p>
</font><i><font size="2">
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25pt">Use of estimates
</p>
</font></i><font size="2">
<p align="justify" style="margin-left: 10%">The preparation of consolidated
financial statements in conformity with Canadian GAAP requires the Company's
management to make estimates and assumptions about future events that affect the
amounts reported in the consolidated financial statements and related notes to
the financial statements. Actual results may differ from those estimates. </p>
<p align="justify" style="margin-left: 10%">Significant estimates used in the
preparation of these interim consolidated financial statements include, but are
not limited to, the recoverability of accounts receivable and investments, the
quantities of material on leach pads and in circuit, the proven and probable ore
reserves and resources and the related depletion and amortization, the estimated
tonnes of waste material to be mined and the estimated recoverable tonnes of ore
from each mine area, the estimated net realizable value of inventories, the
accounting for stock-based compensation, the provision for income and mining
taxes and composition of future income and mining tax assets and liabilities,
the expected economic lives of and the estimated future operating results and
net cash flows from mining interests, the anticipated costs of reclamation and
closure cost obligations, the fair value of assets and liabilities acquired in
business combinations and goodwill. </p>
<p align="right">Page 6 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(c) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Cash and cash
equivalents </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Cash and cash equivalents include
cash, and those short-term money market instruments that are readily convertible
to cash with an original term of less than 90 days. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(d) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Inventories and
stockpiled ore </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Finished goods, work-in-process,
heap leach ore and stockpiled ore are valued at the lower of average production
cost or net realizable value. Production costs include the cost of raw
materials, direct labor, mine-site overhead expenses and depreciation and
depletion of mining interests. Supplies are valued at the lower of average costs
or replacement cost. </p>
<p style="margin-left: 10%" align="justify">The recovery of gold and silver from
certain oxide ores is achieved through the heap leaching process. Under this
method, ore is placed on leach pads where it is treated with a chemical solution
which dissolves the gold contained ore. The resulting &quot;pregnant&quot; solution is
further processed in a plant where the gold is recovered. For accounting
purposes, costs are added to ore on leach pads on current mining and leaching
costs, including applicable depreciation, depletion and amortization relating to
mining interests. Costs are removed from ore on leach pads as ounces of gold and
silver are recovered based on the average cost per recoverable ounce on the
leach pad. </p>
<p style="margin-left: 10%" align="justify">Estimates of recoverable gold on the
leach pads are calculated from the quantities of ore placed on the leach pads
(measured tonnes added to the leach pads), the grade of ore placed on the leach
pads (based on assay data), and a recovery percentage (based on ore type).
Although the quantities of recoverable gold and silver placed on each leach pad
are reconciled by comparing the grades of ore placed on the leach pad to the
quantities actually recovered, the nature of the leaching process inherently
limits the ability to precisely monitor inventory levels. The ultimate recovery
of gold and silver from the leach pad is not known until the leaching process
has concluded at the end of the mine life. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(e) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Mining interests
</p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Mining interests represent
capitalized expenditures related to the development of mining properties,
related plant and equipment and expenditures related to exploration arising from
property acquisitions. Capitalized costs are depreciated and depleted using
either a unit-of-production method over the estimated economic life of the mine
to which they relate, or for plant and equipment, using the straight-line method
over their estimated useful lives. </p>
<p align="right">Page 7</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(e) </p>
<p style="margin-left: 10%; margin-top: -25pt">Mining interests (continued) </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">The costs associated with mining
properties are separately allocated to reserves, resources and exploration
potential, and include acquired interests in production, development and
exploration stage properties representing the fair value at the time they were
acquired. The value associated with resources and exploration potential is the
value beyond proven and probable reserves assigned through acquisition. The
value allocated to reserves is depreciated on a unit-of-production method over
the estimated recoverable proven and probable reserves at the mine. The resource
value represents the property interests that are believed to potentially contain
economic mineralized material such as inferred material within pits; measured,
indicated, and inferred resources with insufficient drill spacing to qualify as
proven and probable reserves; and inferred resources in close proximity to
proven and probable reserves. Exploration potential represents the estimated
mineralized material contained within (i) areas adjacent to existing reserves
and mineralization located within the immediate mine area; (ii) areas outside of
immediate mine areas that are not part of measured, indicated, or inferred
resources; and (iii) greenfields exploration potential that is not associated
with any other production, development, or exploration stage property, as
described above. At least annually or when otherwise appropriate, and subsequent
to its review and evaluation for impairment, value from the non-depletable
category is transferred to the depletable category as a result of an analysis of
the conversion of resources or exploration potential into reserves. </p>
<p style="margin-left: 10%" align="justify">Costs related to property
acquisitions are capitalized until the viability of the mineral property is
determined. When it is determined that a property is not economically
recoverable the capitalized costs are written off. </p>
<p style="margin-left: 10%" align="justify">Exploration costs incurred to the
date of establishing that a property is economically recoverable are included in
operations. Further development expenditures are capitalized to the property.
</p>
<p style="margin-left: 10%" align="justify">Drilling and related costs incurred
on sites without an existing mine and on areas outside the boundary of a known
mineral deposit which contains proven and probable reserves are exploration
expenditures and are expensed as incurred to the date of establishing that
property costs are economically recoverable. Further development expenditures,
subsequent to the establishment of economic recoverability, are capitalized to
the property. </p>
<p style="margin-left: 10%" align="justify">Upon sale or abandonment the cost of
the property and equipment, and related accumulated depreciation or depletion,
are removed from the accounts and any gains or losses thereon are included in
operations. </p>
<p style="margin-left: 10%" align="justify">The Company reviews and evaluates
its mining properties for impairment annually or when events or changes in
circumstances indicate that the related carrying amounts may not be recoverable.
Impairment is considered to exist if the total estimated future undiscounted
cash flows are less than the carrying amount of the assets. An impairment loss
is measured and recorded based on discounted estimated future cash flows. Future
cash flows are estimated based on expected future production, commodity prices,
operating costs and capital costs. </p>
<p align="right">Page 8 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(f) </p>
<p style="margin-left: 10%; margin-top: -25pt">Reclamation and closure cost
obligations </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">The Company's mining and exploration
activities are subject to various governmental laws and regulations relating to
the protection of the environment. These environmental regulations are
continually changing and are generally becoming more restrictive. The Company
has made, and intends to make in the future, expenditures to comply with such
laws and regulations. The Company has recorded a liability and corresponding
asset for the estimated future cost of reclamation and closure, including site
rehabilitation and long-term treatment and monitoring costs, discounted to net
present value. Such estimates are, however, subject to change based on
negotiations with regulatory authorities, or changes in laws and regulations.
</p>
<i>
<p style="margin-left: 5%">(g) </p>
<p style="margin-left: 10%; margin-top: -25pt">Intangible royalty asset</i> </p>
<p style="margin-left: 10%" align="justify">Intangible assets consist of a
royalty agreement between Amapari and a third party, valued upon acquisition
(Note 5 (b)). The agreement arose from the initial purchase of the Amapari mine
leases. Under the agreement, the Company receives 1% of gross revenues from iron
ore mined by the third party on adjacent properties. The asset is amortized on a
units-of-production basis which is measured by a portion of the third party
mine's economically recoverable and proven ore reserves recovered during the
period. </p>
<p style="margin-left: 10%" align="justify">The Company reviews and evaluates
the intangible annually or when events or changes in circumstances indicate the
carrying amount may not be recoverable. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(h) </p>
<p style="margin-left: 10%; margin-top: -25pt">Goodwill </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Acquisitions are accounted for using
the purchase method whereby assets and liabilities acquired are recorded at
their fair values as of the date of acquisition and any excess of the purchase
price over such fair value of tangible and intangible net assets is recorded as
goodwill. Goodwill is identified and allocated to reporting units. Goodwill is
not amortized. </p>
<p style="margin-left: 10%" align="justify">The Company evaluates, on an annual
basis, the carrying amount of goodwill to determine whether current events and
circumstances indicate that the carrying amount may no longer be recoverable. To
accomplish this evaluation, the Company estimates the fair value of its
reporting units that include goodwill and compares those fair values to the
reporting units' carrying amounts. If the carrying value of a reporting unit
exceeds its fair value, the Company compares the implied fair value of the
reporting unit's goodwill to its carrying amount, and any excess of the carrying
value over the fair value is charged to operations. Assumptions underlying fair
value estimates are subject to significant risks and uncertainties. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(i) </p>
<p style="margin-left: 10%; margin-top: -25pt">Income and mining taxes </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">The Company uses the liability
method of accounting for income and mining taxes. Under the liability method,
future tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and for tax
losses and other deductions carried forward. Upon business acquisitions, the
liability method results in a gross-up of mining interests to reflect the
recognition of the future tax liabilities for the tax effect of such
differences. </p>
<p align="right">Page 9 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b></font><i><font size="2">
<p style="margin-left: 5%">(i) </p>
<p style="margin-left: 10%; margin-top: -25pt">Income and mining taxes
(continued) </p>
</font></i><font size="2">
<p align="justify" style="margin-left: 10%">Future tax assets and liabilities
are measured using enacted or substantively enacted tax rates expected to apply
when the asset is realized or the liability settled. A reduction in respect of
the benefit of a future tax asset (a valuation allowance) is recorded against
any future tax asset if it is not more likely than not to be realized. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period in which the change is substantively enacted.
</p>
</font><i><font size="2">
<p style="margin-left: 5%">(j) </p>
<p style="margin-left: 10%; margin-top: -25pt">Employee benefits </p>
</font></i><font size="2">
<p align="justify" style="margin-left: 10%">A liability is recognized for
benefits accruing to employees in respect of wages and salaries, annual leave
and long service leave when it is probable that settlement will be required and
they are capable of being measured reliably. Liabilities recognized in respect
of employee benefits expected to be settled within 12 months are measured at
their nominal values using the remuneration rate expected to apply at the time
of settlement. </p>
<p align="justify" style="margin-left: 10%">Liabilities recognized in respect of
employee benefits which are not expected to be settled within one year are
measured at the present value of the estimated future cash outflows to be made
by the Company in respect of services provided by employees up to reporting
date. </p>
</font><i><font size="2">
<p style="margin-left: 5%">(k) </p>
<p style="margin-left: 10%; margin-top: -25pt">Foreign currency translation </p>
</font></i><font size="2">
<p align="justify" style="margin-left: 10%">Effective April 1, 2007 the Company
determined that a change in its functional currency had occurred. The functional
currency changed from the Canadian dollar (&quot;Cdn$&quot;) to the U.S. dollar (&quot;US$&quot;).
The change was necessary due to the acquisition of Amapari and Peak Mines (Note
5 (b)). Revenues and direct costs are now principally denominated in U.S
dollars. Accordingly, results for the Company would be more fairly reflected by
adopting the US$ as the Company's functional currency. The Company has also
adopted the US$ as its reporting currency. </p>
<p align="justify" style="margin-left: 10%">The comparative figures for the year
ended November 30, 2006 were translated using the current method of translation.
Under this method, the statement of operations and the cash flow statement items
were translated into the reporting currency using the rates in effect at the
date of the transactions, effectively the average exchange rate of US$1.00 =
Cdn$1.1415 for the period. Assets and liabilities were translated at the
November 30, 2006 year-end rate of US$1.00 = Cdn1.1369. All resulting exchange
differences are reported in accumulated other comprehensive income, a separate
component of shareholders' equity. </p>
<p align="justify" style="margin-left: 10%">All operations outside of Canada
apply the US$ as their reporting and measurement currency and therefore
translate their operating results using the temporal method. Under this method,
foreign currency monetary assets and liabilities are translated into US$ at the
exchange rates prevailing at the balance sheet date; non-monetary assets
denominated in foreign currencies are translated using the rate of exchange at
the transaction date; and foreign exchange gains and losses are included in the
determination of earnings. In addition, unrealized gains and losses due to
movements in exchange rates on cash balances held in foreign currencies are
shown separately on the consolidated statements of cash flows. </p>
<p align="right">Page 10 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font SIZE="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(k) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Foreign currency
translation (continued) </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Monetary assets and liabilities are
translated at exchange rates prevailing at the balance sheet date. All other
assets, liabilities, revenues and expenses arising in foreign currencies are
translated at the exchange rates prevailing at the date of the transactions; the
resulting gains or losses on foreign exchange are included in the results of
operations. </p>
</font><i><font size="2">
<p style="margin-left: 5%" align="justify">(l) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Earnings (loss)
per share </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Earnings (loss) per share
calculations are based on the weighted average number of common shares and
common shares equivalents issued and outstanding during the year. Diluted
earnings per share are calculated using the treasury method which requires the
calculation of diluted earnings per share by assuming that outstanding stock
options, warrants and convertible debentures with an average market price that
exceeds the average exercise prices of the options and warrants for the period,
are exercised and the assumed proceeds are used to repurchase shares of the
Company at the average market price of the common share for the period. </p>
</font><i><font size="2">
<p style="margin-left: 5%" align="justify">(m) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Revenue
recognition </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Revenue from the sale of metals is
recognized in the accounts when persuasive evidence of an arrangement exists,
title and risk passes to buyer, collection is reasonably assured and the price
is reasonably determinable. Revenue from the sale of metals in concentrate may
be subject to adjustment upon final settlement of estimated metal prices,
weights and assays. Adjustments to revenue for metal prices are recorded monthly
and other adjustments are recorded on final settlement. Refining and treatment
charges are netted against revenue for sales of metal concentrate. </p>
</font><i><font size="2">
<p style="margin-left: 5%" align="justify">(n) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Stock-based
compensation </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">The Company applies the fair value
method of accounting for all stock option awards. Under this method the Company
recognizes a compensation expense for all stock options awarded to employees,
based on the fair value of the options on the date of grant which is determined
by using the Black-Scholes option pricing model. The fair value of the options
is expensed over the vesting period of the options. </p>
</font><i><font size="2">
<p style="margin-left: 5%" align="justify">(o) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Financial
instruments - recognition and measurement </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Effective December 1, 2006, the
Company adopted the new accounting standards, </p>
<i>
<p style="margin-left: 10%" align="justify">Financial Instruments - Recognition
and Measurement</i> (&quot;Section 3855&quot;), <i>Financial Instruments - Disclosure and
Presentation</i> (&quot;Section 3861&quot;) and <i>Hedges</i> (&quot;Section 3865&quot;) that were
issued by the CICA. This accounting policy change was adopted on a retrospective
basis with no restatement of prior period financial statements. The new standard
and accounting policy change is as follows: </p>
<p align="right">Page 11 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>2.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Summary of significant
accounting policies (continued) </p>
</b><i>
<p style="margin-left: 5%">(o) </p>
<p style="margin-left: 10%; margin-top: -25pt">Financial instruments -
recognition and measurement (continued) </p>
</i>
<p align="justify" style="margin-left: 10%">In accordance with this new
standard, the Company now classifies all financial instruments as either
held-to-maturity, available-for-sale, held for trading, loans and receivables,
or other financial liabilities. Financial assets held to maturity, loans and
receivables and financial liabilities other than those held for trading, are
measured at amortized cost. Available-for-sale instruments are measured at fair
value with unrealized gains and losses recognized in other comprehensive income.
Instruments classified as held for trading are measured at fair value with
unrealized gains and losses recognized on the statement of operations. </p>
<p align="justify" style="margin-left: 10%">Upon adoption of this new standard,
the Company designated its cash and cash equivalents and short-term investments
as held-for-trading, which is measured at fair value. The Company has designated
its asset backed commercial paper (&quot;ABCP&quot;) as available-for-sale, which is
measured at fair value and unrealized gains and losses are recognized in other
comprehensive income. Receivables are classified as loans and receivables, which
are measured at amortized cost. Accounts payable and accrued liabilities,
short-term borrowings and long-term debt are classified as other financial
liabilities, which are measured at amortized cost. </p>
<i>
<p style="margin-left: 5%">(p) </p>
<p style="margin-left: 10%; margin-top: -25pt">Comprehensive income </p>
</i>
<p align="justify" style="margin-left: 10%">Effective December 1, 2006, the
Company adopted the new accounting standard related to comprehensive income
(&quot;Section 1530&quot;) that was issued by the CICA. The new standard and accounting
policy change is as follows: </p>
<p align="justify" style="margin-left: 10%">Comprehensive income is the change
in shareholders' equity during a period from transactions and other events and
circumstances from non-owner sources. In accordance with this new standard, the
Company now reports a statement of comprehensive income and a new category,
accumulated other comprehensive income, in the shareholders' equity section of
the consolidated balance sheet. The components of this new category may include
unrealized gains and losses on financial assets classified as
available-for-sale, exchange gains and losses arising from the translation of
financial statements of a self-sustaining foreign operation and the effective
portion of the changes in fair value of cash flow hedging instruments. </p>
<b>
<p>3.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Changes in accounting policies
</p>
</b><i>
<p style="margin-left: 5%">(a) </p>
<p style="margin-left: 10%; margin-top: -25pt">Accounting policies implemented
effective January 1, 2008 </p>
</i>
<p style="margin-left: 10%">(i) </p>
<p style="margin-left: 15%; margin-top: -25pt">Capital disclosures and financial
instruments - Disclosures and presentation </p>
<p align="justify" style="margin-left: 15%">The Company adopted three new
presentation and disclosure standards that were issued by the CICA: Handbook
Section 1535, <i>Capital Disclosures</i> (&quot;Section 1535&quot;), Handbook Section
3862, <i>Financial Instruments - Disclosures</i> (&quot;Section 3862&quot;) and Handbook
Section 3863, <i>Financial Instruments - Presentation</i> (&quot;Section 3863&quot;). </p>
<p align="right">Page 12 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>3.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Changes in accounting policies
</p>
</b>
</font><i><font size="2">
<p style="margin-left: 5%">(a) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Accounting
policies implemented effective January 1, 2008 (continued) </p>
</font></i><font size="2">
<p style="margin-left: 10%; margin-bottom: -25pt" align="justify">(i) </p>
<p style="margin-left: 15%" align="justify">Capital disclosures and financial
instruments - Disclosures and presentation (continued) </p>
<p style="margin-left: 15%" align="justify">Section 1535 requires the disclosure
of both qualitative and quantitative information that enables users of financial
statements to evaluate the entity's objectives, policies and processes for
managing capital. Section 1535 specifies the disclosure of (i) an entity's
objectives, policies and processes for managing capital; (ii) quantitative data
about what the entity regards as capital; (iii) whether the entity has complied
with any capital requirements; and (iv) if it has not complied, the consequences
of such non-compliance. </p>
<p style="margin-left: 15%" align="justify">Sections 3862 and 3863 replace
Handbook Section 3861, <i>Financial Instruments - Disclosure and Presentation</i>,
revising and enhancing its disclosure requirements and carrying forward
unchanged its presentation requirements for financial instruments. Sections 3862
and 3863 place increased emphasis on disclosures about the nature and extent of
risks arising from financial instruments and how the entity manages those risks.
</p>
<p style="margin-left: 10%; margin-bottom: -25pt" align="justify">(ii) </p>
<p style="margin-left: 15%" align="justify">Inventories </p>
<p style="margin-left: 15%" align="justify">On January 1, 2008, the Company
adopted Section 3031, <i>Inventories</i>, which replaces the existing Section
3030, and establishes standards for the measurement and disclosure of
inventories. The new standard provides more extensive guidance on the
determination of cost, including allocation of overhead, requires impairment
testing and expands the disclosure requirements. The adoption of Section 3031
did not have a material impact on the Company's consolidated financial position
and results of operations for the period ended June 30, 2008. </p>
</font><i><font size="2">
<p style="margin-left: 5%" align="justify">(b) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Accounting
policies to be implemented effective January 1, 2009 </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">Goodwill and intangibles </p>
<p style="margin-left: 10%" align="justify">Effective January 1, 2009, the
Company will adopt Section 3064, <i>Goodwill and Intangible Assets</i>, which
replaces Section 3062, and establishes revised standards for recognition,
measurement, presentation and disclosure of goodwill and intangible assets.
Concurrent with the introduction of this standard, the CICA restricted the
application of EIC 27, <i>Revenues and Expenditures in the Pre-operating Period</i>
(&quot;EIC 27&quot;). As a result, the Company will not be able to defer costs and
revenues incurred prior to commercial production at new mine operations. </p>
<p align="right">Page 13</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>4.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Financial instruments </p>
</b>
<p style="margin-left: 5%" align="justify">The Company thoroughly examines the
various financial instrument risks to which it is exposed and assesses the
impact and likelihood of those risks. These risks may include credit risk,
liquidity risk, market risk and other price risks. Where material, these risks
are reviewed and monitored by the Board of Directors. </p>
</font><i><font size="2">
<p style="margin-left: 5%; margin-bottom: -25pt">(a) </p>
<p style="margin-left: 10%" align="justify">Capital risk management </p>
</font></i><font size="2">
<p ALIGN="JUSTIFY" style="margin-left: 10%">The Company manages its capital to
ensure that it will be able to continue as a going concern while maximizing the
return to stakeholders through the optimization of the debt and equity balance.
</p>
<p style="margin-left: 10%" align="justify">In the management of capital, the
Company includes the components of shareholders' equity, short-term borrowings
and long-term debt, as well as the cash and cash equivalents and short-term and
long-term investments. </p>
<p style="margin-left: 10%" align="justify">The Company manages the capital
structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the
capital structure, the Company may attempt to issue new shares, issue new debt,
acquire or dispose of assets or sell its investments. </p>
<p style="margin-left: 10%" align="justify">In order to facilitate the
management of its capital requirements, the Company prepares annual budgets that
are updated as necessary depending on various factors, including successful
capital deployment and general industry conditions. The annual and updated
budgets are approved by the Board of Directors. </p>
<p style="margin-left: 10%" align="justify">Prior to June 30, 2008, the
Company's investment policy was to invest its cash in highly liquid, lower risk
short-term interest-bearing investments with maturities of 120 days or less at
the original date of acquisition, selected with regards to the expected timing
of expenditures from continuing operations. </p>
<p style="margin-left: 10%" align="justify">Upon completion of the Transaction,
the Company adopted a new investment policy. Going forward, the Company must
invest its funds in investments with a minimum credit rating at the time of
purchase of R-1 (high) from the Dominion Bond Rating Service (&quot;DBRS&quot;) or an
equivalent rating from Standards &amp; Poor and Moody's. At all times, more than 50%
of the aggregate amount of permitted investments must be invested in treasury
bills, bonds, notes and other indebtedness of Canada or the Provinces of British
Columbia, Alberta and Ontario. All investments must have a maximum term to
maturity of six months and the average term will generally range from seven days
to 90 days. Under the new policy, the Company is no longer permitted to invest
in asset backed commercial paper (&quot;ABCP&quot;) (Note 7) or auction rate securities (&quot;ARS&quot;).
</p>
<p ALIGN="JUSTIFY" style="margin-left: 10%">The Company expects its current
capital resources will be sufficient to carry its exploration and development
plans and operations through its current reporting period. </p>
<p style="margin-left: 10%" align="justify">The Company has long-term note
indentures (Note 9) that contain a general covenant that the Company shall work
diligently toward obtaining and, once obtained, maintaining in good standing,
all permits required for the operation of its properties. </p>
<p align="right">Page 14 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
<b>
<p>4.</b> </p>
<p style="margin-left: 5%; margin-top: -25pt"><b>Financial instruments
(continued) </p>
</b><i>
<p style="margin-left: 5%; margin-bottom: -25pt">(b) </p>
<p style="margin-left: 10%">Credit risk </p>
</i>
<p style="margin-left: 10%" align="justify">Credit risk is the risk of an
unexpected loss if a party to its financial instrument fails to meet its
contractual obligations. </p>
<p style="margin-left: 10%" align="justify">The Company's financial assets are
primarily composed of cash and cash equivalents, investments and accounts
receivable. Credit risk is primarily associated with trade receivables and
investments; however it also arises on cash and cash equivalents. </p>
<p style="margin-left: 10%" align="justify">To mitigate exposure to credit risk,
the Company has established policies to limit the concentration of credit risk,
to ensure counterparties demonstrate minimum acceptable worthiness, and to
ensure liquidity of available funds. </p>
<p style="margin-left: 10%" align="justify">The Company closely monitors its
financial assets and does not have any significant concentration of credit risk.
The Company sells its gold exclusively to large international organizations with
strong credit ratings. The historical level of customer defaults is minimal and,
as a result, the credit risk associated with gold trade receivables at June 30,
2008 is not considered to be high. </p>
<p style="margin-left: 10%" align="justify">The Company's cash and cash
equivalents are held in large Canadian financial institutions. Short term
investments (including those presented as part of cash and cash equivalents) are
composed of financial instruments issued by Canadian banks and companies with
high investment-grade rate. </p>
<p style="margin-left: 10%" align="justify">The Company employs a restrictive
investment policy (Note 4 (a)) as detailed in the capital risk management
section. </p>
<i>
<p style="margin-left: 5%; margin-bottom: -25pt">(c) </p>
<p style="margin-left: 10%">Liquidity risk </p>
</i>
<p style="margin-left: 10%" align="justify">Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they fall due. The
Company manages liquidity risk through the management of its capital structure
and financial leverage as outlined in Note 4 (a) of the unaudited consolidated
interim financial statements. </p>
<i>
<p style="margin-left: 5%; margin-bottom: -25pt" align="justify">(d) </p>
<p style="margin-left: 10%" align="justify">Currency risk </p>
</i>
<p style="margin-left: 10%" align="justify">The Company is exposed to the
financial risk related to the fluctuation of foreign exchange rates. The Company
operates in Australia, Brazil, Canada, Chile, Mexico and the United States. The
Company has not hedged its exposure to currency fluctuations. </p>
<p align="right">Page 15 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
</font><b>
<p><font size="2">4.</font></b><font size="2"> </font></p>
<p style="margin-left: 5%; margin-top: -25pt"><b><font size="2">Financial
instruments (continued) </font></p>
</b><i><font size="2">
<p style="margin-left: 5%" align="justify">(d) </p>
<p style="margin-left: 10%; margin-top: -25pt" align="justify">Currency risk
(continued) </p>
</font></i><font size="2">
<p style="margin-left: 10%" align="justify">The Company is exposed to currency
risk through the following assets and liabilities denominated in currencies
other than the U.S. dollar: cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities. The sensitivity of the Company's net
earnings from these financial instruments due to fluctuations in the exchange
rates between the U.S. dollar and the currencies noted below (there is no impact
on comprehensive income): </p>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="48%">&nbsp;</td>
      <td WIDTH="26%" align="right">&nbsp;</td>
      <td WIDTH="26%" align="right"><font size="2">Six months</font></td>
    </tr>
    <tr>
      <td WIDTH="48%">&nbsp;</td>
      <td WIDTH="26%" align="right">&nbsp;</td>
      <td WIDTH="26%" align="right"><font size="2">ended</font></td>
    </tr>
    <tr>
      <td WIDTH="48%">&nbsp;</td>
      <td WIDTH="26%" align="right">&nbsp;</td>
      <td WIDTH="26%" align="right"><font size="2">June 30,</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">2008</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">10% increase in</font></td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">10% decrease in</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Brazilian $real</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Brazilian $real</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">Net earnings</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">1,087</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">(1,087)</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="48%">&nbsp;</td>
      <td WIDTH="26%" align="right"><font size="2">10% increase in</font></td>
      <td WIDTH="26%" align="right"><font size="2">10% decrease in</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Mexican peso</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Mexican peso</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">Net earnings</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">433</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">(433)</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="48%">&nbsp;</td>
      <td WIDTH="26%" align="right"><font size="2">10% increase in</font></td>
      <td WIDTH="26%" align="right"><font size="2">10% decrease in</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Canadian dollar</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font size="2">Canadian dollar</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font size="2">$</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="26%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">Net earnings</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">948</font></td>
      <td WIDTH="26%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font size="2">(948)</font></td>
    </tr>
    <tr>
      <td WIDTH="48%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font size="2"><b>2,468</b></font></td>
      <td WIDTH="26%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font size="2"><b>(2,468)</b></font></td>
    </tr>
  </table>
</div>
<p align="justify" style="margin-left: 10%">For the period ended June 30, 2008,
a 10% fluctuation between the Australian dollar, relative to the U.S. dollar
would not have a significant impact on net earnings and other comprehensive
income. </p>
</font><i><font size="2">
<p style="margin-left: 5%; margin-bottom: -25pt">(e) </p>
<p style="margin-left: 10%">Interest rate risk </p>
</font></i><font size="2">
<p style="margin-left: 10%">Interest rate risk is the risk that the fair value
of the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. </p>
<p align="justify" style="margin-left: 10%">The Company is exposed to interest
rate risk on its outstanding borrowings and short-term investments. In
particular, the Company is exposed to interest rate changes on those ABCP
investments that are expected to pay interest. Interest is proposed to be set
against the Canadian bankers' acceptance rate which may fluctuate. A 1% change
in the bankers' acceptance rate would result in an annual difference of
approximately $1.6 million in the interest income to the Company. The Company
has not entered into any derivative contracts to manage this risk. </p>
<p ALIGN="justify" style="margin-left: 10%">The Company follows the policy of
issuing fixed interest rate debt to avoid future fluctuations in its debt
service costs. </p>
<p ALIGN="right">Page 16 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="left"><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font>Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </p>
</font><b>
<p><font size="2">4.</font></b><font size="2"> </font></p>
<p style="margin-left: 5%; margin-top: -25pt"><font size="2"><b>Financial
instruments (continued)</b></font><i><font size="2"> </font></i></p>
<p style="margin-left: 5%; margin-bottom: -25pt"><i><font size="2">(f) </font>
</i></p>
<p style="margin-left: 10%"><i><font size="2">Commodity price risk </font></p>
</i><font size="2">
<p align="justify" style="margin-left: 10%">The Company is subject to price risk
for fluctuations in the market price of gold, silver and copper. The Company's
earnings and cash flows are subject to price risk due to fluctuations in the
market price of gold, silver and copper. World gold prices have historically
fluctuated widely. World gold prices are affected by numerous factors beyond our
control, including: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="1">
<ul>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  </font><font size="2">the strength of the U.S. economy and the economies of
  other industrialized and developing nations; </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">global or regional political or economic crises; </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">the relative strength of the U.S. dollar and other currencies;
  </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">expectations with respect to the rate of inflation; </font>
  </li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">interest rates; </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">purchases and sales of gold by central banks and other holders;
  </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">demand for jewelry containing gold; and </font></li>
  <li>
  <p ALIGN="justify" style="margin-left: 10%; margin-top: 0; margin-bottom: 0">
  <font size="2">investment activity, including speculation, in gold as a
  commodity. </font></li>
</ul>
<p align="justify" style="margin-left: 10%"><font size="2">The Company is also
subject to price risk for fluctuations in the cost of energy, principally
electricity and purchased petroleum products. The Company's production costs are
also affected by the prices of commodities it consumes or uses in its
operations, such as lime, reagents and explosives. The prices of such
commodities are influenced by supply and demand trends affecting the mining
industry in general and other factors outside the Company's control. The Company
has not entered into any hedging activities to mitigate these price risks.
</font></p>
<p style="margin-left: 10%"><font size="2">A 10% change in commodity prices
would impact the Company's net earnings as follows: </font></p>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="496">&nbsp;</td>
      <td WIDTH="414" align="right"><font SIZE="2">Six months</font></td>
    </tr>
    <tr>
      <td WIDTH="496">&nbsp;</td>
      <td WIDTH="414" align="right"><font SIZE="2">ended</font></td>
    </tr>
    <tr>
      <td WIDTH="496">&nbsp;</td>
      <td WIDTH="414" align="right"><font SIZE="2">June 30,</font></td>
    </tr>
    <tr>
      <td WIDTH="496" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td WIDTH="414" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font SIZE="2">2008</font></td>
    </tr>
    <tr>
      <td WIDTH="496" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td WIDTH="414" align="right" style="border-top-style: solid; border-top-width: 1">
      <font SIZE="2">$</font></td>
    </tr>
    <tr>
      <td WIDTH="496" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="414" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="496" bgcolor="#E9F1F8"><font SIZE="2">Gold price</font></td>
      <td WIDTH="414" align="right" bgcolor="#E9F1F8"><font SIZE="2">3,641</font></td>
    </tr>
    <tr>
      <td WIDTH="496"><font SIZE="2">Copper price</font></td>
      <td WIDTH="414" align="right"><font SIZE="2">365</font></td>
    </tr>
  </table>
</div>
<i><font size="2">
<p style="margin-left: 5%; margin-bottom: -25pt">(g) </p>
<p style="margin-left: 10%">Financial assets and liabilities </p>
</font></i><font size="2">
<p align="justify" style="margin-left: 10%">The Company has designated its cash
and cash equivalents, short-term investments as held-for-trading, which is
measured at fair value. The Company has designated its ABCP as
available-for-sale, which is measured at fair value and unrealized gains and
losses are recognized in other comprehensive income. Accounts receivable are
classified as loans and receivables, which are measured at amortized cost.
Accounts payable and accrued liabilities, short-term borrowings and long-term
debt are classified as other financial liabilities, which are measured at
amortized cost. The long-term debt are financial instruments which have been
recorded at fair value at the date of acquisition and will be measured at
amortized cost going forward. </p>
<p align="right">Page 17 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>

<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify" style="margin-bottom: -25.5pt">4.</b> </p>
<p align="justify" style="margin-left: 5%"><b>Financial instruments (continued)
</p>
</b></font><i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 5%; margin-bottom: -25.5pt">(g) </p>
<p align="justify" style="margin-left: 10%">Financial assets and liabilities
(continued) </p>
</font></i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 10%">The fair value of financial
instruments traded in active markets (such as held-for-sale securities) is based
on quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the Company is the current bid price. </p>
<p align="justify" style="margin-left: 10%">The carrying value less impairment
provision, if necessary, of trade receivables and payables are assumed to
approximate their fair values. </p>
<p align="justify" style="margin-left: 10%">The Company's financial instruments
primarily consist of cash, short-term money market investments, accounts
receivable, accounts payable and short-term borrowings. </p>
<p align="justify" style="margin-left: 10%">For cash, short-term money market
investments, and current accounts receivable and payable and short-term
borrowings, carrying value is considered to be the fair value due to the short
term nature of these instruments. </p>
<b>
<p align="justify" style="margin-bottom: -25.5pt">5.</b> </p>
<p align="justify" style="margin-left: 5%"><b>Business combination and asset
acquisition </p>
</b><i>
<p align="justify" style="margin-left: 5%; margin-bottom: -25.5pt">(a) </p>
<p align="justify" style="margin-left: 10%">Acquisition of Metallica and NGI </p>
</i>
<p align="justify" style="margin-left: 10%">On May 9, 2008, the Company entered
into an agreement to complete a business combination (the &quot;Transaction&quot;) with
Metallica and NGI. </p>
<p align="justify" style="margin-left: 10%; margin-bottom: -25.5pt">(i) </p>
<p align="justify" style="margin-left: 15%">Metallica </p>
<p align="justify" style="margin-left: 15%">The acquisition of Metallica has
been accounted for as a purchase transaction. Shareholders of Metallica received
0.9 of a New Gold common share and nominal cash consideration for each one
common share of Metallica. </p>
<p align="justify" style="margin-left: 15%">87,447,821 common shares issued to
Metallica shareholders were valued at $6.92 per share. The value per share was
determined with reference to the share price of New Gold common shares for the
two days prior to, the day of, and the two days subsequent to the date of the
announcement on March 31, 2008. Holders of options, warrants or other
convertible instruments of Metallica (&quot;Metallica equity instruments&quot;) exchanged
such equity instrument for similar securities of New Gold at an exchange ratio
of 0.9 and at a price equivalent to the original price divided by 0.9. </p>
<p align="right">Page 18 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>5.</b> </p>
<p style="margin-left: 5%; margin-top: -25.5pt"><b>Business combination and
asset acquisition (continued) </p>
</b></font><i><font FACE="Times New Roman" size="2">
<p style="margin-left: 5%; margin-bottom: -25.5pt">(a) </p>
<p style="margin-left: 10%">Acquisition of Metallica and NGI (continued) </p>
</font></i><font FACE="Times New Roman" size="2">
<p style="margin-left: 10%; margin-bottom: -25.5pt">(i) </p>
<p style="margin-left: 15%">Metallica (continued) </p>
<p style="margin-left: 15%">The preliminary allocation of the purchase price
based on the consideration paid and Metallica's net assets acquired is as
follows: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="85%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td WIDTH="85%">&nbsp;</td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td WIDTH="85%">&nbsp;</td>
      <td WIDTH="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Issuance of New Gold shares (87,447,821 common shares)</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">605,139</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Fair value of options issued</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">7,294</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Fair value of warrants issued</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">46,674</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Transaction costs</font></td>
      <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2,798</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Purchase consideration</font></td>
      <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">661,905</font></td>
    </tr>
    <tr>
      <td WIDTH="85%">&nbsp;</td>
      <td WIDTH="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">Net assets acquired</font></td>
      <td WIDTH="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Net working capital acquired (including cash of
      $34,154)</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">20,525</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Mineral property, plant and equipment</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">656,345</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Other long-term assets</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2,214</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Goodwill</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">130,364</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Long-term liabilities</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(2,671)</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 20">Future income tax liability</font></td>
      <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">(144,872)</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">661,905</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 10%">(ii) </p>
<p align="justify" style="margin-left: 15%; margin-top: -25.5pt">NGI </p>
<p align="justify" style="margin-left: 15%">This element of the Transaction has
been accounted for as a purchase of assets and assumption of liabilities of NGI
by Peak Gold. </p>
<p align="justify" style="margin-left: 15%">In accordance with the determination
that Peak Gold is the accounting acquirer in this Transaction, the deemed
consideration is the market value of the 37,005,717 NGI common shares and, the
fair value of options, warrants and convertible or exchangeable securities of
NGI currently outstanding. As at June 30, 2008, there were options, warrants,
convertible or exchangeable securities and other rights to acquire an aggregate
of 30,678,500 common shares of NGI. The common shares of NGI have been valued at
$7.82 per share, the share price of NGI as of June 30, 2008, the closing date of
the Transaction. </p>
<p align="right">Page 19 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited) </font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>5.</b> </p>
<p style="margin-left: 5%; margin-top: -25.5pt"><b>Business combination and
asset acquisition (continued) </p>
</b></font><i><font FACE="Times New Roman" size="2">
<p style="margin-left: 5%; margin-bottom: -25.5pt">(a) </p>
<p style="margin-left: 10%">Acquisition of Metallica and NGI (continued) </p>
</font></i><font SIZE="2" face="Times New Roman">
<p align="justify" style="margin-left: 10%">(ii) </p>
<p align="justify" style="margin-left: 15%; margin-top: -25.5pt">NGI (continued)
</p>
<p align="justify" style="margin-left: 15%">The preliminary allocation of the
purchase price based on the consideration paid and NGI's net assets acquired is
as follows: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="85%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Issuance of New Gold shares (37,005,717 common shares)</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">289,538</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Fair value of
      options issued</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">8,241</font></td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Fair value of warrants issued</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">57,415</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Transaction costs</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">3,224</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Purchase consideration</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">358,418</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Net working capital (including cash of $103,564)</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">87,931</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Mineral property,
      plant and equipment</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">538,287</font></td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Other assets</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">94,629</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Long-term
      liabilities (Note 8)</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      (252,892)</font></td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Future income tax liability</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(87,933)</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Convertible debentures</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">(21,604)</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">358,418</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p align="justify" style="margin-left: 10%">For the purposes of these
consolidated interim financial statements, the purchase consideration has been
allocated on a preliminary basis to the fair value of assets acquired and
liabilities assumed, based on management's best estimates and taking into
account all available information at the time of the Transaction, as well as
applicable information at the time these consolidated financial statements were
prepared. The Company will complete a valuation of Metallica and NGI using an
independent party and, therefore, this preliminary allocation is subject to
change. </p>
<i>
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Acquisition of
Amapari and Peak Mines </p>
</i>
<p align="justify" style="margin-left: 10%">On February 15, 2007, the Company
entered into an agreement with Goldcorp Inc. (&quot;Goldcorp&quot;) to acquire Goldcorp's
Amapari mine in Brazil and Peak mine in Australia (the &quot;Acquisition&quot;). The
Company completed the acquisition of the Amapari mine and the Peak mine on April
3, 2007 and April 27, 2007, respectively. In consideration for the acquisition
of the Amapari and Peak mines, the Company issued to Goldcorp 155 million common
shares with a value of $100 million and paid $200 million in cash, respectively.
</p>
<p align="justify" style="margin-left: 10%">The business combination has been
accounted for as a purchase transaction, with the Company as the acquirer and
the Amapari and Peak Mines as the acquiree. The results of the operations of the
acquired assets are included in the consolidated financial statements of the
Company from the dates of the Acquisition. </p>
<p align="right">Page 20 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>5.</b> </p>
<p style="margin-left: 5%; margin-top: -25.5pt"><b>Business combination and
asset acquisition (continued) </p>
</b><i>
<p style="margin-left: 5%">(b) </p>
<p style="margin-left: 10%; margin-top: -25.5pt">Acquisition of Amapari and Peak
Mines (continued) </p>
</i>
<p style="margin-left: 10%">The final allocation of the assets and liabilities
acquired is as follows: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td WIDTH="85%">&nbsp;</td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Purchase price</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Cash</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">200,000</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Common shares</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">100,000</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Acquisition costs</font></td>
      <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">5,032</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">305,032</font></td>
    </tr>
    <tr>
      <td WIDTH="85%">&nbsp;</td>
      <td WIDTH="15%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Net assets acquired</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Cash and cash equivalents</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">11,212</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Accounts receivable</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">4,391</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Inventories and stockpiled ore</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">40,286</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Mining interests</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">299,535</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Intangible asset</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">14,664</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Other</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">5,091</font></td>
    </tr>
    <tr>
      <td WIDTH="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Current liabilities</font></td>
      <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      (23,618)</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Reclamation and closure cost obligations</font></td>
      <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(16,662)</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Future income tax liabilities, net</font></td>
      <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">(29,867)</font></td>
    </tr>
    <tr>
      <td WIDTH="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">305,032</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2"><b>
<p>6.</b> </font></p>
<p style="margin-left: 5%; margin-top: -25.5pt"><b>
<font FACE="Times New Roman" size="2">Inventories and stockpiled ore </p>
</font></b>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      June 30,</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      December 31,</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      2008</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">2007</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Supplies</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>18,464</b></font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">15,092</font></td>
    </tr>
    <tr>
      <td width="70%"><font FACE="Times New Roman" SIZE="2">Work-in-process (a)</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      7,903</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">7,505</font></td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Heap leach ore (b)</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>17,383</b></font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">12,254</font></td>
    </tr>
    <tr>
      <td width="70%"><font FACE="Times New Roman" SIZE="2">Stockpiled ore (c)</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      1,000</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">1,106</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Finished goods</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>2,860</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">3,835</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2"><b>47,610</b></font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">39,792</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2"><i>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Work-in-process
</p>
</i>
<p ALIGN="JUSTIFY" style="margin-left: 10%">Work-in-process is the stage between
the product (gold, silver and copper) as it sits as a raw material (mined or
stockpiled) and when it has been converted into the finished product (dor&#233; or
concentrate). </p>
<i>
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Heap leach ore
</p>
</i>
<p align="justify" style="margin-left: 10%">The recovery of gold from certain
oxide ores is achieved through the heap leaching process used at the Amapari and
Cerro San Pedro mines. Under this method, ore is placed on leach pads where it
is treated with a chemical solution which dissolves the gold contained in the
ore. </p>
<p align="right">Page 21 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">6.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Inventories
and stockpiled ore (continued) </p>
</b><i>
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Stockpiled ore
</p>
</i>
<p align="justify" style="margin-left: 10%">The low-grade stockpiled ore is
located at Amapari and Peak mines and is forecasted to be drawn down throughout
the remainder of the life of the mines. </p>
<b>
<p align="justify">7.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Investments
</p>
</b>
<p align="justify" style="margin-left: 5%">As part of the Transaction, the
Company acquired $167 million (Cdn$170 million) at face value in asset backed
commercial paper (&quot;ABCP&quot;) which is rated R1-high by Dominion Bond Rating
Service. In mid-August 2007, a number of non-bank sponsors of ABCP, including
those with which NGI had invested, announced that they could not place ABCP due
to unfavourable conditions in the Canadian capital markets. As a result, there
is presently no active market for the ABCP held by the Company. </p>
<p align="justify" style="margin-left: 5%">As at June 30, 2008, the non-bank
ABCP market remained the subject of a restructuring process with the expressed
intention of replacing the ABCP with a number of long-term floating rate notes.
The restructuring plan would, if the restructuring plan is completed as
currently planned, see the pooling of all of the underlying assets from all the
ABCP trusts with the exception of those assets designated as ineligible for
pooling (&quot;Ineligible Assets&quot;) and those series of assets backed exclusively by
traditional financial assets (&quot;Traditional Series&quot;). ABCP relating to the pooled
assets will be replaced with four classes of notes named A1, A2, B and C in
declining order of seniority. ABCP relating to Ineligible Assets and Traditional
Series would be replaced with new tracking notes whose characteristics are
designed to track the performance of the particular assets of the series to
which they correspond. </p>
<p align="justify" style="margin-left: 5%">On April 25, 2008, the affected
parties in the ABCP restructuring voted to approve the restructuring which has
been conducted under the Companies' Creditors Arrangement Act. Subject to the
court sanctioning of the plan, the restructuring is currently planned to be
completed in the third quarter of 2008 at which point the Company should be able
to sell all or part of the notes it will receive on the restructuring. However,
numerous motions challenging several aspects of the restructuring terms,
including the blanket legal releases, remain before the court and there remains
the possibility that future court decisions could impact the timing and ultimate
issuance of the restructured notes. As a result, the Company, following the
acquisition of NGI classifies its holdings in ABCP as long-term investments. </p>
<p align="right">Page 22 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">7.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Investments
(continued) </p>
</b>
<p align="justify" style="margin-left: 5%">The Company has estimated the fair
value of ABCP at acquisition. The Company has used the following methodology and
made the following assumptions: </p>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">The fair value
estimate of the long-term floating rate notes proposed to be received under the
restructuring has been calculated based on the relative contribution analysis
and maturity dates as detailed in the table below. </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td COLSPAN="2"><font FACE="Times New Roman" SIZE="2">Restructuring</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">Face</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">Fair value</font></td>
      <td align="right" nowrap>&nbsp;</td>
    </tr>
    <tr>
      <td COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">categories</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">value</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">estimate</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Maturity date</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">millions $</font></td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">millions $</font></td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td COLSPAN="2" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      MAV 2 notes</font></td>
      <td width="15%" align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td width="15%" align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td width="15%" align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td><font FACE="Times New Roman" SIZE="2">A1 (provisionally rated AA<sup>1</sup>)</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">101.0</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">60.3</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">December
      31, 2016</font></td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8">&nbsp;</td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">A2
      (provisionally rated AA<sup>1</sup>)</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">31.5</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">17.6</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">December 31, 2016</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td><font FACE="Times New Roman" SIZE="2">B</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">5.4</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">0.8</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">December
      31, 2016</font></td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8">&nbsp;</td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">C</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">4.2</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">0.3</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">December 31, 2016</font></td>
    </tr>
    <tr>
      <td COLSPAN="2"><font FACE="Times New Roman" SIZE="2">Traditional asset
      tracking notes</font></td>
      <td align="right" nowrap>&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td><font FACE="Times New Roman" SIZE="2">(provisionally rated AAA)</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">9.3</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">8.8</font></td>
      <td align="right" nowrap><font FACE="Times New Roman" SIZE="2">September
      12, 2015</font></td>
    </tr>
    <tr>
      <td COLSPAN="2" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Ineligible asset tracking notes</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8">&nbsp;</td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Class 3/13/14
      (Class 14</font></td>
      <td align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" nowrap bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">December 20, 2012</font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">provisionally rated BBB)</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">15.6</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">3.4</font></td>
      <td align="right" nowrap style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">to October 24, 2016</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">167.0</font></td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">91.2</font></td>
      <td align="right" nowrap style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
      <td align="right" nowrap>&nbsp;</td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2"><sup>1</sup></font></td>
      <td COLSPAN="3"><font FACE="Times New Roman" SIZE="2">provisional ratings
      as provisionally released by DBRS</font></td>
      <td>&nbsp;</td>
    </tr>
  </table>
</div>
<font SIZE="2" face="Times New Roman">
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">The A1, A2 and
traditional asset tracking notes comprise the major categories of the notes
contemplated to be received totaling 85% of the face value of the original
investments made and 95% of the fair value estimate of the Company's holdings.
In the case of the A1 and A2 notes, it is estimated that they will pay interest
at a rate 0.5% less than the bankers' acceptance (&quot;BA&quot;) rate and it is estimated
that prospective buyers of these notes will require premium yields between 7%
and 8% over the BA rate. </p>
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">The traditional
asset notes are estimated to generate interest of 0.5% above the BA rate and a
prospective buyer of those notes is estimated to require a premium of 1.5% over
the BA rate. </p>
<p align="justify" style="margin-left: 5%">Using these assumptions, the Company
estimates that the A1, A2 and traditional asset tracking notes will generate
returns between 3.7% and 4.7%. The Company has then applied its best estimate of
prospective buyers' required yield and calculated the present value of the new
notes using required yield as the discount factor. Using a range of potential
discount factors allows the Company to estimate a range of recoverable values.
</p>
<p align="justify" style="margin-left: 5%">An identical procedure was performed
for the B, C and ineligible tracking notes. </p>
<p align="justify" style="margin-left: 5%">No estimate of the restructuring
costs, which have been stated as being immaterial by the restructuring
committee, nor any interest income which may have accrued since August 13, 2007,
have been included in the fair value assessment due to a lack of verifiable
information. </p>
<p align="justify" style="margin-left: 5%">Based upon a sensitivity analysis of
the assumptions used, the expected yield required by a potential investor
remains the most significant assumption included in the fair value estimate. </p>
<p align="right">Page 23 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>7.</b> </p>
<p style="margin-left: 5%; margin-top: -25.5pt"><b>Investments (continued)</b>
</p>
<p style="margin-left: 5%" align="justify">Based on this exercise the Company
estimated that as at June 30, 2008 the range of recoverable amounts was between
$81.5 million and $102.6 million. There can be no assurance that this estimate
will be realized. Subsequent adjustments, which could be material, may be
required in future reporting periods. </p>
<p style="margin-left: 5%" align="justify">The Company has designated the
investments as available-for-sale financial instruments. </p>
<b>
<p>8.</b> </p>
<p style="margin-left: 5%; margin-top: -25.5pt"></font><b>
<font SIZE="2" face="Times New Roman">Mining interests </p>
</font></b>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td colspan="4" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>June 30, 2008</b></font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>Accumulated</b></font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right"><font FACE="Times New Roman" SIZE="2"><b>depreciation</b></font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2"><b>Net book</b></font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>Cost</b></font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>and depletion</b></font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>value</b></font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>$</b></font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Mining
      properties</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <b>1,235,008</b></font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <b>3,952</b></font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <b>1,231,056</b></font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Plant and equipment</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>312,988</b></font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>25,214</b></font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>287,774</b></font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>1,547,996</b></font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>29,166</b></font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>1,518,830</b></font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
    </tr>
    <tr>
      <td colspan="4" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">December 31, 2007</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">Accumulated</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      depreciation</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">Net
      book</font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Cost</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">and depletion</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">value</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Mining
      properties</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      190,163</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      2,687</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      187,476</font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Plant and equipment</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">144,641</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">16,286</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">128,355</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">334,804</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">18,973</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">315,831</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p style="margin-left: 5%" align="justify">A summary of property by net book
value is as follows: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="28%">&nbsp;</td>
      <td width="36%" align="right" colspan="3" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Mining properties</font></td>
      <td width="12%" align="right">&nbsp;</td>
      <td width="12%" align="right">&nbsp;</td>
      <td width="12%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="28%">&nbsp;</td>
      <td width="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="12%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">Non-</font></td>
      <td width="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="12%" align="right"><font FACE="Times New Roman" SIZE="2">Plant
      and</font></td>
      <td width="12%" align="right"><font FACE="Times New Roman" SIZE="2">June
      30,</font></td>
      <td width="12%" align="right"><font FACE="Times New Roman" SIZE="2">
      December 31,</font></td>
    </tr>
    <tr>
      <td width="28%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Depletable</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">depletable</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Total</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">equipment</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">2008</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">2007</font></td>
    </tr>
    <tr>
      <td width="28%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">$</font></td>
    </tr>
    <tr>
      <td width="28%">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
      <td align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Amapari</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      11,718</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      71,215</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      82,933</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      74,460</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      157,393</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      174,744</font></td>
    </tr>
    <tr>
      <td width="28%"><font FACE="Times New Roman" SIZE="2">Cerro San Pedro</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">196,401</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">69,395</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">265,796</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">69,769</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">335,565</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">-</font></td>
    </tr>
    <tr>
      <td width="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">El
      Morro project/</font></td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td width="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 5%">Other projects (a)</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      -</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      320,779</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      320,779</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      -</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      320,779</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      -</font></td>
    </tr>
    <tr>
      <td width="28%"><font FACE="Times New Roman" SIZE="2">New Afton project</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">-</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">447,043</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">447,043</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">91,244</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">538,287</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">-</font></td>
    </tr>
    <tr>
      <td width="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Peak Mines</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      5,179</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      109,326</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      114,505</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      51,728</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      166,233</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      140,497</font></td>
    </tr>
    <tr>
      <td width="28%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Corporate</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">-</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">-</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">-</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">573</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">573</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">590</font></td>
    </tr>
    <tr>
      <td width="28%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">213,298</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">1,017,758</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">1,231,056</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">287,774</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">1,518,830</font></td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">315,831</font></td>
    </tr>
  </table>
</div>
<font SIZE="2" face="Times New Roman">
<p align="right">Page 24 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">8.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Mining
interests (continued) </p>
</b>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">(i) </p>
<p align="justify" style="margin-left: 15%; margin-top: -25.5pt">Chile - El
Morro Project </p>
<p align="justify" style="margin-left: 15%">The El Morro copper-gold project
consists of the La Fortuna and El Morro areas. Xstrata has a 70% interest in the
El Morro project. </p>
<p align="justify" style="margin-left: 15%">The Company has other projects in
Chile that consist of copper-gold exploration concessions that are contiguous to
the El Morro project. </p>
<p align="justify" style="margin-left: 10%">(ii) </p>
<p align="justify" style="margin-left: 15%; margin-top: -25.5pt">Other projects
include </p>
<p align="justify" style="margin-left: 15%">(1) </p>
<p align="justify" style="margin-left: 20%; margin-top: -25.5pt">Chile - Rio
Figueroa Project </p>
<p align="justify" style="margin-left: 20%">The Company has an option agreement
with Sociedad Contractual Minera Los Potrillos (&quot;Potrillos&quot;) to acquire a 100%
interest in a copper-gold exploration project referred to as the Rio Figueroa
project. </p>
<p align="justify" style="margin-left: 15%; margin-bottom: -25.5pt">(2) </p>
<p align="justify" style="margin-left: 20%">USA - Liberty Bell </p>
<p align="justify" style="margin-left: 20%">The Company entered into an
exploration agreement with the right to acquire the Liberty Bell gold project in
central Alaska. </p>
<p align="justify" style="margin-left: 15%; margin-bottom: -25.5pt">(3) </p>
<p align="justify" style="margin-left: 20%">Canada - Ajax </p>
<p align="justify" style="margin-left: 20%">The Company owns a 100% interest in
the Ajax-Python Claim Group. </p>
<b>
<p align="justify">9.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Long-term
debt </p>
</b>
<p align="justify" style="margin-left: 5%">Long-term debt consists of the
following: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="85%">&nbsp;</td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Senior secured notes (a)</font></td>
      <td align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">218,703</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Embedded early
      redemption feature at fair value (b)</font></td>
      <td align="right"><font FACE="Times New Roman" SIZE="2">(360)</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Subordinated convertible debentures
      (c)</font></td>
      <td align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">34,549</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">&nbsp;</td>
      <td align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">252,892</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2"><i>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Senior secured
notes </p>
</i>
<p align="justify" style="margin-left: 10%">In accordance with the provisions of
CICA Handbook Section 1581, </font><i><font face="Times New Roman" size="2">
Business </p>
<p ALIGN="JUSTIFY" style="margin-left: 10%">Combinations</font></i><font SIZE="2" face="Times New Roman">,
the Company has performed a preliminary estimate of the fair value of the senior
secured notes (the &quot;Notes&quot;) using the closing price as listed on the Toronto
Stock Exchange (&quot;TSX&quot;) on June 30, 2008 for the Notes. The face value of the
Notes at June 30, 2008 was Cdn$237 million. </p>
<p align="right">Page 25 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">9.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Long-term
debt (continued) </p>
</b></font><i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Senior secured
notes (continued) </p>
</font></i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 10%">The Notes, originally issued by NGI
pursuant to a note indenture dated June 28, 2007, mature and become due and
payable on June 28, 2017 and bear interest at the rate of 10% per annum. Under
the terms of the Notes, the Company has agreed to certain additional
restrictions on its business as it relates to the New Afton assets. In
particular, the Company has agreed: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="1">
<ul>
  <li>
  <p align="justify" style="margin-left: 10%; margin-bottom: 12pt"></font>
  <font FACE="Times New Roman" SIZE="2">to grant to the Trustee under the note
  indenture, for the benefit of the noteholders, a first-ranking security
  interest on the New Afton project assets; </li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p ALIGN="JUSTIFY" style="margin-left: 10%; margin-bottom: 12pt"></font>
  <font FACE="Times New Roman" SIZE="2">that it will not sell or otherwise
  transfer any of the New Afton project assets except for transfers made in the
  ordinary course of business for fair market value or transfers of production
  from the New Afton project pursuant to any risk management or offtake
  agreement; </li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-left: 10%; margin-bottom: 12pt"></font>
  <font FACE="Times New Roman" SIZE="2">that it will not incur additional
  indebtedness except for certain permitted indebtedness and it will not create
  any security interest of any kind securing indebtedness on any New Afton
  project assets except for certain permitted encumbrances; and </li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-left: 10%; margin-bottom: 12pt"></font>
  <font size="2" face="Times New Roman">to certain limitations on its ability to
  make advances to its subsidiary companies for cash flow produced from the New
  Afton project assets. </li>
</ul>
<p align="justify" style="margin-left: 10%">Interest is payable in arrears in
equal semi-annual instalments on January 1 and July 1 in each year. </p>
</font><i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Embedded early
redemption feature at fair value </p>
</font></i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 10%">The Company has the right to redeem
the Notes in whole or in part at any time and from time to time prior to June
27, 2017 at a price ranging from 120% to 100% (decreasing based on the length of
time the Notes are outstanding) of the principal amount of the Notes to be
redeemed. </p>
<p align="justify" style="margin-left: 10%">The early redemption feature in the
Notes qualifies as an embedded derivative that must be bifurcated for reporting
purposes. As of June 30, 2008, the fair value of the derivative asset is $0.4
million. As a result of bifurcating the early conversion feature from the Notes,
a basis adjustment is added to the cost of the long-term debt. The basis
adjustment is amortized over the term of the debt using the effective interest
rate method. </p>
</font><i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Subordinated
convertible debentures </p>
</font></i><font FACE="Times New Roman" size="2">
<p align="justify" style="margin-left: 10%">In 2007, NGI issued 55,000
convertible subordinated debentures (&quot;Debentures&quot;) for an aggregate principal
amount of Cdn$55 million. The Debentures, which were issued pursuant to a
Debenture Indenture dated June 28, 2007 (the &quot;Debenture Indenture&quot;), each have a
principal amount of $1,000, bear interest at a rate of 5% per annum and are
convertible by the holders into common shares of the Company at any time up to
June 28, 2014 at a conversion price of Cdn$9.35 per share. The Debentures do not
allow forced conversion by the Company prior to January 1, 2012 but after that
date the Company may redeem the Debentures if the market price of the Company's
shares is at least 125% of the conversion price. The Debentures are classified
as compound financial instruments for accounting purposes because of the holder
conversion option. </p>
<p align="right">Page 26 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">9.</b> </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt"><b>Long-term
debt (continued) </p>
</b><i>
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Subordinated
convertible debentures (continued) </p>
</i>
<p align="justify" style="margin-left: 10%">Interest is payable in arrears in
equal semi-annual instalments on January 1 and July 1 in each year. </p>
<p align="justify" style="margin-left: 10%">The Debenture Indenture provides
that in the event of a change of control of the Company, as defined therein,
where 10% or more of the aggregate purchase consideration is cash, the Company
must offer to either (i) redeem the outstanding Debentures at a redemption price
equal to 100% of the principal amount, plus accrued and unpaid interest up to
but excluding the date of redemption, or (ii) convert the outstanding Debentures
into common shares at conversion prices ranging from Cdn$7.48 at inception to
Cdn$9.35, based on a time formula specified in the Debenture Indenture. </p>
<p align="justify" style="margin-left: 10%">The Debentures are subordinate to
the Notes and any secured indebtedness incurred subsequent to the issue of the
Debentures. </p>
<p align="justify" style="margin-left: 10%">The Company has allocated $34.5
million of the $56.2 million fair value as a liability based on the fair value
of a similar debt instrument without an associated conversion option. The debt
component of the Debentures will be accreted over the expected term to maturity
using the effective interest method. The fair value of the conversion option of
the debenture as of June 30, 2008 was $21.6 million. </p>
<p align="justify" style="margin-left: 10%">The Debenture Indenture requires the
Company to comply with certain reporting and other covenants. </p>
<b>
<p align="justify">10. </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt">Share capital
</p>
</b><i>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Authorized </p>
</i>
<p align="justify" style="margin-left: 10%">Unlimited number of common shares
without par value <br>
Unlimited number of preferred shares without par value </p>
<i>
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Special
warrants </p>
</i>
<p align="justify" style="margin-left: 10%">On November 28, 2007, the Company
completed a private placement financing of 14,772,333 Special Warrants at a
price of Cdn$7.50 per Special Warrant for total gross proceeds of Cdn$110.8
million (US$111.8 million) and net proceeds after issue costs of Cdn$103.2
million (US$104.2 million). Each Special Warrant entitled the holder thereof to
receive one unit of the Company, at no additional cost. Each unit comprised one
common share of the Company and one-half of one common share purchase warrant.
Each whole common share purchase warrant entitled the holder to acquire one
additional common share, at a price of Cdn$9.00 until November 28, 2012. </p>
<p align="justify" style="margin-left: 10%">On February 28, 2008, the 14,772,333
Special Warrants outstanding at December 31, 2007 were converted into 14,772,333
common shares of the Company and 7,386,168 common share purchase warrants. The
warrants were valued at $23.7 million using the Black-Scholes pricing model and
that amount is included in share purchase warrants. A fair value of
approximately $3.20 for each warrant was calculated using the following
assumptions: no dividends are paid, volatility of 60%, risk free interest rate
of 3.4%, and expected life of five years. Every 10 warrants are exercisable into
1 New Gold common share. </p>
<p align="right">Page 27 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">10. </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt">Share capital
(continued) </p>
</b><i>
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Stock options
</p>
</i>
<p align="justify" style="margin-left: 10%">The Company has established a
&quot;rolling&quot; stock option plan (the &quot;Plan&quot;) in compliance with the TSX Exchange's
policy for granting stock options. Under the Plan, the maximum number of shares
reserved for issuance may not exceed 10% of the total number of issued and
outstanding common shares. The exercise price of each option shall not be less
than the market price of the Company's stock at the date of grant. Options
generally vest over three years. </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="70%">&nbsp;</td>
      <td align="right" width="15%">
      <p style="margin-right: 4">&nbsp;</td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">Weighted</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td align="right" width="15%">
      <p style="margin-right: 4">&nbsp;</td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">average</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">Number of</font></td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">exercise</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td align="right" width="15%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">options</font></td>
      <td align="right" width="15%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">price</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td align="right" width="15%" style="border-top-style: solid; border-top-width: 1">
      <p style="margin-right: 4">&nbsp;</td>
      <td align="right" width="15%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">Cdn$</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td align="right" width="15%">
      <p style="margin-right: 4">&nbsp;</td>
      <td align="right" width="15%">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Balance, December 31, 2007</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2,149,600</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">9.10</font></td>
    </tr>
    <tr>
      <td width="70%"><font FACE="Times New Roman" SIZE="2">Granted</font></td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,241,000</font></td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">6.24</font></td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Options assumed on acquisition of Metallica</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,930,095</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">4.07</font></td>
    </tr>
    <tr>
      <td width="70%"><font FACE="Times New Roman" SIZE="2">Options assumed on
      acquisition of NGI</font></td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2,828,500</font></td>
      <td align="right" width="15%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">7.03</font></td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Exercised</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(31,000)</font></td>
      <td align="right" width="15%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1.00</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Forfeited</font></td>
      <td align="right" width="15%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">(391,200)</font></td>
      <td align="right" width="15%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">9.22</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Balance, June 30, 2008</font></td>
      <td align="right" width="15%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">7,726,995</font></td>
      <td align="right" width="15%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">6.66</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p align="justify" style="margin-left: 10%">The following table summarizes
information about the stock options outstanding at June 30, 2008: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" align="right">
    <tr>
      <td COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Options outstanding</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <p align="right">&nbsp;</td>
      <td COLSPAN="2" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Options exercisable</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Weighted</font></td>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
    </tr>
    <tr>
      <td>
      <p align="right">&nbsp;</td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">Weighted</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">average</font></td>
      <td>
      <p align="right">&nbsp;</td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">Weighted</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">Number of</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">average</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">remaining</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">Number of</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">average</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">stock options</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">exercise</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">contractual</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">options</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">exercise</font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">outstanding</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">price</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">life</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">exercisable</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">price</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Cdn$</font></td>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Cdn$</font></td>
    </tr>
    <tr>
      <td width="20%">
      <p align="right">&nbsp;</td>
      <td width="20%">
      <p align="right">&nbsp;</td>
      <td width="20%">
      <p align="right">&nbsp;</td>
      <td width="20%">
      <p align="right">&nbsp;</td>
      <td width="20%">
      <p align="right">&nbsp;</td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">333,000</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">1.76</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">1.3 years</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">333,000</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">1.76</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">103,500</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">2.74</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">1.3 years</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">103,500</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">2.74</font></td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">685,397</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.56</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">2.1 years</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">685,397</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.56</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">600,000</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">4.60</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">1.3 years</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">600,000</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">4.60</font></td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">1,160,198</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">5.58</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.7 years</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">990,198</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">5.60</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">1,914,200</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">6.42</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.7 years</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">1,084,067</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">6.55</font></td>
    </tr>
    <tr>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">680,000</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">7.24</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.7 years</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">655,000</font></td>
      <td bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">7.24</font></td>
    </tr>
    <tr>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">1,773,200</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">9.29</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.7 years</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">641,067</font></td>
      <td><font FACE="Times New Roman" SIZE="2">
      <p align="right">9.27</font></td>
    </tr>
    <tr>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">477,500</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">11.00</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">1.8 years</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">477,500</font></td>
      <td style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">11.00</font></td>
    </tr>
    <tr>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">7,726,995</font></td>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">6.66</font></td>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">3.1 years</font></td>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">5,569,729</font></td>
      <td style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">6.22</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p style="margin-left: 10%">On July 8, 2008, the Company granted 1,623,700 stock
options to employees and directors. These options have an exercise price of
Cdn$7.84, vest over three years and have a contractual life of five years from
date of grant. </p>
<p align="right">Page 28 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">10. </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt">Share capital
(continued) </p>
</b><i>
<p align="justify" style="margin-left: 5%">(d) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Stock-based
compensation </p>
</i>
<p align="justify" style="margin-left: 10%">For the period ended June 30, 2008,
the Company recorded $3.18 million as stock-based compensation expense and
recorded this amount in contributed surplus. The value was determined using the
Black-Scholes pricing model. A weighted average grant-date fair value of
Cdn$8.00 using the following assumptions: no dividends are to be paid;
volatility of 60%, risk free interest rate of 3.53%; and expected life of 4.14
years. </p>
<i>
<p align="justify" style="margin-left: 5%">(e) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Share purchase
warrants </p>
</i>
<p align="justify" style="margin-left: 10%">A summary of the changes in share
purchase warrants is presented below: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      Weighted</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      average</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">Number
      of</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      exercise</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">warrants</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">price</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">Cdn$</font></td>
    </tr>
    <tr>
      <td width="70%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Balance, December 31, 2007</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">21,750,000</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">15.00</font></td>
    </tr>
    <tr>
      <td width="70%"><font FACE="Times New Roman" SIZE="2">Issued</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      7,386,161</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">9.00</font></td>
    </tr>
    <tr>
      <td width="70%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Metallica share purchase warrants exercisable into New Gold shares</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">17,757,760</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">3.92</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">NGI share purchase warrants</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">27,850,000</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">15.00</font></td>
    </tr>
    <tr>
      <td width="70%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Balance, June 30, 2008</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">74,743,921</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">11.77</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p align="justify" style="margin-left: 10%">The following table summarizes
information about outstanding share purchase warrants at June 30, 2008: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" align="right">
    <tr>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">Number</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">Exercise</font></td>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">of warrants</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">prices</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Expiry date</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Value</font></td>
    </tr>
    <tr>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">Cdn$</font></td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">$</font></td>
    </tr>
    <tr>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%">
      <p align="right">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">14,607,760</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3.44</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">December 11, 2008</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">39,866</font></td>
    </tr>
    <tr>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">3,150,000</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">6.11</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">December 20, 2009</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">6,808</font></td>
    </tr>
    <tr>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">21,750,000</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">15.00</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">April 3, 2012</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">57,673</font></td>
    </tr>
    <tr>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">7,386,161</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">9.00</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">November 28, 2012</font></td>
      <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">
      <p align="right">23,718</font></td>
    </tr>
    <tr>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">4,150,000</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">15.00</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">June 28, 2017</font></td>
      <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p align="right">8,556</font></td>
    </tr>
    <tr>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">23,700,000</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">15.00</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">June 28, 2017</font></td>
      <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">48,859</font></td>
    </tr>
    <tr>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">74,743,921</font></td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <p align="right">&nbsp;</td>
      <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p align="right">185,480</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p align="right">&nbsp;</p>
<p align="right">Page 29 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">10. </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt">Share capital
(continued) </p>
</b><i>
<p align="justify" style="margin-left: 5%">(f) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">Diluted
earnings per share </p>
</i>
<p align="justify" style="margin-left: 10%">The following table sets forth the
computation of diluted earnings per share: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">Six
      months</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">ended</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">June
      30,</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">2008</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Earnings available to common
      shareholders</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">$5,039</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2"><i>(in thousands)</i></font></td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Basic weighted average number of shares outstanding</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">72,633</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Effect of dilutive
      securities</font></td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Share purchase warrants</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">8,020</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">Stock options</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">1,317</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">Diluted weighted average number of
      shares outstanding</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">81,970</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Earnings per share</font></td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Basic</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">$0.07</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 26">Diluted</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">$0.06</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p align="justify" style="margin-left: 10%">The following lists the stock
options and share purchase warrants excluded from the computation of diluted
earnings per share because the exercise prices exceeded the average market value
of the common shares of Cdn$7.14 for the period. </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="90%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">June
      30,</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">2008</font></td>
    </tr>
    <tr>
      <td width="85%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" SIZE="2">(in thousands)</font></td>
    </tr>
    <tr>
      <td width="85%">&nbsp;</td>
      <td width="15%" align="right">&nbsp;</td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Stock options</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">2,706</font></td>
    </tr>
    <tr>
      <td width="85%"><font FACE="Times New Roman" SIZE="2">Share purchase
      warrants</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">56,986</font></td>
    </tr>
    <tr>
      <td width="85%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
      Convertible debentures</font></td>
      <td width="15%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">55,000</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p align="right">Page 30 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>11. </p>
<p style="margin-left: 5%; margin-top: -25.5pt">Supplemental cash flow
information </p>
</b></font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td width="40%">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">Three months</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">Three months</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">Six months</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">Seven months</font></td>
    </tr>
    <tr>
      <td width="40%">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">ended</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">ended</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">ended</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">ended</font></td>
    </tr>
    <tr>
      <td width="40%">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">June 30,</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">June 30,</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">June 30,</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">June 30,</font></td>
    </tr>
    <tr>
      <td width="40%">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">2008</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2007</font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">2008</b></font></td>
      <td width="15%" align="right"><font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">2007</font></td>
    </tr>
    <tr>
      <td width="40%" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">$</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">$</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td width="40%" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 26">Change in non-cash working
      capital</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" valign="bottom"><font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Accounts receivable</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(5,152)</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(4,559)</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(8,952)</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(4,568)</font></td>
    </tr>
    <tr>
      <td width="40%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Inventories and stockpiled
      ore</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">3,367</b></font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,946</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">5,615</b></font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,946</font></td>
    </tr>
    <tr>
      <td width="40%" valign="bottom"><font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Accounts payable and accrued
      liabilities</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(6,158)</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(5,163)</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(7,672)</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(4,698)</font></td>
    </tr>
    <tr>
      <td width="40%" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Other</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>(71)</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(243)</font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">119</b></font></td>
      <td width="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">(243)</font></td>
    </tr>
    <tr>
      <td width="40%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(8,014)</b></font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(8,019)</font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>(10,890)</b></font></td>
      <td width="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 2" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">(7,563)</font></td>
    </tr>
    <tr>
      <td width="40%" valign="bottom">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 26">Non-cash financing and
      investing activities</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" valign="bottom"><font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Shares issued on acquisition
      (Note 5 (a) and 5 (b))</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">894,677</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">103,253</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">894,677</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">103,253</font></td>
    </tr>
    <tr>
      <td width="40%" valign="bottom" bgcolor="#E9F1F8">
      <p style="text-indent: -26; margin-left: 26">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 26">Operating activities included
      the following payments</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td width="40%" valign="bottom"><font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Interest paid</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">139</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">532</font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">139</b></font></td>
      <td width="15%" align="right" valign="bottom">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">532</font></td>
    </tr>
    <tr>
      <td width="40%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="text-indent: -26; margin-left: 52">Income taxes paid</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">4,145</b></font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,299</font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 4">6,025</b></font></td>
      <td width="15%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 4">1,299</font></td>
    </tr>
  </table>
</div>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p align="right">Page 31 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font SIZE="2" face="Times New Roman"><b>
<p>12. </p>
<p style="margin-left: 5%; margin-top: -25.5pt">Segmented information </p>
</b>
<p style="margin-left: 5%" align="justify">The Company manages its operations by
geographical location. These reportable operating segments are summarized in the
table below: </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Brazil</font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Chile</font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Canada <sup>(2)</sup></font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Mexico <sup>(2)</sup></font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Australia</font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Other <sup>(1)</sup></font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Total</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: none; border-top-width: medium" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt"><b>
      <p style="text-indent: -20; margin-left: 20">Three months ended June 30,
      2008</b></font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Revenues</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">19,775</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">19,722</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">39,497</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Depletion and depreciation</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">5,311</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">2,324</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">22</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">7,657</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">(Loss) earnings from
      operations</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(7,668)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">2,944</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(1,171)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(5,895)</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Total assets</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">213,250</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">320,779</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">741,515</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">523,084</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">195,877</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">172,457</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">2,166,962</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Expenditures for mining
      interests</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(2,314)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(7,357)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(24)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(9,695)</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt"><b>
      <p style="text-indent: -20; margin-left: 20">Six months ended June 30,
      2008</b></font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Revenues</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">38,542</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">57,176</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">95,718</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Depletion and depreciation</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">9,321</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">4,697</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">43</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">14,061</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">(Loss) earnings from
      operations</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(7,995)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">20,088</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(4,509)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">7,584</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Total assets</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">213,250</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">320,779</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">741,515</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">523,084</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">195,877</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">172,457</font></td>
      <td WIDTH="10%" align="right" valign="bottom" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">2,166,962</font></td>
    </tr>
    <tr>
      <td WIDTH="30%" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Expenditures for mining
      interests</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(4,466)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(12,325)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(26)</font></td>
      <td WIDTH="10%" align="right" valign="bottom">
      <font FACE="Times New Roman" style="font-size: 8pt">(16,817)</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p style="margin-left: 5%">(1)&nbsp;&nbsp;&nbsp;&nbsp; Other includes corporate
balances and intercompany eliminations</p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="95%" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0">
    <tr>
      <td WIDTH="60%" style="border-bottom-style: solid; border-bottom-width: 1">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Brazil</font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Australia</font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Other <sup>(1)</sup></font></td>
      <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">Total</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" style="border-top-style: solid; border-top-width: 1">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
      <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">$</font></td>
    </tr>
    <tr>
      <td WIDTH="60%">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt"><b>
      <p style="text-indent: -20; margin-left: 20">Three months ended June 30,
      2007</b></font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Revenues</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">15,466</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">23,976</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">39,442</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Depletion and depreciation</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">3,762</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">5,719</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">9,481</font></td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">(Loss) earnings from
      operations</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(2,512)</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">5,876</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(4,889)</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(1,525)</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Total assets</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">171,963</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">208,690</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">69,446</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">450,099</font></td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Expenditures for mining
      interests</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(1,363)</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(6,938)</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(7)</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">(8,308)</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <p style="text-indent: -20; margin-left: 20">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt"><b>
      <p style="text-indent: -20; margin-left: 20">Seven months ended June 30,
      2007</b></font></td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
      <td WIDTH="10%" align="right">
      <p style="margin-right: 4">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Revenues</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">15,466</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">23,976</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">39,442</font></td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Depletion and depreciation</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">3,762</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">5,719</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">-</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">9,481</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">(Loss) earnings from
      operations</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(2,512)</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">5,876</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(4,958)</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(1,594)</font></td>
    </tr>
    <tr>
      <td WIDTH="60%"><font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Total assets</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">171,963</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">208,690</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">69,446</font></td>
      <td WIDTH="10%" align="right">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="margin-right: 4">450,099</font></td>
    </tr>
    <tr>
      <td WIDTH="60%" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">
      <p style="text-indent: -20; margin-left: 40">Expenditures for mining
      interests</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(1,363)</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(6,938)</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(7)</font></td>
      <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" style="font-size: 8pt">(8,308)</font></td>
    </tr>
  </table>
</div>
<font FACE="Times New Roman" SIZE="2">
<p style="margin-left: 5%" align="justify">(1) Other includes corporate balances
and intercompany eliminations </p>
<p style="margin-left: 5%" align="justify">(2) Segments acquired on June 30,
2008 (Note 1)</p>
<p align="right">Page 32 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font>
<p><b><font size="4">New Gold Inc. </font></b><font size="4"><br>
</font><font size="2">Notes to the consolidated financial statements <br>
June 30, 2008 <br>
(Tabular amounts expressed in thousands of U.S. dollars, except share and per
share amounts) <br>
(Unaudited)</font></p>
<font SIZE="2" face="Times New Roman"><b>
<p align="justify">13. </p>
<p align="justify" style="margin-left: 5%; margin-top: -25.5pt">Commitments and
contingencies </p>
</b>
<p align="justify" style="margin-left: 5%">(a) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">The Company has
entered into a number of contractual commitments related to equipment orders to
purchase long lead items or critical pieces of mining equipment necessary to
commence development of the New Afton project. At June 30, 2008, these
commitments totaled $26.0 million and are expected to fall due over the next 12
months. </p>
<p align="justify" style="margin-left: 5%">(b) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">In 2007, the
Company terminated its mining contract with its mining contractor at the Cerro
San Pedro Mine. The mining contractor maintains that it was not paid for all
amounts owed under the mining contract, including early contract termination
fees, and has filed an arbitration claim against the Company for $16.8 million
plus value added taxes. The Company has filed a counter claim against the mining
contractor for $2.5 million. Arbitration proceedings are scheduled to take place
in Denver, Colorado in November 2008. Management has not yet determined the
ultimate outcome of this arbitration and as at June 30, 2008 the Company has
recorded an $8.4 million provision for this claim. </p>
<p align="justify" style="margin-left: 5%">(c) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25.5pt">The Company is
from time to time involved in various claims, legal proceedings and complaints
arising in the ordinary course of business. The Company does not believe that
adverse decisions in any pending or threatened proceedings related to any
matter, or any amount which it may be required to pay by reason thereof, will
have a material effect on the financial condition or future results of
operations of the Company. </p>
</font>
<dir>
  <dir>
    <p>&nbsp;</p>
  </dir>
</dir>
<p>&nbsp;</p>
<font FACE="Times New Roman" SIZE="2">
<p align="right">Page 33 </p>
<hr color="#000000" size="5"></font>

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</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>exh992.htm
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
<html>

<head>
<title>New Gold Inc.: Exhibit 99.2 - Prepared By TNT Filings Inc.</title>
</head>

<body>

<div style="border-top-style: solid; border-top-width: 1; padding-top: 1">

<hr color="#000000" size="5">
</div>
<b>
<p><font size="5">NEW GOLD INC. <br>
</font><font size="2">Management's Discussion and Analysis <br>
</font></b><font size="2">Six Months Ended June 30, 2008 <br>
(in United States dollars, except where noted) </p>
<i>
<p align="justify">This Management's Discussion and Analysis should be read in
conjunction with New Gold's unaudited interim consolidated financial statements
for the three and six months ended June 30, 2008</i><b> </b></font><i>
<font SIZE="2">and related notes thereto which have been prepared in accordance
with Canadian generally accepted accounting principles. This Management's
Discussion and Analysis contains &quot;forward-looking statements&quot; that are subject
to risk factors set out in a cautionary note contained herein. The reader is
cautioned not to place undue reliance on forward- looking statements. All
figures are in United States dollars, tabular amounts are in thousands, unless
otherwise noted. This Management's Discussion and Analysis has been prepared as
of August 13<sup>th</sup>, 2008. Additional information relating to the Company
is available on SEDAR at <u>www.sedar.com</u>. </p>
</font></i><b><font SIZE="2">
<p align="justify">Due to the close of the recent merger between New Gold Inc.
Metallica Resources Inc. and Peak Gold Ltd. on June 30, 2008, consolidated
interim financial statements of the newly formed company for the three and six
month periods ending June 30, 2008 are presented on the basis that Peak Gold is
the acquirer for accounting purposes. Consequently, the consolidated income and
cash flow statements include results of only Amapari and Peak Mines for the
period of January 1 to June 30, 2008 and the consolidated balance sheet at June
30, 2008 reflects the balances of the merged entity. </p>
<p align="justify">SECOND QUARTER HIGHLIGHTS </p>
</font></b><font FACE="Symbol MT" LANG="JA" SIZE="2">
<ul>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2"><b>Gold production of 42,052 ounces <br>
&nbsp;</li>
  </b></font><font FACE="Symbol MT" LANG="JA" SIZE="2">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2"><b>Gold sales of 40,540 ounces <br>
&nbsp;</li>
  </b></font><font FACE="Symbol MT" LANG="JA" SIZE="2">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font><b>
  <font SIZE="2">Total cash costs were $742 per ounce (net of by-product sales)
  <sup>(1)</sup> <br>
&nbsp;</li>
  </font></b><font FACE="Symbol MT" LANG="JA" SIZE="2">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2"><b>Net Losses were $(4.8) million <br>
&nbsp;</li>
  </b></font><font FACE="Symbol MT" LANG="JA" SIZE="2">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2"><b>On June 30, 2008, the business combination between Peak Gold
  Ltd., Metallica Resources Inc and New Gold Inc. closed. The combined company
  New Gold Inc. owns three operating gold mines in Australia, Brazil, and Mexico
  and development projects in Canada and Chile. </li>
</ul>
</b></font><font style="font-size: 9pt">
<p align="justify">(1) The Company has included a non-GAAP performance measure,
total cash cost per gold ounce, throughout this document. The Company reports
total cash costs on a sales basis. In the gold mining industry, this is a common
performance measure but does not have any standardized meaning, and is a non-GAAP
measure. The Company follows the recommendations of the Gold Institute standard.
The Company believes that, in addition to conventional measures, prepared in
accordance with GAAP, certain investors use this information to evaluate the
Company's performance and ability to generate cash flow. Accordingly, it is
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP.<i> </i></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%">
    <p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%"><font size="2">
    <p align="right">1</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b><i>
<p align="justify">Background </p>
</i></b>
<p align="justify">The Company is a gold producer engaged in gold mining and
related activities including acquisition, exploration, extraction, processing
and reclamation. The Company's assets are comprised of the Amapari mine in
Brazil, the Cerro San Pedro mine in Mexico, and the Peak mine in Australia.
Significant development projects include the New Afton copper-gold project in
Canada and a 30% interest in a copper-gold project in Chile. </p>
<p align="justify">With a clear direction in place, New Gold Inc.'s strategy
focuses on three main pillars; delivery on operational targets (production,
cost, safety and social responsibility); internal growth through the
construction and development of the New Afton copper-gold project and the review
of the Amapari processing alternatives; and external growth through the
acquisitions of operations. New Gold is working towards maximizing shareholder
value through diversified production, maintaining a reduced risk profile and
enhancing growth potential. The board of directors, management and the employees
of New Gold Inc. are committed to achieving this in a socially responsible and
sustainable manner. </p>
</font><b>
<p align="justify"><i><font SIZE="2">Corporate Developments </p>
<p align="justify">Business Combination </p>
</font></i></b><font SIZE="2">
<p align="justify">On June 30, 2008 New Gold Inc. (&quot;NGI&quot;), Metallica Resources
Inc. (&quot;Metallica&quot;) and Peak Gold Ltd. (&quot;Peak Gold&quot; or the &quot;Company&quot;) completed a
business combination and asset acquisition (the &quot;Transaction&quot;) to form New Gold
Inc. (&quot;New Gold&quot;). In accordance with the provisions of the Canadian Institute
of Chartered Accountants (&quot;CICA&quot;) Handbook Section 1581, Business Combinations,
Peak Gold has been identified as the acquirer for accounting purposes. As such,
this management discussion and analysis is a continuation of the operations of
Peak Gold, with the comparative information being that of Peak Gold. References
to NGI are to the pre-transaction corporate entity whereas references to New
Gold refers to the post-transaction consolidated entity. </p>
<p align="justify">Under terms of the Transaction, shareholders of Peak Gold
received 0.1 shares of New Gold common shares and nominal cash consideration for
each one common share of Peak Gold. The Transaction has been accounted for as a
purchase of assets and assumption of liabilities of NGI by Peak Gold.
Shareholders of Metallica received 0.9 shares of New Gold common shares and
nominal cash consideration for each one common share of Metallica. For
accounting purposes the acquisition of Metallica has been accounted for as a
purchase transaction. Refer to Note 5 of the Company's unaudited interim
consolidated financial statements for the three and six months ended June 30,
2008 for further information on the Transaction. </p>
<p align="justify">The Transaction provides the Company with an improved
production profile through the diversification of producing assets, increased
reserves and resources and broadens growth potential with an inventory of
developments and exploration stage assets. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">2</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b><font SIZE="2"><i>
<p>Selected Financial Information </p>
</i>
<p>(US dollars in thousands, except per share amounts and per ounce amounts)</font></b><font SIZE="2">
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="42%" align="right" colspan="4"><font style="font-size: 8pt">
    <p style="margin-right: 4" align="center"><b>Three Months Ended</b></font></td>
    <td WIDTH="10%" align="right" style="border-left-style: none; border-left-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Four</b></font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: none; border-left-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Months</b></font></td>
    <td WIDTH="20%" COLSPAN="2" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4" align="center"><b>Three Months Ended</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: none; border-left-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>ended</b></font></td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="10%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>June 30,</b></font></td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Mar 31,</b></font></td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Dec 31,</b></font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Sep 30,</b></font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>June 30,</b></font></td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Mar 31,</b></font></td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Nov 30,</b></font></td>
    <td WIDTH="10%" align="right"><font style="font-size: 8pt">
    <p style="margin-right: 4"><b>Aug 31,</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2008</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2008</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2007 <sup>(4)</sup></b></font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2007</b></font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2007 <sup>(1)</sup></b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2007 <sup>(3)</sup></b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2006</b></font></td>
    <td WIDTH="10%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font style="font-size: 8pt">
    <p style="margin-right: 4"><b>2006</b></font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-top-style: solid; border-top-width: 1">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-top-style: solid; border-top-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Revenues</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$39,497</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$56,221</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$46,979</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$44,663</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$39,442</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Gold produced (ounces)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">42,052</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">43,300</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">53,430</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">53,900</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">42,500</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Gold Sales (ounces)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">40,540</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">51,700</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">52,351</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">55,000</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">48,000</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Average Realized Price (US$/ ounce)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$898</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$933</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$793</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$697</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$662</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Depreciation and
    depletion</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(7,657)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(6,404)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(3,766)</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(13,258)</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(9,481)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Corporate
    administration</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$3,196</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$4,027</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$5,122</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$2,814</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$5,290</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$67</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$247</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$66</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Earnings (loss) from operations</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(5,895)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$13,479</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$13,090</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$2,612</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(1,525)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(67)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(247)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(66)</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Interest and other income</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$1,355</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$1,967</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$1,198</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$1,250</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$1,651</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$14</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Net earnings (loss)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(4,751)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$9,790</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$14,789</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$1,180</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(1,289)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(54)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$10,188</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Earnings (loss) per share</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(0.05)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$0.01</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$0.02</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$0.09</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$0.10</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Cash flow from (to) operating activities</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 4">$(2,987)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$18,394</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$12,944</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$7,823</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$5,856</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(3)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 4">$(63)</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Total Cash costs (per gold ounce) <sup>(2)</sup></font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$742</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$427</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$398</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$303</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$343</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Cash and Cash
    Equivalents</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$319,179</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$197,636</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$149,924</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$77,111</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$77,388</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$643</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$328</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$449</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Short term investments</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$32,440</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$1,110</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Investments</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$91,193</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="10%" align="right" valign="bottom">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%">
    <p style="text-indent: -15; margin-left: 15"><font style="font-size: 8pt">Total Assets</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$2,166,962</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$590,691</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$572,398</font></td>
    <td WIDTH="10%" align="right" style="border-right-style: solid; border-right-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$456,912</font></td>
    <td WIDTH="10%" align="right" style="border-left-style: solid; border-left-width: 1" valign="bottom">
    <font style="font-size: 8pt">
    <p style="margin-right: 8">$ nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$nil</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$342</font></td>
    <td WIDTH="10%" align="right" valign="bottom"><font style="font-size: 8pt">
    <p style="margin-right: 8">$463</font></td>
  </tr>
</table>
<font SIZE="2">
<p style="margin-left: 5%">(1) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25pt">Includes
operating results of Amapari and Peak Mines from April 3, 2007 and April 27,
2007 respectively, to June 30, 2007. </p>
<p style="margin-left: 5%">(2) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25pt">The calculation
of total cash costs per ounce of gold for Peak Mines is net of by-product copper
sales revenue. </p>
<p style="margin-left: 5%">(3) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25pt">The Company
changed its fiscal year end from November 30 to December 31, commencing with the
thirteen month period ending December 31, 2007. As a result, the quarter ended
March 31, 2007 is a four month period. </p>
<p style="margin-left: 5%">(4) </p>
<p align="justify" style="margin-left: 10%; margin-top: -25pt">In the fourth
quarter, the company finalized the purchased price allocation of the assets and
liabilities acquired in the acquisition of Amapari and Peak Mines. The result of
the fourth quarter includes adjustments made upon completion of the allocation
of the purchase consideration of Amapari and Peak Mines. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">3</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p align="justify"><b>Overview of the second quarter 2008 financial results </b>
</p>
</i>
<p align="justify">Net loss for the second quarter of 2008 was $(4.8) million,
which includes $0.6 million related to stock-based compensation expense (a
non-cash charge). This was a $(3.5) million increase in net loss compared to the
second quarter of 2007. Combinations of lower gold sales and lower than
anticipated grades were contributing factors to the increased loss for the
second quarter of 2008. Total cash costs were $742 per ounce for the second
quarter of 2008, which were negatively impacted by the appreciation of the
Australian and Brazilian currencies against the U.S. dollar, lower gold sales
and a lower production as compared to previous quarters. </p>
<p align="justify">&nbsp;</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><font SIZE="2"><b>New Gold Inc. Management Discussion and
    Analysis</b></font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">4</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b>
<p>Operation Review </p>
<p>Amapari, Brazil <br>
</b>(US dollars in thousands, except ounce and per ounce amounts) </p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="80%" align="center" colspan="5"><font SIZE="2"><b>Three Months
    Ended</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>June 30,</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">March 31,</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">December 31,</font></td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8"><font size="2">September 30,</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">June 30,</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2"><b>Operating Data</b></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>2008</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2008</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2007</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2007</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">2007</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Tonnes of ore mined</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>605,000</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">626,000</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">846,200</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">754,200</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">621,900</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Tonnes of waste removed</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>1,491,000</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">1,199,000</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2,193,600</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2,272,500</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">1,494,600</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Ratio of waste to ore</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>2.5</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">1.92</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2.6</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">3.0</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">2.4</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Tonnes of ore processed</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>388,000</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">384,000</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">529,800</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">519,400</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">461,400</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Average mill head grade (grams/tonne)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>1.76</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2.35</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">3.41</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">2.41</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">2.49</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Average recovery rate (%) <sup>(1)</sup></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>60.0%</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">63%</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">62%</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">62%</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">68%</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Gold (ounces)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">&nbsp;&nbsp; &#150; Produced <sup>(2)</sup></font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>20,938</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">18,201</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">24,400</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">22,200</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">22,700</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">&nbsp;&nbsp; &#150; Sold</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>22,099</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">20,453</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">22,600</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">22,200</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">23,200</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Average realized gold price (per ounce)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>$895</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$918</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$785</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$684</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">$ 666</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">Total cash costs (per ounce)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 8"><b>$968</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$650</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$583</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$491</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 8">$ 539</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: none; border-bottom-width: medium" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font size="2"><b>Financial Data</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: none; border-top-width: medium">
    <font size="2">Revenues</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium" bgcolor="#E9F1F8">
    <font size="2">
    <p style="margin-right: 8"><b>$19,775</b></font></td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium">
    <font size="2">
    <p style="margin-right: 8">$18,767</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium">
    <font size="2">
    <p style="margin-right: 8">$17,710</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: none; border-top-width: medium">
    <font size="2">
    <p style="margin-right: 8">$15,190</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium">
    <font size="2">
    <p style="margin-right: 8">$15,470</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font size="2">(Loss) Earnings from operations</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font size="2">
    <p style="margin-right: 4"><b>$(7,668)</b></font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 4">$(327)</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 8">$ 3,751</font></td>
    <td WIDTH="15%" align="right"><font size="2">
    <p style="margin-right: 4">$(1,560)</font></td>
    <td WIDTH="15%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font size="2">
    <p style="margin-right: 4">$(2,512)</font></td>
  </tr>
</table>
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(1) </p>
<p ALIGN="justify" style="margin-left: 10%">Gold recovery is determined when the
individual leach pads are reclaimed and production is reconciled. </p>
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(2) </p>
<p ALIGN="justify" style="margin-left: 10%">Tonnes of ore processed each quarter
do not necessarily correlate to ounces produced during the quarter, as there is
a time delay between placing tonnes on the leach pad and pouring ounces of gold.
</p>
<p ALIGN="JUSTIFY">Amapari's gold production for the second quarter of 2008 was
20,938 ounces compared to 22,700 ounces for the same period in 2007. The lower
gold production results primarily from lower tonnes processed due to unplanned
maintenance on key processing and mining equipment, heavy rainfall and reduced
recovery and grade of ore. During the quarter, access to higher grade materials
was restricted due to unfavourable weather conditions, while mobile and key
processing plant equipment availabilities adversely impacted the amount of ore
processed. A comprehensive review of operations at Amapari commenced during the
third quarter. </p>
<p align="justify">In relation to reserves at Amapari, five rigs continue to
drill around the perimeter and under existing pits. A consulting company has
been contracted to assemble a feasibility study on processing modifications
required to convert existing resources to reserves. This work is scheduled to be
completed later this year or early next. A previously contemplated modification,
the wash plant, has been determined to be inappropriate and studies have shifted
to alternate concepts. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">5</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p align="justify">Total cash cost per ounce for the quarter was $968 per ounce
compared to $539 per ounce in the second quarter of 2007. Cash costs were
negatively impacted by reduced gold ounces sold during the quarter, the
continued strengthening of the Brazilian currency (real) against the US Dollar
(&quot;USD&quot;), increased cyanide and carbon costs and increased maintenance and other
operating costs. </p>
<p align="justify">Revenue for the quarter was $19.8 million which was $4.3
million or 28% higher than the previous year period with lower sales volume
offset by a higher gold price. Losses for the current quarter were $(7.7
million)<i> </i>compared to $(2.5) million a year ago and are attributed to
higher processing costs and reduced recovery and grade of ore. Cash flow from
operations was $3.0 million with higher price off-setting lower production. </p>
</font>
<p>&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">6</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b>
<p>Peak Mines, Australia <br>
</b>(US dollars in thousands, except ounce and per ounce amounts) </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Two</b></font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Three</b></font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Months</b></font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Months</b></font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="46%" align="center" colspan="4"><font SIZE="2"><b>Three Months
    Ended</b></font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Ended</b></font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4"><b>Ended</b></font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: none; border-right-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: none; border-left-width: medium">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>June 30,</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">March 31,</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">December 31,</font></td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4"><font SIZE="2">September 30, </font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">June 30,</font></td>
  </tr>
  <tr>
    <td WIDTH="29%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Operating Data</b></font></td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4"><b>2008</b></font></td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2008</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007<sup>(2)</sup></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2007<sup>(3)</sup></font></td>
  </tr>
  <tr>
    <td WIDTH="29%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Tonnes of ore milled</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>186,326</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">179,087</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">188,933</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">182,835</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">132,24</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">164,962</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Average mill head grade</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Gold (grams/tonne)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>4.18</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">4.96</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">5.55</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">6.21</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4"><font size="2">5.29</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">5.31</font></td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Copper (%)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>0.46%</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">0.70%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">0.59%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">0.65%</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4"><font size="2">0.78%</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">0.75%</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Average recovery rate</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Gold (%)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>84.2%</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">87.9%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">86%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">87%</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">88%</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">88%</font></td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Copper (%)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>64.9%</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">78.9%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">70%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">74%</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">77%</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">76%</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Produced</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Gold (ounces)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>21,114</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">25,099</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">29,030</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">31,703</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">19,800</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">24,600</font></td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Copper (thousands of pounds)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>1,237</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">2,172</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">1,746</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">1,932</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">1,748</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2,059</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Sold</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Gold (ounces)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>18,441</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">31,247</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">29,751</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">32,800</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">24,800</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">30,800</font></td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Copper (thousands of pounds)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>855</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">2,551</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">2,469</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">1,908</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2,776</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">2,776</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Average realized price</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Gold (per ounce)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>$902</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$943</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$799</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$707</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$672</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$674</font></td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">&nbsp; &#150; Copper (per pound)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>$4.27</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$3.75</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$2.99</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$3.47</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$3.19</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$3.19</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Total cash costs per gold ounce<sup>(1)</sup></font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>$472</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$281</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$258</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$176</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$160</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$234</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Financial Data</font></td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Revenues</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>$19,722</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$37,454</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$29,278</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$29,467</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$23,970</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$28,070</font></td>
  </tr>
  <tr>
    <td WIDTH="29%">&nbsp;</td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="11%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="29%"><font SIZE="2">Earnings from operations</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">
    <p style="margin-right: 4"><b>$2,944</b></font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$17,144</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$13,416</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">
    <p style="margin-right: 4">$6,494</font></td>
    <td WIDTH="12%" align="right" style="border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$5,876</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">$6,319</font></td>
  </tr>
</table>
<font SIZE="2">
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(1) </p>
<p ALIGN="justify" style="margin-left: 10%">The calculation of total cash costs
per ounce of gold is net of by-product sales revenue. If the copper sales were
treated as a co-product, average total cash costs at Peak Mines for the three
months ended June 30, 2008, would be $548 per ounce of gold and $3.41 per pound
of copper compared to $309 per ounce of gold and $2.28 per pound of copper in
the previous year. </p>
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(2) </p>
<p ALIGN="justify" style="margin-left: 10%">Peak Mines operations are included
in New Gold's operating results for the period subsequent to April 27, 2007, the
date of the acquisition. </p>
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(3) </p>
<p ALIGN="justify" style="margin-left: 10%">Prior quarter information is
presented for information purposes only. </p>
<p ALIGN="JUSTIFY">Peak Mines produced 21,114 ounces of gold and 1,237,000
pounds of copper in the second quarter of 2008. Gold and copper grades were
lower due to mining of lower grade stopes and dilution associated with pillar
extraction. A new primary ore production source in the Hulk ore body will begin
production in the third quarter supplementing ore supply. Mill throughput of
186,326 tonnes reflects expected underground tonnage and high mill availability.
Sales of gold and copper were low during the quarter due to the lower production
rate. </p>
<p>Total cash costs for the quarter were $472 per ounce sold and have been
impacted by a strengthening Australian dollar and lower volumes sold. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">7</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p><b>Operation Review </b></p>
<p align="justify" style="margin-left: 5%"><b>Cerro San Pedro, Mexico <br>
</b>(US dollars in thousands, except ounce and per ounce amounts) </p>
<i>
<p align="justify" style="margin-left: 5%">As a result of the Transaction which
closed on June 30, 2008, the Company now owns and operates the Cerro San Pedro
mine located in Mexico. It should be noted that because the business combination
closed on June 30, the consolidated interim statements of New Gold for the
period ended June 30, 2008 will not reflect the revenues and earnings presented
below for the Cerro San Pedro mine. </p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td>&nbsp;</td>
    <td COLSPAN="2" align="right"><font size="2">
    <p style="margin-right: 15%"><b>Three Months Ended<sup>(3)</sup></b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>June 30,</b></font></td>
    <td align="right"><font size="2"><b>March 31,</b></font></td>
  </tr>
  <tr>
    <td><font size="2"><b>Operating Data</b></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>2008</b></font></td>
    <td align="right"><font size="2"><b>2008</b></font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Tonnes of ore mined</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>2,440,293</b></font></td>
    <td align="right"><font size="2">2,276,533</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Tonnes of waste removed</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>3,074,769</b></font></td>
    <td align="right"><font size="2">3,051,869</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Ratio of waste to ore</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>1.26</b></font></td>
    <td align="right"><font size="2">1.34</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Tonnes of ore processed</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>2,440,293</b></font></td>
    <td align="right"><font size="2">2,276,533</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Average mill head grade <i>(grams/tonne)</i></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>.64</b></font></td>
    <td align="right"><font size="2">.61</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Average Gold recovery rate <i>(%)</i></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>41%</b></font></td>
    <td align="right"><font size="2">41%</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Average Silver recovery rate <i>(%)</i></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>19%</b></font></td>
    <td align="right"><font size="2">15%</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Gold (ounces)</font></td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">&nbsp; &#150; Produced <sup>(1)</sup></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>20,653</b></font></td>
    <td align="right"><font size="2">18,290</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp; &#150; Sold</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>22,190</b></font></td>
    <td align="right"><font size="2">15,922</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Silver (ounces)</font></td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">&nbsp; &#150; Produced <sup>(1)</sup></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>283,749</b></font></td>
    <td align="right"><font size="2">228,623</font></td>
  </tr>
  <tr>
    <td><font size="2">&nbsp; &#150; Sold</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>300,728</b></font></td>
    <td align="right"><font size="2">203,973</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font SIZE="2">Average realized gold price (per ounce)</font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>$897</b></font></td>
    <td align="right"><font size="2">$933</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font SIZE="2">Total cash costs net Silver credits (per
    ounce)<sup>(4)</sup></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>$375</b></font></td>
    <td align="right"><font size="2">$496</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-bottom-style: solid; border-bottom-width: 1">
    <font size="2">Financial Data</font></td>
    <td align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td><font size="2">Revenues<sup>(2)</sup></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>25,050</b></font></td>
    <td align="right"><font size="2">18,477</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td align="right">&nbsp;</td>
  </tr>
  <tr>
    <td><font SIZE="2">(Loss) Profit from operations<sup>(2)</sup></font></td>
    <td align="right" bgcolor="#E9F1F8"><font size="2"><b>10,523</b></font></td>
    <td align="right"><font size="2">7,497</font></td>
  </tr>
</table>
</i>
<p ALIGN="justify" style="margin-left: 5%; margin-bottom: -25pt">(1) </p>
<p style="margin-left: 10%" align="justify">Tonnes of ore processed each quarter
do not necessarily correlate to ounces produced during the quarter, as there is
a time delay between placing tonnes on the leach pad and pouring ounces of gold.
</p>
<p style="margin-left: 5%; margin-bottom: -25pt" align="justify">(2) </p>
<p style="margin-left: 10%" align="justify">Revenues and (Loss) Profit from
Operations are not included in the financial results of the Company since the
closing date of the Transaction was June 30, 2008. </p>
<p style="margin-left: 5%; margin-bottom: -25pt" align="justify">(3) </p>
<p style="margin-left: 10%" align="justify">Commercial production at the Cerro
San Pedro mine commenced on May 1, 2007 however; the operation was still in its
ramp up stage and production results are not comparable and therefore have not
been presented. </p>
<p style="margin-left: 5%; margin-bottom: -25pt" align="justify">(4) </p>
<p style="margin-left: 10%" align="justify">The calculation of total cash costs
per ounce of gold is net of by-product sales revenue. If the silver sales were
treated as a co-product, average total cash costs at Cerro San Pedro (CSP) for
the three months ended June 30, 2008, would be $483 per ounce of gold and $9.22
per ounce of silver. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">8</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p align="justify">Gold production for the second quarter of 2008 increased 13%
to 20,653 ounces compared to 18,290 ounces in the first quarter of 2008. Silver
production for the second quarter of 2008 increased 24% to 283,749 ounces
compared to 203,973 ounces in the first quarter of 2008. Production from January
1, 2008 through June 30, 2008 for gold and silver was 38,943 ounces and 512,372
ounces, respectively. </p>
<p align="justify">Gold and silver sales for the three months ended June 30,
2008 totaled $19.9 million and $5.2 million, respectively. The Company sold
22,190 ounces of gold and 300,728 ounces of silver at an average realized price
per ounce of $896.74 and $17.13, respectively. This compared to the average
London PM fix for gold of $896.29 per ounce and the average London fix for
silver of $17.18 per ounce for the three months ended June 30, 2008. </p>
<p align="justify">Operating costs were $14.5 million and operating cash flow
was $10.1 million for the three months ended June 30, 2008. </p>
<p align="justify">Cash costs for the second quarter of 2008 was $375 per ounce
compared to $496 per ounce in the first quarter of 2008. Cash costs showed a 24%
improvement in the second quarter in comparison to the first quarter reflecting
the production ramp up from the heaps. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">9</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><i><font size="2">
<p><b>Project Development Review: </b></p>
<p style="margin-left: 5%" align="justify"><b>New Afton Copper-Gold Project </b>
</p>
</font></i><font SIZE="2">
<p style="margin-left: 5%" align="justify">As part of the Transaction, the
Company acquired the New Afton Copper-Gold Project (the &quot;Project&quot;) which is
expected to commence production towards the end of 2009. </p>
<p ALIGN="JUSTIFY" style="margin-left: 5%">During 2008, the Company continues
its focus on the underground development of the Project and in the second
quarter commenced the ramp-up of the surface construction. The underground
development is continuing on five development faces including the surface portal
which began development in early 2008. The Company completed 1,267 metres in the
second quarter up from 824 metres of underground development during the first
quarter. The Project is now averaging in excess of 110 metres per week of
underground development advance. </p>
<p style="margin-left: 5%" align="justify">Surface activities included the
development of new roads and preparation of the construction office site in
advance of the mill erection expected to commence early in the fourth quarter
following site preparation and foundation completion. Site preparations for the
temporary construction office were completed during the second quarter and
occupancy occurred in July. </p>
<p style="margin-left: 5%" align="justify">During the second quarter the Company
commissioned the pit de-watering system for the original Afton pit and is now
dewatering and storing the water in the previously mined Pothook pit where it
will be stored and later used when milling commences. </p>
<p style="margin-left: 5%" align="justify">The Company also continued its
permitting processes for the remaining key permits which are focused on water
use and tailings impoundment. </p>
<p style="margin-left: 5%" align="justify">The engineering and procurement
procedures for the mill site continued and detailed engineering has attained the
47% level. </p>
<i>
<p style="margin-left: 5%" align="justify"><b>El Morro Project </b></p>
</i>
<p style="margin-left: 5%" align="justify">The Company has an agreement with
Xstrata whereby Xstrata will finance, at the Company's election, 70% of the
Company's 30% share of El Morro's project development costs at Xstrata's cost of
financing plus 100 basis points. Xstrata would be repaid through 80% of the
Company's share of future project cash flow. Management believes that the
Company, has the ability to obtain sufficient financing, if required, in the
event of a decision by Xstrata to proceed with construction. </p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">10</font></td>
  </tr>
</table>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><i><font size="2">
<p><b>Exploration Review: </b></p>
</font></i><font SIZE="2">
<p align="justify" style="margin-left: 5%">As a result of the business
combination that closed on June 30, 2008, the Company acquired the following
exploration projects: </p>
<i>
<p align="justify" style="margin-left: 5%"><b>Rio Figueroa </b></p>
</i>
<p align="justify" style="margin-left: 5%">In June 2008, the Company entered
into an agreement with Antafagasta Minerals S.A. (&quot;Antafagasta&quot;) which provides
Antafagasta an option to earn up to a 70% interest in the Company's Rio Figueroa
copper-gold exploration project in Chile. Antafagasta will make option payments
to the underlying landowners totaling $2.7 million through September 2009 to
earn a 30% interest in the Rio Figueroa project. Antafagasta can increase its
interest in the project from 30% to 50% by making qualified exploration
expenditures totaling $7.0 million through June 2012. Antafagasta can further
increase its interest in the project from 50% to 70% by making a cash payment to
the Company of $5.0 million and delivering a feasibility study for the project
by June 2015. </p>
<i>
<p align="justify" style="margin-left: 5%"><b>Alaska Peninsula </b></p>
</i>
<p align="justify" style="margin-left: 5%">In September 2005, the Company
entered into an option agreement with Full Metal Minerals Ltd. (&quot;FMM&quot;) to earn a
65% interest in precious and base metal exploration properties located in
Southwest Alaska and the Aleutian Islands. The Company may increase its interest
in individual properties to 70% by completing a pre-feasibility study, and it
may further increase its interest in individual properties to 80% by completing
a feasibility study. </p>
<i>
<p align="justify"><b>Review of Financial Results </b></p>
</i>
<p align="justify"><b>Three months ended June 30, 2008 compared to the three
months ended June 30, 2007 </b></p>
<p align="justify">The net (loss) for the three months ended June 30, 2008 were
impacted by the following factors: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="1">
<ul>
  <li>
  <p align="justify"></font><font SIZE="2">Revenues increased by approximately
  $0.1 million in the second quarter of 2008 compared to the second quarter in
  2007 despite lower gold sales. The increase is primarily as a result of higher
  realized gold prices which increased 36% over last year; <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify"></font><font SIZE="2">Operating expenses increased by 32%
  compared to the same quarter in 2007 and is attributable the following:
  continued weakening of the US dollar compared to the Australian and Brazilian
  currency (14% increase in the Australian dollar and a 20% increase in the
  Brazilian real compared to the second quarter of 2007); and increased
  maintenance costs at Amapari. In addition due to the acquisition of Peak Mines
  closing on April 27<sup>th</sup> 2007, the second quarter of 2007 included
  only 2 months of operating expenses for Peak Mines. <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="3">
  <li>
  <p align="justify"></font><font SIZE="2">Depreciation and depletion, which
  relates to mining activities, was $7.7 million for the quarter. Depreciation
  and depletion was $5.3 million for Amapari and $2.3 million for Peak. This was
  $1.8 million lower compared to the second quarter of 2007. In December 2007
  the Company finalized its valuation of the acquisition of Amapari and Peak
  Mines resulting in adjustments to the fair value of depletable properties and
  a consequent reduction to depletion expense </font>
  <font FACE="Century Gothic" SIZE="3"><i><br>
&nbsp;</li>
  </i></font><font FACE="Symbol MT" LANG="JA" SIZE="3">
  <li>
  <p ALIGN="JUSTIFY"></font><font SIZE="2">Corporate administration was $2.1
  million lower in the second quarter of 2008 compared to the second quarter of
  2007, as a result of reduced stock-based compensation charges. Stock-based
  compensation was $0.6 million for second quarter of 2008 compared to $4.1
  million in the second quarter of 2007<i> </li>
</ul>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">11</font></td>
  </tr>
</table>
</i></font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Symbol MT" LANG="JA" SIZE="1">
<ul>
  <li>
  <p align="justify"></font><font size="2">Interest income decreased by $0.3
  million in the quarter compared to the second quarter of 2007 primarily as a
  result of decreased interest rates and shorter investment maturity terms of
  investments compared to the same period in the prior year. </li>
</ul>
<p align="justify">Net losses amounted to ($4.8) million for the three months
ended June 30, 2008, compared to net loss of $1.3 million in the same period
last year. The increased loss is attributable is mainly attributable to the
increased operating costs noted above. </p>
<p align="justify"><b>Six months ended June 30, 2008 compared to the six months
ended June 30, 2007 </b></p>
<p align="justify">It should be noted that the operating results of the Amapari
and Peak Mines were included in the Company's operating results from April 3<sup>rd</sup>
and April 27<sup>th</sup>, 2007 respectively. Accordingly, the operating results
of the Company for the six month ended June 30, 2007 do not reflect operating
results for a full six month period. </p>
<p align="justify">The net earnings for the six months ended June 30, 2008 were
impacted by the following factors: </p>
</font><font FACE="Symbol MT" LANG="JA" SIZE="1">
<ul>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Revenues increased by $56.3 million in the six months ended
  June 30, 2008 as compared to the same period in 2007, primarily as result of a
  full six months of sales for Amapari and Peak Mines compared to only three
  months of production sales for the same period in 2007 and higher realized
  gold prices, which increased 39% over last year; <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Operating expenses increased by 156% to $64.6 million (2007 -
  $25.3 million) primarily due to a full six months of commercial production in
  2008. The six months ended June 30, 2007 includes operating results for
  Amapari and Peak Mines from April 3<sup>rd</sup>, 2007 and April 27, 2007,
  respectively to June 30, 2007. <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Depreciation and depletion increased by 48% to $14.1 million
  (2007 - $9.5 million) primarily due to a full six months of commercial
  production. In addition, the finalized purchase price allocation of assets and
  liabilities acquired in the acquisition of Peak Mines and Amapari were not
  completed until the fourth quarter of 2007. Accordingly, the six months ended
  June 30, 2008 included depreciation based on finalized purchase price
  allocations while the same 2007 period did not. <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Corporate administration increased by 35% to $7.2 million
  (2007- $5.4 million) as a result of increased corporate activity. <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Exploration expense increased by $1.3 million in the six months
  ended June 30, 2008 as compared to the same period in 2007, as a result of
  continued exploration work at Amapari and Peak Mines <br>
&nbsp;</li>
  </font><font FACE="Symbol MT" LANG="JA" SIZE="1">
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0"></font>
  <font SIZE="2">Interest income of which the majority was earned on funds
  received from private placement, increased by $1.7 million in the six months
  ended June 30 as compared to the same period in 2007 primarily due to the fact
  that private placement funds were received in April 2007 and only available
  for investing for a period of approximately 3 months in the second quarter of
  2007 compared to a full six month period June 30. Net earnings amounted to
  $5.0 million for the six months ended June 30, 2008, compared to a net loss of
  ($1.3) million in the same period last year. Higher net earnings are primarily
  a result of a full six months of commercial operations and significant
  increases in realized gold prices ($918 per ounce compared to $662 per ounce
  in the same period last year). Total cash costs per ounce were $742 for the
  six months ended June 30, 2008 as compared to $343 in the same period in 2007.
  The increase significantly due to labour costs, rising cost of consumables,
  unplanned maintenance costs and the strengthening of the Australian dollar and
  Brazilian real offset by higher by-product sales. </li>
</ul>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">12</font></td>
  </tr>
</table>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p><b>Non-GAAP Measure &#150; Total Cash Cost per Gold Ounce Calculation </b></p>
</i>
<p align="justify">The Company reports total cash costs on a sales basis. In the
gold mining industry, this is a common performance measure but does not have any
standardized meaning, and is a non-GAAP measure. The Company follows the
recommendations of the Gold Institute standard. The Company believes that, in
addition to conventional measures, prepared in accordance with GAAP, certain
investors use this information to evaluate the Company's performance and ability
to generate cash flow. Accordingly, it is intended to provide additional
information and should not be considered in isolation or as substitute for
measures of performance prepared in accordance with GAAP. The following table
provides a reconciliation of total cash costs per ounce to the financial
statements: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">(In thousands of USD except for ounce</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">Three months ended</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">Three months</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">Six months</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">Six months</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">of gold and cash cost per ounce)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">June 30, 2008</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">ended June 30, 2007</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">ended June 30, 2008</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">ended June 30, 2007</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">Operating Expenses per financial</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">&nbsp; statements</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 8">$33,265</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">$25,289</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">$64,632</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">$25,289</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">Treatment and refining charges</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium" bgcolor="#E9F1F8">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none; border-bottom-width: medium">
    <p style="margin-right: 8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">&nbsp; on concentrate sales</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 8">740</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">1,884</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">2,642</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: none; border-top-width: medium; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 8">1,884</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-left: 3">By-product copper sales</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">(3,832)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(9,145)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(13,707)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(9,145)</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-left: 3">Non-cash adjustments</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 4">(92)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(1,557)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(990)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 4">(1,557)</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-left: 3">Total cash costs</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 8">30,081</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">16,471</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">52,577</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">16,471</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-left: 3">Ounces of gold sold</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 8">40,540</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">47,997</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">92,240</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">47,997</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-left: 3">Total cash cost per ounce of gold</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 8">$742</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">$343</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">$570</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 8">$343</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">13</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p><b>Liquidity and Capital Resources </b></p>
</i>
<p align="justify">As of June 30, 2008, the Company held cash and cash
equivalents of $319.2 million (December 31, 2007 - $149.9 million) and working
capital of $325.4 million (December 31, 2007 - $214.1 million). The majority of
the increase is attributed to cash and cash equivalents of $134.2 million (net
of acquisition costs) acquired from the closing of the business combination
transaction at the end of the quarter. </p>
<p align="justify">The Company has approximately $319.2 million in its treasury
which is invested in highly liquid lower risk, short-term, interest-bearing
investments with maturities of 90 days or less from the original date of
acquisition. This does not include $91.2 million related to asset backed
commercial paper (&quot;ABCP&quot;) at June 30, 2008 discussed below. </p>
<p align="justify">As part of the Transaction, the Company acquired $170 million
in asset backed commercial paper (&quot;ABCP&quot;) which is rated R1-high by Dominion
Bond Rating Service. In mid-August 2007, a number of non-bank sponsors of ABCP,
including those with which NGI had invested, announced that they could not place
ABCP due to unfavourable conditions in the Canadian capital markets.
Accordingly, there is presently no active market for the ABCP held by the
Company. The Company classifies its holdings in ABCP as long-term investments
and has estimated the fair value on ABCP at acquisition. Based on this exercise
the Company estimated that the fair value of the ABCP is approximately $91.2
million as at June 30, 2008. There can be no assurance that this estimate will
be realized. Subsequent adjustments, which could be material, may be required in
future reporting periods. </p>
<p align="justify">The Company has approximately $14.1 million in short-term
borrowings of which $10 million has been paid subsequent to quarter-end. </p>
<p align="justify">In the opinion of management, the working capital at June 30,
2008, together with cash flows from operations, are sufficient to support the
Company's normal operating and capital requirements on an ongoing basis. </font>
<b><i></p>
</i></b><font size="2">
<p align="justify">During the quarter ended June 30, 2008, the Company had
negative operating cash flows of $(3.0) million. Approximately $3.0 million and
$(5.5) million were generated from and used in operations at the Amapari and
Peak Mines, respectively. Peak Mines had a negative operating cash flow due to a
delay in the receipt of payment for copper concentrate. The current value of the
copper concentrate receivable at June 30, 2008 is $25.0 million and payment is
expected in the fourth quarter of 2008. </p>
<p align="justify">During the three months ended June 30, 2008, the Company
invested a total of $9.7 million in mining interests, including $2.3 million at
Amapari and $7.4million at Peak. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">14</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b>
<p>Contractual Obligations: </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 3">&nbsp;</td>
    <td WIDTH="65%" align="center" colspan="5" style="border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Payments Due by Period</b></font></td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 3">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 3">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">Less than 1</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-left: 3">Contractual Obligations (in 000's USD$)</b></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">Total</b></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">year</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">1-3 years</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">4-5 years</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">After 5 years</b></font></td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">Long-Term Debt</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">286,656</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">286,656</font></td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">Interest Payable on Long -Term Debt</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">225,595</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">25,966</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">51,932</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">51,932</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">95,765</font></td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">New Afton Commitments &amp; Permits</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">31,660</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">25,524</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">4,663</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">1,473</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 3">Other</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">351</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">140</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 4">211</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 4">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="37%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-left: 3">Total Contractual Obligations</b></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">544,262</b></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">51,630</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">56,806</b></font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">53,405</b></font></td>
    <td WIDTH="13%" align="right" style="border-style: solid; border-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 4">382,421</b></font></td>
  </tr>
</table>
<p align="justify"><font size="2">The majority of the Company's contractual
obligations consists of long-term debt and interest payable. Long-term debt
obligations comprise of senior secured notes and subordinated convertible
debentures. The senior secured notes were originally issued by NGI pursuant to a
note indenture dated June 28, 2007, mature and become payable on June 28, 2017
and bear interest at a rate of 10% per annum. At June 30, 2008 the face value of
the notes totaled $232.7 million (Cdn$237.0 million) with remaining interest
payable totaling $209.4 million. Interest is payable in arrears in equal semiannual installments on January 1 and July 1 each year. </font></p>
<p align="justify"><font size="2">The Company has 55,000 subordinated
convertible debentures that bear interest at a rate of 5% per annum and are
convertible by the holders into common shares of the Company at any time up to
June 28, 2014. At June 30, 2008 the aggregate principal of the subordinated
convertible debentures was $54.0 million (Cdn$55.0 million) with remaining
interest payable totaling $16.2 million. Interest is payable in arrears in equal
semi-annual installments on January 1 and July 1 each year. </font></p>
<p ALIGN="JUSTIFY"><font size="2">As of August 12, 2008, there were 212,290,459
common shares of the Company outstanding. The Company had 7,458,405 stock
options outstanding under its share option plan. In addition, the Company had
67,898,674 common share purchase warrants outstanding. </font></p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">15</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p align="justify"><b>Commitments </b></p>
</i>
<p ALIGN="JUSTIFY">The Company has entered into a number of contractual
commitments related to equipment orders to purchase long lead items or critical
pieces of mining equipment necessary to commence development of the New Afton
project. At June 30, 2008, these commitments totaled $26.0 million and are
expected to fall due over the next 12 months. </p>
<i>
<p align="justify"><b>Off-Balance Sheet Transactions </b></p>
</i>
<p align="justify">The Company has no off-balance sheet arrangements. </p>
<i>
<p align="justify"><b>Risks and uncertainties </b></p>
</i>
<p align="justify">Readers of this Management Discussion and Analysis should
give careful consideration to the information included or incorporated by
reference in this document and the Company's interim consolidated financial
statements and related notes. Significant risk factors for the Company are metal
prices, currency fluctuations, government regulations, foreign operations,
environmental, ability to obtain additional financing, risks relating to recent
acquisitions, and dependence on management. </p>
<i>
<p align="justify"><b>Metals Prices </b></p>
</i>
<p align="justify">Gold, silver and copper prices have a direct impact on the
Company's profitability. Metal prices are affected by a variety of factors
including interest rates, exchange rates, international economic and political
trends, inflation or deflation, fluctuations in the value of the US dollar and
foreign currencies, global and regional supply and demand, and the political and
economic conditions of major metal producing countries throughout the world. The
Company does not presently have a metals hedging policy nor has it conducted any
metals hedging in the past. </p>
<i>
<p align="justify"><b>Currency Fluctuations </b></p>
</i>
<p align="justify">Exchange rate fluctuations may affect the costs that the
Company incurs in its operations. Gold, silver and copper are sold in US dollars
and the Company's costs are incurred principally in Canadian dollars, Australian
dollars, Mexican Pesos and Brazilian reals. The appreciation of non-US dollar
currencies against the US dollar can increase the cost of gold, silver and
copper production and capital expenditure in US dollar terms. </p>
<p align="justify">In addition, following the acquisition of Amapari and Peak
Mines the Company recorded $29.9 million of future income tax liabilities on
mineral interests, which are recorded in local currencies. The future income tax
liabilities are monetary items, which are revalued each period end at current
exchange rates, with the gain or loss recorded in income for the period. The
Company has not entered into such types of transactions during the current or
comparative periods. The Company has assessed this risk and has not presently
adopted an active currency hedging program given the correlation between metal
prices and the currencies in which the Company operates. In 2008, favourable
changes in metal prices have mitigated the adverse effect of the appreciation of
the foreign currency against the US dollar. </p>
<i>
<p align="justify"><b>Government Regulations </b></p>
</i>
<p align="justify">The mining, processing, development and mineral exploration
activities of the Company are subject to various laws governing prospecting,
development, production, taxes, labour standards and occupational health, mine
safety, toxic substances, land use, water use, land claims of local people and
other matters. No assurance can be given that new rules and regulations will not
be enacted or that existing rules and regulations will not be applied in a
manner which could have an adverse effect on the Company's financial position
and results of operations. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">16</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p><b>Foreign Operations </b></p>
</i>
<p align="justify">The Company's operations are currently conducted in Brazil,
Mexico, Canada, United States, Chile, and Australia, and as such the Company's
operations are exposed to various levels of political, economic, and other risks
and uncertainties. These risks and uncertainties vary for each country and
include, but are not limited to, extreme fluctuations in currency exchange
rates; high rates of inflation; labor unrest; exploration and fluctuations in
currency and exchange rates; renegotiation or nullification of existing
concessions, licenses, permits and contracts; illegal mining; changes in
taxation policies; restrictions on foreign exchange and repatriation; and
changing political conditions, currency controls and governmental regulations
that favor or require the awarding of contracts to local contractors or require
foreign contractors to employ citizens of, purchase supplies from, a particular
jurisdiction. </p>
<p align="justify">Changes, if any, in mining or investment policies or shifts
in political attitude in these countries could adversely affect the Company's
operations or profitability. Operations may be affected in varying degrees by
government regulations with respect to, but not limited to, restrictions on
production, price controls, export controls, currency remittance, income taxes,
expropriation of property, foreign investment, maintenance of claims,
environmental legislation, land use, land claims of local people, water use and
mine safety. </p>
<p align="justify">Failure to comply strictly with applicable laws, regulations,
and local practices relating to mineral right applications and tenure, could
result in loss, reduction or expropriation of entitlements. </p>
<p align="justify">The occurrence of these various factors and uncertainties
cannot be accurately predicted and could have an adverse effect on the Company's
operations or profitability. </p>
<i>
<p align="justify"><b>Environmental </b></p>
</i>
<p align="justify">All phases of the Company's operations are subject to
environmental regulation in the various jurisdictions in which it operates.
These regulations mandate, among other things, the maintenance of air and water
quality standards and land reclamation. They also set forth limitations on the
generation, transportation, storage and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, directors, and employees. There is no assurance that future
changes in environmental regulation, if any, will not adversely affect the
Company's operations. </p>
<p align="justify">Government approvals and permits are currently, and may in
the future be, required in connection with the Company's operations. To the
extent that such approvals are required and not obtained, the Company could be
curtailed or prohibited from continuing its mining operations or from proceeding
with planned exploration or development of mineral properties. </p>
<i>
<p align="justify"><b>Asset Backed Commercial Paper (ABCP) </b></p>
</i>
<p ALIGN="JUSTIFY">As at June 30, 2008, the non-bank ABCP market remained the
subject of a restructuring process with the expressed intention of replacing the
ABCP with a number of long-term floating rate notes. The restructuring plan
would, if the restructuring plan is completed as currently planned, see the
pooling of all of the underlying assets from all the ABCP trusts with the
exception of those assets designated as ineligible for pooling (&quot;Ineligible
Assets&quot;) and those series of assets backed exclusively by traditional financial
assets (&quot;Traditional Series&quot;). ABCP relating to the pooled assets will be
replaced with four classes of notes named A1, A2, B and C in declining order of
seniority. ABCP relating to Ineligible Assets and Traditional Series would be
replaced with new tracking notes whose characteristics are designed to track the
performance of the particular assets of the series to which they correspond. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">17</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p align="justify">On April 25, 2008, the affected parties in the ABCP
restructuring voted to approve the restructuring which has been conducted under
the Companies' Creditors Arrangement Act. Subject to the court sanctioning of
the plan, the restructuring is currently planned to be completed in July or
August 2008 at which point the Company should be able to sell all or part of the
notes it will receive on the restructuring. However, numerous motions
challenging several aspects of the restructuring terms, including the blanket
legal releases, remain before the court and there remains the possibility that
future court decisions could impact the timing and ultimate issuance of the
restructured notes. As a result, the Company, following the acquisition of NGI
classifies its holdings in ABCP as long-term investments. </p>
<p align="justify">The Company has estimated the fair value on ABCP at
acquisition by using a probability weighted cash flow approach. There can be no
assurance that this estimate will be realized or that it will be adequate.
Subsequent adjustments, which could be material, may be required in future
reporting periods. </p>
<i>
<p align="left"><b>Additional Financing </b></p>
</i>
<p align="justify">The mining, processing, development, and exploration of our
projects may require additional external financing. Failure to obtain sufficient
financing could result in the delay or indefinite postponement of exploration,
development or production on any or all of our projects. There can be no
assurance that additional capital or other types of financing will be available
if needed or that, if available, the terms of such financing will be favorable.
</p>
<i>
<p align="left"><b>Risk Relating to Recent Acquisitions </b></p>
</i>
<p align="justify">The Company recently completed a business combination
transaction with Metallica Resources Inc. and Peak Gold Ltd. There can be no
assurances that the benefits anticipated from these acquisitions will be
realized. </p>
<p align="justify">The Company has been identified as the acquirer for
accounting purposes for the business combination. The cost of the acquisition
will be allocated to the assets acquired and liabilities assumed based on the
fair value at the date of acquisition. The estimation of fair value for mining
interests takes into account expected future cash flows associated with the life
of mine plans. This allocation is not yet complete due to inherent complexities
in the valuation process and revisions that may impact earnings prospectively in
the future may be required. </p>
<i>
<p align="left"><b>Dependence on Management </b></p>
</i>
<p align="justify">The Company strongly depends on the business and technical
expertise of its management team and there is little possibility that this
dependence will decrease in the near term. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">18</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p align="justify"><b>Title to the Company's Mineral Properties </b></p>
</i>
<p align="justify">The acquisition of title to mineral properties is a very
detailed and time-consuming process. Title to mineral concessions may be
disputed. Although the Company believes it has taken reasonable measures to
ensure proper title to it's properties, there is no guarantee that title to any
of such properties will not be challenged or impaired. Third parties may have
valid claims underlying portions of the Company's interest, including prior
unregistered liens, agreements, transfers or claims, including aboriginal land
claims, and title may be affected by, among other things, undetected defects. As
a result, the Company may be constrained in its ability to operate its
properties or unable to enforce its rights with respect to the properties. An
impairment to or defect in our title to our properties could have a material
adverse effect on our business, financial condition or results of operations.
</p>
<i>
<p align="justify"><b>Exploration and Development </b></p>
</i>
<p align="justify">Risks related to our recent start of production at our Cerro
San Pedro mine include risks associated with the operation of a mine and risks
of encountering unexpected geological formations or unanticipated variations in
grade. </p>
<i>
<p align="justify"><b>Accounting Policies implemented effective January 1, 2008
</b></p>
</i>
<p align="justify">The Company has adopted three new presentation and disclosure
standards that were issued by the Canadian Institute of Chartered Accountant:
Handbook Section 1535, Capital Disclosures (&quot;Section 1535&quot;), Handbook Section
3862, Financial Instruments &#150; Disclosures (&quot;Section 3862&quot;) and Handbook Section
3863, Financial Instruments &#150; Presentation (&quot;Section 3863&quot;) </p>
<p align="justify">Section 1535 requires the disclosures of both qualitative and
quantitative information that enables user of financial statements to evaluate
the entity's objective, policies and process for managing capital. Section 1535
Specifies that disclosures of (i) an entity's objective, policies and processes
for managing capital; (ii) quantitative data about what the entity regards as
capital; (iii) whether the entity has complied with any capital requirements;
and (iv) if it has not complied, the consequences of such non-compliance. </p>
<p align="justify">Section 3862 and 3863 replace Handbook Section 3861,
Financial Instruments &#150; Disclosures and Presentation, revising and enhancing its
disclosure requirements and carrying forward unchanged its presentation
requirements for financial instruments. Section 3862 and 3863 place increased
emphasis on disclosures about the nature and extent of risk arising from
financial instruments and how the entity manages those risks. </p>
<p align="justify">Section 3031, Inventories, which replaces the existing
Section 3030, establishes standards for the measurement and disclosure of
inventories. The new standard provides more extensive guidance on the
determination of cost, including allocation of overhead, requires impairment
testing and expands the disclosure requirements. The adoption of Section 3031 is
not expected to have a material impact on the Company's consolidated financial
position and results of operations. </p>
<i>
<p align="justify"><b>Accounting Policies to be implemented effective January 1,
2009 </b></p>
</i>
<p align="justify">Effective January 1, 2009, the Company will adopt Section
3064, Goodwill and Intangible Assets, which replaces Section 3062, and
establishes revised standards for recognition, measurement, presentation and
disclosure of goodwill and intangible assets. Concurrent with the introduction
of this standard, the CICA withdrew EIC 27, Revenues and Expenditures in the
Pre-operating Period (&quot;EIC 27&quot;). As a result of the withdrawal of EIC 27, the
Company will not be able to defer costs and revenues incurred prior to
commercial production at new mine operations. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">19</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><i>
<p align="justify"><b>Critical Accounting Policies and Estimates </b></p>
</i>
<p align="justify">The preparation of its consolidated financial statements
requires the Company to use estimates and assumptions that affect the reported
amounts of assets and liabilities as well as revenues and expenses. </p>
<p align="justify">The Company's accounting policies are described in note 2 of
the notes to its June 30, 2008 consolidated financial statements. The Company's
accounting policies relating to work-in-progress inventory valuation,
depreciation and depletion of mineral property, plant and equipment and site
reclamation and closure accruals are critical accounting policies that are
subject to estimates and assumptions regarding reserves, recoveries, future gold
prices and future mining activities. All estimates used are subject to periodic
review and are adjusted as appropriate. Life-of-mine plans are prepared each
year, so all estimates relating to mining activities, reserves, recoveries and
gold prices are reassessed annually, or more frequently as determined by
management. Because of the ongoing review process, the Company has been able to
update its estimates on a timely basis as developments affecting the underlying
assumptions have necessitated such modifications. </p>
<i>
<p align="justify"><b>Inventories </b></p>
</i>
<p align="justify">Finished goods, work-in-progress, heap leach ore and
stockpile ore are valued at the lower of average production costs or net
realizable value. </p>
<p align="justify">The Company records the cost of mining ore stacked in its
leach pads and in process at one of its mines as work-in-progress inventory, and
values work-in progress inventory at lower of cost ore at estimated net
realizable value. These costs are charged to earnings and included in cost of
sales on the basis of ounces of gold recovered. The assumptions used in the
valuation of work-in-process inventories include estimates of gold contained in
the ore stacked on leach pads, assumptions of the amount of gold stacked that is
expected to be recovered from the leach pads, the amount of gold in these mill
circuits and an assumption of the gold price expected to be realized when the
gold is recovered. If these estimates or assumptions prove to be inaccurate, the
Company could be required to write-down the recorded value of its
work-in-process inventories, which would reduce the Company's earning and
working capital. </p>
<i>
<p align="justify"><b>Mineral Properties </b></p>
</i>
<p align="justify">The Company records mineral property acquisition costs and
mine development costs at cost. In accordance with Canadian generally accepted
accounting principles, the Company capitalizes preproduction expenditures net of
revenues received, until the commencement of commercial production. </p>
<p align="justify">A significant portion of the Company's mineral property,
plant and equipment is depreciated and amortized on a unit-of-production basis.
Under the unit-of-production method, the calculation of depreciation, depletion
and amortization of mineral property, plant and equipment is based on the amount
of reserves expected to be recovered from each location. If these estimates of
reserves price to be inaccurate, or if the Company revises its mining plan for a
location, due to reductions in the price of gold or otherwise, to reduce the
amount of reserves expected to be recovered, the Company could be required to
write-down the recorded value of the mineral property, plant and equipment, or
to increase the amount of future depreciation, depletion and amortization
expense, both of which would reduce the Company's earnings and net assets. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">20</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p align="justify">In addition, generally accepted accounting principles require
the Company to consider at the end of each accounting period whether or not
there has been an impairment of capitalized mineral property, plant and
equipment. For producing properties, this assessment is based on whether factors
that may indicate a need for a write-down are present. If the Company determines
there has been an impairment because its prior estimates of future cash flows
have proven to be inaccurate, due to reductions in the price of gold, increases
in the costs of production, reductions in the amount of reserves expected to be
received or otherwise, or because the Company has determined that the deferred
costs of non-producing properties may not be recovered based on current
economics or permitting considerations, the Company would be required to
write-down the recorded value of its mineral property, plant and equipment,
which would reduce the Company's earning and net assets. </p>
<i>
<p align="justify"><b>Reclamation Obligations </b></p>
</i>
<p align="justify">The Company has an obligation to reclaim its properties after
the minerals have been mined from the site, and has estimated the costs
necessary to comply with exiting reclamation standards. Generally accepted
accounting principles require the Company to recognize the fair value of a
liability for an asset retirement obligation, such as site closure and
reclamation costs, in the period in which it is incurred if a reasonable
estimate of fair value can be made. The Company records the estimated present
value of future cash flows associated with site closure and reclamation as a
liability when the liability is incurred and increases the carrying value of the
related assets by the same amount. Subsequently, these asset retirement costs
are amortized to expense over the life of the related assets using the
unit-of-production method. At the end of each period, the liability is increased
to reflect the passage of time (accretion expense) and changes in the estimated
future cash flows underlying any initial fair value measurements (additional
asset retirement costs). If these estimates of costs or of recoverable mineral
resources prove to be inaccurate, the Company could be required to write down
the recorded value of its mineral property or increase the amount of future
depreciation and accretion expense, or both, all which would reduce the
Company's earnings and net assets. </p>
<i>
<p align="justify"><b>Future Tax Assets and Liabilities </b></p>
</i>
<p align="justify">The Company recognizes the future tax benefit related to
future income tax assets and set up a valuation allowance against any portion of
those assets that it believes will, more likely than not, fail to be realized.
Assessing the recoverability of future income tax assets requires management to
make significant estimates related to expectations of future taxable income.
Estimates of future taxable income are based on forecasted cash flows from
operations and the application of existing tax laws in each jurisdiction. In
circumstances where the applicable tax laws and regulations are either unclear
or subject to ongoing varying interpretations, it is reasonably possible that
the changes in these estimates could occur that materially affect the amount of
future income tax liabilities recorded at the balance sheet date. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <font SIZE="2">
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right">21</td>
    </font>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>

<font FACE="Times New Roman" SIZE="2"><i><b>
<p align="justify">Stock based compensation </p>
</b></i>
<p align="justify">CICA Handbook section 3870 Stock-based Compensation and Other
Stock-Based Payments establishes standards for the recognition, measurement and
disclosure of stock-based compensation and other stock-based payments made in
exchange for goods and services. Compensation expense is determined using the
Black-Scholes Option Pricing Model based on estimated fair values of all
stock-based awards at the date of grant and is expensed to operations over each
award's vesting period. The Black-Scholes Option Pricing Model utilizes
subjective assumptions such as expected price volatility and expected life of
the option. Changes in these input assumptions can significantly affect the fair
value estimate. </p>
<i><b>
<p align="justify">Financial Instruments </p>
</b></i>
<p align="justify">The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities. The
Company does not use interest rate contracts or other derivative financial
instruments to manage the risks associated with its operations, and therefore,
in the normal course of business are inherently exposed to currency, interest
rate and commodity price fluctuations. </p>
<i><b>
<p align="justify">International Financial Reporting Standards (IFRS) </p>
</b></i>
<p align="justify">The Canadian Accounting Standards Board (AcSB) recently
confirmed January 1, 2011 as the date that International Financial Reporting
Standards (IFRS) will replace current standards and interpretations of Canadian
Generally Accepted Accounting Standards (GAAP) for publically accountable
enterprises. The change from Canadian GAAP to IFRS will fundamentally change the
way Canadian companies report their financial position and results from
operations. It may also affect certain business functions. </p>
<p align="justify">Currently, the Company is in the process of developing an
IFRS changeover plan. This process involves analyzing and assessing the impact
of IFRS on accounting policies, information technology and data systems,
internal controls over financial reporting, disclosure controls and procedures
including investor relations and external communication plans, financial
reporting expertise, including training requirements and business activities.
</p>
<i><b>
<p align="justify">Controls and Procedures </p>
<p align="justify">Disclosure Controls and Procedures </p>
</b></i>
<p align="justify">Disclosure controls and procedures are designed to provide
reasonable assurance that all relevant information is gathered and reported on a
timely basis to senior management, so that appropriate decisions can be made
regarding public disclosure. As at the end of the period covered by this
management's discussion and analysis, management evaluated the effectiveness of
the Company's disclosure controls and procedures as required by Canadian
securities laws. </p>
<p align="justify">Based on that evaluation, management has concluded that the
disclosure controls and procedures were effective to provide reasonable
assurance that information required to be disclosed in the Company's interim
filings as such term is defined under Multilateral Instrument 52-109 &#150;
Certification of Disclosure in Issuers' annual and interim filings is recorded,
processed, summarized and reported within the time periods specified by those
laws, and that material information is accumulated and communicated to
management as appropriate to allow timely decisions regarding required
disclosure. </p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">22</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><i><b>
<p align="justify">Internal Controls and Procedures </p>
</b></i>
<p align="justify">The Company evaluated the design of its internal control and
procedures over financial reporting as defined under Multilateral Instrument
52-109 for the year ended December 31, 2007 for Amapari, Peak Mines and
Corporate operations. Based on this evaluation, management has concluded that
the design of these internal controls and procedures over financial reporting
was effective. </p>
<p align="justify">There has been no change in the Company's design of internal
controls and procedures over financial reporting that has materially affected,
as is reasonably likely to materially affect, the Company's internal control
over financial reporting during the period covered by this management's
discussion and analysis. </p>
<p align="justify">The Company has not yet completed its evaluation over the
design of its internal controls and procedures over financial reporting as
defined under Multilateral Instrument 52-109 for the three month period ended
June 30, 2008 for the Cerro San Pedro mine and New Afton copper-gold project
recently acquired. However, the Company does not anticipate any significant
deficiencies in the design of these controls. </p>
<i><b>
<p align="justify">Limitations on Controls and Procedures </p>
</b></i>
<p align="justify">The Company's management, including the Chief Executive
Officer and Chief Financial Officer, believe that any disclosure controls and
procedures or internal controls over financial reporting, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further a design of a control
system must reflect the fact that there are resource constraints and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, they cannot provide absolute
assurance that all control issues and instances of fraud, if any, within the
Company have been prevented and detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by unauthorized override control. The design of any systems controls
also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Accordingly, because of
the inherent limitations in a cost effective control system, misstatements due
to error or fraud may occur and not be detected. </p>
<i><b>
<p align="justify">Contingencies </p>
</b></i>
<p align="justify">The Company is from time to time involved in various claims,
legal proceedings and complaints arising in the ordinary course of business. The
Company does not believe that adverse decisions in any pending or threatened
proceeding related to any matter, or any amount which may be required to pay by
reason thereof, will have a material effect on the financial conditions or
future results of operations of the Company. </p>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">23</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<p align="justify">In 2007, the Company terminated its mining contract at the
Cerro San Pedro Mine. The mining contractor maintains that it was not paid for
all amounts owed under the mining contract, including early contract termination
fees, and has filed an arbitration claim against the Company for $16.8 million
plus value added taxes. The Company has filed a counter claim against the mining
contractor for $2.5 million. Arbitration proceedings are scheduled to take place
in Denver, Colorado in November 2008. Management has not yet determined the
ultimate outcome of this arbitration and as of June 30, 2008 the Company has
recorded an $8.4 million provision for this claim. </p>
<p align="justify">&nbsp;</p>
<p align="justify">&nbsp;</p>
<font style="font-size: 9pt">
<p align="justify">&nbsp;</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">24</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS </p>
</b></font><font FACE="Times New Roman" style="font-size: 8pt"><i>
<p align="justify" style="margin-left: 5%">This Management's Discussion and
Analysis contains &quot;forward- looking statements&quot;, within the meaning of the
United States Private Securities Litigation and Reform Act of 1955 and
applicable Canadian Securities legislation. Forward-looking statements include,
but are not limited to, statements with respect to the future prices of gold,
silver and copper, the estimation of mineral reserves and resources, the
realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and timing
of the development of new deposits, success of exploration activities,
permitting time lines, currency exchange rate fluctuations, requirements for
additional capital, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims and
limitations on insurance coverage. Generally, these forward- looking statements
can be identified by the use of forward-looking terminology such as &quot;plans&quot;,
&quot;expects&quot;, or &quot;does not expect&quot;, &quot;is expected&quot;, &quot;budget&quot;, &quot;scheduled&quot;,
&quot;estimates&quot;, &quot;forecasts&quot; ,&quot;intends&quot; ,&quot; anticipates&quot;, or &quot;does not anticipate&quot;,
or &quot;believes&quot;, or variations of such words and phrases or state that certain
actions, events or results &quot;may&quot;, &quot;could&quot;, &quot;would&quot;, &quot;might&quot; or &quot;will&quot; or &quot;will
be taken&quot;, &quot;occur&quot; or &quot;be achieved&quot;. Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of the Company to
be materially different from those expressed or implied by such forward-looking
statements, including but not limited to: anticipated synergies from the
business combination may not be realized; there may be difficulties in
integrating the operations and personnel of the Company, Peak Gold and Metallica;
the Company is subject to significant capital requirements associated with its
expanded operations and portfolio of development projects since completion of
the business combination; fluctuations in the international currency markets and
in the rates of exchange of the currencies of Canada, the United States,
Australia, Mexico and Chile; price volatility in the spot and forward markets
for commodities; impact of any hedging activities, including margin limits and
margin calls; discrepancies between actual and estimated production, between
actual and estimated reserves and resources and between actual and estimated
metallurgical recoveries; changes in national and local government legislation
in Canada, the United States, Mexico, Chile and Australia or any other country
in which the Company currently or may in the future carry on business; taxation
controls, regulations and political or economic developments in the countries in
which the Company does or may carry on business; the speculative nature of
mineral exploration and development, including the risks of obtaining necessary
licenses and permits; diminishing quantities or grades of reserves; competition;
loss of key employees; additional funding requirements; actual results of
current exploration or reclamation activities; changes in project parameters as
plans continue to be refined accidents; labour disputes; and defective title to
mineral claims or property or contests over claims to mineral properties, as
well as those factors discussed in the sections entitled &quot;Risks and
uncertainties&quot; included in this document and the section entitled &quot;Risk Factors&quot;
in the Joint Disclosure Booklet of the Company, Peak Gold and Metallica and the
section entitled &quot;Risk Factors Relating to the Operations of the Combined
Company&quot; in the Company's management information circular dated May 16, 2008,
both available on SEDAR at www.sedar.com. Although the Company has attempted to
identify important factors that would cause actual results to differ materially
from those contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated, or intended. There can
be no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. The Company does not undertake to update any
forward-looking statements contained herein, except in accordance with
applicable securities laws. </p>
</i></font>
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  <tr>
    <td WIDTH="60%"><p style="margin-left: 5%"><font SIZE="2" color="#808080">New Gold Inc. Management Discussion and
    Analysis</font></td>
    <td WIDTH="40%">
    <p align="right"><font size="2">25</font></td>
  </tr>
</table>
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<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>exh993.htm
<DESCRIPTION>EXHIBIT 99.3
<TEXT>
<html>

<head>
<title>New Gold Inc.: Exhibit 99.3 - Prepared By TNT Filings Inc.</title>
</head>

<body>

<div style="border-top-style: solid; border-top-width: 1; padding-top: 1">
  <hr color="#000000" size="5">
</div>
<font size="2"><b>
<p align="center">Form 52-109F2 - Certification of Interim Filings</b> </p>
<p>I <b><i>Robert Gallagher, President and Chief Executive Officer of New Gold
Inc.,</i> </b>certify that: </p>
<p align="justify">1.&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed the interim filings (as this term
is defined in Multilateral Instrument 52-109 <i>Certification of Disclosure in
Issuers' Annual and Interim Filings</i>) of <i><b>New Gold Inc.</b></i>, (the
issuer) for the interim period ending <b><i>June 30, 2008;</i> </b></p>
<p ALIGN="JUSTIFY">2.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the interim
filings do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with
respect to the period covered by the interim filings; </p>
<p align="justify">3.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the interim financial
statements together with the other financial information included in the interim
filings fairly present in all material respects the financial condition, results
of operations and cash flows of the issuer, as of the date and for the periods
presented in the interim filings; </p>
<p align="justify">4.&nbsp;&nbsp;&nbsp;&nbsp; The issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
and internal control over financial reporting for the issuer, and we have: </p>
<p align="justify" style="margin-left: 5%">(a)&nbsp;&nbsp;&nbsp;&nbsp; designed such disclosure controls and procedures,
or caused them to be designed under our supervision, to provide reasonable
assurance that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which the interim filings are being prepared;
and </p>
<p align="justify" style="margin-left: 5%">(b)&nbsp;&nbsp;&nbsp;&nbsp; designed such internal control over financial
reporting, or caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with the
issuer's GAAP; and </p>
<p align="justify">5.&nbsp;&nbsp;&nbsp;&nbsp; I have caused the issuer to disclose in the
interim MD&amp;A any change in the issuer's internal control over financial
reporting that occurred during the issuer's most recent interim period that has
materially affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting. </p>
<p>August 13, 2008 </p>
<i>
<p><u>&quot;Robert Gallagher&quot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u></i>Robert Gallagher <i><br>
President and Chief Executive Officer </p>
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<TYPE>EX-99.4
<SEQUENCE>5
<FILENAME>exh994.htm
<DESCRIPTION>EXHIBIT 99.4
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<title>New Gold Inc.: Exhibit 99.4 - Prepared By TNT Filings Inc.</title>
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<p align="center">Form 52-109F2 - Certification of Interim Filings</b> </p>
<p align="justify">I <i><b>Basil Huxham, Executive Vice President and Chief Financial Officer of
New Gold Inc.,</b></i> certify that: </p>
<p align="justify">1.&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed the interim filings (as this term
is defined in Multilateral Instrument 52-109 <i>Certification of Disclosure in
Issuers' Annual and Interim Filings</i>) of <i><b>New Gold Inc.</b></i>, (the
issuer) for the interim period ending <b><i>June 30, 2008;</i> </b></p>
<p ALIGN="JUSTIFY">2.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the interim
filings do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with
respect to the period covered by the interim filings; </p>
<p align="justify">3.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the interim financial
statements together with the other financial information included in the interim
filings fairly present in all material respects the financial condition, results
of operations and cash flows of the issuer, as of the date and for the periods
presented in the interim filings; </p>
<p align="justify">4.&nbsp;&nbsp;&nbsp;&nbsp; The issuer's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
and internal control over financial reporting for the issuer, and we have: </p>
<p align="justify" style="margin-left: 5%">(a)&nbsp;&nbsp;&nbsp;&nbsp; designed such disclosure controls and procedures,
or caused them to be designed under our supervision, to provide reasonable
assurance that material information relating to the issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which the interim filings are being prepared;
and </p>
<p align="justify" style="margin-left: 5%">(b)&nbsp;&nbsp;&nbsp;&nbsp; designed such internal control over financial
reporting, or caused it to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with the
issuer's GAAP; and </p>
<p align="justify">5.&nbsp;&nbsp;&nbsp;&nbsp; I have caused the issuer to disclose in the
interim MD&amp;A any change in the issuer's internal control over financial
reporting that occurred during the issuer's most recent interim period that has
materially affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting. </p>
<p>August 13<sup>th</sup>, 2008 </p>
<i>
<p><u>&quot;Basil Huxham&quot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<br>
</u></i>Basil Huxham <i><br>
Executive Vice President and Chief Financial Officer </i></p>
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