Toronto, November 08, 2012 -- Moody's Investors Service affirmed all ratings of New Gold Inc. ("New Gold") including the company's B1 corporate family and probability of default ratings and B2 senior unsecured notes rating. Moody's also assigned a B2 rating to the company's proposed $500 million senior unsecured notes. Proceeds from the new notes will be used for general corporate purposes. The ratings outlook is stable.

New Gold's B1 rating was affirmed as its leverage, pro-forma for the debt issue, remains in line with Moody's expectations for the rating (2012 adjusted Debt/EBITDA around 2x).

RATINGS RATIONALE

New Gold's B1 corporate family rating primarily reflects the limited diversity of its mines as well as its modest size, relatively short reserve life, and exposure to volatile gold prices. As well, the rating incorporates substantial execution risk associated with the Blackwater expansion project and the possibility of debt-financed acquisitions, which would increase the company's development costs and operational risks. The company however has a good operating margin, its mines are in politically stable jurisdictions, and New Gold's meaningful exposure to base metals reduces the volatility of its cash flows. Moody's expects that New Gold will maintain good liquidity and adjusted leverage (Debt/EBITDA) below 2.5x over the next 12 to 18 months. Beyond this timeframe higher capital expenditures associated with Blackwater and other development projects are likely to pressure the company's cash flows and may cause the company's leverage to increase.

The ratings outlook is stable because gold fundamental are expected to remain relatively favorable over the next 12-18 months, enabling New Gold to produce largely breakeven free cash flow and sustain its leverage between 2x -- 2.5x.

The ratings could be upgraded if New Gold increases its size and mine diversity and continues to develop its projects on time and on budget. As well, adjusted leverage (Debt/ EBITDA) would need to be sustained below 3x.

The ratings could be downgraded if New Gold experiences significant operational difficulties or if there is a material deterioration in its liquidity position. A downgrade would also be considered should adjusted Debt/ EBITDA (excluding El Morro non-recourse financing) be sustained above 4x.

The principal methodology used in rating New Gold was the Global Mining Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

New Gold Inc. is a gold producer with four mines in the United States, Mexico, Australia and Canada. The company also has a 30% carried ownership in the El Morro gold and copper project in Chile and is developing the Blackwater gold and silver project in Canada. Revenue for the twelve months ended September 30, 2012 was $718 million with about 400,000 ounces of gold produced.

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Darren M. Kirk VP - Senior Credit Officer Corporate Finance Group Moody'sCanada Inc.70 York Street Suite 1400 Toronto, ON M5J 1S9 Canada(416) 214-1635Donald S. Carter, CFA MD - Corporate Finance Corporate Finance Group(416) 214-1635 Releasing Office: Moody's Canada Inc.70 York Street Suite 1400 Toronto, ON M5J 1S9 Canada(416) 214-1635(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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