New Gold/Rainy River -- summary under Shares for Shares or Cash

Offer

Each holder of common shares of (TSX -listed) Rainy River may elect to receive $3.83 per share in cash or 0.5 of an New Gold share for each Rainy River share and associated shareholder rights plan rights ("SRP Rights") deposited under the offer (which is conditional, inter alia, on 66 2/3% of the issued and outstanding Rainy River shares (calculated on a fully-diluted basis) being tendered), except that the total amount of cash available under the offer and is limited to $198M 9pro rated for the proportion of the Rainy River shares which are taken up), and the total number of New Gold shares issuable under the offer is limited to 25.8M shares (also pro-rated). Shareholders who deposit their shares pursuant to the offer will be deemed to have deposited the SRP Rights associated with such shares. Assuming that all shareholders tender to the cash alternative, or all tender to the New Gold share alternative, each Rainy River shareholder will receive $1.91 in cash and 0.25 of a New Gold for each Rainy River share. The offer represents a premium of approximately 67%. The offer is in Canadian dollars. The Rainy River board has recommended acceptance.

New Gold

New Gold is an intermediate gold mining company with operating mines in Canada, Mexico, the U.S. and Australia. It is listed on the TSX and NYSE MKT and is a B.C. corporation.

Rainy River

Rainy River has a 100% interest in the Rainy River gold project in Northwestern Ontario. It is a B.C. corporation whose shares are listed on the TSX. 100.4M shares are outstanding.

Compulsory Acquisition/ Subsequent Acquisition Transaction

If 90% of the shares (other than those held by New Gold and affiliates) are taken up, New Gold intends to acquire the balance on the same terms as under the offer. If there instead is a Subsequent Acquisition Transaction, New Gold intends that the consideration offered would be the same as under the offer, and that the shares acquired under the offer would be voted in favour of such transaction.

U.S. securities laws

The issuance of New Gold shares under the offer is being made pursuant to a registration statement on Form F-10 filed with the SEC under the U.S. Securities Act of 1933

Canadian tax consequences

The s. 85.1 rollover will be available to a Rainy River shareholder who receives only New Gold shares (unless gain or loss is reported on the disposition). New Gold will elect jointly with an Rainy River shareholder under 85(1) (or (2)) if the election form is provided within 45 days of the take-up date, failing which the election will not be made. "Eligible Holders" for purposes of being eligible to make the election are non-exempt residents, and non-residents whose shares are taxable Canadian property and not treaty-protected property.

No opinion expressed on a Subsequent Acquisition Transaction. Standard taxable Canadian property disclosure for non-residents.

U.S. Tax Consequences

The transaction generally will be taxable. The consequences would differ if Rainy River were a PFIC, as to which no opinion is given.