GOLD NEWS

New Gold reports 85% increase in 1Q11 net profit, confirms guidance

New Gold reported a nearly 40% increase in quarterly gold production to 107,622 ounces during the first quarter of the year.

RENO, NV - 

Toronto-based New Gold reported Wednesday that net earnings increased 85% to US$25 million or 6-cents per share during the first quarter of this year, compared to $13 million or 3-cents per share in the same period of 2010.

Adjusted net earnings from continuing operations in the first quarter were US$48 million or 12-cents per share, which increased from $18 million or 5-cents per share.

The company reported quarterly gold production increased 39% from 77,215 ounces in the first-quarter 2010 to 107,622 ounces in the first-quarter 2011.

New Gold reiterated its 2011 production guidance of 380,000 to 400,000 ounces and lowered its guidance for total cash cost from $430 to $450 per ounce to $390 to $410 per ounce. "The forecast decrease in total cash cost is driven by the continued strength of the silver price and the significant impact it is having on total cash cost at Cerro San Pedro where need gold is expecting to produce between 1.9 and 2.1 million ounces of silver in 2011," New Gold said.

The company also reported 635,320 ounces of silver production and 3.5 million pounds of copper production during the first-quarter 2011, up from 206,700 silver ounces and 4 million pounds of copper production reported during the first-quarter 2010.

"We are very pleased as the momentum we established through our strong performance in 2010 continues to build in 2011," said New Gold Executive Chairman Randall Oliphant. "Our base of three operating assets has once again delivered increased gold production at lower cost."

"We feel fortunate that with the prevailing strength in commodity prices our margins and cash slows continue to grow significantly," he added. "We believe that this growth will be further enhanced through the development of our two fully-funded organic growth projects as well as by our proposed acquisition of Richfield."

On April 4, 2011, New Gold and Richfield Ventures announced a friendly transaction whereby New Gold will acquire all of the outstanding common shares of Richfield. Each Richfield shareholder will receive 0.9217 of a New Gold share for each Richfield share held. The offer valued Richfield at $10.38 per share or $550 million.