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UPDATE: New Gold Down Another 2%, Hits New Yr Lows As Eliminates Legacy Gold Hedges; Fell 7% Wednesday

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New Gold Inc. (NGD, NGD.TO), which fell 7% Wednesday, has dropped another 2% and hit fresh year lows Thursday as it announced that the company has eliminated its legacy gold hedges that were associated with the 2008 project financing put in place to develop the Mesquite mine. As a result of Mesquite's successful start-up, the company repaid the loan in 2010, four years ahead of schedule. With the elimination of the hedges, New Gold's gold production and gold resource base now have full leverage to the gold price.

"Our constructive view on the gold price has led us to unwind the gold hedges," stated Randall Oliphant, Executive Chairman. "We believe the recent pullback in the gold price has provided us with a window to be opportunistic in eliminating the hedges. We look forward to the balance of 2013 and full year 2014 earnings and cash flow benefitting meaningfully as a result."

By unwinding the hedges, New Gold has removed the requirement to deliver 5,500 ounces of gold monthly at a fixed price of $801 per ounce from May 2013 through the end of 2014. In total, an additional 110,000 ounces of future production can now be sold at the prevailing spot gold price rather than the contract price of $801 per ounce. In total, the company paid $65.7 million to eliminate the gold hedges. The transaction was executed at an average spot price of $1,396 per ounce.

New Gold continues to have a strong balance sheet with significant financial flexibility and anticipates that the elimination of the hedges should result in even more robust earnings and cash flow going forward.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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