New Gold Reduces Debt Position by C$50 Million

    (All figures are in Canadian dollars unless otherwise stated)

    VANCOUVER, Jan. 9 /CNW/ - New Gold Inc. ("New Gold") (TSX and AMEX - NGD)
today announced that it has agreements with certain note holders that will
reduce its debt position by $50 million through the buy back of a portion of
its Senior Secured Notes with a face value totalling $50 million for
consideration of $30 million.
    The purchase and cancellation of these notes reduces New Gold's Senior
Secured Notes debt from $237 million to $187 million and results in a
reduction of $5 million per year in interest payments. This transaction will
also result in an estimated pre-tax gain of approximately US$14 million in the
first quarter of 2009.
    Mr. Robert Gallagher, President and Chief Executive Officer said, "The
opportunity to purchase $50 million of our outstanding debt at a considerable
discount to face value significantly strengthens our balance sheet and is
consistent with our strategy to maintain a solid financial position."
    As a result of this transaction, New Gold's total debt will be reduced to
$242 million which is comprised of $187 million of the Senior Secured Notes at
an interest rate of 10%, expiring June 2017 and $55 million of the Convertible
Debentures at an interest rate of 5%, expiring June 2014. New Gold had
previously reported that as of September 30, 2008, it had cash and cash
equivalents of US$251 million.

    New Gold is an intermediate gold mining company with operating assets in
Mexico and Australia and two development projects in Canada and Chile. For
further information on New Gold, please visit our website at


    Certain information contained in this press release, including any
information relating to New Gold's future financial or operating performance,
may be deemed "forward looking". All statements in this press release, other
than statements of historical fact, that address events or developments that
New Gold expects to occur, are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are generally, but
not always, identified by the words "expects", "does not expect", "plans",
"anticipates", "does not anticipate", "believes", "intends", "estimates",
"projects", "potential", "scheduled", "forecast", "budget" and similar
expressions, or that events or conditions "will", "would", "may", "could",
"should" or "might" occur. All such forward-looking statements are subject to
important risk factors and uncertainties, many of which are beyond New Gold's
ability to control or predict. Forward-looking statements are necessarily
based on estimates and assumptions that are inherently subject to known and
unknown risks, uncertainties and other factors that may cause New Gold's
actual results, level of activity, performance or achievements to be
materially different from those expressed or implied by such forward-looking
statements. Such factors include, without limitation: the results of the
preliminary economic assessment assessing the viability of a new process
facility at Amapari; New Gold's operations are subject to significant capital
requirements ; fluctuations in the international currency markets and in the
rates of exchange of the currencies of Canada, the United States, Australia,
Brazil, 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, Australia, Brazil, Mexico and Chile or any other
country in which New Gold currently or may in the future carry on business;
taxation; controls, regulations and political or economic developments in the
countries in which New Gold 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; defective title to mineral claims or property or contests over
claims to mineral properties. In addition, there are risks and hazards
associated with the business of mineral exploration, development and mining,
including environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses (and the
risk of inadequate insurance or inability to obtain insurance, to cover these
risks) as well as "Risks and Uncertainties" included in New Gold's MD&A filed
November 12, 2008 available at Forward-looking statements are
not guarantees of future performance, and actual results and future events
could materially differ from those anticipated in such statements. All of the
forward-looking statements contained in this press release are qualified by
these cautionary statements. New Gold expressly disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, events or otherwise, except in accordance with
applicable securities laws.

For further information:

For further information: Mélanie Hennessey, Vice President, Investor
Relations, New Gold Inc., Direct: (604) 639-0022, Toll-free: 1 (888) 315-9715,
Email:, Website:

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