OPERATIONAL HIGHLIGHTS
Cerro San Pedro
Cerro San Pedro completed its first full year of operations in 2008, and has ramped up to steady state gold production at the forecasted recovery rates, while gaining recognition for its safety record and its environmental management systems.
2008 PRODUCTION
2009 Targets
Gold:84,561 oz
Silver:1.1 million oz
Cash Cost/oz
(net of by product sales)
$432
Gold:90 - 100 thousand oz
Silver:1.1 – 1.3 million oz
Cash Cost/oz
(net of by product sales)
$550 – 570
History and Location

Cerro San Pedro is an open pit gold and silver, heap-leach mining operation located 20 kilometers north east of the city of San Luis Potosi, Mexico. The Cerro San Pedro mine was acquired through the business combination with Metallica Resources on June 30, 2008. Commercial production at Cerro San Pedro commenced in May of 2007 and has an estimated mine life of ten years, with production expected to be between 80,000 and 100,000 ounces of gold and 2.25 million ounces of silver annually over an estimated mine life of ten years.

Health, Safety, Environment and Sustainability

In recognition of the operation’s exemplary safety record in 2008, Cerro San Pedro was awarded the prestigious “Casco de Plata” (the “Silver Hardhat”) from the Mexican Chamber of Mines, CAMIMEX. The award is granted to the safest mining operation in Mexico in the category of open pit operations with fewer than 500 employees. The operation sustained zero LTIs during the year and has achieved 731 days without lost time due to injury to December 31, 2008.

New Gold takes its responsibility for protection of the environment seriously and integrates reclamation into every phase of mining. The company has an annual reforestation goal of 44 hectares. In 2008, 52 hectares were reforested with 56,400 plants in the neighboring village of Monte Caldera. The company maintains a botanical nursery that has raised more than 74,000 indigenous plants to be used for ongoing reclamation work and to date New Gold has reforested more than 400 hectares of land outside the Cerro San Pedro mine site.

Cerro San Pedro’s environmental management system received recognition from the International Organization of Certification, achieving ISO 14001:2004 status.

New Gold is actively engaged in the local community, providing medical services to 10 neighboring communities, as well as dental care in cooperation with the school of dentistry at the local university. In addition, the company supports education by providing computers, educational software and internet connectivity, as well as transportation from children’s homes to the local schools. New Gold also supports local heritage and culture, including full financial support for the restoration of the church of San Nicholas, and the Virgen de Guadalupe’s altar, as well as building a new rectory for the church.

2008 Operating Results

Cerro San Pedro completed its first full year of operations in 2008, having ramped up to steady state gold production at the forecasted recovery rates. The mine produced 84,561 ounces of gold and 1.1 million ounces of silver at a cash cost of $432 per ounce, net of by-product sales. Silver recoveries were lower than expected and resulted in a modestly higher cash cost than forecasted. Cerro San Pedro generated operating cash flow of $25.0 million in 2008.

Looking Forward

Production in 2009 is expected to yield 90,000 – 100,000 ounces of gold and 1.1 – 1.3 million ounces of silver. Capital expenditures are expected to be approximately $2.8 million in 2009 with the completion of additional leach pad capacity.

The Cerro San Pedro Sulfide exploration project (“CSP Sulfide”) commenced in July 2008. The objective of the CSP Sulfide project is to evaluate the potential of a sulfide style gold-silver-zinc-lead mineralization extending from beneath the current open pit towards an area of previous underground mining located approximately 500 meters to the southwest. Between 1929 and 1949 this area produced approximately 235,000 ounces of gold and 20 million ounces of silver along with significant amounts of zinc, lead and copper. Though distinctly different from the oxide style gold-silver mineralization currently being mined and processed via heap leaching, the potential to develop additional sulfide resources that could be amenable to modern sulphide flotation processing methods represents a compelling opportunity meriting further investigation. The first phase of the CSP Sulphide project includes a further 2,900 meters of drilling and New Gold has recently commissioned a second core rig to accelerate the program for completion during the second quarter of 2009.